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Increasing Strategic Trust between the United States and China

in the Political, Diplomatic and Security Realms

Phillip C. Saunders1
Institute for National Strategic Studies
National Defense University

Background Paper for the National Committee on US-China Relations conference “China, the United
States and the Emerging Global Agenda,” July 13-15, 2008 at the Wye River Conference Center

The United States and China have an ambiguous, multifaceted relationship with a
complex mix of cooperative and competitive elements. China’s power potential and uncertainty
about its long-term political and military evolution have been key considerations in U.S. policy
since the mid-1990s. Instead of defining China clearly as an ally or an adversary, the United
States has sought to engage China to reap the economic and security benefits of cooperation
while hedging against the potential emergence of China as a future threat. A hedge strategy that
seeks to integrate China into the international system as a responsible stakeholder makes sense in
light of the uncertainty about China’s future intentions. But U.S. policymakers have not fully
grappled with the challenges posed by a China that behaves in a restrained and responsible
manner while simultaneously expanding its regional and global influence and developing
military capabilities that may threaten U.S. interests.

A number of political, diplomatic, and security issues are likely to be sources of U.S.-
China contention in the coming decade. This paper will briefly discuss several of these issues,
and then consider potential ways in which the United States and China can reduce differences,
increase strategic trust, and manage areas of strategic competition.


China and the new Taiwan government under President Ma Ying-jeou have resumed
dialogue under the “1992 consensus” and moved forward with an agreement to expand charter
flights and tourism. Both sides expect that visible economic gains from expanded cross-Strait ties
will create a stronger constituency on Taiwan for engagement with the Mainland on political and
security issues. Cross-Strait tensions are likely to ease significantly with the re-establishment of
dialogue and a Taiwan leader who will not be pushing an independence agenda. This newfound
stability is welcome, but does not necessarily mean that the Taiwan issue is headed toward a
peaceful resolution, or that Taiwan will not continue to be a source of tension in Sino-U.S.

The views expressed are those of the author and do not reflect the official policy or position of the National
Defense University, the Department of Defense, or the U.S. government.

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Both China and Taiwan have expressed interest in a peace accord that would reduce
cross-Strait military tensions, but neither appears to have a clear vision of what such an
agreement should look like or a detailed road map for the negotiation process. Significant
domestic obstacles exist on both sides, including Ma’s need to demonstrate that he is acting in
Taiwan’s long-term interest and Hu’s need to move beyond established PRC positions to satisfy
Taiwan concerns on issues such as equal status and international space. Any number of
developments could disrupt improved relations, including recriminations over U.S. arms sales or
key Taiwan diplomatic allies switching to the PRC. China’s top leaders will need to press a
cautious bureaucracy and military to take full advantage of the opportunity to draw Taiwan into
closer relations and negotiate a peace accord. If China continues efforts to isolate and pressure
Taiwan and is unsuccessful in building support on the island for closer relations, the tentative
rapprochement could easily stall.
China hopes that greater economic integration and a military balance moving in Beijing’s
favor will produce closer cultural and political ties that lead eventually (and irreversibly) to
unification. A commitment by Taiwan to give up the possibility of independence would be a key
step on this path. Sustained improvement in cross-Strait relations would reduce Taiwan’s role as
a source of tensions in U.S.-China relations, but would also make Beijing less dependent on
Washington to restrain Taiwan. Peaceful unification with the consent of the people on Taiwan is
an outcome consistent with long-standing U.S. policy, but could also have some adverse side-
effects. The United States would have to consider whether unification strengthens China’s
geostrategic position in Asia, the potential impact upon perceptions of U.S. credibility, the fate of
democracy on Taiwan, and the impact of the terms Taipei and Beijing negotiate on U.S. interests
(for example, would China get military bases on Taiwan?).
Another possibility is that the recent improvement in cross-Strait relations might not last
or lead toward unification. Polls suggest that Taiwan people prefer to maintain the current status
quo that includes independence as a possible outcome. The current status quo could continue for
decades, with or without a peace accord. If Beijing maintains its current emphasis on preventing
Taiwan independence, this outcome could be relatively stable (albeit with a continuing negative
impact on Sino-U.S. relations). But Beijing could eventually try to force a resolution if it decides
that the military balance has moved decisively in its favor (reducing the costs of using force) or
that Taiwan leaders are not serious about negotiating a new political relationship. This might
involve the use of force or coercion using political, economic, and military means. This outcome
would become more likely if political divisions on Taiwan make it impossible for the island to
negotiate with Beijing or if a pro-independence government returns to power. Under these
scenarios, U.S. arms sales and efforts to protect Taiwan would be a negative factor in Sino-U.S.
relations. If Beijing loses patience and shifts to more coercive strategies, the United States would
face difficult decisions about how to respond. Accepting coerced unification would do severe
damage to U.S. interests in Asia; intervention to help Taiwan resist PRC pressure would thrust
the United States squarely into an adversarial relationship with China. As the cross-Strait
military balance moves in China’s favor and Beijing’s power rises, the costs and risks of such
intervention are likely to rise.

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The United States and China have cooperated closely in diplomatic efforts to
denuclearize the Korean peninsula. China’s role has been crucial in sustaining the six party
process and moving the parties to an agreement. However, there are still significant doubts about
whether the process will succeed in removing all of North Korea’s nuclear weapons and nuclear
programs, whether the verification regime will be acceptable, and whether the agreement will be
fully implemented. The next U.S. administration and Congress may take a more skeptical
attitude toward the agreement. Even if this occurs, the United States is likely to regard Beijing as
a crucial player in efforts to resolve the issue.

Two other potential developments on the Korean peninsula could produce significant
tensions in Sino-U.S. relations. The first involves instability in North Korea due to famine,
economic collapse, or the sudden death of Kim Jong-il. China has a strong preference for
stability, and has provided food and fuel aid to keep the regime afloat. Nevertheless, instability in
North Korea could occur with minimal warning and lead to disagreements between the United
States, China, and South Korea about how to respond. Chinese interests would include
containing refuge flows, restoring political stability (possibly through support for a successor
DPRK government), protecting Chinese investments in the DPRK, and reducing the risks of
conflict or outside military intervention. The United States would be more concerned about
proliferation risks, the potential for military conflict, and the opportunity to use the crisis to
change the North Korean political system or move toward unification. A crisis would raise
difficult practical issues such as dealing with humanitarian needs, preventing proliferation, and
deciding who should authorize and coordinate the international response. Given differing
interests and priorities, it is easy to imagine significant disagreements between the United States
and China.

The second development, which might flow from the first, involves differing U.S. and
Chinese preferences over the process and substantive outcomes of Korean unification. China
would prefer a gradual process of unification that allows it to shape the outcome in ways that
advance Chinese interests. These likely include maintaining current territorial borders,
minimizing potential unrest among China’s ethnic Korean minority, economic access to the
peninsula, limiting the U.S. military role on the peninsula (possibly by maintaining a buffer zone
in North Korea), removal of North Korean nuclear, chemical, and biological weapons
capabilities, and ensuring that a future Korean government would be friendly toward China. The
United States shares some of these interests, but would likely seek to maintain a reduced and
reconfigured U.S. military presence on the peninsula after unification and to ensure that a unified
Korea is a democratic and fully sovereign state. The diplomacy of Korean unification—which
might be shaped by unpredictable developments on the ground—could become a major source of

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Mutual concerns about strategic capabilities

China’s efforts to develop advanced strategic and military capabilities are part of a
broader long-term effort to improve China’s comprehensive national power. Chinese military
planners—like those in other advanced militaries—are interested in exploiting advanced
technologies and developing new capabilities that increase military effectiveness. China’s
modernization is focused both on reshaping its military to take advantage of the opportunities
provided by advanced communications, intelligence, and precision-strike capabilities and on
limiting the ability of potential adversaries to use these capabilities against China. Areas of
particular U.S. concern include China’s modernization and expansion of its nuclear arsenal and
efforts to develop advance space and counter-space, cyber-warfare, and conventional force
capabilities that may limit U.S. military access to the Western Pacific.

China is currently modernizing its nuclear forces by deploying a new generation of

mobile land-based and sea-based missiles that will be more survivable in the event of an attack.
This will likely double or triple the number of warheads that can reach the United States.
Beijing’s decisions about how many nuclear weapons it needs will be influenced by its
perceptions of U.S. intentions and by U.S. efforts to deploy missile defenses. China’s January
2007 test of a direct ascent anti-satellite (ASAT) weapon highlighted the PLA’s efforts to exploit
space for military purposes and to develop ways to deny others the ability to operate in space.
The PLA has also been acquiring and developing advanced conventional weapons systems that
may limit the U.S. ability to operate in the Western Pacific region. These include Russian
Sovremenny destroyers with anti-ship missiles designed to target U.S. carrier battle groups,
Russian Kilo class attack submarines, new conventional ballistic and cruise missiles, and
advanced long-range surface-to-air missiles. Press reports suggest that China has already
developed a significant capability to conduct cyber attacks against computer networks.

Beijing’s near-to-medium term objective is not to match U.S. military capabilities, but
rather to create sufficient U.S. vulnerability in critical strategic arenas to ensure that Washington
behaves cautiously when core Chinese interests are at stake. The United States can and should
make investments to improve its own strategic capabilities and to limit its vulnerability to
advanced capabilities of other states. However, these efforts are unlikely to prevent China from
reaping some operational advantages from its own investments and developing some means to
limit the U.S. ability to apply its own capabilities in the event of a conflict. Continued U.S.
dominance would be preferable, but may be impossible (due to the offense-dominant nature of
some strategic domains) or unaffordable (due to high costs and competing demands for scarce
U.S. defense resources). Strategic competition does not mean an all-out arms race is inevitable,
but it will require the United States to think more seriously about how to deal with China if it no
longer enjoys dominance in key strategic areas.

The dynamics of U.S.-China strategic competition will inevitably affect the broader
relationship. Many in the nuclear, missile defense, space, and cyber communities are likely to be
frustrated at resource, technology, and policy limitations that restrict development of advanced

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U.S. capabilities. These strategic communities will focus intently on Chinese R&D and
deployments in their areas, and seek to mobilize leadership attention and resources on their
missions. Their Chinese counterparts will do the same. If U.S. efforts do not produce dominance,
some in these communities are likely to try to attract more attention to their concerns by
highlighting threats from China. The likelihood of continuing U.S.-China strategic competition
suggests that nuclear, missile defense, space, and cyber issues will become at least irritants (and
potentially major destabilizing factors) in bilateral relations for some time to come. The impact
will depend on whether strategic issues can be compartmentalized and handled separately or
whether they come to dominate the broader relationship.

Chinese influence in Asia

China’s expanding influence in Asia will be another area of tension. The growing
economic importance of the China market and China’s use of commercial diplomacy, overseas
investment and foreign aid have provided Beijing with new international tools. Chinese
diplomacy has also become more sophisticated, embracing multilateralism and launching new
initiatives aimed at spurring regional cooperation. China’s efforts to reassure its neighbors have
helped calm regional fears about China’s rising power; Asian countries increasingly view China
as a partner and market opportunity rather than a potential threat. Effective diplomacy and
military restraint have allowed Beijing to improve its relationships with most Asian countries
while significantly expanding its military capabilities.

Chinese leaders have acknowledged the value of U.S. alliances in preserving stability in
Asia, and suggested that China is willing to tolerate those alliances so long as they are not aimed
against China. Most Asian countries prefer an active U.S. regional role—including continuation
of U.S. alliances and the U.S. security presence—to encourage continued Chinese restraint and
cooperative behavior. Many Asian analysts see an intensifying U.S.-China competition for
regional influence, citing Chinese efforts to improve ties with U.S. allies and Beijing’s
preference for regional fora where the United States is not represented.

Beijing’s use of economic and political tools to pursue its international goals is preferable
to the use of military instruments, but China’s increasing influence will complicate U.S. efforts
to pursue its own regional and global interests. Influence is not necessarily a zero-sum game, but
China’s growing ties with U.S. friends and allies in Asia could potentially limit the U.S. ability
to pursue its international goals and respond to Chinese actions that threaten U.S. interests. The
United States should welcome China’s growing ability and willingness to make contributions to
security and stability in Asia. But it should also work more actively to ensure that China’s
growing regional influence does not begin to erode the foundations of the U.S. security presence.

Managing U.S.-China strategic competition

The U.S.-China relationship will continue to be ambiguous, with substantial areas of

cooperation coexisting with strategic tensions and mutual suspicions. The United States and

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China are not inevitable enemies, but managing the competitive aspects of the relationship will
require wise leadership on both sides of the Pacific. The United States will need to improve its
ability to pursue a multifaceted relationship with China within the context of its hedge strategy.
This should involve cooperation where U.S. and Chinese interests are compatible, combined
with active efforts to engage China and influence how it defines and pursues its own interests.
U.S. policymakers should consider whether current dialogue mechanisms are at the right level
and focused on the right issues to advance U.S. interests and engage China effectively. They
should also consider where unofficial dialogues can broaden support for bilateral cooperation or
increase mutual understanding on issues not ripe for official discussion. The United States must
also be prepared to compete vigorously with China in some areas, while simultaneously seeking
to limit the impact of this competition on the broader bilateral relationship.

One way to manage U.S.-China strategic competition is to try to place limits on

competition that might make both sides worse off. For example, unrestrained nuclear
competition or all-out efforts to weaponize space would require huge investments that might
ultimately produce no strategic advantages once the other side’s response is factored in. Mutual
restraint, strategic understandings, and informal limits on development of particular capabilities
may have value in reducing competition. The United States can also use strategic dialogue and
military-military contacts to try to address Chinese strategic concerns and correct misperceptions
about U.S. strategic intentions. Official and unofficial dialogues on nuclear issues and ballistic
missile defense over the last decade have played a useful role in making each side aware of the
other’s concerns and have had modest success in reducing mutual suspicions. These efforts
should be enhanced, but with modest expectations about their ultimate impact.

A second way is to keep the competitive dimensions of US-China relations within the
context of a broader, generally cooperative relationship of huge importance to both countries. By
placing narrow areas of strategic competition in proper proportion to the broad relationship,
leaders can make appropriate decisions about how important these areas are, what investments
are appropriate, and what damage to the broader relationship is justified by prospective strategic
benefits. The specifics of the U.S.-China balance in particular strategic domains would become
very important in a military crisis or conflict. But both sides should be careful not to let concerns
about worst-case scenarios and unlikely contingencies drive the broader relationship. If handled
properly, these concerns can remain remote contingencies rather than the primary focus.

A third way is to recognize that integrating China into the international system as a
responsible stakeholder will require providing China a path to pursue its legitimate aspirations
through peaceful means. As John Ikenberry has written, the current liberal international order is
remarkably flexible and has done a good job so far in accommodating China’s rising power. The
United States will have to recognize that if China is to make greater contributions to maintaining
the international system, it will expect to have a greater voice in shaping the future evolution of
that system. China’s dependence on the international system will limit how hard it can push for
changes, and China will compete with the United States and others in establishing new norms
and rules and revising old ones. China will likely seek to place greater importance on

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sovereignty and to influence global norms on issues such as human rights and governance. The
original formulation of the “responsible stakeholder” concept was silent on the question of which
Chinese interests were legitimate and deserving of respect. The United States will not be able to
ignore this question forever; answering it will likely require some adjustments in both the
international system and in U.S. foreign policy goals. However just as markets provide ways of
reconciling competing economic interests, an open international system can provide ways of
reconciling competing strategic interests without war.

A final point is that the division of labor implicit in a hedge strategy—with the State
Department and economic policymakers focused primarily on engagement and military
policymakers focused primarily on the hedge—can potentially result in a lack of focus and
difficulty in making appropriate trade-offs between U.S. economic and security interests. The
issues involved are complex, and reasonable people can disagree about the answers. An enduring
consensus is likely to be elusive. Strong political leadership and effective use of the National
Security Council as a coordination mechanism will be essential for successful implementation of
a hedge strategy and successful management of the competitive dimensions of U.S.-China

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