How to Play Well With China

Presidents Obama and Xi Jinping will meet in California for two days starting this Friday.

It’s about time.

New sources of friction are constantly appearing in the relationship between the United States and China: trade disputes, tension over North Korea, debates over curbing carbon emissions, allegations of cyberattacks by China.

Having survived re-election, President Obama can shrug off charges of appeasement and treat a rising China with the care it deserves. China, with its leadership transition, has a fresh start, too.

The American and Chinese presidents must seize this opportunity to improve relations; if they don’t, there won’t be another chance for years.

Until now, Mr. Obama’s China policy has been mainly a hedge against China’s rise. The administration’s “pivot” to Asia — the shift of attention and resources from other regions — has convinced many in Beijing that Washington intends to try to stunt China’s growth and contain it the way that America sought to halt the spread of Soviet power during the cold war.

Hedging should be part of America’s strategy. But hedging without a sincere attempt to open up a dialogue risks feeding China’s resentment and transforming competition into conflict.

Cooperation between America and China is crucial for the future of both countries and the world, and the current policy of damage control isn’t enough.

America and China are the world’s two biggest economies, two largest trading nations and two worst polluters. America is the world’s largest debtor, China its biggest foreign creditor. There is no way to rebalance the global economy, slow climate change, manage the trouble kicked up by rogue states and keep the peace in Asia unless Washington and Beijing work together in as many areas as possible.

The first step will be for Mr. Obama and his representatives to stop trying to negotiate with the China they want to see and engage China as it is.

The Chinese won’t accept another approach, and the United States doesn’t have the power to force them to. China is every bit as exceptionalist as America, and has been for centuries. It is a country prepared to make rather than accept new rules, and one that will compete with the United States for Asian and global hegemony.

Yet, for the moment at least, Mr. Obama can earn more of Mr. Xi’s trust by not asking him for things that Beijing can’t provide, like a global partnership to address financial crises, climate change, nuclear proliferation and a host of other issues. Creating a so-called Group of Two to tackle the world’s major problems includes risks that the Chinese leadership can’t afford to accept. China sees itself as a developing country and doesn’t believe it can take on huge new global responsibilities that would come with such a formal upgrading of its ties with the United States.

Mr. Xi, in turn, can earn more confidence in Washington by ensuring that China continues to open domestic markets to American companies, by enforcing intellectual property protections and by maintaining a level competitive playing field.

It is time for the two presidents to think big. Mr. Obama and Mr. Xi should begin work on a declaration of principles, a document that can elevate and focus their partnership.

In 1972, at the end of President Richard M. Nixon’s historic visit to China, the American and Chinese governments published a remarkable joint communiqué. It included references to their “different ideologies,” individual freedom, trade, Korean reunification, Japan, Taiwan and “progress toward the normalization of relations in the interests of all countries.” The document and the conversation it opened stand among the greatest diplomatic achievements of the 20th century.

Seven years later, a second communiqué established formal diplomatic relations. A third document, released in 1982, addressed the future of Taiwan.

In creating a new declaration of principles today, each side will have to give. There are some costs and risks that China won’t accept because they might endanger stability at home.

For instance, China won’t sharply reduce greenhouse gas emissions because it fears that slower production could put millions of Chinese workers on the streets. And it won’t play a major role in propping up the teetering euro zone if doing so requires them to work with governments other than Germany, whose stability it trusts. And it won’t change its position on Taiwan, Tibet or Tiananmen Square.

But there are things China can and will do if the United States offers some incentives that China wants and needs.

China would happily produce a document that Mr. Xi could brag about at home, while accepting responsibility for only a carefully negotiated set of mutually profitable projects. A new communiqué should therefore include negotiated agreements on the joint development of clean energy technologies, cooperation in scientific research and coordinated strategies to mitigate conflict in the developing world.

It’s not a sign of weakness that Washington can’t force China’s leaders to change course on issues they consider central to their national security. Naming and shaming can be an important foreign policy tool. But China will never change its approach on these core issues because of America’s objections, and we can’t allow criticism to drown out calls for cooperation in other areas.

So Mr. Obama shouldn’t expect much movement on issues like Tibet, territorial disputes between China and its neighbors in the East and South China Seas, and a range of human rights issues. Mr. Obama can commit the United States to a frank approach, one that acknowledges China’s core interests, and where appropriate, allows Washington to act as an honest broker.

America and China already enjoy an enormously profitable trade and investment relationship. In 1985, trade between the countries amounted to just $7.7 billion. By 2000, the total reached $116 billion, and in 2012, it surged to $536 billion, putting America and China on track to build the largest trade relationship in history. But certain moves by both sides have eroded trust.

The Obama administration has worked to build momentum behind the Trans-Pacific Partnership, a colossal trade deal involving a host of Pacific Rim countries. China sees the partnership as a move to isolate it and won’t join because it would force Beijing to open areas of its economy that are not ready to withstand competitive pressures. But this does not mean that China must see it as a threat. Those who join should continue to build new commercial ties with China to help assuage the fear that the partnership is designed specifically to isolate China.

China, meanwhile, has been backsliding on market access for American companies, has failed to protect American intellectual property and has invested in a program of “indigenous innovation” that unfairly restricts foreign investment in China’s technology sector at a time when Chinese investment in the American economy is growing rapidly. Conflict in cyberspace is also intensifying, and there is evidence that Chinese hackers are seeking to spy, steal and sabotage — endangering American intellectual property. This is an area where Mr. Obama must continue to vigorously defend American interests.

The United States should continue to exert as much pressure, both diplomatically and through the World Trade Organization, as necessary, to get Beijing to open up. For the moment, a free-trade agreement is not possible. But there is plenty that the United States and China could do to broaden and deepen their trade and investment relationship and avoid unnecessary clashes. With that in mind, American and Chinese negotiators should begin work to devise a “trade investment framework agreement,” the foundation for a more ambitious deal in years to come. To avoid a repeat of some of the bitter investment conflicts that have developed in recent years, Washington must also finally make clear for Beijing where Chinese direct investment in the United States and in American companies is welcome, and where it is not.

In addition, the two sides should form a working group that answers directly to Mr. Obama and Mr. Xi, and whose primary mandate is to draw each side’s red lines in a way that minimizes the risk of conflict, particularly on cyberissues. This would ensure that good ideas are not lost in exchanges between two governing bureaucracies that don’t always understand each other.America and China have much to offer each other. Both benefit from a more predictable international security environment. Both are major importers of foreign oil. China has huge reserves of shale gas and wants to exploit them, and the United States has the technology and the labor force know-how. A more energy-efficient China will lower energy prices in the United States and inflict less environmental damage.

Failure to make progress in one area should not slow work on another. There will be competition. Beijing will continue to invest in its state capitalist system and to manage its currency to suit its own needs. And lectures on political reform are unlikely to yield good results.

Like the former Soviet leader Mikhail Gorbachev, Xi Jinping and most of China’s leadership recognize the need for perestroika, a restructuring. Unlike Mr. Gorbachev, they don’t see glasnost, openness, as a means of achieving it — and no amount of sermonizing from America will change that.

In some ways, the stakes are higher for Mr. Obama and Mr. Xi than they were for Ronald Reagan and Mr. Gorbachev. There is no American-Chinese nuclear threat to focus minds on stronger ties, nor is there a Berlin Wall to separate the two countries’ fortunes. For better and for worse, America and China are bound together in a form of mutually assured economic destruction.

That’s as good a starting point as any for a partnership whose time has come.

Ian Bremmer, the president of Eurasia Group, is the author, most recently, of Every Nation for Itself: Winners and Losers in a G-Zero World. Jon M. Huntsman Jr. was the governor of Utah from 2005 to 2009 and the United States ambassador to China from 2009 to 2011.

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