US China Policy: Opposite Poles

My hat is off to Greg Torode over at SCMP, who performed a public service with an excellent piece on retired US Admiral Bill Owens and the Sanya Initiative.

I blogged on Bill Owens before, when FT failed to supply the right context for Owens (don't miss the comments on that post, they are very informative). Torode, by contrast, gives a complete picture of Owens' backers.

As someone who has experienced the most frigid extremes of the cold war between the US and Soviet Union, Admiral Bill Owens has made it his life's mission to try to prevent a similar chill freezing the emerging relationship between Beijing and Washington.

Talking to the veteran nuclear submarine commander and former vice-chairman of the US Joint Chiefs of Staff in his Hong Kong office, it is clear he is far from sure whether he will succeed. He speaks repeatedly of mutual suspicions haunting both capitals as well as the march of time that threatens the "enormous leadership" required to turn things around.

Already his fledgling Sanya Initiative - a private effort to foster trust and communication between retired military leaders from both countries - must struggle against those suspicions. He is not afraid, he says, to be branded a "panda hugger" back in Washington - a phrase long used as a pejorative in pockets of America's military-industrial complex.

If not exactly a precise return to cold war paranoia, Owens fears China and the US becoming locked in a military, political and economic competition from which only the rivalry of great nations, not the partnership, will be allowed to thrive.

"I think time tends to run out on these things as the attitudes on both sides harden ... as the Chinese military grows, the US will react to it in a competitive way," he explains. "We have only a limited amount of time remaining to find ways to ... become more like friends than competitors and genuinely engage in addressing the issues that the world faces.

....


He does cast himself, however, as someone who believes US behaviour and actions - Taiwan arms sales, for example - can shape China's responses by building trust. Increasingly, that puts him at odds with many military and security analysts who sense China is already determined to present a bi-polar challenge to US primacy.

Why perhaps does Owens hold these positions? Torode deftly informs us of Owens' longtime business connections to the PRC:

After retiring in 1996 as vice-chairman of the Joint Chiefs of Staff - the second-highest ranking military official in the US - Owens became chief executive of telecoms giant Nortel and the attempted satellite start-up Teledesic. Both gave fresh insight into China's future as he dealt with dynamic mainland firms such as Shenzhen giant Huawei Technologies.

In other words, as discussed in the previous post, Owens is a businessman with longtime connections to the PRC. What is the Sanya initiative? It's basically The Remains of the Day with Chinese characteristics. Torode supplies more detail....

Within the administration there is also an unease about the involvement in the Sanya Initiative of General Xiong Guangkai , the former deputy chief of the PLA General Staff and military intelligence supremo. Other generals include General Yu Zhenwu and Vice Admiral Zhao Guojun, former commander of the PLA Air Force and commander of the East Sea Fleet, respectively. The US side includes Admiral Joseph Prueher, former US ambassador to Beijing and head of the Pacific Command, and General Dennis Reimer, former US Army chief of staff. As well as formal discussions, the group have held banquets, fishing trips and met together with their wives.

Funding comes from former chief executive Tung Chee-hwa's China-US Exchange Foundation, Singapore's state investment fund Temasek as well as individuals including former AIG Insurance chief Maurice Greenberg, Owens himself and Vincent Mai, the chairman of AEA Investors, the boutique US private equity firm that employs him.

Note the interconnections -- AIG is an old Shanghai insurance firm, and Greenberg also wrote a similar piece about China for CSIS a while back. It's the emerging global financial nexus of US financial firms and Greater China, fronted by US businessmen who use the titles of yesterday to legitimate their business activities of today. Really, about the only surprising thing is not finding Goldman Sachs' name here.

It would be far easier to buy Owen's piety if his backers were not who they were. As I noted before:

I suppose at this point I should be ranting, but instead I'll simply confine myself to noting, as Ken Silverstein did in Harper's last year, and Carsten Holtz did in FEER two years ago, that the class that shapes our China policy is populated with individuals who also do business with China. The sad sickening Charles Freeman "debate" simply failed to address this urgent problem.

A counterpoint to Owen's views appeared in the UK Prospect this week. It pointed out, basically, that the emerging cold war between China and the US is not merely driven by Chinese expansionism, but also by the nationalism that defines China's economic behavior:

The signs of decoupling are all around us. In January, Google claimed that its proprietary source code and the Gmail accounts of human rights activists had been targeted in a sophisticated cyber-attack from inside China. In response, the company threatened to quit the Chinese market. It remains unclear whether the Chinese government played a direct role in the attacks, condones them, or is simply unable to stop them. The government promotes “indigenous innovation,” a vaguely articulated plan to encourage homegrown intellectual property and the companies that develop it. Some of that innovation has been stolen. Google’s charges placed the issue of Chinese cyber-espionage in the headlines, but the problem has been building for years. Following the Gulf war in 1991, the Chinese government saw the need to invest in the information warfare capabilities of the People’s Liberation Army. At first, cyber-espionage was mainly confined to the military realm, but in the past three years it seems to have expanded into the corporate world.

Beyond the espionage problem, China’s ambitions have provoked a sharp response from high-tech companies in the US and Europe. They charge that China’s policy of favouring products made with domestically created intellectual property proves that Beijing is no longer even pretending to observe international intellectual property rules. That’s why the Google story is not really about censorship or state persecution of dissidents. It is mainly about Baidu, Google’s main Chinese rival. Baidu already holds the dominant market share within China, and if Google leaves or is forced out, Baidu will benefit the most. Companies such as Baidu have growing influence within China’s state bureaucracy and have also become symbols of pride for the government and public.

In January, the US government announced a plan to sell $6.4bn in weaponry to Taiwan. This kind of deal was sure to provoke an angry response from the mainland, and it did. But this time Beijing added an extraordinary threat: the imposition of sanctions on US aircraft manufacturer Boeing, which dominates China’s airline market, worth $400bn over the next 20 years. Were Boeing to lose this business, some of it would surely fall to European aircraft-maker Airbus. But over time, more of it would move to emerging Chinese companies.

The predicaments of Boeing and Google illustrate how the US and Chinese brands of capitalism are pushing Washington and Beijing towards conflict. For the moment, the governments’ incentives for co-operation outweigh any advantage that either can find in direct confrontation. But the forces that divide them are too large for either side to fully control.

Even if Owens is sincere in his views, the tragedy of Adm Owens is that bringing the two nations closer economically is precisely what is driving them apart. Complaints about China's economic nationalism are now commonplace among western businessmen in China. Economic integration does not necessarily bring peace -- just look at the world prior to the first world war. In that context, the problem of China is more like the problem of Germany and the UK at the end of the 19th century, with the rising power of Germany, a declining UK, widespread economic nationalism, trading blocs and colonies.... As Twain said, history does not repeat itself, but it does rhyme.

When nations start spouting rhetoric like "assuming our rightful place" and engaging in exuberant displays of nationalism, take cover. The result is usually piles of corpses.
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