China and the World, Talking Point

A pivotal presidency

The re-elected US leader has some big decisions to make on China

A pivotal presidency

No ordinary tourist: will Obama’s second term lead to better or worse relations with Beijing?

When it comes to strategy, the thoughts of Sun Tzu, a Chinese general from 2,500 years ago, often get a mention. It’s open to question whether the the military musings of Donald Rumsfeld will stand a similar test of time, and be quoted in future millennia.

But Rumsfeld – who holds the unusual distinction of being both the youngest and the oldest person to have served as US Secretary of Defence – did at least deliver one rhetorical gem that is still mused upon a decade later.

“There are known knowns,” he began, during a famed media briefing in 2002. “These are things we know we know. We also know there are known unknowns. That is to say we know there are some things we do not know.”

Should it be swayed by this Rumsfeldian logic, the Chinese leadership is likely drawing some comfort that Mitt Romney wasn’t elected as US president last week. After all, the former governor of Massachusetts looks like a good example of a “known unknown”. After a series of policy flip-flops, it’s hard to know what Romney really stood for. On the contrary, Barack Obama is more of a “known known”. He pitched it as a political virtue too, telling voters: “You know me, I mean what I say, I say what I mean, and I do what I say.”

Broadly speaking, the Chinese are probably pleased he’s still in the White House. That said, the more positive sentiment on Obama’s re-election overlooks the fact that he is less popular today among most Chinese than in 2008. In this week’s Talking Point, WiC looks back on four years of Obama’s China policy, as he prepares for a symbolic trip to Asia at the beginning of his second term.

How has Obama’s approach to China evolved?

Relations started out positively enough with the upgrading of a key channel for discussion. The Strategic Economic Dialogue – inaugurated by George W Bush – became the Strategic “And” Economic Dialogue in April 2009 soon after Obama took office. The revised framing of the S&ED suggested a wider scope for debate between the two governments, fuelling talk of a new “G2” format for decision-making between Beijing and Washington. And when Obama spoke about Sino-US ties as “the most important bilateral relationship of the 21st century”, it was enough to raise concerns among some of America’s allies that Washington was about to prioritise a new relationship with Beijing over more traditional diplomatic ties.

With hindsight, those fears look overblown. Instead the early diplomatic push was a response to what Hillary Clinton, the US Secretary of State, has since termed an unprecedented challenge for the two countries – “trying to do something that has never been done in history, which is to write a new answer to the question of what happens when an established power and a rising power meet.”

Nonetheless, contacts between Washington and the Chinese leadership were extensive for the duration of the first term. Obama himself met with Chinese president Hu Jintao 12 times, while Joe Biden and Xi Jinping swapped visits in the summer of 2011 and early 2012. Leading military officials hosted one another in both capitals, while Clinton jokes that she has lost count of the number of times she visited China (five, by WiC’s reckoning).

“We literally consult with each other almost on a daily basis about every consequential issue facing our nations and the world today,” Clinton told reporters, on what looked like being her final visit to the Chinese capital as Secretary of State in September.

But a change of approach as the term progressed?

It didn’t take long for the first signs of recriminations to creep into relations. That came at the end of 2009 at the Copenhagen climate summit, following disagreements over whether to ditch the Kyoto Protocol’s distinction between developed and developing countries. Obama didn’t mention China by name but his reproach was clear in warning that developing countries should be “getting out of that mindset, and moving towards the position where everybody recognises that we all need to move together”.

In January the following year, relations took another backward step when Washington decided to follow through with President Bush’s sale of weapons to Taiwan. This brought terse words, and further signs of an apparent hardening of relations.

This sense of a deteriorating trend provided something of a contrast to the experience of former presidents, who took time to get Beijing onside.

Bill Clinton suffered initially from talking about the “butchers of Beijing” on the campaign trail in 1992. And a cautious George W Bush wasn’t much of an early favourite in Zhongnanhai, but that changed after 9/11 when he looked for Chinese support for his war on terror. Indeed, as Jeffrey Chen pointed out this month in Fair Observer, an online journal, the Bush administration steadily warmed to Beijing as the years passed, and China moved from “competitor” to “strategic partner” and finally “responsible stakeholder” in diplomatic-speak. The feeling was mutual. By the end of his term, Chinese officials tended to look back fairly favourably on “Little Bush” as he was colloquially known (his father George H Bush – “Old Bush”, naturally – is also remembered positively as the first permanent US representative in China in the 1970s).

But in contrast to his predecessors, relations with the Chinese under Obama seem to have cooled rather than warmed with time.

Blame the Obama ‘pivot’ for the less friendly mood?

That is the perception among many Chinese policymakers. Within two years of taking office, Obama’s administration seemed to be backing away from earlier notions of a “G2” relationship. Some of this message was more coded in tone, like the observation from the Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell that “the Chinese respect strength, determination and strategy”. But others were more direct, including Deputy National Security Adviser Benjamin Rhodes, who told the New York Times that “I certainly think we tested the limit of how far you can get with China through positive engagement… We needed to toughen our line.”

By then, the broader optimism of the early days of Obama’s government was also wearing thin. Specifically on China policy, the criticism was that the US had been too accommodating with Beijing, which was bolstering Chinese assertiveness in the Asia-Pacific region, particularly in the South China Sea.

With the debilitating effect of American involvement in Iraq and Afghanistan, and the psychological hangover of the global financial crisis further eroding American prestige, the US looked weak at a time when Chinese confidence was growing fast.

Perhaps this prompted the major about-turn in American foreign policy last year: a ‘pivot’ of diplomatic and defence resources away from the Middle East and back towards the Asia-Pacific.

“With most of the world’s nuclear power and some half of humanity, Asia will largely define whether the century ahead will be marked by conflict or cooperation,” Obama declared. “As President, I have, therefore, made a deliberate and strategic decision – as a Pacific nation, the United States will play a larger and long-term role in shaping this region and its future… As we plan and budget for the future, we will allocate the resources necessary to maintain our strong military presence in this region. We will preserve our unique ability to project power and deter threats to peace… Our enduring interests in the region demand our enduring presence in the region.”

Not a move welcomed by the Chinese?

American officials have since tried to rebrand the ‘pivot’ as more of a ‘rebalancing’ of foreign policy goals, after years of entanglement in the Middle East. But an early critique of the new direction is that it has tended to be marked by military moves rather than diplomatic or economic ones. Particularly, it has been a naval effort. Battle groups were sent into the Yellow Sea to underline US support for South Korea, port visits were arranged to Vietnam and a new contingent of Marines was posted to Darwin in northern Australia. There have also been extensive military exercises with allies in Asia, including training this year in Guam in which troops from Japan and the US “retook” a remote island from an unnamed enemy – hardly the most diplomatic of dress rehearsals (and no prizes for guessing the ‘unnamed’ adversary).

In fact, some doubt whether the US can revive its former military dominance in the region, especially as the Pentagon hasn’t explained in detail how it will fund its new commitments in Asia. If spending cuts are triggered under the looming ‘fiscal cliff’ crisis in Washington, the financial burden looks even harder to bear.

Nonetheless, the Chinese have been particularly annoyed by what they regard as American interference in disputes with Vietnam, Japan and the Philippines over islands and maritime waters. Chinese foreign minister Yang Jiechi is even said to have stormed out of an ASEAN meeting in which Hillary Clinton announced that the freedom of navigation in the South China Sea was an American “national interest” and that the United States insisted that disputes were settled in a multinational forum approved by all sides.

Although China’s diplomatic response has been relatively measured since, its domestic media has been less restrained. The Global Times led the charge in an editorial last November warning Asian nations that they would be punished should they align with the American outsider.

“Any country which chooses to be a pawn in the US chess game will lose the opportunity to benefit from China’s economy,” it predicted, “That will surely make the US protection less attractive.”

Then in September this year, tempers flared again. “We are entirely entitled to shout at the United States, ‘Shut up’. How can meddling by other countries be tolerated in matters that are within the scope of Chinese sovereignty?” fumed one commentary in the People’s Daily. An editorial in Xinhua tried a different tack, challenging Washington to prove it was not trying “to clip China’s wings and shore up the United States’ cracking pedestal in the Asia-Pacific”.

How about trade and currency policy? What can we expect here?

Despite a brief barrage during presidential campaigning, criticism of China’s exchange rate policy has been relatively muted, helped by a strengthening of the renminbi against the dollar for most of Obama’s first term. The Chinese currency is now much less undervalued against the dollar and unless the revaluation trend is dramatically reversed, few expect to see major political fireworks over the renminbi in the four years ahead.

In terms of trade disputes, Obama’s administration has been more demonstrative, and there were rows over items including car parts, rare earths, steel, tyres and chicken feet. WiC has covered all of these squabbles over the last four years, up to the most recent disagreement this month involving solar panels, where the US International Trade Commission upheld a decision to impose tariffs after complaints of Chinese dumping.

Here, the White House has been more ready to challenge what it says are unfair trade practices. Obama has even boasted about taking China to the World Trade Organisation more times in his first four years than George W Bush managed in two terms of office. And for Chen Zhiwu, a Yale University finance professor writing in the China Daily, there are likely to be more disagreements in the months ahead. In part, Chen says, that is due to Obama’s success with voters in some of the manufacturing-reliant US states which believe they have lost out to China for jobs. “More restrictions are likely, especially during his second term,” he warns. “He will have to pay back those voters in Ohio, Wisconsin and Michigan.”

The broader backdrop to potential trade tension in the years ahead is Washington’s enthusiasm for a new trade grouping called the Trans-Pacific Partnership (TPP). Last year, nine partners in the region announced the outlines of a new multilateral trade deal, and the group has since been ensconced in negotiations for a comprehensive agreement rumoured to include free trade in goods, plus advances in services, investment, health and safety regulations, competition policy and government procurement rules.

The TPP plan was initiated by the Bush administration but seems to have gained traction under Obama. But conspicuously absent from the discussions are the Chinese, who regard the TPP with suspicion, especially its push for more rigorous standards in areas like intellectual property rights, labour and environmental legislation, and new regulations for state-owned enterprises.

The view from Beijing is that many of the stipulations are intended to make it impossible for China to join the TPP in the near future (assuming that an invitation comes at some point) and that the grouping is actually a vehicle designed for American leadership.

Obama pitched it differently during presidential campaigning as more of an effort to bring Beijing into line with international norms. But the message was still pretty direct: “We’re organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards. That’s the kind of leadership we’ve shown in the region. That’s the kind of leadership that we’ll continue to show.”

Whether the TPP will even work is open to debate. Washington is pushing for a rapid timetable for sign-up and it looks difficult to get even the current partners to agree on a platform of common rules and procedures.

To work, the TPP also needs Japan on board and so far the Japanese haven’t joined the negotiations. That may change – there were rumours this week that Prime Minister Noda Yoshihiko may make a formal bid for Japan to participate before the end of the year.

Of course, this would do little to ease Chinese frustration about what its leaders see as another attempt to drive a wedge between China and its neighbours, and as further evidence of an American ‘containment’ strategy, this time in economic form. Beijing’s counterstrike has been to push for trade agreements of its own in Asia, promising wider commercial benefit for all concerned, especially its ASEAN neighbours.

But the problem for the Chinese is that they are making these overtures at a time when many of the same countries are increasingly anxious about the PLA’s military modernisation, as well as its more strident claims in the South and East China Seas.

So expect a battle for influence in the region?

Next week – less than a fortnight after his re-election – Obama travels to Thailand and Cambodia, attending the East Asia summit. This signals that Asia is very much at the forefront of his attention. More significantly still, Obama will also travel to Burma, becoming the first American president to visit the country. Here the symbolism is even more resonant, on speculation that the Burmese are turning away from their former closeness to China (see WiC129 for signs of this) as they seek to foster wider ties.

By contrast, Washington’s rapprochement with Rangoon has been rapid since 2010 when the military junta began reforms (indeed, some human rights activists to complain that the Obama visit is being made too hastily). But the White House seems ready to take the risk, intent on celebrating a foreign policy coup, as well as getting a rare chance to outmanoeuvre the Chinese in what Beijing regards as its own backyard. Signs of the ‘pivot’ in practice, perhaps…

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