Strategic Asia 2007-08: Domestic Political Change and Grand Strategy

How Domestic Forces Shape the PRC’s Grand Strategy and International Impact

executive summary This chapter examines China’s international goals and impact through the lens of domestic politics and internal changes and assesses how these factors shape China’s grand strategy. main argument: China’s grand strategy seeks to sustain rapid domestic economic development for another decade or more. Economic success has vastly enhanced the PRC’s global importance. Internal requirements strongly affect the PRC’s approach to and impact on the international arena. These concerns make credible China’s declared need for long-term peace to achieve national development goals. The nature of China’s development and the measures to sustain it, however, pose challenges for the U.S. and others. policy implications: • Given the momentum of its development, barring major disruptions China’s international importance will continue to grow rapidly in the next five years. • The U.S. and China share fundamental interests in many traditional and nontraditional security and economic areas and have developed an impressive capacity for collaboration. Underlying mutual distrust is growing, however, with potentially costly future consequences. • Traditional U.S. engagement of China is no longer sufficient. “Focused engagement”—according far greater importance to the extent to which Beijing partners with Washington on issues most critical to the future relationship—would be a more effective new approach. • China will more likely act as an international stakeholder if the U.S. frames U.S.-China issues objectively, initiates serious efforts to address them, and credibly signals a willingness to engage in long-term bilateral cooperation. • By resuscitating its regional diplomacy and addressing Asia’s critical regional economic, environmental, and nontraditional security issues, Washington can strengthen the U.S. position in Asia and reduce the negative effects of China’s growing role and influence there. China How Domestic Forces Shape the PRC’s Grand Strategy and International Impact Kenneth Lieberthal Domestic factors explain only a part of China’s foreign policy. Beijing’s policies also seriously reflect threat perceptions and other international developments. To a remarkable extent, however, domestic concerns structure the strategic objectives of China’s formal foreign policy, and the nature of the domestic system produces many of the outcomes that cause other countries to worry about China’s impact and objectives. China is in the midst of change and economic development that is unprecedented in scale and scope. Nearly three decades of efforts have produced an explosion of energy in a political system that, while authoritarian, is flexible, dynamic, and features vigorous competition between different localities. Economic growth has included accepting extensive FDI and promoting foreign trade. After nearly thirty years of reform, the top leaders today harbor a contradictory pair of convictions. The first is that China has become a major country globally and should be treated as such. The second is that rapid growth must continue if China is to avoid massive domestic political instability. In Chinese terminology, the leadership feels they are successfully riding a tiger—but to dismount (from a program of dynamic growth) would risk being devoured by that tiger. Three factors—the leadership’s mentality, Beijing’s resulting grand strategy, and the actual spillover effects of the dynamics of China’s domestic system—are profoundly shaping the international consequences of China’s rise. Kenneth Lieberthal is William Davidson Professor of Business Administration at the Ross School of Business, Arthur F. Thurnau Professor of Political Science, Distinguished Fellow and Director for China at The William Davidson Institute, and Research Associate of the China Center at the University of Michigan. He can be reached at . 30 • Strategic Asia 2007–08 The contours of the situation as of 2007 primarily reflect developments since the end of the Asian financial crisis in the late 1990s. China’s domestic economy since then has been growing at about 10% per year, and internal changes such as urbanization and privatization have accelerated to an unprecedented pace. The leaders have declared that the country has a strategic opportunity to utilize a period of relative international peace to become a “relatively well-off society” by the year 2020. Since the late 1990s the People’s Republic of China (PRC) has developed a sophisticated foreign policy and new security concept to realize this strategic opportunity. After providing an initial overview of China’s strategic objectives and grand strategy, this chapter then explains the key issues in China’s domestic politics, political economy, and society that affect the PRC’s strategic objectives and broader international impact. The...