CAPP Events: 2002

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CAPP Roundtable Explores Major Challenges Confronting China

Much of the policy debate in the United States about relations with China rests on the assumption that China is ascending on the global stage and must, therefore, be "engaged" or "contained". The many daunting domestic challenges currently facing China, however, raise the possibility that China may not rapidly ascend. On March 21, Dr. Kenneth Lieberthal, who served as Special Assistant to the President for Asia and Senior Director for Asia on the National Security Council from 1998-2000, joined a roundtable hosted by the Center for Asia Pacific Policy at RAND's Santa Monica office. He discussed these challenges and posed the question: what are the potential consequences of a faltering China for the United States?

Dr. Lieberthal offered the following list of problems that he considers the most acute:

1) Environmental degradation. Much of China's surface water is polluted, and there is not enough water to support its increasing population and growing economic activity in the north. China also suffers from air pollution caused by small particle pollutants. According to Dr. Lieberthal, China's rate of death caused by chronic respiratory disease is four times that of the United States. These issues will inevitably be very costly to address.

2) Unemployment. There are about 700 million people in China who continue to rely on agriculture to make their living. Land has traditionally served as a fundamental social safety net in rural areas, but the Chinese are increasingly converting rural land to non-agricultural uses. China's rural surplus population is equal to about two-thirds of the entire U.S. population, and very large-scale rural to urban migration will characterize China over the next few decades.

3) Corruption. Systemic, endemic corruption - enhanced by a transitional economy in which more money can be made bending the rules than following them - poses complicated dilemmas. Even harsh attempts to solve the problem have not met with success.

4) Separatist conflicts. China faces regional separatist movements, each with its own distinctive international dimensions, in its northwest, in Tibet, and Taiwan (which Beijing regards as a part of China).

5) China's accession to the World Trade Organization (WTO). Dr. Lieberthal suggested that China's entry to the WTO was the most daunting challenge it faces. By entering the WTO, China will experience deep, wide-ranging changes that will accompany liberalizing its markets. China's accession is likely to attract new forms of foreign investment that will provide a boost to private-sector companies that are best able to allocate resources and capital. This will create many financial winners but also many losers -- losers that the economy will have difficulty absorbing. China is caught in a bind: its reformist leaders believe that it has to place a major bet on the growth-enhancing prospects of global economic interdependence, while the changes necessary to realize those benefits will prove wrenching. In its concerted efforts to put in place the requirements for longterm growth (and thus stability), Beijing is putting the country on something of a high-wire act for the coming years.

Dr. Lieberthal noted that the impending political succession further complicates matters. Overall, China's political system is resilient, but open division in the upper echelons could cause serious instability and cripple China's ability to deal with its most serious challenges. China is unwilling to implement a multi-party system, Lieberthal pointed out, but he recommended that the government increase possibilities for political participation by moving strongly in the direction of expanding local elections.

Dr. Lieberthal surmised that perhaps the greatest threat to the United States is a weak China and pointed to Russia as a cautionary example. A strong and antagonistic China, he believes, could at least be managed and dealt with by the United States. Should China fail to tackle its domestic challenges, it could become a huge source of problems such as contagious disease, drug trafficking, illegal migration, and proliferation. Thus, the United States has a vested interest in China's success, even if many policymakers fail to realize it.

Kenneth Lieberthal currently holds several positions at the University of Michigan: Distinguished Fellow and Director for China at the William Davidson Institute, Professor of Political Science, William Davidson Professor of Business Administration, and Research Associate of the Center for Chinese Studies. He has been on the Michigan faculty since 1983. Prior to that, he taught at Swarthmore College. He received two M.A.'s and a Ph.D. in Political Science from Columbia University.

In his capacity as Special Assistant to the President for Asia, his responsibilities encompassed American policy towards all issues involving Northeast, East, and Southeast Asia. From October-December 2000 he was a Visiting Fellow at the Brookings Institute. Dr. Lieberthal has written and edited nearly a dozen books and authored dozens of published articles.