Chinese Ambitions and the Future of Asia

October 19, 2005

Introduction

JOANNE MYERS: Good afternoon. I'm Joanne Myers, Director of Public Affairs Programs here at the Carnegie Council. Today Dr. Campbell is our guest speaker. We are delighted to have him here to discuss Chinese ambitions and the future of Asia. He will help us to assess whether China poses a potential security threat, and if there is such a risk, the strategy we will need to deal with it.

In July of this year, the Pentagon, in a study mandated by Congress, released its annual analysis of Chinese military power. The report stated that although China faces no direct military threat, its military budget is the third-largest in the world. This report criticized Chinese military spending, arguing that large military expenses are hidden in accounts outside the Chinese defense military and the armed services, which allows for its military spending to be much larger than needs to be officially reported by the government. While the findings acknowledge that at this time China's conventional military force remains unable to directly threaten the territory of the United States, China is modernizing and expanding its arsenal of nuclear weapons, which will soon be capable of reaching American soil.

In particular, the Pentagon report said that China's impressive military buildup threatens the ability of Taiwan to defend itself and, additionally, complicates America's military planning, should the Defense Department be ordered to respond with military force to a crisis in the region.

While it could be argued that it is reasonable, and even predictable, that a rising economic power such as China could and would use some of its newly earned wealth to enhance its military might, the voices of concern in Washington, Europe, Japan, Taiwan, and India are growing louder and louder as China flexes its diplomatic, military, and economic muscles on the world stage. Just how China chooses to use its newfound strength could affect us all.

For many years now, Dr. Campbell has been following the developments in Asia. Whether working in the public arena or in the policymaking shadows, he has been a constant force in shaping official American perceptions of a region which is increasingly seen as composed of the world's fastest-rising powers. In fact, he often lends his voice to NPR's "All Things Considered" and to ABC News as a consultant. He has written widely on world affairs and is co-author of To Prevail: An American Strategy for the Campaign Against Terrorism, and co-editor of The Nuclear Tipping Point.

Our guest today is currently at the Center for Strategic and International Studies, which is a Washington-based think tank that is dedicated to providing world leaders with strategic insights on and policy solutions to current and emerging global issues. At CSIS he is the Senor Vice President and Director of the International Security Program and holds the Henry Kissinger Chair in National Security.

Dr. Campbell came to CSIS from the Department of Defense, where he served as Deputy Assistant Secretary of Defense for Asia and the Pacific in the Pentagon. For his work there he received department medals for distinguished and outstanding public service.

Prior to joining the Defense Department in 1995, he was a Deputy Special Counsel to the President for NAFTA at the White House and a member of the National Security Council Staff. He has also taught at the John F. Kennedy School of Government and was the Assistant Director of the Center for Science and International Affairs at Harvard.

At a time when Donald Rumsfeld is in China on his first official visit as Defense Secretary, and he is complaining of mixed signals from the government leaders there, it is with extreme pleasure that we welcome our distinguished guest, who will, I am confident, not only be able to give us a very clear picture of the situation, but will also be able to clarify the challenges we face in the western Pacific.

Please join me in giving a very warm welcome to our speaker, who just came up from Washington to be with us.

Remarks

KURT CAMPBELL: Thank you very much, Joanne.

It's really a pleasure to be here this evening at the Carnegie Council and to see so many friends in the audience.

This is all on the record. The only people who think about on or off the record are people who are in government. People who are out of government should always be on the record. So I'm happy to speak as openly as I can.

As Joanne indicated, this is really an interesting time. I would argue that, literally, in the last couple of months, for the first time since the end of the Cold War, almost fifteen years now, like fog lifting on a road, we are starting to see the outlines of the foreign policy and national security challenges, the biggest ones that are likely to confront the United States over the next generation or more. I am not saying that there are not other issues, like global warming or energy policy, that are going to be dominant, but I'm going to talk primarily about how to think about foreign policy and national security.

The first one, I think, has been clear since September 11th, and that is that we are going to be facing a long-term extraordinarily vexing set of challenges associated with what we call, loosely, "the war on terror." In reality, all of us, I think, would appreciate that there is something wrong with every word in the mantra of that. Clearly, "war" suggests that this is just a military campaign, when in reality the set of tactics and policies that we need to think about span the gamut, and we have probably over-militarized. "On" suggests that we can neatly disaggregate these people from us, as if this is not a societal set of challenges. "Terror," of course, as everyone appreciates, is a tactic, not a set of followers. So it is immediately confusing and lends to strategic confusion.

I would suggest, however, that since September 11th, we have a series of challenges, which we have now managed to mix Iraq into in a way that we cannot disaggregate, that will plague our country for decades.

The biggest surprise since September 11, of course—and I don't need to tell New Yorkers—is that we have not had a second wave of attacks inside the United States. Remember, we have had numerous attacks elsewhere, Bali and Spain, throughout Europe and in the Middle East. But what that lack of attacks in the United States has done is that it has given us a period in which the anxiety that all of us felt for several months and years has faded a little bit. So we are now entering, I would argue, the post-9/11 period, in which we're still anxious and worried, but it's not the kind of urgent anxiety and palpable fear that many of us experienced on a very regular basis.

For myself, I remember once, just about a year after 9/11, there was a horrible set of alarms that went off in downtown Washington, D.C. It happened suddenly. Many of you who know literature know of something that Chekhov, the great Russian writer, introduced, called the Chekhovian pause, in many of his plays. In those plays there would be a sudden moment, often when a clock would strike for example. All the actors in the play would stop for a moment, and that would basically be a signal to the audience to reflect on what's going on.

Well, on that particular day, I remember these alarms, and I watched the looks on everyone's face in front of me. It was like one giant bubble over everyone's head saying, "Oh, my God, not again."

Those moments are less frequent. Nevertheless, even though it's not on our immediate minds, I think the terrible reality is that this first phase of the so-called struggle with the jihadists has not gone very well. If anything, I think that we have a long, almost cascading set of challenges in front of us that will require a much more nuanced set of policies, and probably a more sophisticated understanding of what, in fact, we are confronting. That may actually require a new political leadership, whether Republican or Democrat, because the issues associated with even assessing the international arena currently are so difficult to grapple with, outside of a very heated political dynamic in Washington, D.C.

So I would say that that set of challenges is fairly clear. They extend to the Middle East, in particular, but they are not just the Middle East. Indeed, one of the biggest challenges that I think we face is that where we might see the biggest threats from the jihadists may not be from communities in places like Saudi Arabia or Egypt. It may well be from disenfranchised and disassociated Islamic followers living in Western Europe or other countries that feel that they are somehow either ignored or treated badly by host countries. That could actually be one of the biggest issues that we have to deal with. The demographics suggest that in the next fifteen or twenty years, large parts of Europe will be actually dominated by Muslim minorities, maybe to the point of majorities.

I ran a session of the Aspen Strategy Group this summer in which we wanted to do an assessment of how we are actually doing in the "war on terror." We brought together fifty of the most prominent people from around the world and the United States. I have to say, at the end of five or six days, I was left with the sense that I actually had very little idea of how we were doing. There were more questions than answers. I think if we are honest with ourselves, this is the reality that we face. I think that is difficult for us.

Iraq is a situation where, if you sit and talk to senior military commanders— I was in the Pentagon yesterday— what is very disheartening is that I don't think we actually know who we are fighting. I don't think we have a very good clue about what's actually going on on the ground. This is the first time in American history— and we have fought in many wars—where we are well into a conflict and we actually don't know very much about who we are fighting. We can tell you the pieces of the folks that we are fighting, what groups they are, but we really don't have a very good sense of how the nature of this struggle is evolving.

But what I am really here to talk to you about this evening is the other part of this. Remember, in the United States our entire history has been dominated by dominant foreign policy challenges. Over a long period of time, we have generally had the luxury of being able to focus on one overriding set of issues, to the exclusion of others. The dominant experience of most of our early lives was the fifty-year struggle with the Soviet Union, in all of its manifestations. That one overarching sort of framework provided the contours and context of decision making for the United States.

I am going to argue with you today that as you look over this road and the fog is lifting, for the first time in our history, we are seeing twin challenges that are likely to break over our bow (sorry to mix metaphors) simultaneously, in a way that is going to complicate our overall challenge ahead. I would argue that these are the rise of China, which I'll get to in a second, and the struggle with jihadists—and each on its own would be overwhelming, daunting, and difficult for us to grapple with in isolation. Taken together, I think they are likely to be overwhelming to a foreign policy elite that has difficulty enough struggling with one problem.

What is difficult about both the rise of China and the continuing challenge of jihadism is that they both are so very different from one another; they require different government capacities, different mindsets, different reliance on allies, different military tools, and they have very different prospects over the long term.

I would say that, in many respects, there are certain aspects of the struggle with jihadism which will require very tough means. We can clearly work with moderate groups in Islamic societies; but it will be very challenging for us to disarm those that have declared war on the United States and certain elements in the West, and that have made decisions to conduct military operations against the United States.

China is a very different story. Anyone who tells you that conflict with China is preordained is sadly mistaken. That is very, very dangerous. I would suggest to you that our relationship with China is bound to be incredibly multifaceted.

Joanne, at the outset, quoted this glossy document that the Pentagon has put out, called Chinese Military Power. On one level, I'm glad for it, because it gives us some anxieties about certain military developments which I think are real and things that we have to focus on. But it puts China in a historical context, that it is somehow a latter-day Soviet Union.

The fact is that China could not be more different than the Soviet Union. I'm not saying that China isn't a challenge, because the challenge that China poses, in many respects, is much more profound than the challenge posed by the Soviet Union. When I say challenge, I'm not saying military or nuclear challenge; I'm saying challenge across the board. China has risen more rapidly in terms of its commercial capabilities, its manufacturing prowess, and its diplomatic capabilities—much faster than I would have ever anticipated a couple of years ago.

In fact, I would suggest that, as we look back on this period twenty or thirty years from now, although we believe, as we sit here in the room today, that the dominant and most important issue facing the United States is the war on terrorism, it may well be, in twenty or twenty-five years, that the dominant issue in retrospect was actually the rise of China, and that Asian dynamics were actually more significant than these issues that are likely to be with us for some time in the Middle East.

I want to take you back a moment, before we talk about what the nature of the challenges vis-a-vis China and Asia, to a point in time. Everyone talks about September 11, but I think, actually, a good place to start when thinking about American foreign policy and where it is going and where it has been is not September 11, but September 10. Ask yourself about what the dominant beliefs in the United States were, at least in Washington among the political and strategic elite, when it came to foreign policy and national security on September 10.

I say it because it's a really interesting exercise, and it tells you how much has changed over a very short period of time.

On September 10, if you look at some of the beliefs that were emanating from the Bush administration—but I would say largely through the political establishment—there were recent documents that suggested that the biggest anxiety facing the United States was the challenges in the future posed by rising states. "Rising states," in Washingtonese, is code word for "China." That's how we politely talk about China, "rising states."

The belief among the strategic community was that the political concern and the tension was shifting inexorably from the Middle East and from Europe towards the real vexing challenges of Asia, and that all the major challenges to peace and stability were found in Asia: the still-divided Korean Peninsula, worries associated with the rise of China, difficulties vis-a-vis China and Taiwan, the nuclear rivalry between India and Pakistan. These were thought of as the animating features of American foreign policy.

Among the Bush team, there was a sense of a shift in strategic military focus away from what they thought were older issues and more towards the new issues of Asia. There was a sense that failed states, like Afghanistan and others, were really for wimps and Democrats; that they really posed no strategic threat to the United States, and we should forsake them. There was lots of rough talk about Africa not being very important or very influential.

It is hard to remember now, but the one overarching mission of the Bush administration in the foreign policy arena was actually to try to make sure that we had a robust ballistic missile defense capability ready to intercept missiles that were coming in. The first foreign policy missions abroad to Europe and to Asia were to convince our allies that that was going to be the most important thing that we had to deal with.

In the military arena, there was a sense that the United States faced no immediate threats and that we had the ability to, in the words of a famous speech that then Governor Bush gave at The Citadel when he was campaigning for president, "skip a generation," and invest in military capabilities, anticipating threats that were going to come on line in fifteen or twenty years.

Also there was a sense that that some of our alliances were fraying and we needed to really rebuild our alliances. What is interesting about all of these issues is how different they have turned out to be in retrospect. I would suggest to you today—and I hope I say this in a way that is not sounding political—that I think some of our alliances are actually in really worse shape today than they have been in many years.

Clearly, the challenges posed by failed states turned out to be as significant as rising states. What we saw immediately after September 11 was a giant detour away from Asia and a renewed focus on Middle East issues, particularly Afghanistan and Iraq. Ballistic missile defense, although we still spend enormous amounts of money on it (a system that is unproven), I don't think has the strategic significance and the political resonance that it had during the Reagan administration. And until very, very recently, there has been very little talk of rising powers.

So I would say that for about four years after September 11, we diverted our attention away from Asia. Remember, the scarcest resource in Washington is not our military power, nor our money, nor our troops; the scarcest and the most precious thing that we have is the attention of our senior-most professionals and politicians in the White House and elsewhere.

My institution is involved in a project where we work fairly closely with Secretary Rumsfeld and his team. In the last couple of weeks we were briefing him along with Deputy Secretary Wolfowitz (before he went to the World Bank), and one of these meetings lasted for about three hours. You're struck by a couple of different things in a meeting like this. On the one hand, you're thinking, "God, this is great. This is what you live for in a think tank. You come up with ideas and views about how to work in the bureaucracy, and you are having a chance to brief at the highest level." So that is one thing you're feeling. The second thing you're feeling is, "If you have three hours to spend with us in a time of war and all the things going wrong, you need to really reevaluate your calendar." I was really struck by that. So I said, "This is an enormous waste of your time."

Anyway, I was sitting next to Deputy Secretary Wolfowitz, who is a terrific intellect and enormously capable, and, like any good bureaucrat, comes to meetings with work to do. You are not going to sit and listen the whole time. He sat down, and he had this enormous stack of paper, which he proceeded to start going through. He'd look up a few times, nod, and then go back to doing his work, like you're supposed to do in government.

I, being a good outsider, was paying no attention to our briefings and, instead, was looking over his shoulder to see what he was working on.

Let's take a guess. I am going to ask you to raise your hand. What percentage of the documents that he was going over related to Iraq? I want you to raise your hand. I'm going to start at 50 percent. Who thinks 50 percent of the documents related to Iraq? Who thinks 60 percent? Be honest. Seventy percent? Eighty percent? Ninety percent? Thirty percent? How about 100 percent? Who's for 100 percent? A hundred percent is the answer.

So it's Iraq, all the time. It is the dominating issue of the Bush presidency. And maybe it should be. But the problem is, there are costs elsewhere. As a person who spends an enormous amount of time in Asia, I find myself thinking of Snow White, one of my daughters' favorite books. It has this wonderful opening scene where the queen looks in the mirror and says, "Who is the most beautiful?" For the first time, the queen hears back, "It's not you. It's Snow White," and she's enraged.

What is going on in Asia is a similar thing, except that the mirror is not really talking back to us. We ask the mirror, "Who is the most powerful, the most virile, the most economically important country in Asia?" Our answer to ourselves is, "The United States." I think, by any aggregate measure, that is a correct answer. But if you ask most people who work a lot in Asia, in the diplomatic arena, in the military arena, in the strategic community, in the commercial context, there is no competition, my friends. The dominant country in Asia today is China, in a way that, if we Americans really appreciated it, would alarm us. When I say it would alarm us, however, that does not mean to say that China is on the march in ways that will inevitably challenge the United States.

In fact, I think what is most interesting about the United States—and, indeed, much of Asia—is how wrong we have gotten what I would call "hegemonic prophecy" in the past when it comes to Asia. I have a book gathering dust on my shelf called The Coming Conflict with Japan. It was only about a decade ago that we believed that the transformation of Japan, from its economic might to political, strategic, and military power, would inevitably challenge the United States. It was a staple of American strategic thinking.

The fact is that China has enormous vulnerabilities. These include its banking systems, huge dislocation, an underemployed population that is probably larger than the population of the United States, huge environmental degradation, a political elite that is at its very core extraordinarily insecure, and a host of problems in the surrounding region. I would suggest to you that China's rise is not preordained, and neither is a conflict with the United States, but that China's success is probably as vexing as the idea of China's failure. If China fails, it will provide some of the most dramatic challenges to the United States and the international community of any possible set of states.

I would say to you, as we look into the future, China is going to be dominating, no matter what. If I had to bet for the next ten years, I think China will be a captivating presence in all aspects of foreign policy and national security. And it is happening at a time when many in Asia believe that we, the United States, are preoccupied with other things. That has alarmed a lot of Asians.

Asians traditionally have looked to the United States over a long bipartisan period, and they have said, generally speaking, that they are satisfied with the level of American engagement in Asia. They may differ with policy views and recommendations, but they have been generally satisfied. What they have always worried about is the future: Will the United States maintain the wit and wisdom to remain engaged in a region that is going to be so dominant in the future?

For the first time, that situation is inverted. Today most Asians believe that the United States is focused on the Middle East to our detriment in Asia, but that once the unpleasantness in the Middle East is resolved, we will return to Asia, perhaps even with a vengeance, in ten or fifteen years. What they worry about, like Thomas Wolfe, is that it will be hard to go back again to the Asia that we knew. Things are changing in dramatic ways, with countries making decisions about long-term relations with China, economically, diplomatically, politically, that a few years ago have been impossible for us to imagine.

This is assisted by a remarkably effective Chinese diplomatic set of agendas and a softer, kinder, and gentler Chinese diplomacy that is witnessed throughout Asia and much of the world; and I must say—though it pains me to do so—that this is often contrasted with an abrupt, often rough, and occasionally crude style of American diplomacy.

I can give you one vivid instance of this. I was asked to go to a strategic retreat, I can't tell you exactly where and with whom. But it was outside Washington with a group of very prominent Asians, and it was set up to talk with both senior Americans and senior Chinese. This was just a few months ago. A very senior American neoconservative came, someone very close to Secretary Rumsfeld. Of course, he was busy, so he could only come for a couple of hours. He came late, and when he came, pretty much demanded to speak immediately. Asians are very polite, so, they said, "Sure, let's hear what you have to say."

He came in, knew very little about Asia, but still wanted to lecture. I sensed that for him it was not as much fun or as interesting to talk about Iraq right now. He was a very aggressive supporter of the war in Iraq. He was disenchanted with that. So his attitude was, "We have to turn to new challenges. A new challenge is China, so let's talk about China."

In the process of these discussions, he said, "Look, the great thing about being a superpower and a global hegemon," which is a word that I wouldn't particularly want to use in conversation—I think the key to diplomacy, when you are on top, is to not rub that in other countries' faces, and instead get other countries to do things that are in your interests, but make them think they are in their interests—"the great thing about being a global hegemon is that you can eat your cake and then you can use your fork and reach across the table and eat the cake of other countries, and they take it. They are forced to work with you."

Asian friends around the table were just in shock—just in shock. They just couldn't believe it. Of course, he was busy, so he had to leave and he didn't stay for the questions and answers.

Immediately thereafter, there was a very senior Chinese person, who began his presentation: "Friends, it's wonderful to be with you here today. China wants to work with you. China wants to listen to you, wants to hear your concerns, and wants to have partnerships with you going forward."

I thought back to an event that I experienced when I was in the government at the Department of Defense. I was in Monterey. The people who attended wanted very badly to get along and work with China. A senior Chinese diplomat was there. He began his presentation over dinner with a diatribe, screaming at the audience about the perfidy of the United States and something that we had done vis-a-vis Taiwan or something. It was just shocking how little he understood the context of his audience. In the midst of this performance, he gestured, almost a perfect backhand, and hit a bottle of wine, and it went about twenty yards, glass everywhere. He didn't miss a beat, just kept right on talking, kept right on going.

I was next, and I thought to myself, "Thank God, we will always have that. China will always undermine its ultimate abilities in foreign policy by such reckless demonstrations."

I thought back to that moment as I was sitting in this meeting, thinking to myself, "My God, we have switched places." What does that mean? Where are we today? I think what we are seeing is a sudden recognition in official Washington that things have happened while we were away, in Asia. We have to remind people that we are still a dominant player. That's why Secretary Rumsfeld has decided to go on this big trip to Asia and to China, a country he has really resisted going to for some time, for a variety of reasons.

I have traveled with Secretary Rumsfeld. It was quite an honor to go with him to the Shangri-La Dialogue in Singapore earlier this year. I was in the pre-meeting, before he went down to give his speech. That morning, as I was trying to get ready, the report had just come down from the inspector general about really alarming atrocities at Abu Ghraib and Guantanamo, and I thought, "Oh, my God, this meeting's going to be tough. The secretary is going to have to answer some really hard questions, and it will be painful."

Before we went into the meeting, the press guy got him ready for this possibility. Nothing; like bullets bouncing off a tank. It didn't bother him. He could answer those questions immediately. But then someone suggested that one of the questions that he was going to have to deal with was allegations that the United States was not as focused on Asia as it could be. "Rubbish! We are here." You could tell that the idea that a very seasoned strategic group of people at the top of the Bush administration could miss out on a big set of strategic issues seemed impossible to him. But underneath, there was alarm and a little bit of defensiveness.

So where are we today? I would suggest to you, as you look at these two challenges, that they are very different. They require different capabilities. But one thing that is clear is that in both our engagement strategy for China and in this "war on terror", we are coming to the end of Phase One, and we are dissatisfied with Phase One in both cases. Phase One in the "war on terror" is an over-militarization of this set of challenges. The Bush administration may not acknowledge this publicly, because that violates the Bush tenet of not admitting a mistake. But privately they recognize that they need to transcend and move into an environment where we have a much different set of goals and objectives, and we empower moderate Islam more effectively. How to do that is another set of challenges. I think it will be very difficult, and I think we are off to a bad start.

Phase One vis-a-vis China is similar, but more difficult to fully capture. We often talk about our policy towards China as having two components:

The first one is so-called "engagement", which means we trade with China, and try to draw China into the international community—and I would say that, by and large, there are clearly gaps in that capability, since China doesn't always play by the rules. But if we look back twenty years ago and ask, if we could achieve what we have achieved today, with enormous economic and commercial integration—we are hyper-integrated with China—would we be pleased with that? I would say we have succeeded beyond our wildest expectations, in some respects. I think one of the biggest challenges that we have in terms of engagement in our commercial interaction is that China is succeeding too much, and that they have ascended in terms of their capabilities and their competitiveness more rapidly than we anticipated.

The other component, of course, is the hedge: the military capabilities, the maintenance of our alliance structures, in an attempt to reassure Asian friends that we will be there in Asia to be able to support peace and prosperity.

By the way, for those of you who are thinking about learning about Asia, and maybe come from a European background, let me give you rule number one: Never in an Asian audience use European analogies to explain things to Asians. You immediately signal to them that you don't understand Asia, so you're going to rely on European analogies.

That being said, let me give you a great European analogy for how to think about Asia. In 1983 or 1984, Lord Robertson, who was then secretary general of NATO, was sitting listening to Italians and Germans and French whining about the United States: "They're difficult to work with, they're arrogant, they're ignorant, they don't know anything, they don't consult." After listening to it for a few minutes, Lord Robertson said, "Alas, they're the only Americans we have."

To a very real extent, there is a similar dynamic that plays out in Asia today. Asia is bereft of security architecture. I'm sorry to lapse into jargon here. The only true recourse for serious security problems is the role of the United States.

Until very recently, we were thought of as a very reliable state in that regard. Iraq and some other things have caused some countries to question that, but overall in Asia, that has generally been eased by a comfort level associated with Republicans, even radical Republicans like President Bush, in a way that I think has managed to temper this overall problem. So there is a sense that the United States plays a very important role, and that role is likely to continue into the future.

Americans fall for this idea that Asian countries are incredibly comfortable with the United States, even if they have some fear and concerns about it. Nothing could be further from the truth. But the destiny for all Asian countries is that they are stuck between two hegemonic, dominant, difficult states, the United States and China. The United States happens to be more democratic and has closer values. But we should not fool ourselves into believing that Asians think it is easy to deal with the United States. That is simply not true.

However, having the United States engaged in Asia is absolutely central to long-term peace and stability. The challenge is to maintain that at a time when the draw, militarily and strategically, is to bring forces and other capabilities out of Asia into the Middle East. Large numbers of U.S. forces have been taken off the Korean Peninsula and off of Okinawa, because we simply need them in the Middle East. The fact is that Asian countries focus on this.

We talk about our transformational capabilities and the ability to reach out and touch countries with long-range stealth capabilities. But the reality is that Asian mindsets are still rather conventional and traditional. Having a military presence in Asia actually matters enormously.

I am going to conclude by just suggesting to you that I think both of these challenges together are likely to be overwhelming, and that real strategy is going to require making choices. How do you make choices in an indifferent environment? I am going to give you my choice going forward.

I think that it is incumbent on American strategic leadership to do everything possible to try to have a relatively good relationship with China. Ultimately, if global Islamic fundamentalist terrorism becomes a staple not only in the Middle East, these challenges are likely to play out in Southeast Asia, where the largest populations of Islamic followers are. If that occurs, it will be an enormous challenge to China, as well as the United States. So we have much to make common cause over in this regard.

It doesn't mean that we are not going to have areas where we compete or where we have problems. But by militarizing our competition, by making and declaring China an enemy, currently is not in our strategic interest. Our strategic interests are to focus on the inevitable challenges that are in front of us associated with the jihadist threat, to try to make as much common cause with China as possible, and to maximize the areas of cooperation, as opposed to those areas that we will inevitably have problems with going forward.

I will tell you that it alarms me that I do not think we have the training, the capability, or now the national resources. I think you can argue about many issues associated with Bush administration foreign policy, and I think, as a Democrat, one of the things that I have to acknowledge about our party is a general timidity and an inability to put forward a very coherent foreign-policy agenda in contrast.

However, the one issue that I worry about more than anything else is that we are reducing financially our capability to be able to do things in the future. If you ask honestly who is paying for the war in Iraq, it's not the American taxpayers. We will pay for it, ultimately, down the road. But currently most of this war is being paid for by China and other Asian investors. That alarms me. The enormous debt that we are accruing makes it difficult for us to have the kind of flexibility to implement sophisticated foreign-policy challenges. At the same time, I think there is a sense among the American public of not appreciating the nature of the challenge ahead.

I am struck, every time I go to China, by how relentless the young Chinese people are, in particular: the entrepreneurial spirit, the sense that "we need to get ahead, and we need to work." If you ask Chinese friends—and I spend an enormous amount of time in China—they will tell you that Americans are basically lazy. They will say that Americans are on the downward slope, and "we are going to claim the future."

When you come back from China and go to a mall and see American youth maybe not as committed as you would like— that's an imperfect snapshot, and I sound like an old fart saying that—it does worry me a little bit. I think it suggests that we are not, at the level of public education, making clear to our people the enormous commercial, political, strategic challenges that lie ahead. This is not some vacation from global politics. We are heading into a period of enormous challenge.

Thank you very much.

JOANNE MYERS: Thank you. Before we open the floor to questions, I just have one request. I was wondering if you could just spend a few minutes addressing the buildup of the Chinese military, vis-a-vis Taiwan.

KURT CAMPBELL: Let me just say, if you look at all the studies done about Chinese military power in the 1990s, all of them underestimated the enormous strides that China has made. They have modernized their short-range missiles, their submarine forces, their air power, and a host of other capabilities faster than any one of us would have anticipated just a decade ago. Anyone who excuses that as not being significant is blowing over something that has to be focused on.

At the same time, we should not over-hype it at this juncture. I think much of what Secretary Rumsfeld suggested is that there are profound areas of vulnerability in Chinese military capabilities. However, I think history suggests to us that countries that have one overriding strategic objective tend to modernize more rapidly than other countries. That is what is going on in China. When you interact with Chinese strategists, it is alarming how much time they spend thinking about military options against Taiwan and, associated with that, the United States.

I flew here from Washington and was on the plane with Secretary Cohen, who was the previous secretary of defense. He was the first to speak at the Chinese Military Academy in 2000, which we arranged. It was difficult to get done, but we managed to get them to agree to and accept a speech from him. I still remember walking into the Great Hall in advance of Secretary Cohen giving the speech. As we walked in—I am not making this up—4,000 colonels and lieutenant colonels from the strategy branch of the People's Liberation Army all stood up and then sat down and listened and furiously scribbled notes. These people are spending 24/7 thinking about military innovations, associated with Taiwan and other places.

That is alarming, and that is worrisome. One of the most important things that the United States needs to do is to communicate that any kind of adventurist military policy in Asia, particularly going after a largely peaceful, if highly disputed internal place like Taiwan, is not in our interests, certainly not in Taiwan's interests, and ultimately will not be in their interests. That vigilance, that deterrence is going to be an essential component of American foreign policy.

I entered this field not being an Asianist. It's a trade. They don't let you in. You are kind of on the outside. I don't mind that. I understand that, and I appreciate it. But one of the sacred beliefs among the people who keep the sacred texts of how we manage the issues between Taiwan and China is that we must not become involved diplomatically. We can't do it; it could be very dangerous. It is implied that we will get ourselves in hot water.

What is contradictory to me as a strategist is that I look globally: to the Middle East, where we have a great ally in Israel, where we are involved deeply in the negotiations, to Northern Ireland, to Cyprus—everywhere there is a potential conflict, the United States plays a role. This is the only place where we, in advance, suggest that we will not play a role diplomatically. But at the same time, American forces, overnight, can be drawn into a conflict that we don't have control over.

Now, that makes no sense to me. On some strategic level, I ask people to explain how that works. People don't like to get into that. They just say, "Well, maybe."

But the reality is, I think, that it is incumbent on the United States to work more aggressively to try to help bridge this gap. I know it violates all the tenets of how we have dealt with issues in the past. But what worries me is that China is following a pernicious strategy vis-a-vis Taiwan, in which they have no intention of talking unless Taiwan capitulates in advance: "If they agree on everything that China wants, then we're ready to sit down." Taiwan is so deeply divided politically, so fundamentally and dangerously divided, that it is not clear to me that they can summon the political will to actually engage China.

I think it is incumbent upon the United States to think about ways in which we can try to assist in a dialogue, because I think a dialogue itself will assist in the situation.

Now, the difficulty for Americans is, of course, that our belief is that if it is a problem, it can be solved. One of the things that I have learned, at least a little bit modestly, about Asia is that some problems are best deferred rather than solved. I would say that the conditions currently do not exist that allow for a solving of the issues between China and Taiwan. However, the conditions are perfect to try to get this off the boil, and export the issues into the future.

I am nervous about Chinese military power. I am concerned that this is a big issue. What worries me more than anything else, though, is that other Asian friends are reluctant to raise it with China. China has managed, with extremely skillful diplomacy, to make it very difficult for other countries to raise concerns publicly about China.

I can recall, just a couple of months ago, an incident with the Thai foreign minister—he is a lovely man. When someone accused him of kowtowing to China, he said, "That is rubbish. That's ridiculous. Thailand is just trying to do everything possible so that it has a good relationship with China and in no way alienates China." That sounds like kowtowing to me.

So that is one of the problems that we face, trying to create an environment where China feels more comfortable being transparent and other countries feel more comfortable asking China very legitimate questions.

Questions and Answers

QUESTION: Thank you for a very interesting presentation. I have a two-pronged question. First, besides Taiwan, where we know what China wants, what do you believe are China's objectives over the next, say, ten years?

The second question is, what is the role of Japan in counterbalance to China?

KURT CAMPBELL: Those are really good questions.

The most important answer to, "What does China want"—and I believe this fundamentally—is that China does not know. They are in the process of figuring out what their role is and where they are going in the world. We can actually help shape some of those outcomes. There are certainly those in China that have maximalist goals, who believe that Asia is not big enough for the United States and China together, and others who believe that China can integrate peacefully into the international system. Even though China is not a democracy, it is still in many respects a pluralist society. Those forces go to war and interact in very complex ways. I actually think that China is changing.

What is also occurring is similar to what is happening here. The United States, I think, still acts as if it is not integrated into the global economy, that we can take steps that somehow don't hurt us. China has a similar problem, I believe. Some of its mindsets in foreign policy and national security suggest that it thinks it can act with impunity and with no consequences to itself. But the reality, of course, which is well understood in the international and the economic communities, is that nothing could be further from the truth.

Ironically, the strategy that Kissinger and his associates originally planned for the Soviet Union, which never worked—entanglement, engagement—is actually working vis-a-vis China. So I think that is quite significant. To the question of what China wants, we don't know, and they don't know.

The second question, on the role of Japan: Nothing could be more important and more complicated. China's rise is incredibly difficult for us psychologically, but imagine how much more challenging it is for Japan. Just a decade ago, everyone thought that Japan was number one and was going to go immediately to a position of dominance. Now you can go to meetings in Asia where the subject of Japan does not come up very much.

Now, that has changed a little bit, more recently, with Koizumi. But I think Japan is struggling with many things. I think it is struggling with identity. It has a political system, even though it is a, quote, "democracy," which has not reflected Japanese interests or evolved in a way that many people would have anticipated.

I also believe that there is a nationalism on the march in Japan, as there is in other Asian countries as well, such as South Korea and China. But it gets more attention in Japan because it has these residues associated with the Second World War.

I often meet with Diet members in Japan, and they will rather nervously tell you, "I was a conservative two years ago. I'm just a moderate now." That is how quickly the political spectrum is changing.

Let me give you one sort of mental reminder that I use that I find very helpful. You go to Shanghai, and the cityscape changes almost every week. Almost every time you go there is a new building or two. It is just dramatic, the change.

You go to Tokyo, and you're lulled, because there is no change. The geography is remarkably consistent. The same rugs in the same hotels that you have been going to for fifteen years, the same place where you walk, and it's kind of worn out. So it lulls you.

Japan is different, in many respects. I would say Japan is going through a kind of psychic or temporal set of changes that are comparable to the changes in the landscapes in Shanghai. Think of Japan as long periods of stability, marked by dramatic periods of change, in which Japan rethinks its role in the world. We are right in the middle of one of those. In the last couple of years, you have seen Japanese forces deploy to Iraq —unthinkable— and provide support in Aceh, support in Afghanistan. There is much more robust talk about a whole host of things, including, frankly, more open discussion about whether Japan should think about nuclear weapons in the future, stuff that heretofore would have seemed impossible. I think that process is likely to continue.

Joanne asked about a potential challenge between China and Taiwan. The issues that I worry about over islands are not, right now, the issues between China and Taiwan. I am actually much more worried about the disputed territories and unresolved undersea resource claims between China and Japan.

September 11 2001 has a lot of significance for the United States. But what happened in Japan, which hardly any Americans know, is that China sent an armada of ships to this contested area in the days leading up to September 11 2005, the day of the Japanese election. That was over all the Japanese major newspapers and, I would argue, was the single most important factor in Koizumi basically securing a remarkable political success in his electoral quest.

What happened the next day was that Japan sent its ships. In the past, it would have demurred and tried to avoid this. Japan—and, again, I don't want to say it rudely—is basically not going to take it anymore. They feel that they have been taking a lot of stuff from China, and they are going to respond.

Donald Zagoria does a trilateral between the United States, Taiwan, and China, which is very helpful. I have recently been involved in some interesting trilaterals between the United States, China, and Japan—senior officials, some other folks, Diet members. I will just give you an idea how one went, most recently. These are people who all know each other, travel together, see each other at conferences.

We got together. "Great to see you. We're in Japan. It's beautiful outside. Let's get down to business." We are sitting around the table and all do our introductions. The Chinese friends go first: "Wonderful to be here. It's great, very important. However, it is occasionally difficult dealing with a Japan that's imperialist, butchering, not remembering its history and brutal, and that basically is going to come back with bayonets all through Asia."

We are all thinking, "Oh, my God." In the past the Japanese would usually just scribble notes and suck it up and take it. But then it's the Japanese turn to speak: "Thank you very much. We're privileged to be here, honored by your honesty, and we appreciate our Chinese friends. However, it is difficult to hear an authoritarian, murdering regime that has butchered its own people in Tiananmen Square, lecturing a democracy of sixty years—but thank you so much for coming."

And there we are. That's what is going on in Asia today.

I would suggest that the most important thing that the United States can do right now is help China and Japan get along a little bit better. I am not sure we are playing a very good role on that. I think we could do a lot better than saying, "Now, now, it is important for us to figure this out."

I would also say that I don't think it's responsible or smart for Prime Minister Koizumi to go to the shrine. I don't think it's in Japan's interest, particularly after his election. I think it basically creates problems at a time when we want greater dialogue and communication between Japan and China. This is not to suggest that there aren't real issues that China has to focus on, but what Prime Minister Koizumi doesn't understand, I don't think, is that by doing this, he may secure some narrow political advantage inside of Japan, but he is playing into the hands of the hardliners in Beijing, who are thrilled that he's doing this.

JOANNE MYERS: In the interest of time, I'm going to take a couple of questions.

QUESTION: Picking up on Tiananmen Square and a lot of the very disturbing things we've heard about the human-rights situation in China in general, should we be concerned, as China gains ascendancy and as it gains power in the world, that its way of life rather than ours may become the model?

QUESTION: In a recent trip to China I noticed two things: first, the great economic progress; and second, that Mao's face was on all the currency. The question, to me, is, first, could that expansion possibly have taken place if it were not a dictatorship? Second, is it possible, in the foreseeable future, that we will see a change in the political life of China?

QUESTION: You mentioned in the course of your talk, very briefly, some problems of China, including dislocation, environmental issues, and I thought you said something about a lack of confidence in leadership. I wonder if you could elaborate on that just a little bit, please.

KURT CAMPBELL: These are all great questions. I am going to go from last to first, if I may.

If I had to suggest one thing to read about China—and there are many great books—I would say look at the series of smuggled notes that came out of the Politburo in 2000 or 2001 that recap and basically reveal the inner workings of the Politburo during Tiananmen. You can find them in Foreign Affairs, but they are in a variety of other places. [Editor's note: See The Tiananmen Papers] What is very clear from them is that the leadership in China is fundamentally insecure and feels itself to be insecure and vulnerable. That vulnerability is animated in everything it does. I think you see it in terms of how it responds to something like Falun Gong and other issues inside China.

I just don't think we can overlook this, and I don't think we can underestimate it in any way. I think it is really a fundamental issue, that Chinese leaders themselves, even if they feel like they have come up this incredibly tortuous political route, feel insecure, both because of the nature of the system and how people in the past have been purged, but also because it is a country that, in many respects, has a lot of barely suppressed violence.

I don't know if any of you have ever been in China during a riot or a street demonstration. I have. I was in China immediately after the accidental bombing in Kosovo of the Chinese embassy. What was interesting was how, almost immediately, what seemed to be a very peaceful kind of city scene turned into a very violent situation. I think that is what Chinese leaders, at some fundamental level, worry about.

Now, would that be fundamentally different if a leadership was elected? Probably. Would there still be enormous tensions in Chinese society? I think the answer to that is, almost invariably, yes.

The second question is, what about political change in China? You can ask lots of Chinese specialists. I remember once being in a meeting at the State Department with this mid-level Chinese bureaucrat. We were talking about China, and he goes, "You know, China's a big country." I'm thinking, "Boy, could you say anything more unhelpful and trite?" Then I remember going up to Harvard to see the greatest dean of Chinese specialists. He was in his eighties. We are sitting by to hear what he had to say. Someone asked him a question, and he said, "You know, China's a big country." So that passes for profound wisdom.

But the only place that you can really go for wisdom in China, of course, is taxi drivers. I remember a conversation with a taxi driver a few years ago. I asked him, "Can China be a democracy?" "Oh, yes, of course. China can be a democracy. It can happen. It definitely can happen." The next question, of course, is, "When?" And he says, "Not for a thousand years."

If I had to guess, I think change will come more rapidly to China than we anticipate. I think, beneath the surface, in nongovernmental organizations and a lot of local stuff, there are a lot of exciting things happening that, if alerted to, I'm not sure would be allowed to continue. But at the same time, it is also the case that this new Hu Jintao leadership is fairly hard and tough, and there is a lot of internal repression.

Recent reports say that the most worrisome trends and the most difficult issues are obviously human-rights issues. How you divide human rights, labor, and democratization issues into different categories is very difficult. We tend to focus on this elite group of people, the intelligentsia. I would suggest to you that the issues that I worry about the most are labor issues inside of China, and how Chinese authorities have dealt with very legal and appropriate attempts to assist in a labor organization. That has been truly brutal.

I think, here, the international community could do a much better job, to be perfectly honest. I think we have had a tendency to look the other way. Those issues, such as the horrible conditions in mines, and the extraordinarily difficult manufacturing conditions with women and young children on their feet for extraordinarily long periods of time—I think those labor issues require a little bit more attention on the part of the United States.

The question, "What does it mean internationally," is a very good question. One of the reasons that China has been on the march is that it is gaining influence and friends among a host of countries, in Africa, such as Chad, and also elsewhere, who really have pretty nefarious domestic politics. They have developed relationships with these countries and they're saying, "Look, I don't care what you do domestically, as long as you deal with us appropriately in terms of energy and the like." That's a mistake. That is worrisome as a trend. I think the direction in foreign policy in the international community is greater concern and a recognition that there is a connection between domestic politics and international behavior.

JOANNE MYERS: As you yourself said, so little time. But I thank you for making the most of it.

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