Monday, June 23, 2008

Everything about Obama's China Adviser - Jeffrey Bader

(some friends on twitter have been talking about Jeff Bader for some days now, and there seem to be little resources about the man most likely to shape the U.S.-China policy in the next eight years, so I decided to do a full research on this guy, and pulled out all materials I can find. Here's all the relevant literature I could find, organized them in 3 parts: 1) Profile, 2) Quotes on the Tibetan Issue, the Olympics, China Trade, and 3) three full-length articles written by the man himself. I have highlighted some important parts in the two relatively long articles for the convenience of your reading.


from In the Tanks
Gregg Sangillo. National Journal. Washington: Apr 23, 2005. Vol. 37, Iss. 17; pg. 1262, 2 pgs

Jeffrey Bader is taking his 27 years of government experience to the Brookings Institution, where he will direct the think tank's new China Initiative. Though Bader has spent a number of years working on China issues since the 1970s, he was originally focused on a different continent altogether, earning his doctorate in European history from Columbia University. After entering the Foreign Service, Bader was sent to Zaire because he spoke French. When he returned, he landed a staff assistant position to Richard Holbrooke in the East Asia Pacific Bureau at the State Department, where Bader worked on the official normalization of relations with Beijing in 1979. Bader says he got the "China bug," but he was also thinking practically about his career. "Within the State Department at the time, you kind of needed to decide if you wanted to be a big fish in the small pond, or a small fish in the big pond. And I always felt that relations with Europe was a very big pond ... whereas in China, at the time, just a handful of people were involved," Bader says, adding, "It seemed like the issue of the future."

Bader, 59, was a political officer in Beijing in the early 1980s, and later worked at the U.S. Mission to the United Nations. From 1987 to 1990, he was deputy director of the China desk at State, where he was involved in the U.S. response to the crackdown in Tiananmen Square. Bader later served as the China desk director, before becoming deputy assistant secretary of State for East Asian and Pacific affairs. From 1997 to 1999, he was director of Asian affairs at the National Security Council, and then served as ambassador to Namibia. He joined the U.S. Trade Representative's Office during the George W. Bush administration, and led negotiations completing China and Taiwan's accession to the World Trade Organization. He was most recently with Stonebridge International, an international consulting firm run by former National Security Adviser Sandy Berger, which helps a number of corporate clients break into the China market.

Bader believes that the Brookings initiative is well timed, with U.S.-China relations becoming an increasingly hot topic. "I think that there's a longer term debate that's beginning in this country about the relationship with China, because people are now beginning to realize the full ramifications of China's emergence." -Gregg Sangillo

Bader Quotes

On Tibet

1. China analysts say the violence in Tibet demands that the president chart a careful course. ''I think to the extent that he can work the issue privately, it's better, frankly,'' said Jeffrey A. Bader, an Asia specialist who worked at the National Security Council under President Clinton. ''The public statements just make the Chinese dig in their heels all the more, make them more resolute in their repression.''

from Bush Silent, but Others Speak Out on Tibet Crackdown
By SHERYL GAY STOLBERG and SOMINI SENGUPTA; The New York Times March 22, 2008 Section A; Column 0; Foreign Desk; Pg. 3

On Olympics

1. Although China insists politics should play no role in sport, the irony is that hosting the Games is entirely political, says Jeffrey Bader, of Washington's Brookings Institution. Speaking to a panel last year, Bader said "Of course the Chinese are seeking to use the Olympics for their own political ends.

"That's why they want to have the Olympics. They did not decide to host the Olympics because of a newly found love of sports; they did it for political reasons."

Consequently, "it's entirely appropriate for those who want to shine a spotlight on China's shortcomings, to do exactly as China is in seeking to demonstrate their successes."

But Bader, too, says a boycott isn't in the cards. "I don't think there's a mood in any capital to deny athletes participation because of China's conduct," he said by phone. "There may be other means by which groups will express their anger; to express their view that China's behaviour is unacceptable. But I don't think it will be a boycott."

There may be more trouble ahead, he warns. "If what we've seen in the past week is a harbinger of what we're going to see between now and August - there's a greater potential (for things) to get out of hand."

from China's Olympic angst; Murmurs of boycotting opening ceremonies over deadly crackdown in Tibet are rattling Beijing officials
Bill Schiller. Toronto Star. Toronto, Ont.: Mar 22, 2008. pg. AA.1

2. "The Olympics are a major event in the history of the modern Chinese nation," Brookings Institution senior fellow Jeffrey Bader says. "It's a source of tremendous national pride, not just for the leadership but also for pretty much the entire population."

from In Beijing, mum's the word for Olympians; Amid fears of protests, athletes told to watch what they say
by Janice Lloyd; USA TODAY February 21, 2008 NEWS; Pg. 1A

3. Specialists on US-China relations said current frictions should not be exaggerated. "Steven Spielberg is just a private citizen," said Jeffrey Bader, the National Security Council director for Asian affairs at the Clinton White House, and now a senior fellow at the Brookings Institution. "What he said will add to the pressures on China over Darfur, which is no bad thing. But a stampede in that direction? I don't think so."

from Bush rules out an Olympic boycott
Rupert Cornwell. The Independent. London (UK): Feb 15, 2008. pg. 2

On China Trade

1. "If you look at the problems of the last few months, like the product safety issue, the strategic dialogue has served as a mechanism for dealing with them," said Jeffrey Bader, director of the China program at the Brookings Institution. "If the Chinese didn't have confidence in Paulson, we probably would have seen some uglier retaliations."

from China's preference: Chinese goods U.S. and Europe cry foul on trade
Steven R. Weisman. International Herald Tribune. Paris: Nov 16, 2007. pg. 1

2. Speaking in Washington, assistant U.S. trade representative for China Jeffrey Bader said the Bush administration had set up an inter- agency group to monitor China's compliance with its WTO commitments and was prepared to take tough action if the mainland blocked U.S. imports.

Antoaneta Bezlova. Global Information Network. New York: Jan 30, 2002. pg. 1

3. In a reminder of how interconnected the world has become, chief U.S. negotiator Jeffrey Bader devoted much of his speech to reading the long list of countries whose citizens perished in last Tuesday's jetliner attacks on the World Trade Center.

"At a time of the most profound national sorrow, combined with determination and resolve to defeat the deadly menace of terrorism, the United States government will not neglect its other interests," Mr. Bader said. "This week's decision on China's WTO entry demonstrates that."

from WTO approves agreement on China's membership
Clare Nullis. The Globe and Mail. Toronto, Ont.: Sep 18, 2001. pg. B.18

4. "The decision to bring China into the WTO will commit China to adhering to the rules-based global trading system," said Jeffrey Bader, chief U.S. negotiator. "It will open markets and contribute greatly" to encouraging reform in China.

from Pact brings China to door of global trade organization
Naomi Koppel. The Globe and Mail. Toronto, Ont.: Sep 15, 2001. pg. A.18

Full-Length Bader Articles

(though these articles are old, some points are still relevant in thinking about the current or future U.S. - China policy)

Urgent tasks for Bush ahead of the Apec summit
Jeffrey Bader and Matthew Goodman. London: Nov 14, 2005. pg. 1

There is more at stake in President George W. Bush's trip to north-east Asia this week than there is in most such excursions. Beyond pressing issues such as North Korea, avian flu, and currency realignment, the critical long-range challenge in the region is ensuring a constructive relationship among China, Japan and the US. When they meet later this week, Mr Bush should press his Japanese and Chinese counterparts to take steps to defuse bilateral tensions and agree to a trilateral dialogue aimed at promoting security and prosperity in Asia.

Relations between Beijing and Tokyo, already strained, have deteriorated sharply over the past year. Sino-Japanese friction is based only in part on differences about the past; at its core, the rivalry is over the future. History has never seen a strong China and a strong Japan at the same time. But this promises to be the case in the 21st century, and both are uneasy about what it portends for their own national destinies.

Simmering resentment in China over the repeated visits by Junichiro Koizumi, the Japanese prime minister, to Tokyo's Yasukuni shrine, where 14 war criminals are buried, erupted in violent demonstrations against Japanese interests in Shanghai last April. Images of the attacks on Japanese television, in turn, fed growing nationalist sentiment in Japan over Beijing's exploitation of history for political gain.

Bilateral friction also has been fuelled by a dispute over energy rights in the waters between the two countries, by unhappiness over Japan's treatment of history in school textbooks and by Chinese opposition to Japan's bid for a permanent seat on the United Nations Security Council. Less visibly, Beijing and Tokyo wrestle for the microphone whenever broader groupings of regional officials meet, for example in the run-up to next month's east Asian summit in Kuala Lumpur.

Distracted by other foreign policy and domestic concerns, Washington has put too little focus on the strategic challenge posed by Sino-Japanese hostility. Some US officials apparently believe that America might benefit from a certain amount of tension between Japan and China. There are many issues in Asia that demand the president's attention, from halting North Korea's nuclear ambitions to promoting balanced economic policies. Yet the risks to US strategic interests posed by these difficult challenges pale in comparison to the prospect of open Sino-Japanese conflict.

Even festering resentment across the East China Sea, by limiting the scope for co-operation on a range of regional challenges, undermines long-term American goals in Asia. Should regional politics become a zero-sum game in which countries have to choose sides and maintain good relations with one at the expense of the other, the prospects for a prosperous and peaceful Asia are sharply diminished.

There are clear steps that each of the three Pacific powers could take to build a more constructive trilateral relationship. By visiting Yasukuni shrine again on October 17, Mr Koizumi missed a unique opportunity to use his strong mandate from the September elections to perform a "Nixon in China" act by pointedly forgoing the widely expected visit. As long as Japan's war criminals are enshrined there, Mr Koizumi should stay away from Yasukuni. If he will not, he should at least assuage Chinese (and Korean) concerns by clarifying publicly the rationale for the visits, namely honouring Japan's millions of war casualties, while explicitly and forcefully denouncing the war criminals and past Japanese atrocities in China. Tokyo should also begin a long-overdue process of investing in institutions of reconciliation, akin to the broad- ranging cultural, educational and other initiatives vis-a-vis Israel and Poland that Germany undertook after the second world war.

In the light of its rising economic and political influence, Beijing should be in a more confident position to reach out to Japan. China should drop its opposition to Japan's bid for permanent Security Council membership. It should allow, without conditions, the resumption of bilateral visits at the head of state and head of government level.

More fundamentally, as Japan faces up more frankly to its own history in the first half of the 20th century, Beijing should educate its people about Japan's responsible international behaviour in the second half of the century and stop gratuitously stoking popular anger in China against Japan.

For its part, Washington could facilitate Sino-Japanese reconciliation by deepening its co-ordinated engagement with both sides and making clear its support for rapprochement. Robert Zoellick, US deputy secretary of state, has put forward the excellent idea of a trilateral discussion among historians of the three countries, since tendentious interpretations of history seem to be such an emotional flashpoint. Washington should also encourage Tokyo and Beijing to settle their territorial dispute over the median line in the East China Sea, either bilaterally or through arbitration if necessary.

And they should all agree to start a high-level, trilateral strategic dialogue. Japan, China and the US are the three countries whose actions will do most to determine whether the 21st century in east Asia is more peaceful and prosperous than the last. It is time they understood their shared interest and responsibility to ensure that this is so.

Jeffrey Bader is director of the China Initiative at The Brookings Institution. Matthew Goodman is vice-president of Stonebridge International, a strategic consulting firm in Washington, DC.

Oil politics, the Middle East and the Middle Kingdom

JEFFREY BADER and FLYNT LEVERETT. Financial Times. London (UK): Aug 17, 2005. pg. 11

The rapid, almost unfathomable growth in China's energy demand is a key element in Beijing's growing interest in exclusive deals with Middle Eastern energy producers for oil and gas. The recent, ultimately unsuccessful bid by CNOOC to acquire Unocal has reinforced perceptions in Beijing that China cannot rely solely on the global energy market to meet its energy needs because US policy will not allow China reliable access to that market. These developments, if not managed intelligently by Beijing and Washington, have potentially profound implications for critical US interests in the Middle East and US-China relations.

China is already the world's second largest oil consumer, after the US. A net importer since 1993, China now purchases from abroad close to 3m barrels per day. In the last two years, 35 per cent of the increment in the world's consumption of petroleum has been China's. Its automobile population is expected to be the world's second largest market within a decade.

To meet this demand, China has been working to expand ties with Middle Eastern oil-producing states, including Iran and Sudan, which have problematic relations with the US. China is seeking to secure its access to Middle Eastern oil by concluding exclusive supply and equity deals and by expanding its political influence in the region.

Middle Eastern energy producers, meanwhile, are looking to China as an alternative to unchallenged US hegemony in the region. Even the staunchly anti-communist Saudi regime is cultivating China as a consumer of its oil and gas to hedge against further deterioration in US-Saudi relations, and Mahmoud Ahmadinejad, the newly inaugurated Iranian president, has expressed interest in forging strategic partnerships with China and India.

Even before its recent energy focus, China's involvement in the Middle East had been frequently problematic for US interests. Starting in the 1980s, China established its position in the region through arms sales to rogue regimes, including Saddam Hussein's Iraq, and transfers of weapons technology.

In the past, China responded to high-level representations about US security concerns and reined in some of its troublesome activities in the Middle East - for example, terminating its controversial nuclear co-operation with Iran in the 1990s. Now, however, China's escalating energy needs and sense of its own rising economic power may make it harder for Washington to influence Beijing's Middle East policy. Already, China's Middle Eastern push is colliding with US policy goals in the region. Chinese exclusive supply or equity deals could distort energy markets beyond the already considerable natural pressure that Chinese demands are generating. Beijing, for example, is the principal non-African supporter of the Sudanese government, blocking the imposition of international sanctions on a state that has become an important oil supplier to China.

While America's interests in the region diverge in significant ways from China's, it would be a mistake under current conditions to seek to exclude China from the Middle East, or to isolate it more broadly. Middle Eastern energy producers will not follow exhortations from Washington to cut off China. The better policy, with a better chance of success, is to try to work with China to give it a sense of energy security and shared interest in a stable Middle East. This would entail, among other things, assuring China that, short of a conflict that Washington is not seeking, the US will keep sea lanes open to China from the Persian Gulf. This would entail drawing China into discussions with key Middle Eastern countries and other parties about developing effective security arrangements for a region undergoing massive shifts in its internal balance of power.

Such an approach could help persuade China to rely more on international markets and less on exclusive supply deals, and would also increase chances that China would ultimately respect US national security and humanitarian goals in places such as Iran and Sudan. Hu Jintao, China's president, will visit the US next month. It is an opportunity for the Bush administration to lay out a path of co-operation with China on energy and the Middle East. Without such an approach, the clash of interests could be damaging not only to the US and China but could also feed a more general and unwelcome antagonism between the world's only superpower and the world's fastest growing power.

Jeffrey Bader is director of the China Initiative, Flynt Leverett is senior fellow at the Saban Center for Middle East Policy, both at the Brookings Institution

China after Deng Xiaoping: Prospects for continuity or change
(this is basically a general introduction to the China after the 1970s)

Jeffrey A Bader. Asian Affairs, an American Review. Washington: Summer 1997. Vol. 24, Iss. 2; pg. 69, 8 pgs

Even though the focus of this hearing is on analysis, not policy, for those of us involved in making policy it is an especially welcome opportunity. Good analysis does not always lead to good policy, but bad analysis is virtually certain to lead to bad policy. The administration welcomes the opportunity to supplement our own analytical efforts with the views of outside experts. The coming year or two in U.S.-China relations will be filled with important policy decisions. Those decisions will cover fundamental aspects of China's interaction with the United States, in areas including regional security, nonproliferation, military cooperation, peaceful nuclear cooperation, human rights, trade, the environment, law enforcement, and Hong Kong, among other issues in our increasingly multifaceted relationship. They will occur against the backdrop of a series of high-level visits, including state visits by President Clinton and Jiang Zemin. Secretary Madeleine Albright was the first high official of the new administration to visit China and was the first U.S. official to meet with the Chinese leadership after Deng's death.

The timing of the hearing also is significant in that we recently marked the twenty-fifth anniversary of the Shanghai Communique, a cornerstone in U.S.-China relations, issued at the conclusion of former president Nixon's historic trip to China and his meeting with Mao Zedong and Zhou Enlai. Deng Xiaoping did not live to see the twenty-fifth anniversary, but he did more than any other Chinese leader to foster closer ties with the United States.

I will discuss Deng's legacy and the prospects for continuity or change in four areas: economic reform, political reform, China's place in the world, and U.S.-China relations. The last fifty years of Chinese politics have been filled with dramatic and often unpredicted events, which have occurred roughly once or twice a decade: the catastrophe of the Great Leap Forward and the accompanying famine that killed millions in the 1950s, the Cultural Revolution that purged the top leadership and traumatized a nation in the 1960s and early 1970s, the demise of Mao Zedong and his left-wing followers and the rise of market-oriented reform under Deng Xiaoping in the 1970s, and the mass demonstrations of 1986 and 1989 leading to the Tiananmen tragedy. I should note here that as paramount leader in 1989, Deng bore the responsibility, which he readily acknowledged afterward, for ending the Tiananmen demonstrations by force-a decision that left deep scars in Chinese society. That history is a cautionary warning against "straight-line" predictions in a society as dynamic and complex as China's.

The transition to the next generation of leadership-to Deng's successor-has been under way for several years. Deng left public office in 1989, when he resigned the chairmanship of the Communist Party's Central Military Commission, and he was incapacitated and inactive during the last years of his life. He promoted Jiang Zemin as the "core" of the next leadership generation. Jiang, who holds two critical Party positions (general secretary and Central Military Commission chairman) as well as the presidency, has grown in stature as the "first among equals." Deng's long survival also allowed Jiang to consolidate and strengthen his position. In public statements by the Party on the occasion of Deng's passing, Jiang's position as the "core" of the leadership was once again underscored. The other key figures in China's leadership are the members of the seven-man Politburo Standing Committee, notably Premier Li Peng, National People's Congress chairman Qiao Shi, economic czar and Vice Premier Zhu Rongji, and the top figures in the PLA [People's Liberation Army], represented on the Politburo Standing Committee by General Liu Huaqing.

As I noted, Deng did not play an active role in the leadership after his health began to deteriorate in 1993. The leadership team I just enumerated-in place essentially since 1989-has thus had several years to operate without Deng's direct guidance. Deng's longevity probably served to mute leadership differences and enforce cautious, consensus-oriented policies. That said, who China's "paramount leader" is may be less important now than it has been in the past. China has begun to diminish, if not yet thoroughly dismantle, the "rule of man" system and is gradually replacing it with a rule of law and institution-building that hold the promise of making future policy swings less violent than those of the 1949-1992 period. We will be watching with great interest the progress of this development.

Economic Reform

Deng Xiaoping was eulogized by his successors as the "chief architect" of China's reform program and its opening to the outside world. His commitment to economic reform led him, throughout the 1980s, to open China to foreign investment and business to acquire the resources, technology, and expertise necessary to carry out his plans for modernizing the country. He instigated highly successful economic reforms in agriculture, dismantling the commune system in favor of household contracts and private farming. He then moved to restructure the urban economy, introducing market incentives in industry, reforming price and wage systems, and granting public and private enterprises more autonomy.

His reforms were controversial and were opposed by orthodox Party officials, who feared they would reduce the Party's control over the economy and expose China to foreign influences. Deng's last response to that opposition was to make a much-publicized trip to south China in January 1992, during which he renewed his emphasis on economic reform, enunciated a new slogan-"market economy with socialist characteristics"-and urged that the pace of economic reform be accelerated. Those remarks gave a powerful boost to reform-minded leaders and set China more firmly on the reform course. His famous expression of a pragmatic approach to economic growth-"It doesn't matter if the cat is black or white, as long as it catches mice"-first uttered in the 1960s, continues to describe a policy that downplays ideology and relies increasingly on letting the economy respond to market forces rather than government dictates.

China's current leaders, in place since the early 1990s, have continued these policies. They remain committed to reform; indeed they recognize that reform is necessary for long-term growth and prosperity. Like Deng, they have learned that a command economy is inefficient and unresponsive and that an inward-looking China, cut off from the outside world, cannot progress.

And the progress China has achieved has been extraordinary. China's GDP rose 11.7 percent annually in real terms from 1991 to 1995. Its foreign exchange reserves top $100 billion, second only to Japan's. Eight in ten urban households have acquired a color television. An urban middle class is emerging, and a population along China's eastern coast of 250 to 350 million people live a lifestyle comparable to that of an advanced developing country.

But Deng also left behind a legacy of unsolved economic problems, and partial reform has brought new ones. His successors will have to grapple with the drain on the country's resources and the government's revenues caused by massive, inefficient, state-owned enterprises. That state-owned sector and the trade regime that protects them are obstacles to China's full realization of its economic potential and its accession to the World Trade Organization. There is a vast disparity between the remarkable expansion of the coastal area and the relatively slow growth of the internal provinces. China's population is 1.2 billion and growing, and the economy must create more than ten million new jobs per year. Eighty to 100 million people have migrated to Chinese cities and towns in search of work or higher incomes. Far-reaching reforms in the financial and communications sectors and massive expenditures on essential infrastructure projects must be undertaken if China is to continue its economic success. With its high growth rate, China is stretching the capacity of existing resources and energy. By 1993, China had become a net oil importer for the first time since the 1960s. By the year 2005, China could be importing 40 percent of its oil.

Implementing the necessary reforms will mean breaking the "iron rice bowl" of security to which urban Chinese workers and managers have been accustomed, a weaning process sure to cause even more discomfort, distress, and disruptions. Hence, although the overall direction of China's economic future remains clearly set, debate will continue over the pace and sequence of reforms, and over the distribution among competing groups of the benefits and proceeds of economic development. Some of the reforms to come are likely to be even more difficult than those already implemented.

Political Reform

Deng broke with tradition, imperial and communist, and relaxed the political grip of the central state apparatus. He decentralized economic decision making, empowering regional government to set their own targets and pace. He reorganized the Communist Party, the PLA, and the central government bureaucracies, ending the period of "mass struggle," class warfare, and "proletarian revolution," and adding an emphasis on professionalism and training. The legal and bureaucratic reforms he began continue to be implemented by his successors, who are beginning to institutionalize the rule of law; lay the foundation for more stable, rational, and transparent decision making; and make the judicial system more fair and predictable.

But Deng's refusal to recognize that an open political system is a necessary complement to, and component of, a strong, prosperous economy continues to haunt his successors. They, too, have yet to recognize that a modern society calls for broader participation in decisions about who governs China and how it is governed, greater respect for political rights, and separation of party and government. There was a brief period of experimentation in the late 1980s, but since June of 1989, maintaining stability by silencing public dissent and opposition before they can threaten the dominance of the Communist Party has been a central preoccupation of the leadership.

Despite government repression of political dissent, personal freedom for ordinary Chinese has burgeoned, with new opportunities that include freedom of movement; greater choice in employment, housing, education, and consumption; and expanded access to information with the creation of thousands of new media outlets. Quasi-independent organizations and the indirect influence of public opinion on politics have continued to grow. Village elections have given millions of Chinese the opportunity to exercise choice in determining who their local leaders will be.

So where is this combination of economic dynamism, greater social mobility, expanding options in daily life, and continuing political repression likely to lead China's political system? The collapse of the Soviet Union does not provide a useful model for understanding China's future. Although they had in common leadership by an authoritarian single party that was intolerant of public dissent and determined to monopolize power, the differences between the two are more striking. The USSR was an internal empire of numerous nationalities that nearly outnumbered the dominant Russians, clinging to an external empire through emphasis on a heavy industrial/military sector, an unwelcome alliance structure, and military occupation. Its economy was a shambles, offering consumers little. The USSR was closed to foreign investment and different forms of property ownership and resisted interaction with the West. China has had none of these characteristics for the last two decades.

Nonetheless, Chinese and foreign observers alike understand that China's vast social and economic problems and its rigid political structure present real risks of social disruption and disorder. Disillusionment with the political system has led to popular cynicism. Crime and corruption are on the rise. Ethnic tensions have surfaced in Tibet, and recently in Xinjiang, in the form of riots and a number of terrorist bombings.

Political opening is unwelcome not only because it threatens the dominant position of the leadership but because, for those who lived through the chaos between 1910 and 1950, or the mass movements of the 1950s, 1960s, and 1970s-most especially the Cultural Revolution-it raises the specter of instability or renewed chaos. We should not dismiss this as frivolous or mere pretext. That said, political reform will be necessary if China is to sustain its modernization program, and indeed, in the long term, it is inevitable. At some point, perhaps after this year's Fifteenth Party Congress, China's leaders will have to move beyond the negative conclusions they drew from Tiananmen and their reliance on repression to maintain stability. That is unlikely to mean significant movement toward Western-style democracy in the short term, but it could mean a resumption of the gradual liberalizing trends of the 1980s, perhaps buttressed ideologically by invocation of a so-called Chinese path to development.

China's Place in the World

Deng's decision to move China out of its isolation changed not only the manner in which it conducted its relations with other countries but also its vision of its role and place in the world. In pursuit of China's reunification, Deng devised the principle of "one China, two systems" for Hong Kong's reversion to Chinese sovereignty, a framework which the PRC has also proposed for Taiwan. Deng pushed China to join major international organizations and subscribe to multilateral treaties, moderated or ended its disputes with other nations, and halted its support for Communist insurgencies elsewhere. His decision to promote better relations with China's neighbors and major economic powers was rooted in his drive to ensure a peaceful international environment that would permit China to concentrate on its domestic economic and social modernization. His decision to send thousands of Chinese students to America has been a significant factor in expanding China's international outlook, as well as China's scientific knowledge. Deng also knew that opening the PRC to the outside world was the only way to acquire the resources, technology, and expertise necessary to modernize his country.

China's foreign policy since the late 1970s has been a function of this domestic priority. Under its current leadership, China has continued to reduce tensions with its neighbors, agreeing on drawdowns in troop deployment along borders and other confidence-building measures with Russia and its central Asian neighbors. China has adopted a less-confrontational and even conciliatory stand in resolving its territorial disputes with India and Japan. Its relations in the South China Sea area, however, although peaceful, are uneasy.

China today is also driven by a desire to be treated as a major power commensurate with its growing economic and military clout. Yet in many ways China remains a reluctant participant in the international system, unwilling or slow to accept the responsibilities that go with being a regional or global power. Steeped in a political environment of isolation and distrust of the outside world, China's current leaders are only slowly recognizing that China has an interest in conforming to international standards. If China wants to influence international norms, it must participate actively and responsibly in their formulation-and in their observance.

As China develops its interactions with its East Asian and Pacific neighbors, much attention will be focused on the People's Liberation Army. Modernization of the military ranked fourth among the "Four Modernizations" that Deng announced in 1978. The PLA chafed under a tight budget and has looked to extrabudgetary activities to supplement on-line funding. Since 1989 the PLA has benefited from more generous funding, but when adjusted for inflation, the actual increase has been unimpressive. Last year's nominal increase was 12.7 percent6 percent after inflation-with much of it devoted to a salary increase. Estimates of actual defense expenditures vary widely, but a credible figure is about 3 percent of GNP or, in absolute terms, less than Japan's. China's recent acquisitions of new weapons systems have relied increasingly on Russia, the source of SU-27 fighter aircraft, Kilo-class submarines, SA-IO surface-to-air missiles, Sovremenny-class destroyers, and heavy transport aircraft.

The relaxation of tensions with Russia having progressed impressively, PLA planning seems more oriented toward other potential areas of conflict off its eastern coast, as its aggressive exercises in the Taiwan Strait last year demonstrated. We do not see signs that the PLA is assuming or demanding the driving role in defining board strategic policy objectives, or that it seeks to reverse China's essentially conservative approach to its relations with its neighbors. A U.S. policy that stresses and balances forward deployment, mutual transparency, regional cooperation, maintenance of our alliances, and development of bilateral military ties helps ensure that there is clarity and predictability in China's defense policy and provides our best response to the PLA's evolution.

U.S.-China Relations

Let me turn last to our bilateral relationship with China. Deng played the central role in normalizing our bilateral relations in 1979 and in moving those relations toward cooperation. He was committed to a positive relationship with the United States as a necessary condition for China's modernization. Although Deng was not uncritical of the United States, at difficult junctures in the relationship he worked to prevent damage, often against advocates of a rigid approach.

China's current leadership appears to want to continue to develop a productive and cooperative relationship with the United States. President Jiang Zemin and Premier Li Peng went out of their way to emphasize to Secretary Albright their commitment to continuity and stability in the relationship. China's leaders want and need access to U.S. markets, technology, and know-how. They have somewhat mixed feelings about our military presence in the Asia-Pacific region but understand that it is a stabilizing influence that allows them to devote their attention and resources to domestic problems. Chinese students by the tens of thousands come to the United States for advanced study and training. Cultural, educational, and professional exchanges have brought Chinese from all walks of life to the United States, and the majority of them carry back a positive message not only of America's good will but of how much China has to learn from the United States. Surveys in China continue to indicate that the United States is the most admired country but also that, after Japan, the United States is the most frequently criticized. The surveys also indicate that many Chinese disagree with U.S. policies toward China.

Chinese are troubled by the threats that modernization and "Westernization" pose to their political system and traditional values. China's leaders and elite are uncertain of the U.S. government's attitude and intentions toward an emergent China. They are critical of discrete U.S. policies: imposition of sanctions for nonproliferation or human rights abuses, support for democracy in Hong Kong and cultural preservation and human rights in Tibet, arms sales to Taiwan, support for the rights of dissidents, reaffirmation of the U.S.-Japan alliance, and congressional opposition to most-favored-nation trade status and to holding the year 2000 Olympics in Beijing. They see such policies as part of a carefully coordinated policy designed to weaken, if not dismember, China and to prevent it from taking its rightful place of global and regional leadership. Confronted with the worldwide collapse of communism and the thorough discrediting of Marxist ideology and economics at home, China's leaders are turning to nationalism to rally their country and legitimate their hold on power. Rising nationalist sentiment is not purely, or even predominately, the product of leadership manipulation, however. It reflects the pride of the Chinese people in the accomplishments of the last two decades, after a century and a half of humiliation and thirty years of Maoist turmoil and totalitarianism. It also reflects the defensiveness of a society undergoing rapid change inspired by outside forces whose intentions are not always perceived as benign.

Implications for U.S. Policy

What the developments I have been describing mean for U.S. policy will be the subject of continuing discussions in the administration, in the Congress, in the media, and in the public. The current administration's approach, like that of the previous five, is one of "comprehensive engagement," which means seeking areas of cooperation and dealing directly and frankly with areas of difference. It is premised on the assumption that there is no natural or inevitable hostility between the United States and China. Working together, we can advance key global and regional security and commercial interests. Over time, our interaction will continue to help transform China in the liberalizing direction that has generally prevailed over the last two decades. China's history has shown us that we should be prepared for surprises. Deng's passing, however, has not altered the validity of these premises.

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