Dealing with a Proactive China

U.S. President Barack Obama stands with Chinese President Xi Jinping as the U.S. national anthem is played during a welcome ceremony in Beijing on November 12, 2014.

Chinese President Xi Jinping will soon arrive in the United States for a state visit, which will include a bilateral summit with President Barack Obama. President Xi will arrive at a challenging time. Under his leadership, Chinese leaders are grabbing every opportunity to push their nation forward, both domestically and internationally. On some issues, these leaders are pushing China in a direction that dovetails with U.S. interests, thus opening up new opportunities for cooperation. Where U.S.-China interests are not aligned, however, Beijing’s growing assertiveness is reheating old frictions and creating new ones. The challenge facing the United States is how to maximize China’s growing value as a partner in some areas while simultaneously pushing back against unwelcome behavior in others. That balancing act has become more complicated in the run-up to Xi’s visit because recent Chinese actions—some constructive, others controversial—directly affect an unusually broad array of American interests.

On the positive side, China is showing an increasing willingness to play a leadership role among nations outside the highly industrialized democratic block. China played a key role in the Iran negotiations, helping the process through shaky moments, and Chinese nuclear experts helped Iranian officials redesign the Arak plutonium reactor so that it will never produce nuclear fuel. On climate change, China’s willingness to issue bold climate targets with the United States last November challenged other developing nations to follow suit and knocked down a firewall that has hindered global climate negotiations for decades.

China is also leaning harder on North Korea. Last week, after North Korean officials announced plans to launch another long-range rocket, China’s foreign minister warned against “taking new actions that could lead to tensions” on the Korean peninsula and called for all nations to take a “responsible attitude.” Pyongyang did not specify a date for the rocket launch, but many analysts believe it will be around October 10. So if Chinese diplomacy is not successful, we could see a new round of provocative activity on the Korean Peninsula within the next few weeks. On all of these issues, Beijing’s ability to speak to a different audience and from a different angle than the United States has made China a valuable diplomatic partner.

On the commercial side, Chinese companies are venturing outward, which creates new partnership opportunities, most notably in China-to-U.S. direct investment. For many Americans, China-to-U.S. foreign direct investment, or FDI, projects provide their first opportunity to directly engage in and benefit from the U.S.-China economic partnership. A recent survey conducted by Rhodium Group reveals that 340 of the 435 American congressional districts have at least one China FDI project. Many of those projects are providing jobs for American workers: More than 80,000 Americans are now directly employed through a Chinese investment project in the United States. Economic competitiveness has always been an issue in the relationship, including U.S. concern that American jobs will migrate to China. Now the reverse is happening: Chinese companies are finally creating jobs in this nation—a trend that both leaders should support.

Unfortunately, Beijing is also moving forward with initiatives that undermine U.S. interests, and those initiatives are posing a growing challenge for Washington. The main question facing the United States is how hard it should push back on contentious issues: To what degree should Washington be willing to take actions that demonstrate U.S. resolve on issues that are U.S. priorities but that also risk undermining the U.S.-China partnership, including in areas of growing cooperation such as denuclearization and climate change? Four difficult issues will dominate the agenda this week:

  • Cybersecurity: U.S. officials recently discovered two massive cyber thefts. Hackers stole private identity information of 80 million Americans from health insurer Anthem, as well as sensitive security clearance information of more than 21 million Americans—many of whom are current federal government employees—at the U.S. Office of Personnel Management. Both incidents appear to be intelligence-gathering operations from the Chinese government, and they follow a string of Chinese commercial cyber thefts targeting American businesses. The overall size and scope of Chinese cyber activity throughout 2015 has pushed the Obama administration to consider imposing retaliatory sanctions. Beijing is taking U.S. retaliatory threats very seriously and recently dispatched a high-level envoy to kick-start cyber discussions in advance of the official visit. That process appears to have diffused at least some tension, but President Obama is still calling cybersecurity “one of the biggest topics that I [will] discuss with President Xi” during his visit and has stated that he is personally willing to take serious action against China to demonstrate U.S. resolve on cybersecurity.
  • Commercial concerns: Trade complaints have plagued the U.S.-China economic relationship for decades. U.S. companies have confronted intellectual property theft, export subsidies that appear to violate World Trade Organization regulations, and market access barriers in China. Despite those challenges, many U.S. companies have profited in the Chinese market. However, Chinese regulators recently began to use anti-trust and national security legislation to drive successful U.S. companies out of the few sectors where they did manage to gain a foothold in the Chinese market. American businesses have long served as a critical anchor for U.S.-China relations. When difficult issues emerge, the business community has traditionally been the loudest voice urging U.S. political leaders to maintain a cooperative stance. Now that voice is becoming increasingly disjointed.
  • Chinese island-building in the South China Sea: China is building artificial islands in the South China Sea to strengthen its hand in ongoing maritime territorial disputes, and this activity raises new questions about China’s intentions toward its neighbors. China’s land reclamation runs counter to international norms that have made it possible for East Asia to enjoy extraordinary stability and economic growth since the end of the Vietnam War. China is attempting to redraw land maps in its favor and, in the process, is creating great anxiety about what China’s rise will mean for its neighbors. Concerns ticked higher last week when new satellite footage revealed that China is building a third air strip on an artificial island.
  • China’s draft Foreign NGO Management Law: Chinese legislators are drafting a new law that, if implemented in current draft form, would impose unprecedented restrictions on American universities and think tanks that send scholars to conduct policy research in China. The current draft would require all American nonprofit institutions to conduct their activities in mainland China—such as scholarly meetings and research trips—under Chinese government management and through official Chinese partners.

Many American observers will be watching President Xi this week to see if China’s top leader can address these concerns during his state visit. China’s increasingly assertive policy actions under President Xi Jinping—some of which do benefit the United States—call for a parallel increase in U.S.-China communication on these issues, not only through official channels but also with the American public. What is unique in 2015 is the number of Americans who are directly involved in the issues outlined above. The 80,000 Americans working for Chinese investment projects; the 100 million cyber victims who suspect Chinese intelligence agencies now retain their private information; the thousands of American think tanks and universities that worry about the future of their China programs under the new NGO law; the American businesses with critical investments in China: all of these groups have a direct stake in the U.S.-China relationship and in this particular state visit.

President Xi’s first U.S. stop is in Seattle, Washington, where he will attend a policy dinner with American business and think tank leaders. That dinner provides an ideal opportunity for President Xi to speak frankly about cybersecurity, U.S. commercial concerns in China, and the Foreign NGO Management Law. If President Xi can make clear that he has heard American concerns on these hot-button issues and understands where those concerns are coming from—even if he personally disagrees with the reasoning behind them—it will help illuminate a potential path forward on these issues. President Xi could also share some of China’s own fears. Americans need not agree with those fears or find them valid—such as China’s belief that the United States is seeking to contain its rise, including militarily in the Western Pacific—but it would be responsible statecraft on the part of the United States to make sure it demonstrates an understanding of what President Xi is saying and why.

If President Xi shows up ready to clear the air and discuss options for addressing American concerns, that should lead to progress in two important directions. First, the two presidents can set a timeline and specific plan of action for developing a new common understanding on cybersecurity, an issue that is now of high interest for millions of Americans. And second, they can launch new and specific cooperative projects in areas such as climate change where interests are closely aligned. The latter will be particularly important given that a major international climate conference is fast approaching.

Melanie Hart is Director for China Policy at the Center for American Progress. Rudy deLeon is a Senior Fellow with the National Security and International Policy team at the Center for American Progress. Brian Harding is Director for East and Southeast Asia at the Center for American Progress.    

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