SHF2013丨Robert Zoellick: A New Era of Great Power Relations

Thank you very much, Ambassador Kim. Thanksto all of you for the invitation to this very prestigious forum. It is apleasure to take part in this event at the suggestion of my good friend,Professor Wu Xinbo of Fudan University, whom I first met in the 1990s throughthe late Dr. Michael Oxenberg, Senior NSC official for China when our twocountries established official diplomatic relations. I'm also very pleased tosee the Korean Foundation for Advanced Studies is this forum's sponsor,underscoring the potential for constructive regional ties—the theme of thisevent.

Last year during his visit to the UnitedStates, President Xi Jinping introduced the idea of a "new type of greatpower relationship." In March of this year, in apparent response,President Obama and his National Security advisor Tom Donilon suggested aninterest in building a new model of relations between an existing power and anemerging one. I suspect that President Xi's concept reflects the seniorleadership's study of history. At last year's meeting of the U.S.-ChinaStrategic & Economic Dialogue, then-President Hu stated, "we shouldprove that the traditional belief that big powers are bound to enter intoconflict is wrong, and instead seek new ways of developing relations betweenmajor countries in this era of economic globalization." In the UnitedStates, professors Graham Alison and Joseph Nye at Harvard have referred tothis challenge as the "Thucydides Trap." In explaining the cause ofthe great Peloponnesian War in the 5thcentury B.C., Thucydides pointed to therise of Athens and the fear that it inspired in Sparta. In centuries since,scholars have pondered how power shifts have led to competitive tensions, whichsometimes have been managed, and other times have led to conflict.

Today I will pose a question based onPresident Xi's suggestion: what might be the substance of "a new type ofgreat power relationship" between China and the United States? My friendKevin Rudd, former Prime Minister and Foreign Minister of Australia, has alsotaken up this topic in a series of thoughtful speeches. Mr. Rudd has outlined anew strategic roadmap for United States-China relations. His approach points tothe need for reinforcing dialogues and cooperative efforts. I will complementMr. Rudd's observations by suggesting specific policies that could forge thisnew type of relationship. In particular, I will focus on both economic andsecurity issues, as well as impediments that China and the United States needto address.

In 2005, I suggested that the United Statesand others should encourage China to become a responsible stakeholder in theinternational system that had provided a supportive context for China'sextraordinary modernization and economic rise. Deng Xiaoping shrewdlyrecognized that China's opening could capitalize on the existing internationalsystem of trade, investment, technology, growth, and security. Through the hardwork of China's people, Deng Xiaoping was proven correct. Yet the internationalsystem of the late 20thcentury has to evolve with new times. Responsibilitiesfor preserving and extending systemic interests, and adapting to newchallenges, need to be considered part of great powers' national interests. TheUnited States, China, and others, however, will not be able to adapt the systemsuccessfully if they do not share a basic commitment to that internationalsystem.

Some observers believe that China has actedlike a reluctant stakeholder, especially when it comes to translating commoninterests into complementary policies. In speculating why, they've asked, isChina still debating or adapting to its role, or, as some voices in Chinasuggest, does China want a new system? If so, what would it look like? DoesChina want to add different ideological content to international relations,which would represent a shift from past Chinese policy? These uncertaintieshave prompted another important query: have Chinese critics of the currentinternational system considered the costs of, and reactions by others, to newChinese aims? Not surprisingly, these questions are arising first in theAsia-Pacific region. Therefore, in considering a possible "new type ofgreat power relationship," we need to have a serious, indepth exchangeabout whether China and the United States share common systemic interests, aswell as about specific policies. Interdependence by itself will not overcome21stcentury problems and threats. These questions fit the agenda of ShanghaiForum, because the nature of Sino-American relations will shape Asia'ssecurity, development, and politics, as well as Asia's connections with theworld.

China's astounding economic success,growing on average 10% a year for thirty years, has propelled it to become thesecond largest economy in the world, the second largest trader of goods andservices, and the second largest recipient of foreign direct investment. TheUnited States, in turn, still accounts for about 22% of global GDP. Althoughproductivity gains are harder to achieve as advanced economies move to thetechnological frontier, recent American innovations in energy, software, andbusiness models reveal a developed economy that retains unusual capacities toadapt and revitalize itself. In contrast to most other developed economies, andeven many developing ones, the United States demographic outlook is modestlypositive. United States integration with its North American partners alsooffers good prospects. Yet the combination of global structural shifts, inparticular the rapid rise of developing economies, along with the stumblingglobal revival from the great recession, necessitate more changes for China,the United States, and the world.

China's developmental challenges aredescribed well in the China 2030 Report released last year. That report wasprepared by the Development Research Center of the State Council along withother Chinese ministries, and an international team from the World Bank Group.The basic problem the researchers were trying to solve was how China couldavoid the so-called "middle income trap", which is the tendency forproductivity and growth to slow after developing economies reach middle-incomelevels. Our Chinese colleagues wisely recognized that straight-line growthprojections rarely come to pass. Consider this problem in a historicalperspective. When the World Bank reviewed the performance of 101 economies thatthe Bank categorized as middle income in 1960, it discovered that by 2008,almost 50 years later, only 13 had made it to high income, and one of those wasGreece.

China has relied heavily on investment infixed assets, principally by the government, and export-led growth. So, Chinawill need to adapt to global structural shifts.

Now that developing economies account forhalf of global output, indeed about two-thirds of global growth over the past 5years, China can no longer base its growth model principally on sales todeveloped economies. China needs to change its growth model to rely on greaterdomestic demand and consumption, as well as a greater role for the privatesector. Investment in human capital will be of increasing importance, and sowill the encouragement of the innovative spirit of China's talented people.This shift could enable more Chinese to benefit from their decades ofdiligence. In doing so, increased consumption might ease social tensions aswell. The China 2030 Report outlined a pathway to a new growth model, includingcompleting the transition to markets for land, labor, enterprises andfinancing; moving to an open innovation system so as to allow China to move upthe value chain; offering equal opportunity and basic social protections to allChinese; restructuring fiscal systems to match accountability for revenue andexpenditures at various levels of government; cleaning up the environment andpricing resources for scarcity; and considering the international implicationsof China's structural shifts.

I do not expect China's new leaders to actthrough a "big bang" reform. I do think that they and the provincialleaders will pursue pragmatic experimentation. Premier Li Keqiang has pointedto urbanization as the portal through which China can pursue connected change,combining issues of land, labor, enterprises, education and other services,consumption, living standards, new infrastructure, housing, sustainability, financing,and governance. Even recognizing the need for change is a very big stepforward. In contrast, over 20 years ago, I watched Japan's political andbureaucratic system resist the need for a new growth model, and now PrimeMinister Abe is having to take bold steps to rectify Japan's past resistance tochange. Yet China's next reform push will be difficult. The Chinese leadershipwill need to maintain balancing growth in the near term by relying principallyon the current economic structure while changing that structure for futuregrowth. A "new type of great power relationship" would anticipate theeconomic and even institutional changes that lie ahead. China and the UnitedStates should identify mutual interests in supporting structural reform andrebalancing in both economies.

Consider what a new cooperative economicapproach might reveal. For example, to boost productivity, create jobs, expandentrepreneurial opportunities, and increase consumption, China needs to opencompetition in the services sector. The Chinese private sector should expandits role. In addition, United States and other foreign businesses and investorscan bring knowhow, technologies, and global connections to support expandedChinese services sector. This cooperation can alleviate trade imbalances andfrictions while promoting mutual interests. China's innovation agenda needs tocombine education, technology, venture capital, network effects, and better IPRprotection and enforcement. Again, United States participation could assist whilebenefiting the United States and others, too. Stronger but flexible socialsafety nets in China could draw from international experience in insurance,savings, and delivery of service models. The United States in turn needs toaddress the costs, financing, and incentives of its older and much moreexpensive safety nets. China's food needs and water conservation could beassisted by United States and foreign products, technologies, and systems,including those for stronger food safety and quality. More open markets couldexpand the complementarity of trans-Pacific agribusiness, while boosting livingstandards. There are mutual opportunities in energy and environmental sectors,including lower carbon sources, alternative technologies, and systems and experiencefor clean air, water, biodiversity, and land use. All these adaptations need tobe supported by deeper, more diverse, and more liquid markets for savings,credit, and investment, while ensuring safety, soundness, and effective crisismanagement. China needs to shift from being a nation of savers with minimalreturns to becoming a nation of investors who play a role in China's privatesector development. China, the United States, and others need better frameworksto encourage cross-investment while managing national security and othersensitivities.

In a sense, China's 21stcentury leaders canlook to the logic of Deng Xiaoping and Zhu Rongji, employing the markets,rules, competition, opportunities, and standards of the international economyto contribute to China's structural reforms and advancement. The United Statesalso needs structural reforms, especially in pension and healthcare systems,tax reform, publicprivate partnerships for infrastructure, and educationconnected to skills and jobs. United States entitlement programs now cost everyman, woman, and child in America $7,400 each year, more than China's income percapita. China and the United States each have very good, self-interestedreasons to pursue these structural reforms. Yet cooperation can boost mutualprospects and the likelihood of success. Moreover, the effectiveness of UnitedStates and Chinese reforms will boost global economic conditions and enhancethe likelihood of structural reforms elsewhere. My sense is that the UnitedStates-China Economic Dialogues, whether under the headings of strategic, jointcommercial, G20, APEC, WTO, or other fora have become too stilted, toodefensive, unimaginative. China's new growth agenda and America's recoveryoffers an opportunity. Both parties need to explore winwin connections. Not allideas will prove workable, but a "new type of great powerrelationship" could seek creative openings and solutions. Moreover, as thetwo major economic powers, developed and developing, the United States andChina need to consider how their cooperation can catalyze improved regional andglobal systems. For example, moves to open up China's services sector, whichare in China's own interests, could be deployed to boost the service sectorliberalization negotiations in the WTO. The WTO information technologyagreements in the 1990s proved to be a great boon to global sourcing, supplychains, logistics systems, innovation, and consumers. The WTO members are nowdiscussing an ITA-2, to update the old product list and to add services. Chinaand the United States should be driving this effort.

There are other opportunities, too, fromtrade facilitation measures to rules for more open government procurement.There will be increasing pressure to clarify the rules of open competition forstate-owned enterprises. A few years ago sovereign wealth funds demonstratedthat steps toward increased transparency and encouraging best practices couldcounter anxieties while improving overall performance. The United States andChina need to be discussing the future of the international monetary system aswell. That system has to adjust to both global shifts and the consequences oftoday's extraordinary monetary policies. The world needs to be on the watch forcompetitive currency devaluation. As China internationalizes the RMB and movestowards an open capital account, a new era of great power relations willrequire the major economies to manage the evolution to a multiple reservecurrency system.

China and the United States have experienceand perspectives on development that could assist other countries, whetherthrough natural resource development, agriculture, expanded manufacturing andsupply chains, service sector development, infrastructure, or investment. Chinaand the United States have a common interest in inclusive growth, goodgovernance, transparency and anti-corruption, rule of law, trade, and avoidingboom-bust cycles. This new era could foster cooperation with multilateralinstitutions, and with private-sector networks. Environmental topics need to beexplored too, from biodiversity and wildlife conservation to low carbondevelopment. Frankly, if the United States and China are at odds on topics thatrequire cooperation across national borders, the international system isunlikely to act effectively. If China and the United States can cooperate, evenif just step by step, others are likely to join in. The economic agenda for anew type of great power relationship could be very extensive. There will besensitivities and differences to manage, but the expanded network of economicties, whether governmental, private, transnational, or multilateral, can be asource for problem solving ideas and creativity, and some cushion to absorb theinevitable differences.

But China and the United States do not havesuch a network to deal with security issues, whether bilaterally ormultilaterally. I think this gap can be traced in part to a structuraldifference. In China, the People's Liberation Army reports to the CentralMilitary Commission, a Party institution with only one or two civilians. I haveobserved that China's senior foreign policy officials, even up to the level ofState Councilor, are unlikely to be able to intervene on security topics untilafter the PLA has acted, and sometimes only after damage has been done toChina's foreign relations. China does not have a national security councilsystem to integrate security, foreign, defense, and even economic and politicalconsiderations. As a result, there is no institutional Chinese counterpart forwhat elsewhere would be described as political-military discussions. At times,China and the United States have had militaryto- military exchanges, but theseare not yet at the appropriate levels. China turns the discussions off and onto register displeasure, and that inhibits the in-depth exchanges and trustthat need to be forged.

Moreover, a new type of great powersecurity relations necessitates much more than discussions among militaries.Some Chinese officials and scholars have recognized the need for fullerintegration of Chinese views on security and foreign policy topics. The Chinesesystem might, for example, look to a member of the Standing Committee of thePolitburo to interconnect defense, foreign policy, security, and internationaleconomic topics, drawing together the PLA, government officials, and the Party.Or, the Party leadership might rely on subcommittees. However it is structured,a political-military discussion between China and the United States couldsupplement a renewed strategic dialogue. The current dialogue has taken upimportant topics, but too briefly, too infrequently, and with limitedengagement at the highest levels where the strategic decisions are likely to bemade. The most effective Sino-American strategic exchanges, such as Kissinger-Zhou, Brzezinski-Deng, have been small and involve many hours of conversationto develop a greater understanding of world-views, interests, and conceptualframeworks. A true high-level strategic discussion, including politicalmilitarydimensions, should foster a dialogue on historical perspectives, geographicconsiderations, economic dimensions, technological shifts, politicalconstraints, perceptions of changing conditions, national interests, and asearch for mutual interests. It could also assist China and the United Statesto manage differences. In such a dialogue the United States should offer aclear explanation of why its policies are not based on a containment strategy,as some Chinese seem to think. The United States should also explain itsstrategic concept of relations with China, and why hedging policies by theUnited States and others could be a reasonable reaction toward some Chinesebehavior.

Most importantly, the United States andChina have mutual interests that they should at least understand, and perhapseven foster together. For example, these interests might include: freedom ofthe seas and maritime security, which is important for China's internationaleconomic interests, regional stability, and important for United Stateslinkages as a maritime and Pacific power with Eurasia; open skies and access toouter space, so as to facilitate movement of people, goods, and information,which are important to our economies and security; access to reasonably pricedenergy sources, including the development, transit, and safe use ofresources—this interest is served by securing stability in the Gulf, multiple energysources and pipelines, sea-lane security, technological development, and energyefficiency; development of other resources in conjunction with social andenvironmental safeguards, while managing disputes over territories andownership; establishment of a sense of security for other partners in theAsia-Pacific, so as to avoid destabilizing and potentially threatening militarycompetition or miscalculation; nonproliferation of WMD, especially to states orterrorists that will endanger regional and global peace and stability; andcountering violent Islamic radical movements, while encouraging Islamic leaderswho seek peaceful development with respect for religious beliefs. Thisidentification of interests should be complemented by sharing of assessments ofthreats to those interests, and then perspectives on how to deal with thosethreats.

Yet these mutual interests, and even deepeconomic interdependence, could be overwhelmed by a failure to deal withdifferences in the Asia-Pacific. The challenge for United States and Chineseleaders is to use global cooperation as an incentive to reduce regionalfrictions rather than to permit regional tensions to undermine their globalcooperation. China has an interest in the security of its coastal approaches,and in gaining influence in the Western Pacific. The United States has anetwork of alliance and partner countries that value the stability and economicsecurity provided by America's presence. These alliance ties are important toAmerica's regional and global standing, and that has reassured others.Therefore, China's relations with some neighbors, including Japan, cannot beseparated from United States relations with China, or United States relationswith its allies. At the same time, these United States partners, like theUnited States itself, value their economic, political, and cultural ties toChina. Today, China's Asian allies are few, poor, unreliable, and oftenisolated. United States allies are prosperous and expanding. If China'sassertion of influence is interpreted as a threat to others, China willinevitably evoke a counter reaction. To avoid creating its own encirclement,China has an interest in building ties with United States allies and friends,not in increasing their fears. The United States and China together have aninterest in fostering regional integration within a global system, withoutthreats that weaken confidence or escalate tensions.

It seems that the countries of SoutheastAsia recognize the mutual benefits of economic integration within a safesecurity framework. Yet, the differences over resource development are spillingover into fears about maritime security. None of the parties should have aninterest in escalating anxieties or conflict. They should share an interest innegotiated, cooperative solutions. Northeast Asia, however, poses seriousdangers. North Korea, with a failed economy and uncertain leadership, has usedthreats and nuclear weapons to demand assistance while mobilizing an isolated,garrison state. Its international trade, dangerous weapons, and illegalactivities has created havoc elsewhere. North Korea has rejected the 1953Armistice. It has used military force against South Korea twice in recentyears, killing people and risking escalation that could slip out of control.North Korea has threatened preemptive strikes against South Korea and theUnited States while endangering Japan, and tested nuclear weapons and ballisticmissiles that it could use to implement those threats.

China has traditionally believed NorthKorea offers a security buffer, but this is outdated logic. An invasion ofChina is not conceivable. Conflict precipitated by North Korea is increasinglyconceivable, and certainly not in China's interests. When Dai Bingguo and Iheld strategic discussions in 2005 and 2006, I suggested that the United Stateswould be content if North Korea became like China. And how could China objectto that? Moreover, I pointed out that if the Koreas are ever unified, howeverthe process, China would then have an interest in the United States retaining asecurity alliance with Korea. This alliance would reassure Koreans, who haveseen throughout their history that their peninsula served as a root for themilitaries of much bigger neighbors. If a unified Korea inherited a nuclearweapon, the United States alliance with Korea could be instrumental inpersuading it not to become another nuclear power. A nuclear Korea would leaveJapan as the only Northeast Asian country without nuclear weapons, a situationthat would worry the Japanese. Moreover, I told Dai Bingguo that it was myexpectation, contrary to some Chinese speculation, that a United Statesalliance with a unified Korea would be backed by air and naval assets in thesouth, not large land forces and certainly not troops on the Yalu River. Incontrast, if the United States alliance with Korea ended, Japan mighteventually be concerned about being the sole Asian host to United States basesand forces.

That was years ago. Chinese and UnitedStates strategists need to be having these discussions about security inNortheast Asia now, to head off dangers and prepare for a safer tomorrow. Isuspect, for example, that one reason behind China's reluctance to press NorthKorea to end its hostile acts and begin reforms is a concern about being ableto manage the process of change in North Korea. Perhaps South Korea, the UnitedStates, and others in the region could discuss the possibilities for changewith China. While China may wish to avoid considering this prospect, the realityis that a threatening North Korea could prompt responses by others thatconflict with China's preferences for regional security.

Yet all of these substantive proposals fora "new type of great power relationship" are likely to be stillbornunless China and the United States remove a corrosive that is eating away atour trust and ties: cyber security. Cyber security anxieties take differentforms, which compound the rising risk of confrontation. One dimension isespionage; a second is commercial espionage, which the United States and othersources believe is rampant, extremely costly, and destructive; a third issabotage; and a fourth is a question of cyber warfare, and whether and howprinciples of war such as hot pursuit, collateral damage, proportionality, andunacceptable damage apply in this area. Decades ago, with the advent of nuclearweapons, security strategists developed doctrines and theories to manage therisks of mass destruction. I don't know whether cyber security lends itself tosimilar discussions. I do know that it is vital that the great powers of the21st century discuss how they might deal with these issues, which couldotherwise undermine President Xi's suggestion of how to respond to history'slessons.

There is a debate in the United Statesabout whether China's concept of international relations can ever accept asystem based on rules that support an integrative approach. Some, including Dr.Henry Kissinger, believe that China's view of itself as a Middle Kingdom onlyallows for tributary relations. The difference in perspective may reflect, inpart, variations in experiences on economic and security issues. Economicpolicymakers have observed how Deng Xiaoping employed the internationaleconomic system as an enabler of dramatic internal reforms, and Zhu Rongji wenteven further, using China's WTO accession to import international economicrules and relationships. Similarly, China's economic relations and actions overthe past 5 years of economic crisis have been generally cooperative. In my timeat the World Bank Group I also saw China's support for, and willingness toadapt to, multilateral development institutions and issues prompted by China'seconomic rise. The experience with security topics raises more doubts, perhapsleading to the differences in perceptions about China's concepts ofinternational relations in the 21st century.

The idea of a "new type of great powerrelationship" does not answer these questions, but it does offer us anopportunity to explore various answers. It's not only China that brings usspecial historical perspectives to this task. The United States, although it isthe established power, is not a status quo power. Many international observersare confused about this American quality. Commentators ask why the UnitedStates, the largest and most powerful country, doesn't simply want to preservethe existing order. One symbol of America's global engagement is the one dollarbill. If you look at the back of that bill, you will see a picture of the greatseal of the United States. That seal that was approved by the United StatesCongress in 1782, includes a Virgilian motto: Novus ordo seclorum -"neworder of ages." As my professor of diplomatic history pointed out longago, much of American history is about whether this new order is supposed to begeographically limited to the just-created United States, or broadlyapplicable. In addition to security and power, and freedom of trade and dollardiplomacy, American foreign policy has at times sought to promote the principlesof the 18th century enlightenment that were embodied in America's revolution.Today those principles are reflected in discussions about human rights andfreedoms, but also in topics that China is debating, including good governance,limits on arbitrary governmental action, and the rule of law. The challenge ofcrafting this new type of great power relationship is intriguing. It involvesmuch more than a new balance of power. China is a rising power, but one guidedby many traditional views. The United States is an established power, but onethat seeks change. Both the United States and China are highly successfuleconomies, deeply interconnected with many countries and regions. Theirrelations will affect many others and the world.

I hope the ideas that I offered today atthe Shanghai Forum will contribute to the effort to avoid the Thucydides Trap,and the exploration of a new type of great power relationship--perhaps even asubject of discussion for the two Presidents in June. This could be an excitingventure, and I look forward to hearing your perspectives. Thank you.