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Business is the Backbone

May 27, 2021

The continuous deterioration of China-U.S. relations in recent years has gone beyond what many people might have anticipated. The American Chamber of Commerce in China’s white paper, 2021 American Business in China, mentioned that most of its members identified “tensions in China-U.S. relations” as their foremost challenge for business operations in China. Indeed, China-U.S. ties are at a crucial moment in history. Owing to the rising strategic mutual suspicion and growing prominence of structural differences, the two sides face an important choice: They can either slide into confrontation and conflict or engage in benign competition.

Divergences do exist between China and the U.S. The crux is how we approach them. The two parties need to listen to each other and find ways to resolve differences together. If we choose confrontation, however, it will be another story. After a period of free-fall, the China-U.S. relationship is now at a platform stage, and the choices we make will determine the future of bilateral ties. The new U.S. administration seems determined about “strategic competition” with China, and in its own words  such competition will be “long-term” and “fierce.” China, however, has been emphasizing stability and continuity in its U.S. policies and remains dedicated to building a relationship based on coordination, cooperation and stability.

The Chinese side has difficulty accepting the term strategic competition to define relations because it’s a zero-sum concept, which may drive diplomatic behavior in the wrong direction. Though the U.S. side pledged to delimit and control strategic competition to prevent disastrous scenarios, its attitude and approach to China can’t get rid of the zero-sum idea of one side winning when the other side loses. The thinking based on strategic competition excludes the possibility of the two countries sharing consensus on fundamental interests, and makes cooperation impossible. Therefore, the U.S. side needs to exercise caution in defining competition with China.

Some international relations scholars recently announced the dawn of an era of “major power competition.” In Chinese eyes, however, despite constant increases in challenges, the general trend of global peace, development and cooperation has seen no fundamental change. In the post-Cold War era, the U.S. assessment of global trends has not been close to reality, and its obsession with hegemony has overshadowed the general trend toward peace and development driven by the wishes and pursuits of people of the wider world. China’s judgment about the grand global trend of peace and development has proved correct — which is also a key reason it has successfully made progress by taking advantage of the dynamic trend, promoting reform and opening-up and joining the race toward prosperity.

Once when I was invited to talk about Chinese policies and views about the international situation at a forum in Europe, I used the English word “trend” to express the idea of the Chinese character 势 (pronounced shi), as I told the audience that China believes the current global trend is for peace and development. Dr. Henry Kissinger, who was chairing the occasion interrupted and said he could explain to the audience: “势 is a unique concept in Chinese politics, whose connotations can’t be fully conveyed with the English word ‘trend.’ So one may directly use ‘shi,’ ” he said. “What the Chinese call ‘shi’ is irresistible, like the torrent rushing down from a high mountain. Politicians’ responsibilities are to judge where ‘shi’ lies, and then lead the people to follow and take advantage of it, thus achieving success.” He must have heard it many times in China and could make it clearer than I did. So judgment about the overall global trend is very important and shouldn’t be brushed off. The Chinese are convinced that peace and development still are the theme of the present-day world and what most countries and people are after, and China’s leaders and government have reaffirmed it.

We can’t deny competition as objective existence, but we advocate competition based on fairness and justice. As President Xi Jinping pointed out at the virtual Davos Agenda of the World Economic Forum in January, “We should advocate fair competition, like competing with each other for excellence in a racing field, not beating each other in a wrestling arena.”

In the history of international relations, the choice of path has never been made in an instant, especially when it comes to adjustments in major power relations, which inevitably entail a fairly long process of interaction. Nor have historical outcomes been determined purely by strategic will, but rather formulated by a series of necessary or accidental incidents. China-U.S. relations are also in such a fluid process, and the end game is far beyond our sight. Uncertainty originating from the eye-dazzling changes in the relationship may lead to various likely scenarios. People may get a better picture when we depict it with a panchromatic spectrum.

The darkest end of the spectrum is the prospect of contradictions continuously escalating, which may evolve into all-around crises that trigger Cold-War style fierce confrontation or even war. Many international scholars have issued early warnings about such a scenario. Dr. Kissinger, for one, warned at last November’s Bloomberg New Economy Forum: “Unless there is some basis for some cooperative action, the world will slide into a catastrophe comparable to World War I.”

At the brighter end of the spectrum is the prospect of relative controllability and coexistence, where China and the U.S. resolve differences within the existing international structure. Bilateral ties enter a track of benign competition, finally achieving common evolution, and each is successful in its own way. The present relationship displays considerable pendulousness and uncertainty. Sometimes the two parties may lock horns in fierce contradictions; sometimes they may communicate with a cool approach, acknowledging the need of collaboration and being willing to explore ways for cooperation. If the two sides can affirm each other’s red lines and bottom lines, reach consensus in some key realms on resolving or managing divergences, gradually establish rules for peaceful coexistence in a state of competition and maintain and expand cooperation in areas where they have shared responsibilities and interests, then the probability of China-U.S. relations heading toward the brighter end of the spectrum will be high.

Big countries need to have the end in mind at the beginning in dealing with their relations, taking into consideration both the major objective (of course it should at once be feasible) and the price they would be willing to pay for it. To achieve a desirable outcome, they must avoid getting bogged down in divergences and hostility, thus infusing energy that pushes in an unintended negative direction. 

Over the past 40-plus years, the China-U.S. diplomatic relationship has seen constant contradictions, even crises, yet they were all managed and controlled in a timely manner because the two sides shared a consensus on the overall orientation of developing bilateral ties, and both peoples were in favor of a healthy, stable China-U.S. relationship. Those original aspirations remain meaningful even from the perspective of this new era. The two countries’ need for each other in their respective development has not changed; it has actually increased. Meanwhile, such things as the upsurge of various cross-border challenges and technology’s demand for new rules have provided reasons and soil for greater China-U.S. cooperation.

Observing the new U.S. administration, one can see that it’s preoccupied with troubleshooting at home. China has hence become a constant reference in appeals to its domestic audience. However, while Washington has realized it’s not possible to solve domestic problems by passing the buck to an outsider, it also seems incapable of liberating itself from the tremendous inertia of the wrangling provoked over the past few years. Messages from Congress, in particular, have been quite negative, brimming with resentful, confrontational feelings. Such factors will continue to push bilateral ties to the darker end of the spectrum. There is now a greater need for people who care for the relationship to inject positive factors into the China-U.S. relationship.

Cooperation is a bond we must grasp tightly. In his phone conversation with U.S. President Joe Biden, President Xi said that when China and the U.S. cooperate, both will benefit; when they fight, both will get hurt. So cooperation is the sole correct choice for both sides. Biden also said the U.S. would be willing to cooperate with China when it’s in the U.S. interest.

During their recent Anchorage meeting, ranking Chinese and U.S. officials took the opportunity to candidly exchange opinions on a broad range of subjects. Afterward the two countries’ climate envoys met in Shanghai and issued a joint statement, after which Xi participated in the virtual Climate Summit Biden had initiated. These developments not only demonstrated diplomatic wisdom and professionalism but also the two countries’ willingness and capability for assuming international responsibilities and meeting global challenges.

Many topics can be put into the basket of China-U.S. cooperation, among them economy and trade, the No. 1 factor of everlasting prominence. People used to say economic and trade ties were the ballast of China-U.S. relations. Against the backdrop of deteriorating bilateral ties and increasingly complicated internal and external environments, will this ballast continue to be as functional?

We need to see that the measures of trade bullying and arbitrary decoupling the U.S. side has taken in recent years have not addressed the business community’s concerns but have disrupted the order of normal exchanges between the two countries. Instead of cutting U.S. deficits and facilitating manufacturing backflow, the tariff war has added to the burdens of U.S. consumers. Nor has this been conducive to global supply chain stability. Some people believe they can limit de-coupling to intended areas in the field of science and technology, but the risk is that there is no way to control the potential chain reactions it may ignite. The blow to China-U.S. relations and the global system would still be broad.

It is evident from this year’s white paper that the American business community in China maintains a coolheaded and pragmatic attitude. More than two-thirds of businesses see China as a priority market, 85 percent of chamber members have no plan to relocate their manufacturing or purchasing procedures from China and nearly two-thirds of the members plan to increase investment in China in 2021. This is a show of confidence in the Chinese market and a vote for China-U.S. economic and trade cooperation.

Every one of us, including everyone present here from the business community, has been a part of China-U.S. interaction, exerting impact on the orientation of the relationship’s evolution. Then, how should the business community encourage the two countries to make rational choices about bilateral ties? I think it is important, first, to support fair competition; second, to maintain the momentum of cooperation; third, to actively promote communication.

Both American companies in China and Chinese companies in the U.S. face competition. Business communities in both countries should actively explore paths for benign competition and create an all-win situation for society, businesses and consumers. In doing so, they should learn mutual respect — respect for the other country’s political, judicial and regulatory institutions, as well as for the other market’s culture of production and consumption — so as to provide better goods and services for people.

Hopefully the business community will continue helping governments in both countries build a business environment that respects intellectual property rights and the rules of fair trade. The white paper endorses the continuous headway China has made in reform and opening-up, as well as market building, with 47 percent of members believing the situation in IPR protection is improving. They should have seen the Chinese government attaching great importance to IPR protection, constantly enhancing both legislative and enforcement endeavors. The white paper also raised concerns about such issues as market inclusiveness, oversight mechanisms, business compliance management and social responsibility awareness, and put forward suggestions for both countries to perfect industrial policies and market access and to strengthen law enforcement regarding IPR protection.

I trust that the voices of the business community are listened to carefully here in China. The Foreign Investment Law, which took effect in January last year, will further improve the environment for foreign business development in China. While continuously making and revising IPR-related laws, China will also strengthen law enforcement, upgrade public awareness   and work harder to address the concerns of business. On the other hand, hopefully, the American business community and its Chinese counterparts’ voices can also be heard by the U.S. government, and normal economic and trade exchanges will be less subject to interference and disruption from politics.

I had an interesting dialogue with William Klein, acting deputy chief of mission at the U.S. embassy in China, in Bo’ao in early April. We have differences on many subjects, but what worries us the most is the absence of trust between the two countries. The fundamental way out is to adhere to dialogue and communication.

Business communities in both countries share a responsibility to stand out more and make their voices heard, play a role in promoting China-U.S. communication. They can help the two governments accumulate mutual understanding and trust, not only to let both governments hear their reasonable appeals and make sure their concerns are taken care of but also to let the general public in both countries know that the business communities in both countries are making efforts against the headfwinds to continue operating and engaging in benign, rules-compliant competition, as well as the mutually beneficial, win-win outcomes of economic and trade cooperation.

The U.S. Senate is reviewing the Strategic Competition Act of 2021 — 280-plus pages — in which some of the judgments lack factual support. It is dangerous for a major power to make policies based on unreliable information. The business community has a responsibility to help make sure there is a sound legal foundation that guarantees steady economic and trade cooperation between the two countries.

Chinese and U.S. interests have been deeply and profoundly intertwined. Bilateral cooperation has extended into numerous areas, and potentials for the future will be even greater. This is the source of our confidence in the prospect of bilateral economic and trade ties. I hope the business community will make continuous efforts and play a backbone role in the development of China-U.S. relations.

(The author is director of the Center for International Security and Strategy at Tsinghua University and a former vice minister of foreign affairs. The text is an excerpt of her May 11 speech at an AmCham China event in Beijing.)

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