Divide and Conquer

March 7th, 2005

By Melinda Liu

Bush's trip to Europe exposes a rift over the big question in Asia: what does China mean to do with its might?

March 7 issue - A not-so-funny thing happened on George Bush's trip to Europe last week. He went to ease the tension over the war in Iraq, but wound up laying bare a new dispute over China. Bush urged the European Union to reconsider plans to lift a 15-year-old arms embargo on Beijing, and the leaders of Europe politely but clearly declined. Once again, Washington and Brussels hold deeply conflicting views of an ambitious power. Only imperial Iraq was a Saddam Hussein fantasy. China is clearly an emerging superpower. The question that now divides the West is: what kind of superpower?

This split could be very dangerous, and not only to transatlantic relations, because the Chinese regime looks invulnerable to change. The question of how Beijing will exercise its growing strength, and how the West should respond, will only grow in importance. And the debate in Brussels last week seemed to crystallize two very different answers. "There's a sense that we're just talking past each other," says one U.S. diplomat. To Europe, China is a one-dimensional "trade-driven soft power without a military threat," says Willem van der Geest, head of the European Institute for Asian Studies in Brussels. So why not sell the country weapons?

While the American view also emphasizes China's economic rise, there is an influential camp (headquartered in the Pentagon) that sees Beijing as a potentially aggressive empire, probing to extend its commercial reach worldwide and its political and military influence from Thailand's Kra isthmus through the China Sea to Taiwan. Accelerating China's military buildup with Western arms could hasten the day when Beijing may act on its vow to reunite with its "renegade province" by force, if necessary. Urging Europe to maintain the embargo last week, Bush spoke of Americans' "deep concern" that resuming weapons sales "would change the balance of relations between China and Taiwan."

Taiwan is critical: the island has long been a dim bulb on Europe's geopolitical radar and a bright red flashing light on America's. But the split is widening, to Washington's frustration. European officials tend to dismiss a conflict there as extremely unlikely. China may be the second largest and fastest growing major economy, their thinking goes, but its leaders need to repair gaping flaws in the financial and social order before they can begin to contemplate military adventures. China's defense budget, estimated at $70 billion, is a fraction of America's $500 billion, and today Beijing lacks even the ships required to invade Taiwan.

Yet there are options short of invasion—missiles, high-tech warfare to disrupt communications. The Pentagon assumption is that China's missile buildup opposite Taiwan is aimed at thwarting U.S. intervention in a conflict by making the price too high—using missile strikes to sink U.S. naval carriers. China's National People's Congress is expected to debate, as early as March 5, an antisecession law that would mandate an invasion of Taiwan if the island declares independence. That has some Pentagon officials up in arms, says former State Department China hand John Tkacik. "They're saying: 'Holy crap, these guys really are intent on war at some point. We could be in trouble if we don't give clear signals of American policy here'."

That's one reason not to sell arms to China. So is the fact, according to Washington, that Europeans simply don't understand how dangerous tilting the balance of power in the Taiwan Strait could be. If America once saw the Soviet Union as an economic midget with grand politico-military ambitions, today it sees China as an economic giant with at least one deadly serious geopolitical target: Taiwan. Indeed Pentagon officials have lately revived concerns about China that had faded with its increasingly official integration into world trade bodies. Discussing Beijing's naval buildup, U.S. Secretary of Defense Donald Rumsfeld recently called China "a country we hope and pray enters the civilized world in an orderly way." In January, CIA Director Porter Goss warned that China's growing forces in the Taiwan Strait are "threatening U.S. forces in the region." Europe, not incidentally, has no military forces in the area.

Perhaps it's natural that Europe tends to focus instead on China's soft but unquestionable aim to conquer the commercial world. No one keeps such records, but in 2004 Chinese President Hu Jintao probably set one for one-man commercial diplomacy, cutting deals across Europe, Africa and Asia before a grand November finale in Latin America, where he signed 39 commercial agreements with five nations in 16 days, worth $20 billion in Argentina alone. "Chinese don't have much foreign-policy ideology. They don't attempt to export communism. They want to let the economy be the country's engine," says Marco Incerti of the Centre for European Policies in Brussels, who predicts that there's "probably no way to prevent China from becoming the dominant economic power in the long term."

China's advantages over the West in commercial diplomacy are huge: Beijing has long since abandoned the idea of spreading revolution, yet can still play on Third World solidarity. China has a huge pile of surplus cash with which to buy good will and has needs—particularly for energy to fuel its booming economy—that others can satisfy. As a global power with relatively little global responsibility it can, for example, forgive Africa's debt without demanding improvements in governance, as the West has. Its huge market and cheap labor is irresistible to Western business.

With no political ideals to uphold, or domestic opposition to face, Hu can grip and grin with impunity even among the most unsavory dictators; last year alone China handed out $200 million in aid to Burma, bankrolled nickel mines in Cuba, signed oil deals with Iran and Sudan. The Sudan deal shows that China is not only "unconcerned about corporate-image liabilities," writes Drew Thompson of the Center for Strategic and International Studies. "In fact Chinese companies are attracted to the potential for large profits in markets with less competition from multinational firms."

This is playing hardball in a supposedly "soft" game, and it is working. Japanese officials believe China's aim is to establish economic dominance in Asia by picking off favorable trade deals with all its neighbors, one by one, bloc by bloc. Former American allies are now tilting to Beijing; in Thailand, Prime Minister Thaksin Shinawatra recently declared that henceforth China and India would be "the most important countries" for Thai foreign policy. Thailand has urged China to lead construction of a $20 billion canal across the Kra isthmus. China last year became the largest investor in Cambodia, a nation largely shunned by Americans since Hun Sen consolidated power in 1998.

China's commercial influence is spreading beyond Asia. Brazilians have hailed their new working alliance with China in global trade talks as the harbinger of a "multipolar" world, less dominated by the United States. African countries think it's "great" that Chinese aid and investment come with no strings attached, says Elizabeth Sidiropoulus of the South African Institute of International Affairs in Johannesburg. That contrasts with "the sometimes onerous conditionality of the West."

Unfortunately, Europe and the United States cannot rely on official statements to clarify Beijing's intentions. An old saying of the late leader Deng Xiaoping still influences Chinese diplomacy: "Hide your talents and pretend to be weak." One official insists his colleagues never talk of empire or even superpowerdom: "Power, yes, but not a superpower," due, among many things, to the country's vast and unruly population. "We don't want to be enemies with anyone, we oppose unilateralism, we want U.N. involvement," he says. Except, of course, in Taiwan.

Hu often calls his deals "win-win" bargains among friends. He came to power in 2003 speaking of his nation's "peaceful rise," hoping to gain acceptance for China's emergence on the world stage. The phrase is still often cited in the West as a definitive statement of Chinese policy. But Hu has dropped it, apparently after hawks complained that the word "peaceful" could tie their hands on Taiwan, and doves feared that "rise" might evoke imperial Germany, Japan and America. No, the West will have to watch what China does, not what it says.

With John Barry in Washington, Karen Macgregor in Durban, Eric Pape and Marie Valla in Paris, Joe Cochrane in Phnom Penh, and Mac Margolis in Rio