James Martin Center for Nonproliferation Studies
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Phillip C. Saunders
Director, East Asian Nonproliferation Program

Paper prepared for the conference on "The Global Strategic Context of U.S.-China Relations," sponsored by the China Institute of International Studies and the China Policy Program of the Elliott School of International Affairs, George Washington University. Beijing, China, October 11-12, 2001. The author thanks David Shambaugh, Jing-dong Yuan, Leonard Spector, Sarah Diehl, and Li Yang for helpful comments.

Over the last decade, Sino-U.S. relations have undergone a series of important changes. Economic, educational, and cultural contacts between the two societies have continued to deepen steadily, sometimes in ways that make both governments uncomfortable. At the same time, official relations have been marked by increasing suspicions and punctuated by periodic crises such as the April 2001 incident when a Chinese fighter collided with a U.S. reconnaissance plane. Sino-U.S. relations have become the object of intense domestic political conflicts in both countries, and military planners on both sides have begun to focus on scenarios for possible military conflict. Periodic efforts by U.S. and Chinese leaders to define areas of common security interests and cooperate in addressing them have been overwhelmed by domestic opposition and by the shadow of longer-term security issues. Chinese concerns about Taiwan independence, American military intervention, and U.S. hegemony have been matched by American worries about whether a rising China will eventually challenge the United States.

Despite these concerns, the United States and China share numerous important common interests on transnational security issues such as nonproliferation, terrorism, and energy security. These issues involve threats that span international borders and demand international cooperation to develop effective solutions. Unfortunately, the mere existence of common interests is insufficient to produce cooperation in addressing these issues. Without strong leadership to focus on common interests and manage conflicting interests, potential areas of security cooperation are likely to be overwhelmed by bilateral security issues such as Taiwan and longer-term concerns about Sino-U.S. rivalry. This happened in 1990-91 (when the first Bush administration tried to articulate a new basis for Sino-U.S. cooperation) and in 1996-98 (when Presidents Bill Clinton and Jiang Zemin tried to use summit visits to stimulate cooperation on transnational security issues).

The second Bush administration's approach to international relations initially focused more on traditional security issues than on transnational security issues, and included a new emphasis on security threats in East Asia. Nevertheless, the administration's focus on missile defense reflected a concern with the threat posed by weapons of mass destruction (WMD) proliferation, the administration was worried about homeland defense, and Vice-President Dick Cheney headed a task force on energy policy that examined ways of increasing U.S. energy security. The terrorist attack on the United States on September 11, 2001 reordered American security priorities and provided a potential opportunity for the United States and China to make a new start in security cooperation. Leadership and high-level political commitment from both sides—but especially from China—will be necessary to seize this opportunity. If past patterns hold true, initial efforts at cooperation will gradually be eroded by concerns about longer-term security issues and the opportunity to put Sino-U.S. relations on a firmer footing will slip away. The challenge for both the United States and China is to build a mature relationship where the two sides can cooperate on common interests whenever possible while simultaneously managing areas where interests conflict.

This paper assesses the rationale for and obstacles to security cooperation on four key non-traditional security issues: terrorism, nonproliferation, economic security, and energy security. It also briefly examines other security issues where the United States and China might cooperate and discussions possible mechanisms for institutionalizing cooperation.

Terrorism

The September 11 attacks on the World Trade Center and the Pentagon dramatically highlighted the threat that international terrorism poses to the United States. In the aftermath of the attacks, President Bush has declared a "war on terrorism" and is now marshalling the full resources of the U.S. government in this effort. The Bush administration has assembled an international coalition to support a protracted campaign against terrorist groups and the states that support them. Fighting terrorism and bringing the perpetrators of the September 11 attack to justice are now the top security priorities of the United States. China needs to understand the strength of U.S. popular feelings about the attacks, which inflicted more casualties than the Japanese surprise attack at Pearl Harbor. (The attacks also killed more PRC nationals than the accidental bombing of the Chinese embassy in Belgrade). It is impossible for the United States to adopt a "business as usual" approach to terrorism in the wake of these attacks.

China generally shares U.S. concerns about terrorism, although the issue has less immediacy for Chinese leaders. Uighur separatists in western China have mounted a series of bombing attacks in Xinjiang and in major Chinese cities. Some of these groups have reportedly received training and financial support from terrorist groups in the Middle East. China's approach to dealing with terrorism has combined efforts to co-opt ethnic minorities, repression of groups that advocate separatism, and maintaining good relations with some states (such as Iran and Pakistan) where terrorists operate so that China will not become a target. China's state-centric approach to international relations strongly opposes terrorism. When two Chinese colonels noted that terrorism was a possible means of "asymmetric warfare" against the United States, Chinese military officers and analysts roundly condemned the suggestion.

President Jiang Zemin has condemned the terrorist attacks against the United States and offered China's sympathies and support. U.S. and Chinese terrorism experts have already met to share information and discuss how the two countries can cooperate against international terrorism. Potential areas of cooperation include:

• intelligence sharing;
• use of Chinese airfields and airspace to support humanitarian or combat operations against Usama bin Laden;
• diplomatic support in the United Nations;
• controlling exports of small arms that might reach terrorist groups; and
• sanctions against states that refuse to cooperate in anti-terrorist efforts.

Obstacles to cooperation: Sino-U.S. cooperation in fighting terrorism faces some limits. One U.S. concern is China's tendency to equate separatism with terrorism, regardless of whether separatist groups use political means or terrorist attacks. The United States is unlikely to endorse Chinese efforts to define peaceful protestors in Tibet or Taiwan as terrorists. Moreover Chinese efforts to link these issues are likely to erode the goodwill produced by cooperation in the war against terrorism. If Americans view Chinese support for anti-terrorism as conditional or based on narrow self-interest, the value of these contributions in improving bilateral relations will be greatly reduced. If evidence links countries like Iraq to the attacks, the United States will likely pressure other countries to impose sanctions and cease doing business with these countries. Chinese firms have significant business interests in Iran, Iraq, and (to a lesser degree) Afghanistan and may be reluctant to end these ties. Chinese sales of conventional weapons and small arms to these countries may also become contentious issues.

China's concerns about setting precedents allowing U.S. military intervention are a second obstacle. China will be reluctant to endorse open-ended U.S. retaliation that violates state sovereignty and wants the United Nations Security Council to authorize any expansion of military responses to include other countries. The United States regards the September 11 attacks as the equivalent of an act of war, and believes that more specific UN authorization is not necessary. Despite these concerns, China has accepted U.S. military actions against terrorist groups. It should be noted that the concerns Chinese officials have expressed about U.S. military responses (including that the desire that they be based on clear evidence, target the guilty parties, and minimize civilian casualties) are similar to the concerns European allies have expressed. However, if the campaign drags on indefinitely or U.S. military action broadens to target other countries, Chinese support may dwindle. China also has concerns about whether the U.S. war on terrorism will result in a long-term U.S. military presence in Pakistan and Central Asia.

Nonproliferation

Nonproliferation has been one of the more persistent and contentious issues in Sino-U.S. relations for the last 15 years. The continuing presence of nonproliferation issues on the bilateral agenda has masked a considerable degree of convergence in U.S. and Chinese views and significant progress in addressing proliferation threats. The range and scope of U.S. concerns about Chinese proliferation behavior has narrowed appreciably over the years as China has joined the major arms control and nonproliferation treaties and improved its export control laws. Both countries are members of the key international nonproliferation treaties (including the nuclear Non-Proliferation Treaty (NPT), the Chemical Weapons Convention (CWC), and the Biological Weapons Convention BWC)) and play an active role in international arms control negotiations. From 1995-98, the United States and China cooperated on a range of important arms control and nonproliferation issues, including indefinite extension of the NPT, the CWC, final negotiations on the Comprehensive Test Ban Treaty (CTBT), and the UN Security Council resolutions in response to the 1998 nuclear tests in South Asia. This cooperation gradually ended as Chinese concerns about U.S. ballistic missile defense plans increased.

China and the United States still share numerous common interests in fighting proliferation. In terms of specific nonproliferation issues, the United States and China both oppose the introduction of nuclear weapons onto the Korean peninsula and seek to restrain India's efforts to build an operational nuclear arsenal. Both also want to avoid arms races in Northeast Asia that might lead Japan, South Korea, and even Taiwan to develop nuclear weapons and ballistic missiles. Finally, both the United States and China seek ways to improve the effectiveness of the treaties banning chemical and biological weapons.

Obstacles to cooperation: Despite a significant record of successful bilateral cooperation, proliferation remains a contentious issue. China has received little political credit in the United States for its significant accomplishments, which have been overshadowed by a small number of continuing weapons transfers. U.S. concerns now center mainly on Chinese exports of ballistic missile technology to Pakistan and exports of dual-use technology to Iran that can be used for chemical and biological weapons. The current military conflict in Afghanistan and the threat of WMD terrorism have turned these issues from abstract proliferation concerns to concrete threats to American lives. If Pakistani nuclear weapons fall into the hands of Islamic terrorists, China's assistance to Pakistan's nuclear weapons program in the 1980s will be blamed. China argues that U.S. arms sales to Taiwan and proposals to provide theater missile defense systems to Japan and Taiwan should be considered a form of proliferation. Chinese efforts to link its bilateral proliferation commitments with American conventional arms sales to Taiwan have led many to question China's commitment to nonproliferation principles and to conclude that Chinese missile technology exports are used as leverage to force the United States to address Chinese security concerns. While China is a member of the major international arms control treaties, it has significant reservations about export control regimes such as the Missile Technology Control Regime (MTCR). Chinese commitments to abide by MTCR restrictions on exports of ballistic missile technology have been made bilaterally, interpreted as narrowly as possible, and have not been implemented effectively. The United States is still waiting for China to issue export control laws governing missile technology that were promised in November 2000.

Ironically, after American efforts to persuade China to join the arms control and nonproliferation regime bore fruit, the United States now appears to be losing interest in arms control. The Senate's rejection of the CTBT is one example; the Bush administration's rejection of international efforts to develop a BWC verification protocol is another. Several Bush administration officials have argued that the United States cannot afford to be constrained by treaties in an uncertain future world. Instead, the administration's emphasis has been on building ballistic missile defenses that can protect the U.S. homeland, which would require withdrawing from the Anti-Ballistic Missile (ABM) Treaty. Even a limited national missile defense (NMD) system would cause concerns for China, which currently possesses only 18-24 intercontinental ballistic missiles capable of reaching the United States. The Bush administration is not prepared to accept any binding limits on U.S. missile defenses, which makes it difficult to engage in a serious strategic dialogue with China. A serious strategic dialogue would also require China to discuss the ultimate size of its future strategic forces. U.S. NMD deployment would accelerate the pace and expand the scope of China's ongoing strategic modernization program. The issues of ballistic missile defense and China's strategic modernization are likely to continue to impede efforts to cooperate on other nonproliferation issues. Chinese concerns about NMD have already produced a deadlock in international arms control efforts, where work on a fissile material cutoff treaty has been linked to a Chinese demand for negotiations on a ban on outer space weapons. The U.S. emphasis on ballistic missile defense and counterproliferation at the expense of arms control could prompt China to withdraw from some of its bilateral nonproliferation commitments and even to resume nuclear weapons testing.

Another important obstacle to cooperation is the Chinese buildup of short and medium range missiles opposite Taiwan. This buildup does not violate any international regimes, but China's use of M-9 missile tests to intimidate Taiwan in 1995-96 raised concerns throughout Asia about Chinese behavior and intentions. China regards its missiles as a means of deterring moves toward Taiwan independence. China strongly opposes the U.S. sale of advanced theater missile defense (TMD) systems to Taiwan, but its ongoing missile buildup (currently between 300-350 missiles) is increasing support for providing Taiwan with TMD. The missile buildup is also stimulating Taiwan's interest in developing offensive missile and aircraft strike capabilities that would allow it to hold China at risk. An arms race is already underway across the Taiwan Strait; the question is whether it will accelerate or whether it can be slowed or stopped.

Economic Security

The 1997 Asian financial crisis alerted both Chinese and U.S. officials to the potential for a global financial crisis that could impose grave costs on their economies. The United States played a major role in combating the crisis, working through international organizations like the World Bank and International Monetary Fund. The United States also kept its market open to imports from Asian countries, allowing them to increase exports to help revive their economies.

China's main contribution in the Asian financial crisis was to avoid devaluing the yuan, potentially preventing a cycle of competitive devaluations throughout Asia. China was spared much of the impact of the Asia crisis because its currency was not convertible and was therefore protected from attacks by currency speculators. Nevertheless, China also saw a significant slowdown in its export growth as Asian countries with devalued currencies increased exports to pay off their debts. The Asian financial crisis showed that even though China's integration into the world economy has produced major benefits, it also carries significant risks. China's entry into the World Trade Organization (WTO) will intensify these risks, as China becomes more integrated into the world economy and has less ability to use government policies to cushion risk.

The bulk of writings about economic security have focused on monetary stability and the risk of a currency crisis, but other issues also fall into this category. China's rapid growth has been partly fueled by its high savings rate. Concerns about bad loans (especially to state-owned enterprises) and about the solvency of China's banking system could cause a domestic economic crisis with international repercussions. Another danger is the potential impact of a global recession. During the Asia crisis, the U.S. economy provided an engine that helped Asian countries recover and resume growth. If the U.S. economy falters—a distinct possibility—it is not clear what countries or regions might pick up the slack.

Obstacles to cooperation: Despite common interests in maintaining the health of the global economy, there are barriers to cooperation. For one thing, the Bush administration appears to be ideologically opposed to intervention in world markets, citing the danger of "moral hazards" if governments and international financial institutions bail out investors and countries that make policy mistakes. For another, the United States is committed to the current set of global economic institutions, where it enjoys significant institutional advantages and can exercise economic power. China has much less of a voice in these institutions and would prefer not to strengthen the dominant U.S. position. Moreover efforts to build alternative financial institutions in Asia would almost certainly require a greater Japanese role, which raises concerns for both the United States and China. Forms of cooperation that exclude the United States—such as bilateral agreements to hold the currency of other countries or to provide guarantees of emergency loans—are unlikely to be sufficient in the face of a major crisis. China may have to choose between accepting the increased risk of a global financial crisis and supporting changes that strengthen the economic power and position of the United States.

In a future crisis, China might be expected to play a more active international role. For example, if the current global economic slowdown increases, the United States will likely pressure China to stimulate domestic demand rather than increase exports. A related question is whether China's growing trade surplus with the United States is sustainable over the long-term. The United States and Japan experienced significant tensions over trade issues in the 1980s and 1990s. The U.S.-Japan security alliance helped buffer these tensions, but the United States and China have no similar mechanism. Conflicts over China's compliance with WTO rules might exacerbate these economic conflicts rather than ease them.

Energy Security

China and the United States both depend on energy imports from the Middle East. Ensuring stable and secure supplies of energy at an affordable price is critical to continued economic growth in both countries. Although coal will remain China's primary energy source through 2020 and longer, China's dependence on oil imported from the Middle East will increase significantly over the coming decades. The PRC boosted its crude oil imports by about 30% in 2000, with most of the increase coming from the Middle East. The PRC is unlikely to be able to increase domestic crude oil output in current oil fields, and development of energy resources in the western regions of the PRC faces numerous obstacles. Despite efforts to increase domestic oil production and diversify sources of energy, the United States will also remain dependent on supplies of oil from the Middle East.

Obstacles to cooperation: Despite common interests, cooperation on energy security faces obstacles. The United States has emphasized political and military alliances with key oil-producing states to maintain access to Middle Eastern energy supplies. The United States has also used naval power to ensure the flow of oil to the United States and its allies. China's strategy has focused more on maintaining good political relations with oil-producing states, including states such as Iran that are on poor terms with the United States. China is also building pipelines to bring natural gas (and potentially oil) from fields in western China and Central Asia to eastern China. These pipelines are intended to make China more self-sufficient and to reduce vulnerability to a supply shock. China is also interested in tapping offshore natural gas and oil reserves in the East and South China Seas (although it is unclear how much oil is there and whether natural gas supplies can be profitably retrieved).

China worries about the U.S. ability to use naval forces to cut off Chinese oil imports from the Middle East, but alternative sources of energy are few and significantly more expensive. A key question is whether China is willing to rely on the United States to maintain world access to oil supplies and to protect the shipping lanes from the Middle East to Asia. Alternatively, China could decide to try to develop political relationships and power projection capabilities to secure its supply of energy independently of the United States. This would require development of a much stronger Chinese navy, an expensive and difficult undertaking likely to promote conflict with the United States.

Other Security Issues

Other important non-traditional security issues cannot be covered fully here. These include immigration/alien smuggling, international organized crime, and environmental issues such as global warming.

Immigration/Alien Smuggling

According to recent estimates, about 25,000 Chinese citizens enter the United States illegally each year. Organized criminals known as "snakeheads" receive fees as high as $25,000 per person for transport to the United States; a number of illegal Chinese immigrants have died during efforts to enter the United States illegally. The number of illegal Chinese immigrants in the United States is expected to rise to between 400,000 and 900,000 people by 2005. Although illegal immigration is mainly a problem for the United States, China also has concerns about refugees from North Korea.

International Organized Crime

Tne consequence of globalization has been greater scope for organized criminal groups to operate across international borders. The activities of these groups not only raise security issues, but their widespread use of bribery also has the potential to undermine public confidence in government officials. Activities of these groups include smuggling, drug trafficking, and international piracy. Drug trafficking is a growing concern in China, where the number of addicts has soared in recent years.

Environmental Security

Global warming is an issue that can only be addressed through global cooperation, but cooperation has been elusive. Developing countries insist that developed countries are responsible for the problem and have resisted any binding commitments. Yet China is currently the second largest emitter of carbon dioxide, and will surpass the United States to become the largest emitter by 2020. China's continuing dependence on coal as its main source of energy will exacerbate the problem. Efforts to address the problem of global warming without Chinese participation are unlikely to succeed. At the same time, the solution in the Kyoto protocol (no restrictions on developing country emissions) is clearly unacceptable to Congress and has been used to justify U.S. rejection of the protocol. An effective solution requires U.S. and Chinese participation, which is unlikely if this deadlock cannot be resolved. The two countries could also cooperate on other environmental issues, including mitigating the air pollution caused by coal and ways for Chinese industries to adopt energy-efficient, low pollution technology.

Approaches to Cooperation

The United States and China share common interests on a wide range of important security issues. Yet despite these common interests, security cooperation has proven to be elusive and transitory in the past. Can the two countries use the opportunity provided by the September 11 terrorist attack to cooperate more effectively in the future?

One problem lies in different U.S. and Chinese approaches to bilateral cooperation. The U.S. approach emphasizes functional cooperation and gradually building trust by working together on practical issues. The Chinese approach emphasizes the overall relationship, with the attitude that "if two countries have good relations, they can work together on any issue." In practice, it has proven difficult to reconcile these divergent approaches. Chinese officials require high-level political commitment to make low-level cooperation possible, while American officials are reluctant to make such high-level commitments without a solid record of lower-level cooperation. The complicated domestic politics of Sino-U.S. relations in both countries add an additional barrier to security cooperation.

Another question is whether different means of structuring Sino-U.S. security cooperation might produce more durable results. Several different models are possible:

• High-level summits. This approach uses regular summit visits between senior leaders to mobilize the bureaucracies in each country to produce concrete accomplishments. This approach has the advantage of demonstrating that senior leaders are committed to cooperation. President Clinton and President Jiang tried to use this approach in 1997-98, but the effort unraveled under domestic political opposition, accusations of Chinese nuclear espionage, and the accidental bombing of the Chinese embassy in Belgrade. Domestic politics and scheduling have made it difficult to sustain regular summit visits.
• Functional commissions/working groups. This approach emphasizes cooperation by organizing groups of experts in a particular functional area. These experts can meet on a regular basis and develop ties that allow cooperation on specific issues. Its advantage lies in the fact that it brings the officials needed to implement policy changes together and focuses them on cooperative solutions. The disadvantage includes the fact that working-level officials do not have sufficient influence to keep functional ties going if unrelated events disrupt the broader relationship. As a result, this approach is unlikely to stabilize relations in difficult periods.
• Premier-level commission. Another approach is to have regular meetings at the vice-presidential/premier level. One example is the U.S.-Russian Gore-Chernomyrdin commission. By delegating responsibility for cooperation to senior political leaders who meet every six months, this mechanism can combine high-level political support with regular meetings. It also allows the second-in-commands to build a personal relationship. China and Russia have used a similar model that includes regular visits between Premier Zhu Rongji and his Russian counterpart. One question is whether the personalities of the leaders involved are conducive to this kind of arrangement.

Regardless of the mechanisms, political commitment from senior leaders is required to sustain cooperation. Without high-level approval and prodding, it will be difficult for bureaucracies in the United States and China to work together to address these pressing non-traditional security issues. It is unclear whether Chinese political leaders are prepared to make this kind of commitment, and whether the Bush administration is prepared to reciprocate.

The September 11 terrorist attack provides an opportunity for a fresh start in relations between the Chinese government and the Bush administration. The question is whether the two sides can use this opportunity to build a framework for more stable relations. This will require developing the ability to focus on short-term common interests while temporarily putting aside longer-term potential conflicts of interest. It will demand discipline to resist the tendency to turn each opportunity for cooperation into leverage that can be used on other issues. This ability to compartmentalize cooperation and conflicts is a necessary part of a more mature, realistic Sino-U.S. relationship. Cooperation on non-traditional security issues may also help sustain domestic political support for the good bilateral relations, a factor that will be especially important if conflicts over trade issues increase. The record of security cooperation to date is not encouraging, but the pressing and important issues discussed above demand renewed efforts.

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