US fears of China's scientific advances - CIR 17 November 2005

Speaking in Beijing on 14 November, former US president George Bush senior, said: "Both my oldest son, the current US President Bush, and I think that US-China relations have never been better than they are right now…[and] the best days are still ahead." This is not the impression one gets from reading the just-released 2005 Annual Report to Congress of the US-China Economic and Security Review Commission.

One of the themes we have reiterated over the years, when arguing that a Cold War-style rivalry between the US and China was unlikely, has been that the vast economic interaction between the US and China precludes any such development. The point about the US-China commission’s latest report that stuck us so forcefully was that it was this very economic interaction that was a primary cause for concern.

All the usual causes for concern were on display in the report, including "methodical and accelerating military modernization", which the report said "presents a growing threat to US security interests in the Pacific". It pointed to "China’s aggressive pursuit of territorial claims in the East and South China Seas", saying they indicated "ambitions that go beyond a Taiwan scenario and pose a growing threat to nations, including US alliance partners, on China’s periphery".

The report warned that China has accumulated "a formidable force of ballistic and cruise missiles, advanced strike aircraft, and modern naval combatants with long range and truly lethal combat power".

Other well-aired causes for concern that were emphasized in the report included:

* "Broad-ranging" proliferation activities.

* A failure to pull its weight over North Korea.

* Human-rights abuses, total media control, and the domination of the Communist Party at home.

* China’s energy-security policies, which lead it to seek "to own oil at the wellhead" (unlike the US which secures its supplies via open international markets) and to "trade influence and assistance, including weapons technologies, arms, and other aid" for access to oil and gas in "terrorist-sponsoring states such as Sudan and Iran".

* Industrial espionage and lack of protection for intellectual property rights.

* The undervaluation of the RMB currency by somewhere between 15% and 40% and a related bilateral goods trade deficit for the US which is heading to more than $200bn in 2005.

All of these are important points and serious challenges both to relations between Washington and Beijing and a stable world order. But they are issues in which, for the most part, fault can be identified and mitigated through negotiation or counter-action.

What the commission’s report shows, however, is that what really worries the US are the quite legitimate advances that China is marking in science and technology through its economic engagement with the West. In other words, it is China’s growing power per se, not the means by which it is being achieved or even the purposes to which it is likely to be put that is the main issue.

The report points out: "Science and technology development is the centrepiece of China’s comprehensive strategy to build national power. As a result the Chinese government has a comprehensive, co-ordinated strategy for S&T development, which it began to implement in the mid 1980s. Government policies encourage growth and investment in key industries, among which are the software and integrated circuit industries. Such policies include foreign investment incentives, tax incentives, government subsidies, technology standards, industrial regulations, and incentives for talented Chinese students and researchers studying and working overseas to return to China. Many of these policies make it difficult, if not impossible, to achieve a level playing field in this area of US-China trade and jeopardize long-term US leadership in this vital sphere."

The report adds: "The technology that China is developing and producing is increasing in sophistication at an unexpectedly fast pace."

It also notes that the problem is exacerbated for the US because "the US defence establishment is increasingly reliant on the private sector for its technologies", and the Chinese government’s co-ordinated strategy of utilizing incentives and subsidies to spur the development of domestic capacity and dual-use technology industries "is weakening the health of key US commercial sectors on which the US defence establishment relies".

So what is America to do about all this? On the issues on which China is seen to be at fault, the commission recommends a combination of punitive and counter measures, such as filing a WTO dispute regarding China’s exchange rate policy, imposing across-the-board tariffs to force a currency revaluation, the freezing of the assets of Chinese companies involved in WMD proliferation, and "increasing US military capabilities in the Western Pacific in response to growing Chinese capabilities and deployments in the area".

On the question of China’s growing and "unexpected" capabilities in science and technology, it recommends that the US government acts to "develop a co-ordinated, comprehensive national technology competitiveness strategy designed to meet China’s challenge to US scientific and technological leadership".

And, more generally, the commission recommends that Congress and the administration work "to undertake more active efforts to co-ordinate with the European Union, Japan, and other interested nations to address mutual trade- and security-related concerns with China."

This, of course, is the "contain China" policy, so dreaded by Beijing - and all the indications are that Japan would be a wholehearted collaborator in such a policy. Unfortunately for Washington, the signals from the European Union are the opposite. Joe de Courcy, Editor.