China’s remarkable aggregation of national power over the past 35 years has been a source of wonderment: to economists, who have been surprised by that country’s consistently high rate of growth; to political scientists, who are at a loss to explain the persistence of authoritarian Communist Party rule despite its more open market order; and to historians, who describe China’s meteoric rise as unprecedented. But to the U.S. national security community, China’s swift climb up the international power ladder has been a source less of wonderment than of increasing concern.How should America evaluate the risks that the People’s Republic of China (PRC) poses to its current and future interests? It is a crucial question, since sound strategy depends on an accurate assessment of the capabilities and intentions of potential rivals. Significantly underestimating China’s ambitions and its future means to advance them could render the United States strategically vulnerable. Exaggerating those same factors risks an inefficient use of America’s diplomatic, military, and economic resources, while counterproductively stimulating more vigorous PRC investments in hard power than would otherwise be the case.Much literature has appeared in recent years speculating on future Sino-American cooperation, competition, or conflict. While there is no shortage of theories of international relations to inform conjecture on likely future scenarios, two in particular highlight the sharp contrasts in approach and perspectives that characterize this debate. The first is realism, which assumes an evolving international environment in which fierce competition between leaders and challengers is the norm. The realist dynamic is sometimes called the “Thucydides Trap”, a term inspired by Thucydides’ famous account of the seemingly inevitable conflict between the rising city-state of Athens and the status quo power Sparta as they struggled for dominance of Ancient Greece in the fifth century BCE.1 Realists who embrace the Thucydides Trap metaphor argue that the risks of hegemonic wars between rising states (such as China) and status quo states (such as the United States) are high. A second and contrasting theory framing this discussion is neoliberalism, which assumes that open-access political systems (which China is not) and market-based economic exchange create opportunities for the realization of positive sum gains between competing powers. Deepening socio-economic interdependence, encouraged and sustained by skillfully designed international institutions, can ensure stability and growing prosperity.These two perspectives promote very distinct U.S. approaches for dealing with the challenges posed by a rising China. Realists, who believe that states operate in an unsentimental and unforgiving environment, would advise current U.S. leaders to keep ample powder dry, to leverage existing and acquire new allies, and to occasionally accommodate when relevant U.S. interests are much less than those of China. Persuaded that the China locomotive will keep speeding down the tracks in the years ahead, a realist would point to growing U.S.-China friction in the East and South China Seas as the shape of things to come.Neoliberals would advise the status quo power to maintain the vibrancy and appeal of liberal political-economic norms and institutions in the belief that the contender will find it more advantageous to be a member of a successful club than to start one of its own. More importantly, neoliberals argue that long-term club membership leads to co-option and to an evolutionary change in the contender’s values. Of course, the neoliberal predictions of co-option and an evolutionary change in values are sharply at odds with those of China’s Communist Party, whose leaders envision no evolution concerning its monopoly on political power.Both Thucydidean realists and neoliberals warn against the adoption of the other’s viewpoint. Realists point out that overly-optimistic predictions of China’s power trajectory could result in a less robust U.S. foreign policy that might encourage PRC aggression, undermine America’s reputation, discourage the commitment of allies, and set conditions for the possibility of a significant strategic setback. Neoliberals counter that too muscular a policy could undercut cooperative efforts at securing optimal agreements between the United States and China that might help improve long-term relations. Moreover, while either side could be correct, both could prove irrelevant if China’s growth slows significantly, seriously weakening its prospects to become a truly formidable challenger.No matter what the perspectives or underlying assumptions, any useful analysis of this vexing and serious policy dilemma requires a deep understanding of China’s current standing in both regional and global affairs, as well as comprehensive knowledge of the internal and external constraints it faces in trying to realize its long-term ambitions. An effective China policy for the United States is best built on a foundation that is grounded in sober, thorough assessments of the context in which Sino-American relations exist and operate.China’s Strategic GoalsChina’s economic development and military modernization programs have witnessed dramatic progress since the early-1980s. Its aggregate GDP in 1980 was the seventh largest in the world, ranked behind Italy and ahead of Canada, with an estimated GDP per capita of $253. By 2014, China’s GDP had multiplied thirty times to more than $9 trillion and is now the second largest in the world. Its GDP per capita is $6,747 (adjusted to $9,844 for purchasing power parity, or PPP).2 The PRC’s military spending, less than $10 billion in 1990, grew to more than $129.4 billion by last year, second only to that of the United States and accounting for 9.8 percent of total global military expenditures.3China’s economic and military budget growth rates are likely to slow in future years, but the United States, facing its own fiscal challenges, must be concerned with China’s relative gains in coming decades. For example, if over the next twenty years China experiences a lower but sustained annual growth rate of 5 percent while the United States maintains a 2 percent growth rate, by 2035 China’s GDP (using current estimates of PPP as the baseline) would stand at more than $35 trillion, compared with an estimated U.S. GDP of about $24 trillion.Given the possibility that the PRC may continue to accumulate national power at rates surpassing those of the United States, understanding China’s desired strategic ends is critical to designing an effective foreign policy. China’s core national security objectives are to protect its sovereignty, achieve modernity, and maintain stability. Effective pursuit of these objectives requires complementary political, economic, and military strategies. When determining national goals and priorities, PRC leaders generally exhibit a cautious realist worldview, but their aspirations are ambitious, historically inspired, and politically informed. They feel a deep sense of mission to restore the assumed former greatness of the Chinese state, and as part and parcel of that mission, to recover China’s territories “lost” during a “century of humiliation” at the hands of the West and Japan.China’s leaders also strongly believe that the Communist Party must maintain its monopoly on political power for the sake of internal stability. Keenly aware of the hugely disruptive forces attending China’s rapid transition from a poor rural to an emerging middle class urban society, Party leaders do not take national unity for granted.The principle of single-party domination of the state, in turn, has had three major implications for China’s security strategy. First, with the erosion of communism’s ideological appeal, PRC leaders have justified their autocratic rule by asserting that they alone are qualified to secure China’s core national security objectives, especially the preservation of domestic order. In their view, internal security is tantamount not only to regime survival, but also to the prevention of state disintegration.Second, single-party rule mandates that the loyalty of China’s national security apparatus, especially the People’s Liberation Army (PLA), is first to the Party and only second to the state. China’s leadership has periodically made a point of emphasizing this mandate, perhaps reflecting worries about the military’s political loyalties and professional orientation.4Third, China’s communist leaders are wary of the subversive effects that open democratic political systems can have on closed systems over the long course of uncontrolled contact—a lesson learned when the Party nearly lost its grip on power during the Tiananmen Square protests in 1989. Chinese President Xi Jinping’s 2013 guidance to the party cadre warned explicitly against advocacy of constitutional democracy, universal values, civil society, neo-liberalism, media freedom, “historical nihilism” (meaning, excessive criticism of the Communist Party for past blunders and atrocities), and inordinate questioning of reforms (that is, challenging the Party line). This official admonition serves as an unequivocal rejection of Western political philosophy and values, raising serious doubts about the neoliberal presumption that China’s current regime would ever embrace a U.S.-led liberal political-economic world order.5China’s near-term national security objectives (out to the year 2020) have been well articulated by party, government, and military authorities. According to the U.S. Department of Defense Annual Report to Congress for 2014, the PRC’s benchmark goals include restructuring the economy to maintain growth and improving the standard of living for China’s citizens in order to promote stability. In addition, the report notes that by 2020, Beijing aims to significantly advance its military modernization programs in order to establish the capability to fight and win potential regional conflicts (including those related to Taiwan), protect sea lanes of communication (SLOCs), enforce its territorial claims in the South and East China Seas, and defend its national borders.6President Xi, as part of his “Chinese Dream” vision, also promotes the “Two 100s”: the socio-economic goal of China becoming a “moderately well off society” by 2021 (the hundredth anniversary of the founding of the Chinese Communist Party, and, not coincidentally, the end of Xi’s second and assumed final term as President and Party head); and the goal of becoming a fully developed nation by 2049 (the hundredth anniversary of the establishment of the People’s Republic of China).7 To achieve these goals, China could adopt one of three strategies: 1) work to delegitimize the U.S.-led world order and function as a spoiler aiming to build a new structure; 2) support the existing system, playing by the rules of the game and socializing itself as a supporter of the status quo; or 3) shirk as it develops its own views of how the world should be ordered, but implement its plan gradually and opportunistically.8 A fourth option might be to gradually overturn America’s Asia-Pacific security architecture while consistently outplaying the U.S. within the existing global economic system.The Chinese leadership, at present, seems to assess the overall global situation as generally favoring China.9 That view, presumably, extends the window of opportunity identified in 2002 by former President Jiang Zemin, who proposed pursuing rapid development by working within, rather than challenging, the existing global architecture. But it is unclear how long China will remain a relatively compliant player in America’s rules-based world economic system, or continue to accept U.S. military domination of the Western Pacific. China’s leaders seem increasingly discontent with both. Evidence includes Beijing’s efforts to establish the yuan as a viable global reserve currency; last year’s establishment of the Asia Infrastructure Investment Bank (now with well more than fifty prospective founding members) as an institutional rival of the World Bank; its recent accelerated construction of artificial islands and assertiveness when dealing with maritime and territorial disputes in the East and South China Seas; and Chinese naval and air forces aggressively challenging U.S. maritime and air reconnaissance activities within its declared Exclusive Economic Zones (EEZs).10 Additionally, President Xi has sharply criticized U.S. security policies in the Asia-Pacific region, pointedly stating: “To beef up an entrenched or military alliance targeted at a third party is not conducive to maintaining common security.”11 The most prominent indicator of China’s dissatisfaction is its aspiration to establish a “new major power relationship” with the United States, a relationship based upon acknowledged equality.12Domestic Constraints on China’s Rise For all its ambition, China’s strategic options are not unlimited. Indeed, its foreign policy choices are severely constrained both by formidable domestic problems and by unfavorable international factors that the United States would be wise to consider when formulating its response to China’s increasing influence.Internally, Beijing’s leaders face an interwoven array of daunting social, environmental, economic, and political problems that, left unresolved, will limit the state’s ability to generate national power and could even threaten the Communist Party’s monopolistic grip on political and societal control. A brief look at five of these issues makes clear the severity of the situation.Economic Restructuring: Some 100,000 state-owned enterprises (SOEs) account for about half of China’s economic assets. Despite 15 years of reform efforts, only half of the SOEs have been corporatized, and their return on assets is not significantly different from those of the traditional SOEs. Overall, SOE financial performance has deteriorated significantly since 2008, becoming a major drag on economic growth. This drag serves as a source of serious political opposition to enterprise reform, thereby limiting the national leadership’s effort to focus on strategic sectors such as aviation, energy, and telecommunications.13Nevertheless, the impetus for reform has not slackened over the past year, as both state and local SOEs have been selling off non-strategic assets in accordance with Party policy direction. Serious political obstacles to economic reform remain, however, including the fact that, for all of their inherent inefficiencies, SOEs predictably provide jobs to workers, who, if unemployed, might question both Party wisdom and its unchallenged supremacy. At the same time, labor costs are rapidly rising. In 2013, for example, China’s 269 million migrant workers earned an average of $410 per month, an increase of nearly 14 percent from 2012 and almost twice the rate of the nation’s GDP.14 As a result, Chinese firms are being forced to change their enterprise models and export strategies as foreign companies choose lower-wage alternatives to China.15The three-decade transition from an agrarian to industrial-service economy, which saw the transition of some 300 million people from rural to urban areas, will continue over the next two decades, with another 350 million people—a number in excess of the entire U.S. population—still to follow. The economic impact of this colossal resettlement has been staggering. Chinese investment in real estate, which was $120 billion in 2003, grew to $980 billion in 2011. The infrastructure required to support this exploding urban population is massive.16Adding to these difficulties, PRC debt loads have exploded over the past decade. Government debt (a large percentage of which is higher-risk local government debt) to GDP ratio stood at 53.5 percent in 2012, up from 32.5 percent in 2005.17 Of greater concern is the recent rapid rise of total debt (encompassing that from the corporate, household, and financial sectors), which increased from 150 percent of GDP in 2009 to 250 percent in 2014.18 Included in these figures are loans to SOEs that have poor repayment records, but that are often protected by political patronage. Moreover, the recent and dramatic rise of China’s shadow banking industry has complicated the central government’s efforts to bring lending under control.19 Aging Population & Social Welfare Costs: The scope and pace of aging in China’s population pose other significant economic problems for the Party. Over the next twenty years, the ratio of workers to retirees (at the current retirement age of sixty) will decrease from five-to-one to two-to-one. This dramatic demographic shift is both exacerbated and made more urgent by the success of the “one child policy” in place since 1979. It will not only erode the huge economic stimulus and advantage of a young working population, but it will also come at a point in China’s modernization when it is more vulnerable to the “middle income trap.”20 Huge expenditures will be required to put into place more comprehensive national health care and pension systems to help avoid that potential pitfall.Unequal Income Distribution: China’s gap between its rich and poor, measured by its Gini coefficient, has widened greatly since its opening to the world in 1979. In 2012, the head of China’s National Bureau of Statistics, Ma Jiantang, pegged it at 0.47-0.49, which is slightly below that of the United States, but high for a developing country.21 The reasons for this growing gap in wealth distribution are well understood: rapid urbanization on the backs of migrant workers not offered basic social services (a variant of America’s own illegal immigrant phenomenon, except that those affected are PRC citizens); the disparity in wealth between the coastal regions and China’s interior provinces; the cumulative impact of quality education and health care disproportionally available to the Party, government, and urban elite; and widespread corruption (discussed below). In 2013, the Third Plenum of the 18th Chinese Communist Party Congress noted the pressing need to attend to this problem, but failed to offer any concrete proposals for doing so.22Environmental Degradation and Food Safety: China’s economic miracle has occurred in tandem with environmental catastrophe. Air and water quality, especially in China’s major urban areas, is among the worst in the world. In 2012, China’s Vice Minister of Environmental Protection, Wu Xiaoqing, stated that 40 percent of the country’s rivers and 55 percent of its groundwater were unfit for drinking. Moreover, he noted that in rural China some 320 million people lack access to safe drinking water.23 The cost of such economic externalities came to roughly $230 billion in 2010, or about 3.5 percent of GDP.24 The scale of investment needed to adequately address known environmental threats is extraordinary. For example, between 2011 and 2020, the government plans to spend $850 billion in water-related projects alone.25 Food safety is also a major issue and an increasingly politicized one. It was only in the face of mounting public pressure that the Ministry of Environmental Protection admitted (in 2014) that the acreage of soil contamination (from heavy metals, pesticides, and other toxins) of China’s farmlands had reached a record high of 20 percent.Political Decay: Most worrisome to China’s leaders is the danger of losing their monopoly on political power. President Xi (like his predecessors) routinely calls official corruption a cancer that, if unattended, will destroy the Party. But by insisting on exclusive occupation of China’s commanding political heights, the Party itself becomes more vulnerable to dysfunction, corruption, and political decay as the number of political, economic, and social contradictions multiply. China witnessed approximately 180,000 protests in 2010. Reflecting Party anxieties, the state spends large sums of money to ensure “stability maintenance.” As recently as 2013, China’s expenditures for internal security exceeded those for its armed forces.26Perhaps the Party leaders’ greatest dilemma is that, while they understand the need to decentralize economic and resource allocation decision-making, they seem driven to pursue further political consolidation in hopes that political and economic power can somehow be disentangled. As a result, the development of an independent economic entrepreneurial spirit, the establishment of a more robust rule of law system, and the growth of civil society are all significantly retarded in China, even as pressure for change continues to mount.International Constraints on China’s RisePRC leaders also face daunting obstacles in the international arena. These include factors related to history and geopolitics, military potential, and ideological appeal.History and Geography: China shares land borders with 14 countries, three of which it has fought limited wars with during the past fifty years: Russia (as the Soviet Union), Vietnam, and India. A major land dispute with India remains unresolved, while China’s historical influence in the Russian Far East dating back to the Qing Dynasty continues to cause unease in Moscow. China’s expansive maritime claims in the East and South China Seas have not only stimulated increasingly fractious disputes with Japan, the Philippines, and Vietnam, but have also led to disagreements with North Korea, South Korea, Indonesia, Malaysia, and Brunei. Pursuit of these claims has also excited responses in Washington because they involve two American treaty allies and potentially undermine the principle of freedom of navigation—a vital U.S. security interest.27Indeed, even as Party leaders seek to restore the prestige and influence of dynastic empires in centuries past, China’s neighbors show no desire to return to a tributary political order. Moreover, China is not an ethnically monolithic state. Its populace includes restive non-Han Muslim citizens in its northwest Xinjiang Province who have ethnic kin in Central Asia, as well as a large and culturally distinct Tibetan population in its southwest. Additionally, the PRC lays claim to a de facto independent, democratic Taiwan that evinces little desire to unify with the mainland. Even the full assimilation of Hong Kong has proven both politically and socially challenging, as demonstrated by the continuing pro-democracy movement. The tightening and expansion of Chinese power is consistently contested both within its borders and in its immediate neighborhoods.Military Limitations: Despite extensive modernization over the past 25 years, the People’s Liberation Army still lacks extended force projection or sustained blue water naval capabilities. China’s military can bring impressive power to bear at particular points along its border and near coastal areas. It can also impose increasing costs on U.S. forces operating near its territory. However, the PLA lags far behind U.S. armed forces in terms of aggregate Asia-Pacific regional, and especially global, capabilities.Moreover, given the costly political, economic, and social challenges that China’s leaders must address over the next two decades, it seems unlikely that the Chinese armed forces will continue to enjoy the double-digit annual budget increases that it has been provided since the mid-1990s. In addition, problems with corruption, a lack of leadership initiative thanks to an over-centralized command structure, and the still unproven ability of the PRC research and development establishment to produce equipment and systems that rival those of the United States and its key allies all cast doubt on the PLA’s ability to become a world-class military power in the near- to mid-term.Absence of Allies and Partners: A state’s power is measured by its own usable capabilities and those of its relevant allies and partners in various contingencies. Competent allies magnify a state’s power, and here China is at a tremendous disadvantage when compared with the United States. China has only one treaty ally—North Korea—and is sharply at odds even with that regime, whose interests are not always in line which those of the PRC. The one cooperative security organization it nominally leads, the Shanghai Cooperative Organization (SCO), includes Russia, Kazakhstan, Tajikistan, Kyrgyzstan, and Uzbekistan, but no one takes it seriously as a functional military alliance. More important, the current warming relations between Moscow and Beijing will likely cool once Beijing intensifies its efforts to establish a new China-dominated Silk Road through Central Asia, a move the Kremlin views as Chinese encroachment on a traditionally Russian sphere of influence. Meanwhile, after losing its sway over its former quasi-ally Myanmar, China’s most reliable source of influence within ASEAN is a struggling Cambodia. And to date, the PLA has yet to establish any foreign military bases of consequence.The contrast with U.S. capabilities and assets could not be more striking. In the Asia-Pacific region alone, America has active military alliances with Japan, Korea, Australia, the Philippines, and Thailand, and special relationships with Singapore, New Zealand, and Taiwan. It has some 80,000 servicemen and servicewomen stationed throughout the region. It also leads the 28-member NATO Alliance, the most powerful military coalition in the world. While China can unilaterally apply concentrated pressure at specific locations on its periphery, the United States can call upon a worldwide network of friends and allies to flexibly deal with a wide variety of regional and global security challenges.Weak Ideational Appeal: China’s global economic power is significant but its growth trajectory is slowing. Even if Beijing can buy influence with its cash reserves, its political model is not one that many states (never mind Hong Kong and Taiwan) aspire to adopt, sharply limiting China’s “soft power” appeal. The United States ranks ahead of China around the world (except in the Middle East) in favorability ratings, and significantly so among those 18–29 years of age.28 The once and very temporarily vaunted Beijing Consensus, a system that marries market mechanisms to authoritarian political control, remains a mirage. The Communist Party might yet develop a form of governance that is universally attractive, but for now, China finds itself at a distinct disadvantage in the battle of political ideas.An American China PolicyAmerica’s search for a coherent and consistent strategic response to China’s rise has proven difficult for four reasons. First, we do not know whether China’s capabilities will ever match the ambitions of the Party’s leaders. If China is indeed entering an era of more modest growth and heightened political uncertainty, its ability to continue generating and mobilizing the political, economic, and military resources needed to achieve its goals remains, at best, uncertain.Second, regardless of one’s assessment of the PRC’s future strength, the United States must consider its China policy both in a regional and global setting. While it is never easy to accurately divine changes in the international environment, these are particularly dynamic times. The distribution of power among states is increasingly multipolar, the influence of post-World War II norms and institutions governing diplomatic and economic behavior is eroding, wars of internal disorder appear to be rapidly multiplying, and transnational threats are ascendant. Such a world is not easy to interpret and even harder to predict. Yet, to construct a China policy without reference to its greater geopolitical context is to guarantee error.A third complication for crafting a long-term China strategy is America’s ability to dispassionately assess its own current capabilities and power trajectory and to prioritize the most significant threats to that power over time. Early 20th-century political writer Walter Lippmann famously stated that a credible foreign policy “consists in bringing into balance, with a comfortable surplus of power in reserve, a nation’s commitments and the nation’s power.”29 However, those in Washington charged with developing U.S. foreign policy sharply disagree over threat prioritization. They also continue to debate America’s future trajectory. Some claim the United States is undergoing a period of retrenchment, while others point to signs of irreversible political decline and economic stagnation. Whatever the current state of political and economic affairs in the United States, power is relative. Thus, should America stumble in the next two decades while China maintains slower but steady rates of growth, the strategic consequences (as noted above) would still be significant. Alternatively, should U.S. administrations give short shrift to Asia-Pacific security concerns in order to grapple with problems elsewhere in the world, even a faltering China might still cleverly apply its more limited resources in an effort to end America’s military domination of the Western Pacific.A fourth obstacle to designing an effective China policy is the difficulty of deciding upon and making explicit the key assumptions on which to build future strategies. While it is obvious that any effective American foreign policy must carefully factor the PRC into its underlying strategic calculus, competing theoretical perspectives suggest radically different ways to analyze and counter the rise of China even as the underlying policy presuppositions of each approach are rarely spelled out and debated.In sum, formulating a consensus-based China strategy is a tall order. It is useful to remember, though, that a sound national security strategy can only be derived from sober and balanced risk assessments. Worst-case threat scenarios need to be considered, but even America’s impressive resources are inadequate to bulletproof the nation against every possible danger. In weighing the perils posed by a particular threat, policymakers and strategists must carefully contemplate both probability and consequences before deciding on mitigation measures.Does China, the rapidly rising challenger, pose a threat to the status quo dominance of the United States? America sees its current power relationships as the status quo. However, China defines the status quo in historical terms that span several millennia. Seen in this light, today’s China clearly is in the process of assuming a more prominent position in Asia and perhaps globally. It feels entitled to its “rightful”, traditional place in the sun and is actively seeking ways to make that a reality.For now, though, China is a peculiar combination of a domestic status quo power and a rising international power. Internally, China’s Communist Party leaders are exceedingly cautious and risk averse. Externally, however, they increasingly seem buoyed by the huge economic gains of the past 35 years and consequently are unilaterally declaring property rights along their maritime frontier despite the evident risks. Yet China, burdened with far more problems than the United States, will fail to sustain its upward trajectory if its domestic political and economic foundations are not radically redesigned to suit new circumstances. Beijing will eventually have to pull back internationally in order to retrench domestically, or risk the consequences of reaching too far, too fast, and for too long.For the United States, then, an effective China policy should be premised upon a combination of many things: meticulous assessments of the PRC’s capabilities; sound comprehension of the organizational dynamics of Communist Party governance and the role of the PLA; a deeper understanding of the domestic foundations of China’s growth; and better knowledge and a more sophisticated expertise to better inform the options available to the United States for enhancing its standing in the Asia-Pacific region and globally. With those parameters in mind, the following are eight suggested measures for developing an effective China policy that is properly integrated into America’s overarching international security strategy.Conduct Comprehensive and Realistic Assessments of Current and Future PRC Capabilities: China’s ability to generate hard power in the coming years is highly contingent on the soundness of its political and economic foundations. Analyses that concentrate on the rollout of new PLA hardware are essential for military planners, but they hardly serve as an adequate basis for formulating strategy. Identifying and making explicit China’s considerable political, economic, social, and military vulnerabilities is necessary both to avoid overestimating strengths and to recognize how best to leverage weaknesses.Nest Management of U.S.-China Relations in Integrated Regional and Global Strategies: Obviously, China and the United States should cooperate to address security, environmental, and economic problems facing the world. However, Sino-American proclamations that breezily express common interests in regional and global trouble spots (such as “maintaining peace on the Korean Peninsula” or “stabilizing Afghanistan”) rarely translate into meaningful plans of action that reflect the important differences in strategic priorities or the inadequacy of PRC means. Excessive focus on operationalizing President Xi’s suggested “new great power relationship” provides China with unwarranted status and leverage, while failing to make explicit the divide in political values, asymmetry of entrepreneurial advantages, and huge imbalances in alliance capacities and capabilities that are major strategic assets and advantages for the United States.Exploit Contradictions in China’s Strategic Partnerships Oriented Against the United States: As Beijing works tirelessly to weaken Washington’s bonds with its allies (especially in East Asia), the U.S. government should take more active advantage of the inherent tensions in the relationships around the globe that China increasingly promotes to counter American influence. The best and most important example is the China-Russia strategic partnership, which, despite President Putin’s statements to the contrary, is unlikely to survive Russia’s growing economic pauperization and subordination to China. Looking past the Putin era, there may be an opportunity to forge a working relationship based on an overlapping interest in balancing China in Central Asia and the northern zones of the Far East.Increase Burden-Sharing Among Allies and Partners: Those states on the front line of China’s push to expand its maritime frontiers prefer to align with an offshore-balancing United States than to bandwagon with a potentially hegemonic China. The U.S. government, though, should insist that regional allies and partners contribute adequately to their own security.30 Tolerating free-riding is especially costly given current pressure on U.S. defense spending. Free-riding may also convince an otherwise cautious Beijing that resistance to its aggressive behavior primarily comes from across the Pacific Ocean and not from its neighbors. Moreover, states invested more heavily in their own defense have an inherent incentive to search for any and all potential allies rather than simply outsourcing the problem to a strong patron. In short, burden-sharing, when done properly, results in a more powerful and credible security architecture.Develop Resilient Military Capabilities and Reconsider Low-Payoff Reconnaissance Operations: For many years to come, the U.S. military will be able to decisively defeat the PLA in a protracted high-end conventional conflict. Additionally, China’s rulers do not wish to risk their prized lock on political power, which might be challenged by a populace subjected to the privations that accompany an extended war. However, under duress, Party and military leaders might be willing to confront U.S. military power if they are confident they could unhinge American forces by surgically removing vital enablers such as space-based communications, navigation, and intelligence systems; disabling computer-dependent command-and-control capabilities; or even neutralizing naval carrier task forces.In short, the United States must decrease the PLA’s willingness to roll the dice by developing capabilities and employing doctrines that avoid single points of failure. At the same time, the U.S. government should reconsider those low-value military intelligence activities near China’s coast (for example, Sensitive Reconnaissance Operations, or SROs) that provide little critical information but reinforce the PLA’s self-serving narrative about U.S. containment and excite a nationalistic response. Offers to scale back or eliminate certain activities might serve as a catalyst for negotiations on the establishment of bilateral and regional crisis-avoidance and management mechanisms.Deepen and Expand Liberal Economic Regimes: The political survival of China’s Communist Party is subject to the steady improvement in the material welfare of its citizens. For the Party to reliably deliver the necessary goods, China must participate in major international economic regimes. Membership, in turn, increases its equities in the still U.S.-dominated status quo. To the extent that open societal orders benefit from liberal economic regimes, membership may also stimulate the growth of political pluralism within China, despite Party determination to resist any such tendencies. Given the strategic importance of economic co-option, Washington should place particular emphasis on completing the Transatlantic Trade and Investment Partnership, the Trans-Pacific Partnership, and the U.S.-China Bilateral Investment Treaty. In doing so, the United States would help reinforce existing incentives structures and make it more costly for China to create its own regimes rather than participate in, assimilate to, and benefit from the existing international economic order.Build America’s China and Asia-Pacific Expertise: The U.S. government must invest in language and area studies programs to improve government, military, and intelligence agency knowledge of China and the Asia-Pacific region. We need such expertise to better understand Beijing’s strategic intentions and its likely power trajectories, to more fully comprehend the future regional environment, and to develop informed and effective policies. Such skills and expertise would also allow the United States to better understand and more effectively respond to China’s attempts to expand its influence within the Asia-Pacific region and to other parts of the globe.Strengthen America’s Domestic Foundations of Power: Last, but perhaps most important, America must focus on strengthening its domestic sources of national power—especially human capital, education, research and development, and the effectiveness of its political system. Domestic policies and programs that fortify the bedrock of American prosperity and stability also enhance its power, its influence, and its power-projection capabilities in the long-term. For now, the direct challenge posed by China is primarily economic. Therefore, China is best countered with an American response that both demonstrates a persuasive, self-sustaining political-economic model worthy of emulation and also bolsters U.S. capabilities at home and abroad. Such a response is not only appropriate for dealing with a China that may falter in the years ahead, but also for maintaining America’s global influence and its ability to flexibly defend its vital national interests far into the future.
1The historical dynamic and its possible relevance to contemporary Sino-American relations are described by Graham Allison in “Thucydides’ Trap has been sprung in the Pacific”, Financial Times, August 21, 2012.2International Monetary Fund, World Economic and Financial Surveys: World Economic Outlook Database.3Keith Crane, Roger Cliff, et al., Modernizing China’s Military: Opportunities and Constraints (RAND, 2005), p. 134; and the International Institute for Strategic Studies, The Military Balance 2015 (Routledge, 2015), pp. 21–2.4See Sulmaan Khan, “The Coming Coup in China”, The American Interest (March/April 2015).5Chris Buckley, “China Takes Aim at Western Ideas”, New York Times, August 19, 2013.6Office of the Secretary of Defense, “Military and Security Developments Involving the People’s Republic of China 2014”, United States Department of Defense Annual Report to Congress (Office of the Secretary of Defense, 2014), p. 15.7Eugene Clark, “Two Sessions to Help China Define and Fulfill Its Dream”, China.org.cn, March 5, 2014.8Randy Schweller cited in workshop summary report by Joshua Itzkowitz-Shifrinson, Rapporteur. Workshop organized by M. Taylor Fravel and Liselotte Odgaard, “Assessing China’s Rise: Power and Influence in the 21st Century”, Massachusetts Institute of Technology, Cambridge, Massachusetts (February 27–28, 2009), p. 3.9Ministry of National Defense of the People’s Republic of China, Special Report: 2012 Defense White Paper, “I. New Situation, New Challenges and New Missions”, The Diversified Employment of China’s Armed Forces (April 16, 2013).10Moran Zhang, “Will the Chinese Yuan Replace the U.S. Dollar as the Global Reserve Economy”, International Business Times, March 14, 2013; and Yukon Huang, “Demystifying the Asian Infrastructure Investment Bank”, Carnegie Endowment for International Peace, April 21, 2015.11“China to Promote Its Security Theory at Shangri-La”, The Straits Times, May 30, 2014.12Jane Perlez, “Chinese President to Seek New Relationship With U.S. in Talks”, New York Times, May 28, 2013.13“Fixing China Inc.”, Economist, August 30, 2014.14Daniel Levin, “Plying Social Media Chinese Workers Grow Bolder in Exerting Clout”, New York Times, May 2, 2014.15Dexter Roberts, “Is the ‘Golden Age’ for Multinationals in China Over?”, Bloomberg Businessweek: Global Economics, May 30, 2014.16Jeffrey Towson and Jonathan Woetzel, “All You Need to Know About Business in China”, Insights & Publications, McKinsey & Company (April 2014).17Jack Perkowski, “China’s Debt: How Serious Is It?”, Forbes, January 21, 2014.18Mamta Badkar, “China’s Total Debt Surges to 251% of GDP”, Business Insider, June 21, 2014; and “China Debt: The Great Hole of China”, Economist, October 18, 2014.19Sheridan Prasso, “Shadow Banking”, Bloomberg Quicktake, November 6, 2014.20Feng Wang, “Racing Towards the Precipice”, China Economic Quarterly (June 2012). The “middle income trap” refers the phenomenon wherein a society cannot advance from middle- to high-income levels due to failures to make appropriate investments, diversify production, and reform labor markets.21Kevin Yao and Aileen Wang, “China Let’s Gini Out of the Bottle; Wide Wealth Gap”, Reuters, January 18, 2013.22 “Communiqué of the Third Plenary Session of the 18th Central Committee of the Communist Party of China“, adopted November 12, 2013, made public on January 14, 2014.23Elizabeth C. Economy, “China’s Water Challenge: Implications for the U.S. Rebalance to Asia”, prepared statement before the Senate Foreign Relations Subcommittee on East Asian and Pacific Affairs, U.S. Senate, 1st Session, 113th Congress, July 24, 2013.24Edward Wong, “Cost of Environmental Damage in China Growing Rapidly Amid Industrialization”, New York Times, March 29, 2013. According to a Council on Foreign Relations report based on World Bank data, this figure had risen as high as 9 percent of China’s Gross National Income, a rate surpassing India. See Beina Xu, “China’s Environmental Crisis” Council on Foreign Relations Backgrounders, April 25, 2014; and World Bank, “Supporting Report 3: Seizing the Opportunity of Green Development in China”, (2008), pp. 249–50.25David Stanway, “After China’s Multibillion-Dollar Cleanup, Water Still Unfit to Drink”, Reuters, February 20, 2013.26Agence France-Presse, “China Spends $125 Billion Per Year on Riot Gear And ‘Stability Maintenance’”, Business Insider, May 19, 2013.27Chun Han Wong, “China to Expand Naval Operations Amid Growing Tension with U.S.”, Wall Street Journal, May 26, 2015.28Pew Research Global Attitudes Project, “America’s Global Image Remains More Positive than China’s”, July 18, 2013.29Walter Lippmann, American Foreign Policy: Shield of the Republic (Little, Brown & Co., 1943), p. 9.30There is considerable room for improvement. For example, against the U.S. defense spending of 3.8 percent of GDP, Japan spends 1 percent and the Republic of the Philippines 1.3 percent. See World Bank, Military Expenditure (% of GDP).