Robert Zoellick: Can America and China be Stakeholders? | Brunswick

Can America and China be Stakeholders?

Ambassador Robert Zoellick was honored to address the 40th Anniversary Gala dinner of the US-China Business Council.

On December 4th, Ambassador Robert Zoellick, former President of the World Bank, US Trade Representative and Deputy Secretary at the US Department of State and current Geopolitical Principal at Brunswick Group, was honored to address the 40th Anniversary Gala dinner of the US-China Business Council.

Fourteen years ago, I gave a speech to the National Committee on U.S.-China Relations titled: “Whither China: From Membership to Responsibility?” That title included a question mark.
Having largely accomplished the aim of integrating China, the question for the United States, I explained back then, concerned Beijing’s conduct: “How will China use its influence?”
I urged China to look beyond membership in the international system— “to become a responsible stakeholder in that system.”
The speech stressed the “norms,” not just the “forms,” of international integration.
Now to make such a policy effective, U.S. officials needed to remain in close touch with developments in China and the wider region—with the help of allies and all of you in the business community. American policy needed to work the details as well as discuss strategy.
We used to call this diplomacy.
Today’s logic of constant confrontation with China rejects the approach I had outlined.
It rejects the idea that China can play a constructive role within the system that America constructed.
It rejects the idea that China can make contributions.
It even rejects the idea that China can, or even would, act in ways that complement U.S. interests.
Be aware: If U.S. policy assumes China cannot do any of those things within the system America designed, then the United States will, in effect, be prodding China into championing a parallel, separate system, with very different rules.
I understand many of today’s complaints, but we are at serious risk of losing sight of American aims and how best to achieve them.Until the late 1980’s, China was the world’s leading proliferator of nuclear weapons and missiles… It ceased nuclear tests in the 1990s and signed the Comprehensive Test Ban Treaty—while waiting for U.S. action before ratifying.

• Although China once had been a partner of Iran, it worked with the United States to sanction and halt Iran’s nuclear program.
• Although China fought against the United States in the Korean War, it has worked with Washington to press North Korea to freeze and reverse Pyongyang’s nuclear weapons program.
• Between 2000 and 2018, China supported 182 of 190 UN Security Council resolutions imposing sanctions on states violating international rules, prodded by vigorous U.S. efforts.
• China is the second largest funder of the UN and UN peacekeeping missions…
• China is the largest contributor to global growth. China cut its global current account surplus from about 10 percent of GDP to around zero—meaning that its demand has fueled worldwide expansion.
• For the past 15 years, China has been the fastest growing destination for U.S. exports—until the Trump Administration embraced protectionism and sparked worldwide retaliation.
• China no longer undervalues its exchange rate. It reduced reserves by about $1 trillion.
• During the global financial crisis, China had the largest and quickest stimulus to counteract what could have been another Depression.
• China, the largest emitter of greenhouse gases, now accepts that it must join in efforts to limit climate change…

But those who blithely assume that U.S. cooperation with China didn’t produce results in America’s interest are flat wrong.
Those who assume that China has not acted constructively within the U.S.-guided system—who assume that China is only a disrupter—are misleading themselves, and self-deception is dangerous in diplomacy.
We need to be clear-eyed about the real strategic challenges that China presents and disciplined not to distract with blanket blasts that will likely lead to misjudgments and mistakes.
Evan Feigenbaum of the Carnegie Endowment has pointed out recently that China is in fact pursuing a two-track approach toward the changing international order.
As a member of international organizations, China seeks to nudge those regimes toward Chinese preferences and norms.
As Feigenbaum has explained, however, China is pursuing a second, alternative track as well: China’s Belt and Road presents another international model, a modern adaptation of China’s long-standing preference for tributary ties. This effort offers economic benefits to those who join China, combined with warnings for states that fail to accommodate Beijing.
We need to compete with China within international institutions and country-by-country. Because it’s hard to beat something with nothing.
We need to compete with China by promoting better ideas and practices and through attractive partnerships, instead of by retreating and bullying.
We also need to ask why Sino- American relations have tumbled into constant confrontation.
I believe six developments have converged:

1. First, frustrations boiled over for U.S. businesses on market access: a lack of reciprocal trade and investment openings; forced technology transfers; IPR violations; regulatory hurdles and arbitrary actions; and restrictions on exports, such as rare earth minerals.
2. Second, Americans question whether China’s state capitalism permits fair competition.
3. Third, Americans fear that China will dominate the technologies of the future. This critique targets the “Made in China 2025” plan, although Party leaders have downplayed that plan’s influence. We are already in the age of the splinternet. I expect to see decoupling in telecom, internet and ICT services, and 5G systems.
4. Fourth, I pointed out in China last year that no one had explained the motivation for Belt and Road: Was it a geopolitical move? A plan to employ excess Chinese capacity to build infrastructure? A development project? My guess is all of the above. The idea that China could build out Eurasia with Chinese-style transport corridors may well be building debts, not sustainable development.
5. Fifth, China’s foreign and security policy has clearly moved beyond Deng Xiaoping’s adage of “Hide your strength, bide your time.” These goals, while disconcerting, should not be surprising. They merit a strategic, well-resourced, and consistent response. Navy Captain Alfred Thayer Mahan, writing about American strategy in the Asia-Pacific at the dawn of the 20th Century, expected power in the region to remain “debated and debatable.” In other words, the United States would need to compete, maneuver, and balance power with others. We could benefit from Mahan’s historical and geopolitical perspective in the 21st Century. Mahan also wanted to boost U.S. trade with Asia. Tariffs, he wrote, were like “a modern ironclad that has heavy armor, but inferior engines and guns; mighty for defense, weak for offense.” Why have we adopted an ironclad trade policy?
6. Finally, my sixth point is that Xi Jinping’s leadership has prioritized the Communist Party and restricted openness and debate in China. China hurts itself by forging a role model for dystopian societies of intrusive technologies and reeducation camps. The rule of law and openness upon which Hong Kong’s “One Country, Two Systems” model rests may topple or be trampled. If China crushes Hong Kong, China will wound itself—economically and psychologically—for a long time.

The foundation of America’s appeal is our own story. We need to work on the America of the world’s imagination and aspiration.
I am saddened when our leaders fail to appreciate that America’s practices should be examples and models, a founding principle dating back to America’s Revolutionary generation and then Abraham Lincoln.
The United States will not win a competition by becoming more like China.
Which brings me back to where I began, with the “Responsible Stakeholder” speech of 2005.
I closed those remarks by explaining that, “Freedom lies at the heart of what America is…” guided by our call for the “non-negotiable demands of dignity.”
I pointed out that our purpose in championing ideas and ideals was not “to weaken China.” Our goal, as President George W. Bush then stated it, has been “to help others find their own voice, attain their own freedom, make their own way.”
China’s future chapters are still to be written.
The challenges of U.S.-China relations, as I’ve outlined them tonight, fit poorly with bombast and tariff barrages.
“Toughness” alone fails as policy if unconnected to objectives.
As time passes, the United States loses friends and trust around the world. China maneuvers tactically with America and watches, probably with wry satisfaction, as the United States dissipates the international strengths built up over many decades.
Ask yourself: Can the United States really expect to deny China a place in the international system, with influence over rule-making?
If we acknowledge China’s role as a power at the table, shouldn’t we urge China to assume responsibilities as a systemic stakeholder?
The United States is a stakeholder with interests, too. Some 250,000 Americans died in Asia in the 20th Century. To paraphrase Napoleon, the borders of a nation’s influence are marked by the graves of its soldiers.
We should not abandon our stake for shaky, short-term trade announcements or by degrading alliances into ties of convenience based upon shady accountings of troops, tribute, and trade.
I’ll conclude with a direct observation for all of you, leaders in America’s business community: The ground is shifting under your feet.
Your own concerns with China led many of you, perhaps understandably, to pull back.
You then stepped cautiously to avoid President Trump’s wrath—not to mention China’s.
The stakes are higher now. Be alert to greater risks of miscalculations and unintended consequences.
Kevin Rudd—former Prime Minister of Australia, a good friend of the United States, and a close student of China—recently warned: “A fully ‘decoupled world’ would be a deeply destabilizing place, undermining the global growth assumptions of the last 40 years, heralding the return of an iron curtain between East and West and the beginning of a new conventional and nuclear arms race with all its attendant strategic instability and risk.”
Are you ready for this?
You need to decide whether you think the United States can still cooperate with China to mutual benefit while managing differences-- and if so, how.
You need to decide whether U.S. influence can be enhanced through long-term partnerships with allies and partners.
You need to decide whether we should save, update, and even expand the international trading system of openness, rules, and fair settlements of disputes.
You need to decide whether you wish to represent America abroad as purveyors of principles, as well as commerce, treating people from other lands with dignity and respect.
Then you need to make your case—not just with the Administration, but with Congress, Governors, and Mayors; with your employees, customers, and suppliers; with the media and opinion leaders.
When I selected the word “stakeholder” in 2005, I had in mind that stakeholders have interests in a shared enterprise. That interest is worth work, even perseverance, to preserve, adapt, and grow. Only the foolish or faint-hearted just yield or abandon the enterprise.
Cooperation as stakeholders does not mean the absence of differences. Stakeholders compete, too. The management of their differences should take place within a larger framework that offers common benefits.
This can be done.But only with your support and activism. 

Read the full speech here.

Read more about Bob Zoellick's comments on the US and China in the Financial Times.

Can America and China be Stakeholders?

Ambassador Robert Zoellick shared remarks at the US-China Business Council's annual Gala, speaking to the role of the US and China in the future global order.