World Order

In March 2018, the Council on Foreign Relations’ Center for Preventive Action convened a workshop to examine areas of cooperation between the United States and China. The workshop, held in partnership with Peking University’s School of International Studies, was made possible by the support of Carnegie Corporation of New York. The views described here are those of workshop participants only and are not Council on Foreign Relations or Carnegie Corporation positions. The Council on Foreign Relations takes no institutional positions on policy issues and has no affiliation with the U.S. government. Introduction Emerging challenges to international order require cooperation between the United States and China, two countries that share a common interest in preventing the world from becoming more dangerous and disorderly. U.S.-China relations are becoming more strained and antagonistic, however, and the prospects for cooperation appear to be receding. To explore whether there are still grounds for cooperation on issues of common concern between the two countries, in March 2018 the Center for Preventive Action (CPA) at the Council on Foreign Relations convened a group of fifteen experts from the United States and China for the workshop “Managing Global Disorder: Prospects for U.S.-China Cooperation.” CPA partnered with Peking University’s School of International Studies in Beijing for the workshop and also met with experts at the China Institutes of Contemporary International Relations in Beijing and the Shanghai Institutes for International Studies in Shanghai. During the workshop, President Donald J. Trump announced plans to impose about $60 billion in new tariffs on Chinese imports. While trade was a major topic of discussion, it was by no means the only area discussed. Workshop participants assessed conflicting views of the sources of global disorder and examined areas of global governance such as international trade, development, the environment, and the future of various multilateral institutions. They also discussed the most pressing security challenges in East and Southwest Asia. Participants highlighted the need for a greater understanding between the United States and China on the evolving international order. No major transnational problems will be solved without some cooperation between the two powers. It is therefore imperative that the two countries avoid a further deterioration of the relationship and instead identify areas of potential cooperation. Status of the World Order and Perspectives on Global Norms All participants recognized that the international liberal order is under considerable strain. Most agreed that, at the end of the Cold War, the United States expected that the post–World War II system it had helped create would expand and that China would join international institutions and liberalize both economically and politically. This expectation has since eroded; in fact, one participant argued the concept of an international liberal order was itself a source of friction: as the order is neither international, liberal, nor particularly orderly, and holding China to such a standard unnecessarily creates a zero-sum dynamic in U.S.-China relations. Participants agreed that Western assumptions about China need revisiting, but disagreed about how to do so. Some participants argued that China’s economic and political policies have not actually changed since the immediate post–Cold War period, but China has just changed its approach; the source of friction, therefore, is not China’s actions but the power imbalance created by China’s rise. Others argued that as China has gained more power, it has used that power in disconcerting ways. China has become more restrictive under President Xi Jinping, and hopes of an inevitable political liberalization have not been realized. As a result, many policymakers in the United States are no longer willing to tolerate illiberal tendencies in the name of gradual liberalization. Disagreement was also evident over China’s support for globalization. While China supports the existing trade regime and international institutions such as the World Trade Organization (WTO), the Asian Infrastructure Investment Bank, and the United Nations, it has certainly not championed the free flow of capital and information, two tenets of globalization. In fact, under Xi, China has taken steps in the opposite direction. Participants recognized that the United States and China do share several challenges, including climate change and its consequences, the ability of regulatory institutions to avoid another international financial crisis, and the effects of conflict in the Middle East on the security of the oil supply chain. However, because addressing these challenges requires not only shared interests but also shared understandings, participants cautioned against high expectations for U.S.-China cooperation on those issues over the next five to ten years. Potential Areas of Cooperation Despite a sober assessment of the high-level prospects for cooperation, areas for cooperation exist both regionally and on trade and economic issues. Belt and Road Initiative Participants highlighted opportunities for economic cooperation surrounding China’s Belt and Road Initiative (BRI). As one of the first truly global initiatives to come from China, the BRI has the potential to meet infrastructure needs in developing countries and to contribute to security and stability. However, several areas of concern—including a lack of clarity over the BRI’s scope, nature, and objective; the initiative’s potential weakening of economic, political, and environmental norms; and the likelihood of increased tensions across the geostrategic landscape—could limit international cooperation. Internationalizing BRI projects was offered as a way to diffuse tensions not just between the United States and China, but also among other potential international partners. Investing in “soft” infrastructure like education could also do more to trigger development than investments in “hard” infrastructure such as roads and railways alone, though the positive relationship between education and development was not shared by all in the group. While the current state of relations between the United States and China could stall progress on cooperation over the BRI, participants argued that circumstances allowing for more cooperation could develop over the course of the next six to twelve months. Trade Participants discussed how President Trump’s current approach to the trade relationship with China is modeled on the U.S.-Japan relationship of the early 1980s, when ad hoc negotiations resulted in Japan adopting voluntary export restraints, assuaging U.S. concerns over the threat from Japan’s economy. However, while some parallels exist, there are important differences between the Japanese precedent and the situation the United States currently finds itself in with China: namely, Japan had a close political relationship and military alliance with the United States. Participants agreed that both the United States and China needed to be prepared for a serious escalation in trade tensions. Indeed, fears of a trade war have increased since the conclusion of the workshop, with China announcing tariffs on targeted U.S. goods and the United States responding with an increase of $100 billion in tariffs. Moreover, some participants lamented that the current U.S. approach to trade with China is not informed by analysis of the actual drivers of economic decline in the United States. (However, everyone agreed, any attempt to remedy this in the present U.S. political context would likely be in vain). At the same time, participants pointed out that many of the challenges in U.S.-China trade relations are not unique; Canada, one the closest U.S. allies and trading partners, has had difficulty identifying U.S. objectives in renegotiating the North American Free Trade Agreement. Despite mounting tensions, there are opportunities for cooperation. Trump’s metric for success in U.S.-China trade relations will be measured by the bilateral trade deficit, which sets a clear, outcome-based benchmark for negotiations. In contrast, previous administrations have taken more behavior- driven approaches that set expectations for China’s respect for human rights and other domestic benchmarks. China’s voluntary restraint on steel production and targeted Chinese imports of U.S. products were offered as possible steps toward improved relations. The discussion also underscored that such measures would need to be implemented in a way that allows both leaders to save face. There is also room to find common ground on renegotiating the rules of international trade in a way that recognizes and accommodates both the U.S. and Chinese systems. Several participants pointed to calls for reforms to the WTO and the need to build a new consensus about the body’s value. East Asia Participants agreed that stability in East Asia is a goal the United States and China both share. They recognized North Korea as the most pressing challenge in the region, and noted that there is a mutual interest in a denuclearized Korean Peninsula. Some participants claimed that the United States and China should at least conduct joint contingency planning, as the threat of military clashes has grown in the past year. However, some participants argued that the best avenue to sustain pressure on North Korea would be through U.S.-Chinese cooperation. That could result in the start of a denuclearization process and a ban on long-range missile testing, especially of missiles that can reach the United States. However, significant challenges to such a process remain, including the verification and longevity of an international commitment in light of recent U.S. reversals on the Paris climate accords and the Iran nuclear deal. In the South and East China Seas, clarified rules of engagement and expanded military-to-military cooperation were proposed to minimize the chances of an incident escalating. This would extend beyond current cooperation between the U.S. and Chinese navies, to include China’s coast guard, fishing vessels, and paramilitary forces. Southwest Asia A bright spot among the areas discussed, similar interests in Southwest Asia make the region relatively ripe for cooperation between the United States and China. While recognizing that significant security challenges remain in Afghanistan, the two countries could enhance cooperation and join Afghanistan in trilateral talks that result in small, transactional steps in support of stability. The United States and China could also coordinate their positions on the peace process and deliver a consistent message, publicly and privately, that the two will support a unity government won through political processes, rather than a Taliban government won on the battlefield. The United States, China, and Russia share responsibility for assisting Pakistan in its counterterrorism efforts, participants recognized, calling for dialogue among those states. Potential spillover of terrorist activity on the Afghanistan-Pakistan border into China was also recognized as a concern that is stimulating China’s push into the region. Both the United States and China also have an interest in preventing escalation of the conflict between India and Pakistan. Confidence-building measures, such as joint military exercises, could improve China’s relations with India, which would be a step toward resolving the China-India border dispute. Improving U.S.-Pakistan ties was also proposed as a means to alleviate tensions. Recommendations Participants noted that, while the United States and China seem headed for a period of increased tensions, conflict is by no means predestined. In areas where the United States and China face common major threats—such as climate change, nuclear proliferation, and economic stability—there is greater scope for cooperation. To improve the relationship and increase the chances that the two powers can work together to manage global disorder, workshop participants outlined options for both countries. These included: Opening a discussion to reform global trade rules, as the two share a common interest in preventing the rules from disintegrating altogether. Increasing student exchanges, particularly of U.S. students studying in China, which could create new areas of cooperation in research and development, health care, green energy, and biotechnology. Building a common understanding of shared interests on the Korean Peninsula and identifying a desired interim resolution to the North Korea crisis. Increasing military-to-military communications, including with China’s coast guard and paramilitary elements, as existed during the 2008 Olympics in Beijing. Beginning a trilateral dialogue in support of a peaceful settlement of the conflict in Afghanistan.