Vail Daily column: U.S. must address China’s internal issues
October 12, 2016
One of the most complicated tasks facing the next president will involve formulating a foreign policy addressing China's domestic affairs. China's leaders are facing several internal challenges — challenges directly impacting the American economy and conflicting with the founding tenets of United States foreign policy. The question is what are those? And how should Washington respond?
Beijing's leaders are encountering an array of domestic issues. The hardships include:
• Re-energizing a slowing economy.
• Domestically addressing climate change.
• Managing the value of China's currency.
• Neutralizing Hong Kong's secessionist elements.
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The status of China's economy is the most crucial issue facing Beijing. China's leaders need to stimulate the country's financial climate to augment/enhance employment opportunities, wages and growth. All three are problematic considering a key instigator — Chinese exports — lacks the international attractiveness it held prior to the Great Recession. Beijing is also seeking to shift the populace's spending patterns to a domestic consumption emphasis from an import-spending approach.
The second problem is China's approach to climate change. Beijing is a top emitter of greenhouse gases. China and the U.S. China agreed to implement the December 2015 Paris International Climate Change Agreement. It requires both parties to phase out a prime climate change gas, hydroflourocarbons. Beijing and Washington agreed to additionally reduce emissions from commercial aircraft, which account for about 2 percent of total global carbon emanations. The task is harder for China to achieve given the dynamics of the country's domestic affairs.
The third issue entails the appreciation/deprecation of China's currency. Beijing is attempting to manipulate the Renminbi to enhance the nation's economic conditions. Controlling the Chinese currency's value allows Beijing to influence international market conditions permitting for a boosting of Chinese exports. The approach permits Beijing to rebalance its economy while generating domestic consumption-driven growth. The practice is contentious across the international spectrum, especially in American circles. Many Washington policymakers argue it impacts the nation's employment rate and trade balance.
The final issue surrounds Hong Kong. On Sept. 4, local elections were held. Pro-China elements have dominated elections in the regional governing body, the Legco, since 1997 until now. Pro-independent/secessionist parties won six of the 70 seats recently. The number, while small, alarms the Chinese Communist Party. The situation concerns Beijing considering it faces secessionist movements in the Xinjiang and Tibet provinces — it doesn't need another independence element to contend with, given the potential impact on China's domestic stability.
China's authorities face several obstacles surrounding the above issues. Beijing's overall policy involves sustaining the Chinese Communist Party's control over the nation's socio-economic-political climate, while encouraging financial growth; achieving these objectives entails placating different groups. These include private/public parties who have benefited from the reforms, but oppose additional modifications; competing Chinese Communist Party factions who support less government control over the currency's exchange rate, and a break-up/modification of state-owned enterprises vs. those objecting to similar measures. Many opponents of state-owned enterprises reforms are Chinese Communist Party members with family and personal connections within those organizations' upper echelons — connections proving mutually lucrative, financially and politically. The state-owned enterprises are major engines of the Chinese economy; those same entities are mismanaged, oversized, and have monopolies over various private sectors. State-owned enterprises reform is vital for the success of China's economic transformation; accomplishing it may prove the most difficult task facing Beijing's leaders. The last reform opponents are local and province officials. Many disregard the Chinese Communist Party's directives considering repercussions for their careers and constituents. The last matter evolves around Hong Kong. Beijing risks instigating and/or strengthening independence/secessionist movements regardless of how it responds.
The next administration must craft a multi-fold policy towards China's domestic affairs. It should continue encouraging Beijing to implement economic reforms. A Trump/Clinton administration must entice China to allow international markets to determine the Renmenbi's appreciation/depreciation. It should concurrently display a degree of grudging acceptance if Beijing ignores Washington's prodding, given the potential ramifications on Chinese internal stability. The U.S. should offer China environmental technological assistance in fulfilling its obligations under the Paris agreement. The proposal should only occur providing the shared technology cannot be manipulated for dual-use purposes jeopardizing America's corporations competitive advantage. The next administration should lastly tread carefully if a domestic crisis unfolds producing echoes of the 1989 Tiananmen Square incident.
In conclusion, China's domestic affairs will have an equal impact on the Sino-American relationship as Beijing's foreign policy. The next administration must craft a policy that is firm, yet open-minded, ideological, but pragmatic. It must understand the interconnectivity between China's domestic and foreign affairs. How the next administration addresses China's internal issues will influence the relationship's complexity and facilitation.
Matthew Kennedy has a master's degree in diplomatic studies from the University of Westminster in London. He's lived in Europe, Asia and Russia.