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T h e U n i t e d S t a t e s a n d C h i n a i n P o w U.S. ARMY WAR COLLEGE U.S. ARMY WAR COLLEGE e r T r a STRATEGIC STUDIES INSTITUTE n s i t STRATEGIC STUDIES INSTITUTE i o n D a v i d L a i Visit our website for other free publication downloads http://www.StrategicStudiesInstitute.army.mil/ This Publication SSI Website USAWC Website To rate this publication click here. Strategic Studies Institute Book THE UNITED STATES AND CHINA IN POWER TRANSITION David Lai December 2011 The views expressed in this report are those of the author and do not necessarily reflect the official policy or position of the Depart- ment of the Army, the Department of Defense, or the U.S. Gov- ernment. Authors of Strategic Studies Institute (SSI) publications enjoy full academic freedom, provided they do not disclose clas- sified information, jeopardize operations security, or misrepre- sent official U.S. policy. Such academic freedom empowers them to offer new and sometimes controversial perspectives in the interest of furthering debate on key issues. This report is cleared for public release; distribution is unlimited. ***** This publication is subject to Title 17, United States Code, Sec- tions 101 and 105. It is in the public domain and may not be copy- righted. ***** Comments pertaining to this report are invited and should be forwarded to: Director, Strategic Studies Institute, U.S. Army War College, 632 Wright Ave, Carlisle, PA 17013-5046. ***** All Strategic Studies Institute (SSI) publications may be downloaded free of charge from the SSI website. Hard copies of this report may also be obtained free of charge while supplies last by placing an order on the SSI website. The SSI website address is: www.StrategicStudiesInstitute.army.mil. ***** The Strategic Studies Institute publishes a monthly e-mail newsletter to update the national security community on the research of our analysts, recent and forthcoming publications, and upcoming conferences sponsored by the Institute. Each newsletter also provides a strategic commentary by one of our research analysts. If you are interested in receiving this newsletter, please subscribe on the SSI website at www.StrategicStudiesInstitute. army.mil/newsletter/. ISBN 1-58487-515-1 ii CONTENTS Foreword.....................................................................................v About the Author.................................................................... vii Summary....................................................................................ix 1. INTRODUCTION............................................................... 1 2. T HE POWER TRANSITION THEORY ............................5 Another Power Transition in the Making? ....................13 Who Is the Contender?.....................................................17 3. U .S.-CHINA POWER TRANSITION: FROM POTENTIAL TO REALITY ...............................29 China’s Tortuous Transition to Modernity....................31 1840-1910: From Misguided Development to Revolution..................................................................... 32 1911-1949: Deadly Contests for the Fate of China........ 38 1949-1978: False Start of Modernization and Self Destruction.........................................................................41 1978-2008: Yangwu All Over Again ...............................44 The China Threat .............................................................. 50 China as a Responsible Stakeholder...............................57 4. THE FUTURE OF U.S.-CHINA POWER TRANSITION ..................................................................75 Possible Outcomes for the U.S.-China Power Transition........................................................................... 81 Deadly Contest for Change?............................................81 A Change of Guard? .........................................................85 Reluctant Accommodations?...........................................86 Flashpoints in the U.S.-China Relations.........................97 Taiwan: Why China Does Not Let It Go?...................... 99 Western Pacific: Troubled Waters?...............................117 What about Tibet and Xinjiang?....................................152 U.S.-China Power Transition: At Odds, But Not at War.................................................................173 China’s Options ...............................................................173 U.S. Options .....................................................................174 Do’s and Don’ts on the Core Interests..........................176 Final Thoughts. ................................................................201 iii Appendix 1: Selected Articles From the UN Convention on the Law of the Sea Signed in 1982, Came into Effect in 1994.....................................................................................245 Appendix 2: Cairo Declaration............................................ 257 Appendix 3: Potsdam Proclamation ................................... 259 Appendix 4: Treaty of Peace with Japan.............................263 Appendix 5: Treaty of Peace Between the Republic of China and Japan, Signed at Taipei, 28 April 1952.........265 iv FOREWORD The United States and China have experienced many changes in their relations in the past 30 years. Some international security experts posit that the most profound one has begun—an apparent power transition between the two nations. This potentially titanic change, it is argued, was set in motion by Chi- na’s genuine and phenomenal economic development over the past decade, or so. Clearly, China's impact on the United States and the U.S.-led international system has been growing steadily. Historically, most great power transitions were consummated by war. Can China and the United States avoid a deadly contest and spare the world another catastrophe? The good news is that the two nations expressed goodwill in the mid-2000s, with China’s promise of peaceful development and the U.S. call for China to become a responsible stakeholder in the ex- tant international system. The bad news is that China and the United States still have many unsettled issues, some of which directly involve the two nations’ core interests and others indirectly entangled with China’s neighbors. Those issues can lead to the two nations stumbling into unintended clashes, hence triggering a repeat of the great power tragedies of the past. Some scholars predict that over the next 30 years and beyond, this apparent power transition process will continue to be a defining factor in the U.S.-China relationship. What can we expect from China and the United States with respect to the future of international relations? As China’s economic, political, cultural, and military influences continue to grow globally, what kind of a global power will China become? What kind of a relationship will China develop v with the United States? How does the United States maintain its leadership in world affairs and develop a working relationship with China that encourages it to join hands with the United States to shape the world in constructive ways? In this monograph, Dr. David Lai offers an en- gaging discussion of these questions and others. His analysis addresses issues that trouble U.S. as well as Chinese leaders. Dr. Lai has taken painstaking care to put the conflicting positions in perspective, most no- tably presenting the origins of the conflicts, highlight- ing the conflicting parties’ key opposing positions (by citing their primary or original sources), and point- ing out the stalemates. His intent is to remind U.S., as well as Chinese, leaders of the complicated nature of U.S.-China relations, during a power transition and to encourage them to look at the existing conflicts in this new light. He also intends for the analysis to help the two nations’ leaders look beyond their parochial positions and take constructive measures to manage this complicated process—one that will affect future international relations in seminal ways. The Strategic Studies Institute is pleased to offer this monograph as a contribution to the discussion of this important issue. DOUGLAS C. LOVELACE, JR. Director Strategic Studies Institute vi ABOUT THE AUTHOR DAVID LAI is Research Professor of Asian Secu- rity Studies at the Strategic Studies Institute (SSI) of the U.S. Army War College. Before joining the SSI, Dr. Lai was on the faculty of the U.S. Air War College. Having grown up in China, Lai witnessed China’s “Cultural Revolution,” its economic reform, and the changes in U.S.-China relations. His teaching and research interests are in international relations theory, war and peace studies, comparative foreign and security policy, U.S.-China and U.S.-Asian relations, and Chinese strategic thinking and operational art. Dr. Lai is the author and co-author of many articles and books on U.S.-China and U.S.-Asian relations, and has co- edited several books on the subject, including The PLA at Home and Abroad: Assessing the Operational Capabili- ties of China’s Military (with Andrew Scobell and Roy Kamphausen, Carlisle, PA: Strategic Studies Institute, U.S. Army War College, June 2010), and Chinese Les- sons from Other People’s Wars (with Andrew Scobell and Roy Kamphausen, Carlisle, PA: Strategic Stud- ies Institute, U.S. Army War College, forthcoming). Dr. Lai holds a bachelor’s degree from China and a master’s degree and Ph.D. in political science from the University of Colorado. vii SUMMARY This analysis discusses the nature of U.S.-China relations in the context of an ongoing power transition between these two great powers, the rise of China and its impact, China’s tortuous experience during its transition to modernity, U.S.-China conflicts over the two nations’ core interests, and the future of the U.S.- China power transition. MAIN ARGUMENTS This analysis holds the following propositions. First, as a result of its genuine development and the impact of its expanding influence on the international system, China and the United States are inescapably engaged in a power transition process, which is, on top of all other issues, about the future of international relations. Second, the history of power transition is filled with bloodshed; yet China and the United States are willing to blaze a new path out of this deadly contest. Third, although China and the United States have exchanged goodwill for a peaceful future, the two nations nevertheless have many contentious and unsettled conflicts of interest that are further complicated by the power transition process and, if not properly managed, can force the two to stumble into unintended war against each other, hence repeating the history of power transition tragedy. Finally, the next 30 years will be a crucial stage for China’s development and the evolution of the U.S.- China power transition. Unfortunately, these titanic changes are overshadowed by the inherently conflicting relations between China and the United States. It ix