The new U.S.-China tug-of-war

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U.S.-China relations seem more strained than any time since Richard Nixon and Zhou Enlai signed the Shanghai Communiqué in 1972. China's ancient sense of superiority - which, during the last dynasty, led to decay and obscurantism in confronting the modern world - appears almost overnight to have been discovered once again. Clearly, the leaders as well as the people of the Middle Kingdom are feeling their oats.

But their geopolitical goals and strategies have not changed fundamentally despite their new wealth. Taiwan is the main question on which they're pushing the United States, but the dynamics of this issue are the most positive in decades.

China today is like a poor Chinese farmer who suddenly enjoys a modest windfall - not through a lottery but through hard work, savings and good investment. But he continues to adhere to his long-term plan to have his family become the wealthiest and most respected in the county. This will require decades, perhaps generations, of work and savings but also education and making use of his rivals when possible but realizing that, unless they're hostile, their individual prosperity can be mutually beneficial.

THE BUSH YEARS

The years of George W. Bush were strange ones in U.S.-China relations. When Mr. Bush first took office in 2001, his administration saw the prevention of China's rise to regional military parity with the U.S. - which, if attained, would give China the basis for a global challenge to America's assumed benevolent pre-eminence - as a critical security goal. After 9/11, Mr. Bush turned over political and economic relations with China to Colin Powell, his secretary of state, and like-minded senior trade officials. Their instruction was to retain good ties with China and keep the Taiwan/mainland issue under control.

But geopolitical strategy and defence procurement, deployment and targeting regarding China were all left in the hands of neo-conservative civilians in the Pentagon. Without specifically naming China, the National Security Doctrine of 2002 affirmed the policy of maintaining U.S. global pre-eminence if necessary, it implied, through pre-emptive war. Defence secretary Donald Rumsfeld repeatedly accused the Chinese of an unseemly increase in defence spending and a lack of transparency in its military expenditures. But the Chinese response to the bold implication that China was a long-term threat to the U.S. was restrained, as was their response to the Pentagon's reported plans for new U.S. naval and air deployments to Asia, as well as nuclear retargeting toward the region.

The rhetoric of the Bush administration, meanwhile, emphasized friendly relations. This extended especially to trade. The money flowing into the American economy was consumed in good part by America's spiralling consumption of Chinese goods. Wall-Mart became The Great Wall-Mart. The booming Chinese economy that resulted provided the foundation for a future Chinese arms race with America if that was their intention - which the Pentagon believed it was. But still, there was no program in China to build hundreds of intercontinental ballistic missiles to offset the huge U.S. advantage in this field and the new anti-missile system that the Bush administration had begun to deploy.

CHEN AND OBAMA

The election of Chen Shui-bian, an openly pro-independence candidate, as president of Taiwan strained relations across the strait. But this had little effect on U.S.-China affairs, as Bush officials were careful not to seem to be backing away from the U.S. commitment not to support or encourage Taiwanese independence. In 2003, in a rare rebuke, Mr. Bush publicly lambasted Mr. Chen for his provocative words on the issue. Still, large U.S. arms sales to Taiwan went ahead. The Chinese generally responded only rhetorically, and briefly.

When the Obama administration took office, it made it clear that it believed the best way to assure a positive Chinese role in the world was to treat the Middle Kingdom as a prospective partner, not as the No. 1 potential enemy. Yet, paradoxically, China chose to get tough with Barack Obama in ways it never did with Mr. Bush.

Senior Chinese officials insist that China will not raise the value of its currency, and scold the U.S. for asking. Having profited from U.S. prolificacy, Beijing now demands that Washington protect China's $2-trillion in investments in U.S. dollar instruments. And China has sternly admonished America for its $6.4-billion arms deal with Taiwan and for Mr. Obama's meeting with the Dalai Lama.

STRANGE HIGH DUDGEON

In addition to Mr. Obama's geopolitically friendly posture toward China, there are other factors that make Beijing's high dudgeon with Washington seem strange. Aside from the negative effect on China of the arms sales package - the planning for which was inherited from Mr. Bush - several significant developments should have fundamentally reduced the possibility of U.S.-China tension over Taiwan, as well as strains across the Strait. This is the first time since Chiang Kai-shek fled to Taiwan in 1949 that some sort of long-term settlement between the island and the mainland seems conceivable.

The new dynamics include the domestic political turnabout in Taiwan with the 2008 electoral defeat of Mr. Chen and the return to the presidency of a Kuomintang leader, Ma Ying-jeou. Mr. Ma has reaffirmed the one-China principle but insists that Taiwan must retain its existing level of autonomy. Since the election, there have been cross-Strait visits and official agreements on direct air travel, postal relations and other matters. And Chinese President Hu Jintao has called for talks to end the formal state of hostility between Taiwan and China. Mr. Hu did not mention "peaceful liberation" and, instead, called for peaceful development and a settlement framework that implies that the two negotiating parties would be co-equals.

Soaring economic integration across the Strait, meanwhile, continues. More than a million Taiwanese now reside in China. Most important, however, is the striking change in mood and perception in Taiwan. This transformation reflects popular consciousness of an already "risen" China and of America's new, more realistic geopolitical strategy toward coping with this phenomenon.

The result is less belief in Taiwan that America would persist in any protracted U.S.-China conflict over a Taiwanese move toward independence. There should also be a new fear that a Taiwan-China peace deal that's conceivable today - such as the one Mr. Hu may be suggesting - may not be on the table in 10 or so years. All of these factors have spilled the momentum out of the sails of Taiwanese independence.

THE JOYS OF HUBRIS

In sum, many in China are understandably feeling the joys of hubris. But the core leadership is very likely using Beijing's widely perceived leverage as a tactic - a short-term wedge to advance its position with Washington on issues such as Taiwan and Tibet. At a minimum, the Chinese probably expect to achieve some expansion of U.S. verbal support of China's sovereignty over these two entities and American "opposition" to Taiwanese independence, as well as support for peace talks across the Strait.

The principals in the Politburo probably appreciate the change in Washington's policies under Mr. Obama. They likely still adhere to Deng Xiaoping's advice that they not try "to take the lead" but concentrate on building up the country's economic, scientific and technological foundation. This, they believe, will be the basis of China's ultimate attainment of an unexcelled military and economic position in the world.

These leaders are also likely to understand that the achievement of this grand goal will still rely on a thriving U.S. market for Chinese goods. And this condition, they know, will, in turn, require a healthy American and world economy - and probably also an indefinite continuation of American military power in East Asia and the sea lanes to the region. They probably also believe that the Middle Kingdom's interests depend on the same military forces containing the threat of messianic terrorism on China's border.

The best evidence for these conclusions is the failure of China's leaders to significantly withdraw their holdings in U.S. dollar instruments and to launch a crash program to build hundreds, if not thousands, of ICBMs that could reach the United States. We should all be watching to see whether these restraints continue.

Last year, during a visit to the U.S., Premier Wen Jiabao said China needed decades to catch up with moderately developed countries and 50 years to catch up with the most advanced countries (i.e., the U.S.). I think he and most of his colleagues still believe that.

Jay Taylor is author of The Generalissimo: Chiang Kai-shek and the Struggle for Modern China, winner of the 2010 Lionel Gelber Prize.