China’s leaders have embarked on a conscious strategy to reshape the economy of Asia and the world to their advantage, according to two top scholars at the Council on Foreign Relations, who warned Tuesday the restructuring could occur at the expense of U.S. economic interests if American policymakers fail to develop a comprehensive response.
“China has a very clear, broad, proactive and well-thought out-regional strategy,” one that is “more expansive than any other country in the world,” said former Undersecretary of State Robert Hormats, who spoke on China’s long-term economic strategy in a session with former Treasury Department China envoy Olin Wethington.
The current drift of events are also playing to China’s strengths, Mr. Wethington said in a briefing Tuesday for reporters. “The status quo will not continue to serve us well,” he said.
Both Washington and Beijing have said they are trying to accommodate China’s emergence as a global economic superpower without disrupting the Asian economic boom, but there have been clear signs of competition as China challenges the U.S.-authored rules of the road. China is not a party to the Trans-Pacific Partnership trade deal President Obama has called one of his top priorities, and an International Monetary Fund reform program that would give China, India and other rising powers a greater say in decision-making has broken down because of its failure to pass the U.S. Congress.
The U.S. was also one of the few major powers to decline an invitation to participate in China’s $100 billion new infrastructure development bank for Asia.
Both speakers agreed that China’s initial explosion of economic growth will be impossible to maintain, and that the nation will need to adjust to lower growth rates in order to make its economic progress sustainable. Like the U.S., Chinese leaders are now confronting such delicate political problems as growing income inequality and the balance between economic growth and protecting the environment.
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But it was the nature of China’s international and global economic plans that should be cause for concern, the report said.
The rules of the global economy were standardized before China’s rise, with many of the central international institutions such as the World Bank and IMF created under American leadership in the dying days of World War II.
Now, China wants more say in the establishment of new rules that it says will aid rising economic powers. But, they need allies to do this. By encouraging growth in other Asian countries, China will create bigger markets that it can continue to trade with, and will gain allies in the international economic community.
Mr. Wethington said the Obama administration miscalculated in its decision to shun for now China’s new Asian Infrastructure Investment Bank, at a time when almost all of Washington’s close allies were signing up.
The U.S. “did not realize the depth of Asian desire for their own infrastructure,” nor the “global desire to have China be part of the international economic order.”
He said resisting the AIIB is both futile and not in America’s best interests, but added, “if this bank is to come into being it must function according to high standards.”
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Mr. Hormats said the U.S. needs a more proactive set of policies for East Asia to counter China’s growing influence. But that may have been complicated by the political currents on Capitol Hill that led to at least a temporary defeat for Mr. Obama’s drive for the authority to negotiate big new trade deals such as the TPP.