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01/29/2010

SPIEGEL ONLINE: The Chinese delegation was aggressive at the Copenhagen Climate Summit. The refused to make almost any concessions on climate change. Now, they are protesting loudly against US weapon sales to Taiwan and denouncing military cooperation. Many observers have concluded: "This is the new China we need to get used to." Do we?

Small: The Chinese government certainly seems to believe that it is now in a powerful enough position to be more assertive and uncompromising. But they are in danger of overreaching and provoking a backlash. Copenhagen did indeed cross the line at points into outright diplomatic aggression, in a setting where almost every major world political leader was present.

SPIEGEL ONLINE: The financial crisis has accelerated China's rise. Are the Chinese not yet ready for their new leading role on the global stage?

Small: The Chinese are unready by their own admission. They would rather have had the opportunity to get on with their economic growth in peace and focus on their vast internal challenges. But a country with such a large global footprint has a range of attendant responsibilities that smaller powers do not. There are worrying signs now that China may prefer to take advantage of its power within the system simply to maximize its freedom of action. But the global system can't comfortably accommodate a free-rider on China's scale.

SPIEGEL ONLINE: How did the American delegation react to the often puzzling diplomatic snubs in Copenhagen?

Small: The style of the talks in Copenhagen is something that China finds particularly uncomfortable -- a group of the most senior global political leaders in a room thrashing out their differences and reaching an agreement based on what they know they can sell back home. China hasn't had a leader capable of doing that effectively since Deng Xiaoping. Some of the behavior on show was clearly the product of the fact that the consensus-driven system among China's top leadership doesn't leave its negotiators with much scope for maneuver.

SPIEGEL ONLINE: Was Obama's trip to China in November 2009 a mistake?

Small: Disappointingly, the Chinese seemed to view his conciliatory approach as a sign of weakness rather than a sign of good faith, giving very little during or since the visit. Again, though, I wonder how well this has been played by Beijing. China is in a far stronger position than in 1993 or 2001 but the United States still has many levers at its disposal -- and China has made some bad calls on this sort of power calculus before. Back in 2005, Beijing's evaluation was that the Europeans were so eager to take advantage of commercial opportunities in China that they would agree to lift the European Union arms embargo even in the absence of any Chinese concessions. They were not and the relationship has never quite got back to that level again.

SPIEGEL ONLINE: At the very last minute, however, the Chinese premier and Obama hammered out an agreement in Copenhagen that was adopted by other nations. Is that another example for a "G-2" world order, with Beijing and Washington calling the shots?

Small: It is the thinnest version of the G-2. It reflects the fact that, while the United States remains the leading global power, it is China that is increasingly defining the bottom line for the lowest-common-denominator deals. One can see the same phenomenon at work in negotiations over sanctions on Iran. The only situation in which a real G-2 could emerge is if Beijing and Washington were able to start reaching agreements that drove the agenda forward but the differences between the two sides remain too great for that at present.

SPIEGEL ONLINE: Will the G-2 debate continue?

Small: Insofar as Europe and Japan fear being marginalized, yes. But episodes such as Copenhagen illustrate the fact that the maximum leverage both for China and for the US comes from cementing their position among friends and allies first.

SPIEGEL ONLINE: The Obama government reached out to China in its first year. But now they sell weapons to Beijing's archenemy, Taiwan, and Obama will meet with Tibet's spiritual leader, the Dalai Lama, whom he refused to see last year. Is the relationship cooling down?

Small: It's likely that we are, although the Dalai Lama meeting and the Taiwan arms sales are not really the reflection of a tougher stand yet. The sales were agreed to under the Bush administration, and the Dalai Lama meeting was pushed back in order to smooth the atmosphere around President Obama's visit. Tricky times lie ahead, though, both in the economic realm -- where pressure over the Chinese currency and trade practices look set to mount at a time of high unemployment.

SPIEGEL ONLINE: Has Obama's team decided that they have been too accommodating up until now and that Beijing hasn't given anything in return?

Small: I think the Obama team will continue to seek an effective partnership with China. But it will become harder to sustain that position if China's position on a range of issues remains unyielding. Certainly, the disappointment with Beijing's approach is growing.

SPIEGEL ONLINE: China has amassed a fortune in US treasury bonds. But given the weakness of the dollar, the government in Beijing is increasingly looking for alternative investments or a replacement for the dollar.

Small: Many on the Chinese side continue to say that they would like to slowly unwind their position, but in the short-to-medium term they lack alternatives -- and everyone has backed away from last year's statements by Zhou Xiaochuan about a global reserve currency.

SPIEGEL ONLINE: Some commentators in the US compare the Chinese rise to Japan's strong run in the 1980s when many Americans feared a takeover by the Japanese. Why isn't there a similar public backlash now in America?

Small: The Chinese economy is one-third the size of the US economy, its GDP per capita is less than a sixth the size, and it lags seriously on its innovation and technology capabilities. None of these things were true of Japan in the late 1980s, which was much closer to being an economic peer competitor. China has also been cautious about all its investments in the developed world -- partly to avoid provoking a political response and partly because it has seen better opportunities elsewhere. In addition, the Chinese economy is far more open than Japan's, which makes for a very different dynamic with the US business community, though there are signs that this may be changing.

SPIEGEL ONLINE: Then again, China is not a US ally. It is a dictatorship.

Small: This means that if there is a backlash its ramifications are likely to spill over between the political, economic and security realms. China would do well to keep the relationship on track, otherwise not only could this be a difficult year ahead for US-China relations but bigger questions about how to respond to China's rise may be put on the table.