Rethinking China’s Period of Strategic Opportunity

China International Studies | 作者: Xu Jian | 时间: 2014-05-28 | 责编: Li Xiaoyu
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by Xu Jian

 

Given the complex and profound changes that China’s domestic and international conditions are undergoing, the Eighteenth Party Congress pointed out that China is still in an important period of strategic opportunity. This assertion has drawn extensive global attention for two main reasons. First, people question whether China is in fact still in a period of development opportunity and how China will take and use this opportunity, which will determine whether China can realize its strategic goal of building a well-off society and promoting national rejuvenation, which is of great significance. Second, compared with China’s situation over the past decade, China’s current and future internal and external environments are undergoing great changes, and China is now faced with many unprecedented risks and challenges.

Many people cast doubt on how to perceive and grasp the future period of strategic opportunity, and there has been a significant increase in controversial issues that need to be discussed. For example, given the increase in the constraints and resistance that China’s development has encountered, some people wonder whether China’s period of strategic opportunity has become a mere concept drawn out of pure imagination rather than reality. If there is a period of strategic opportunity for China, what are the new features, the main risks and problems with this situation? What kind of relationship is there between China’s development opportunities and those of other countries? What issues should be emphasized in the process of domestic and foreign policy adjustment to grasp and use the future period of strategic opportunity? The purpose and focus of this article is to discuss these questions.

 

I.
A Few Questions Concerning the Making of the Period of Strategic Opportunity

 

Question 1: What is the period of strategic opportunity?

The so-called “period of strategic opportunity” refers to the duration of time during which the comprehensive national strength, international competitiveness and influence of a country are expected to rise consistently as a result of favorable subjective and objective factors. Three conditions have to be met in judging whether a country is in a period of strategic opportunity.

First, the country must have an environment conducive to creating strong development potential, and it must be able to turn that potential into overall national strength and international competitiveness in a sustainable way. These conditions may include whether or not the country's security and stability are guaranteed, whether existing production factors can provide support for sustainable development, and whether the internal and external environment can provide sufficient power and incentives for sustainable development.

Second, there must be competence and willingness to sense and take chances, to expand or even shape opportunities when favorable conditions arise. Opportunities are always reserved for those who are prepared to seize them. Even if there are favorable conditions, opportunities often slip away if one cannot discover them and make good use of them in a timely manner. Confined by its social conditions and ways of thinking at the time, China failed to realize that the Industrial Revolution was a great opportunity for human progress and national development when it arrived in the West. As a result, China has lagged far behind many countries that underwent the Industrial Revolution in the 19th and early 20th centuries. In the 1950’s and 1960’s, China once again faced new development opportunities, but due to the misguided policies of the Great Leap Forward and the Cultural Revolution, the development gap between China and other countries once again grew.

Third, in a finite period of time, a country must be able to unleash its expected development potential, either in terms of expanded scale or qualitative improvement, so that its development can rise above average levels and account for a large percentage of the world economy, move up the labor supply chain and increase international competitiveness.

In retrospect, these three conditions are common characteristics that rising countries have encountered in the modern era. As long as these three conditions emerge concurrently, one may consider a country to be in a period of development opportunity.

 

Question 2: What are some trends for the creation and utilization of the period of strategic opportunity?

If one compares the experiences of various countries in utilizing development opportunities during different historical eras, one will find an important, watershed change after the end of the Second World War. Since WWII ended, armed forces have played a much less significant role in the creation and utilization of national development opportunities. Before WWII, the rise of almost every modern country went hand in hand with military conquest. While sharing the development opportunities brought along by the Industrial Revolution, the European and American powers and the Japanese Empire repeatedly started various wars of expansion, including wars of aggression for the occupation and conquest of colonies. Since the end of WWII, although force is still the last resort for safeguarding national sovereignty and security, its role in promoting national development has been significantly reduced. In the 1950’s and 1960’s, Japan and Germany underwent extraordinary economic recoveries. In the 1970’s and 1980’s, Asia’s “Four Little Dragons” took off economically. In the first decade of the 21st century, the emerging markets, often represented by the BRICS, also rose economically. The rise of all of these countries has been achieved peacefully. In contrast, countries that excessively used force and spent resources on military build-up were adversely affected. For example, an arms race with the United States and the invasion of Afghanistan were important factors that led to the collapse of the Soviet Union. Defeat in the Vietnam War and the War on Terror in Afghanistan and Iraq are also directly related to the two major declines in American power since WWII.

 

Question 3: Is the rise and fall of great powers still inevitably accompanied by war?

Though the role of force has been reduced in national development, people still have doubt over whether war between great powers is inevitable. Many people are also easily reminded of historical power conflicts due to some recent developments in the international situation.

After WWII and especially today, the ancient, longstanding logic that dominates power has become less and less applicable and is now being replaced by a new “negative sum” logic – namely, the loss of one party does not necessarily turn into the gain of the other. Today, sometimes loss can go both ways. There are two reasons for the change: first, nuclear weapons have completely changed the underlining meaning of major power wars, a process that was demonstrated in the more than four decades-long Cold War. Both countries would not dare cross the red line into “hot war” due to nuclear deterrence. Second, with further globalization, the traditional relationship of interest and competition among major powers has been completely revised. Interdependence has been deepened and a kind of common destiny has come into existence. Contests for self-interest among major powers have increasingly been dominated by the law of positive sum and the win-win theory. Any vicious contest can only bring destruction to both sides. Of course, the changing rules of competition for dominance among major powers do not necessarily imply the elimination of all risk of war. History does not always follow such rational logic. However, under the new international circumstances, the model and style of power competition have been altered and the possibility of war among major powers has been markedly reduced, if not fully eradicated. Any action contrary to this new rule is an infraction against the times.

 

II. China’s Period of Strategic Opportunities is Undergoing Great Adjustments

 

It has become indisputable that the first decade of the 21st century has been an important period of strategic opportunity for China. It is widely acknowledged both at home and abroad that during this period, China enjoyed economic success and an unprecedented increase in its comprehensive national strength and international influence. However, as the domestic and international situations change, the conditions for China have also witnessed changes. First, the world is on the dawn of a new era of comprehensive restructuring of the international power. Second, China’s socio-economic system has entered a new era of great transformation. These two new factors constitute the new framework for assessing China’s period of strategic opportunity.

The international power structure determines the basic characteristics of the international system in a certain period of time, with the balance of power, international order and international strategic environment making up the three major factors. The first decade of the 21st century saw the rise of emerging countries, which also resulted in the so-called “East Up and West down” phenomenon. After the international financial crisis started in 2008, the global balance of power, international order and international strategic environment underwent complex and profound changes, and the restructuring of international power was deepened and accelerated.

Since the beginning of the 21st century, international forces have experienced a gradual and complex process of change. Before the international financial crisis, emerging powers were enjoying fast development and developed countries were the first to be severely affected by the crisis. The crisis accelerated the “East Up and West down” trend in the international balance of power and narrowed the gap between the global blocs. However, as the impact of the financial crisis extended from developed to developing countries, many development defects of emerging countries became apparent and these countries were faced with common pressure from economic slowdowns. Some BRICS countries – Brazil, India and South Africa – were even labeled the “Fragile Five,” along with Indonesia and Turkey. China maintained the best performance among the large-scale economies in the world, but it also had to bid farewell to its era of two-digit growth rates. In contrast with this new trend, it has become more and more obvious that the situation in developed economies is improving. According to World Bank estimates, the United States is embracing continuous growth, the economy of Europe has already bottomed out and the economy of Japan is also expected to recover. Notably, in terms of international competitiveness and growth rate, there is a widening gap between emerging countries and within developed economies. As a leading force among emerging market economies, China is developing much faster than its peer emerging economies. At the same time, the development potential of the United States, the leader in the developed world, is much stronger than the potential of Europe or Japan.

The above-said “East up and West down” phenomenon and the fading of the BRICS reflect the complexity of a multi-polarizing world. World developments are undergoing a more complex rebalancing process and both developed and emerging market economies appear to have strong and weak points in terms of their development prospects. There will be a new balance of power and further development of competition and complementarity. The setbacks in the development of emerging powers have not altered the “East Up and West down” trend, but in the foreseeable future, a “Strong North against Weak South” will still be the basic characteristic of the international balance of power. The current changes have a bright side for world development. According to the forecasts of international institutions such as the World Bank, the recovery of developed economies will help promote the growth of developing countries, constituting a second engine for global growth. In 2014, world economic growth will rise from 2.4 percent to 3.2 percent, and it is expected to maintain this level over the next two years.

At the same time, the reform of the international order is accelerating. On the one hand, the international contest is becoming more intense. The United States has claimed that the current international economic order is the reason for its development dilemmas since the financial crisis, accusing emerging economies of taking a “free ride” by taking advantage of loopholes in international rules and staging unfair competition, which in turn has led to imbalances in the world economy. The United States is advancing the Trans-Pacific Strategic Economic Partnership Agreement (TPP) negotiations in the Asia Pacific region, and it has initiated the Trans-Atlantic Trade and Investment Partnership (TTIP) negotiation with Europe, with an aim to go around the current international trade rules enforced by the WTO and make a new set of rules to favor their own interests. To cope with the pressure from developed countries, emerging countries are strengthening mutual coordination and cooperation in international governance and expanding and deepening cooperation in various areas. On the other hand, international cooperation has also been advanced. The different interests between advanced and emerging countries have not changed the complementary nature of North-South development cooperation. The international financial crisis and other global issues have given birth to new global governance platforms, such as the G20, thus encouraging various countries to strengthen cooperation to deal with common challenges. By the end of 2013, after 12 years of inaction, a breakthrough was realized in the WTO Doha Round negotiations, with several agreements being reached and the WTO avoiding further marginalization. This shows that both competition and cooperation can provide dynamic force to reform the international order. The contest among nations to change the international order is still a competition based on cooperation, and the interdependence between countries is still the highest common divisor in the interest of every nation’s development.

In the field of strategic security, there are some important trends to observe in the realm of international power restructuring. First of all, there has been a major adjustment in American foreign policy, with the strategic focus shifting from counter-terrorism to traditional power competition, and the strategic center shifting gradually from places linked to the War on Terror, like Afghanistan, Iraq and Europe, to the Asia Pacific region. These changes have not only increased the strategic pressure that China faces in its neighboring regions. They have also enhanced the influence of Sino-American relations in the region and beyond. However, the speed and intensity of the American rebalancing strategy is still being checked by many uncertain factors. The Gulf and Middle East regions still rank high in the United States’ strategic outlook. The impact of the Russo-American contest in Ukraine on American global strategy remains to be seen. Second, in recent years Middle Eastern and North African countries have been plagued by long-term instability in the process of development transformation, adding instability to the regional situation and making power games even more complicated. In the future, the region will continue to be an important field to test international coordination and governance, as well as an important place to attract the strategic resources of major powers. Third, with Japanese politics still shifting towards the right, one can see unnerving countercurrents in the political and security arena in East Asia. The Abe regime has publicly distorted the history of WWII, attempting to deny the outcome of the war and challenge the international order that was formed in the aftermath of the war. Japan is sabotaging its relationship with China, South Korea and other neighboring countries. The attempt of the right wing to revive militarism has made Japan a new source of tension in the region and threatened regional security situation.

From the perspective of domestic changes, China has reached a stage of transformation in its economic development, a result of considerable pressure, with three factors being the most influential. First, the traditional export-oriented development model is no longer sustainable due to changes in the external economic environment and the expansion of China’s economic scale. Secondly, the deterioration of the natural environment and the excessive consumption of resources have demonstrated that the costs of old-style development are too high to be sustainable. Thirdly, the high growth rate that China experienced over the past thirty years is no longer sustainable. China’s economy is entering an era of structural deceleration. The first factor has forced China to rely more on domestic demand as opposed to exports for future economic development. The second factor is related to issues like air pollution, water pollution and ecological degradation, which still face serious hurdles and directly affect the livelihood of the Chinese people. Therefore, it is not a purely economic issue, but rather a social one involving people’s health and living environments. It has ranked as one of the top problems in China today. As for the third factor, though academia and public opinion have also reached preliminary consensus, many views remain obscure or biased. Some analysis focuses exclusively on the advantages and disadvantages of having a high economic growth rate from a policy regulation and control perspective. The understanding of rigid restriction on policy regulation and control brought by economic restructuring is clearly inadequate. Therefore, it is necessary to examine the existing research and use good research to deepen our understanding of this issue.

 

III. Major Changes and New Challenges in China’s Period of Strategic Opportunity

 

According to the above-mentioned definition, under the new domestic and international circumstances, the second decade of the 20th century will offer China more strategic opportunity for development. At the same time, alongside the profound and complex changes in its domestic and foreign situation, China’s future period of strategic opportunity has experienced a series of important changes, especially when compared with the situation during the first decade of this century. The second decade has many new characteristics, and it is not a simple carryover from the previous period.

First, the factors determining China’s period of strategic opportunity have turned from being relatively stable and spontaneous to relatively fragile and proactive. In terms of the international strategic environment, a relatively peaceful and stable security environment at home and abroad will remain preconditions for China’s period of strategy opportunity. In today's world, there are only a few factors that can distract the strategic attention of the United States from China for an extended period of time, for example, if the United States and Russia enter into a full confrontation over Ukraine. But such a possibility is low if one examines the development of Russo-American relations. The rightist policies of Japan have become a new factor that may threaten the external strategic environment and disrupt China’s period of strategic opportunity. It poses an even bigger risk than the risk brought forth by the United States. The United States and Japan are also interwoven with issues of territory and sovereignty disputes between China and its neighboring countries. This has created pressure, challenges and unfavorable factors in China’s external strategic environment, especially when compared with the last ten years.

In terms of world economic development and the external development environment, China’s period of strategic opportunity also faces more difficulties, constraints and uncertainties. Though we can see more positive signs in the recovery of the world economy, the foundation will remain fragile for a considerable period, and it is quite unlikely to return to pre-crisis economic conditions. When all countries are faced with development bottlenecks and dilemmas, investment and trade protectionism is inevitable. In addition, the constraints of global issues like climate change and the ecological environment are also on the rise.

Second, the development space brought forth by the period of strategic opportunity is undergoing a qualitative change, transitioning from an expanded scale and extensive economic growth to one of policy improvement. The rapid growth of China in the three decades since Reform and Opening can be characterized by an extensive expansion of scale. After the international financial crisis, the mechanism to pressure the transformation of the development mode came into full being under the concurrent pressures of the changing international market, the deterioration of ecological environment, excessive consumption of resources and economic restructuring. It has become imperative to transform and upgrade China’s development mode to an innovation-oriented, technology-intensive and cost-effective model that relies more on domestic demand. Although it is still important to maintain a minimum economic growth rate to maintain job security and social stability, it is decisive that China achieves the transformation of its development mode as soon as possible. The benefits of the period of strategic opportunity were mainly reflected in the economic expansion rate over in the past decade and more. In the future, the benefits will be measured in accordance with the progress of the transformation of the development model. It is a great change in the nature of China’s development opportunity and is closely related to the question of whether China can overcome the “middle income trap” and further promote the great cause of national rejuvenation. Needless to say, qualitative improvements will be more difficult and challenging than quantitative expansion.

Third, the economic cost of maintaining and utilizing the period of strategic opportunity will rise sharply, and one will see a transition from the low-cost period, which was characterized by destruction of the ecological environment, inefficient use of resources and self-reliant development, to the high-cost period, during which more attention will be paid to ecological conservation, efficient use of resources and sharing development opportunities with other nations. China’s development has provided an important impetus for the growth of the world economy, and it has made important contributions to world development. However, it has exerted pressure and impacts on global climate, the ecological environment, resources and energy in proportion to China’s economic scale. In the early 21st century, the impact of China’s economy at the international level was rather limited. With China becoming the world’s second largest economy, the opportunities and problems brought by China’s development have multiplied, and at the same time have attracted attention from all over the world. It is now urgent for China to work with other countries to better share development opportunities and efficiently utilize international resources to solve the problems that it encounters in the process of development.

Facing a series of changes occurring to the period of strategic opportunity, China needs to enhance its capabilities in the following ways.

China must enhance its ability to rein in the complex international strategic environment. With regards to the increase of external strategic pressure and risk, China needs to strengthen its ability to shape and guide relations with major countries and neighboring countries.

China must persistently promote a new model of major country relations with the United States. Factors affecting mutual trust between China and the United States are very complex. In addition to structural differences and divergent interests, mutual cognitive bias is also part of the two countries’ mutual distrust. Conservative forces in the United States hold some kind of prejudice regarding China’s domestic and foreign policy, at times causing serious disturbances to the Sino-American relationship. There are also two common extremist assumptions in China, characterized by extreme anxiety or blind self-confidence, the former believing that conflict is unavoidable and the latter believing that American decline is inevitable. These are serious misassumptions. From the point of view of the Sino-American interest relationship, mutual interdependence far outweighs any differences, and the base for cooperation is broad and deep. A conflict is entirely avoidable. When viewed from the development trend, China and the United States are enjoying the best development prospects among the emerging and developed countries, respectively. It is most probable that in the next decade, both countries will enter periods of development opportunity at the same time. The best way to maintain these opportunities for both countries is not to counteract but to share and cooperate. Considerable evidence indicates that the consensus between Chinese and American leaders on building a new model of major country relations has had a preliminary result of guiding the bilateral relations.

One of the cornerstones of China’s foreign policy is to maintain a high-level strategic and coordinative partnership with Russia to build a sound external strategic environment. China and Russia are each other’s largest neighboring countries, and together they enjoy a high level of strategic cooperation in international affairs. They also have broad prospects for bilateral cooperation in the fields of energy, science and technology, in addition to other areas. It is of great significance for China to deepen its friendly cooperation with Russia in order to stabilize the security environment in the north, expand its international strategic maneuvering space and gain access to international resources and markets.

Of all the forces in China’s strategic environment, the Japanese right wing has become the single largest source of trouble. For the considerable future, this problem will present a serious test to the Sino-Japanese relations. It is worth noting that although the extremist right-wing policies adopted by Abe’s regime appear to be targeted at China, their hidden target is actually the United States. By pretending to be an American that will balance China, Japan actually wants to break away from American control or even take the United States hostage, an intention that the United States seems to be aware of. At present, the factors that are able to constrain Japan’s right-wing forces are mainly as follows. First, China has sufficient power to deter conflict and make economic interdependence between the two countries continue its positive effect. Second, the Sino-American relationship enjoys stable and positive development and the United States remains in control over Japan. Third, the Republic of Korea, Russia and the international community continue to pressure Japan in terms of international public opinion. Fourth, the domestic, peace-loving forces in Japan continue to play a role. When all these factors are combined, the right-wing force in Japan will face a powerful counterbalance.

As for its territorial and maritime disputes with the neighboring countries, China must work with other countries in the region to promote the establishment of a regional security mechanism. The basis for such a mechanism must be focused on finding solutions through dialogue and negotiation, with the consideration of common security, cooperative security and comprehensive security.

China must also enhance its competitiveness in terms of innova-tion as the core competence. Among all the factors that may influence the transformation of China’s development mode, innovation is the key to success. The 18th Party Congress Third Party Plenum adopted a resolution to comprehensively deepen reform, sending a clear signal to strengthen China’s capacity for innovation and development. That said, it is still important to improve social awareness of innovative development in order to ensure that future reform efforts stay on track.

American economist Edmund Phelps and the economic historian Walt Rostow conducted in-depth research on innovative development. Phelps put forth the idea that innovation represents the ability to drive economic growth by providing original products or services, including design, processing, technology and other categories. He added that innovation is the most vital and sustainable driving force for development. Innovation is not mere imitation, but rather the process of creating something new and different. Innovation without original ideas is only a pseudo form of innovation. The innovative abilities of a nation do not depend on individual groups, such as science and technology workers, but rather on grassroots innovation. In his research, Phelps divides economies into three categories – modern economies (mainly relying on innovation for development), pre-modern economies (relying on imitation for development) and non-modern economies (relying on natural endowments such as resources for development). From this, he draws an analogy between the “trailing whale” principle and the relationship between the first two types of economies. Economies that rely on imitation for development can accelerate or even overtake advanced economies in growth rate by conducting trade with advanced economies and taking chances to accelerate at the initial stage, just like the whale-trailing shoal that swims by taking advantage of the current left behind by whales. But with the improvement of the relative position of these economies, the high growth rate will slow down in approaching the targeted goal, eventually returning to the global average.

The above analysis has important implications for understanding innovative development in China. First, it has now become urgent to promote innovative development. The reduced role of exports and the dawn of an economic slowdown have shown that the role of external forces in helping China catch up with advanced economies has been decreasing. China will have to rely on its own innovative abilities to further narrow the gap with developed countries. Secondly, from the standpoint of grassroots innovation’s importance to national innovation ability, the cultivation of China’s innovation ability will depend on whether its social system can provide favorable soil and conditions for innovation. There are several problems and constraints in this respect. For example, China must make the social and legal environment more conducive to the protection of intellectual property rights; in a society with thousands of years of tradition of compromise, China must also improve social courage to take risks and push new frontiers; in a social atmosphere that has traditionally encouraged conformism, the cultivation of creative thinking is also a problem. These problems can only be solved gradually through correct guidance and vigorous reforms.

We must enhance the ability to actively shape an external environment that is favorable China’s economic and social transformation and sustainable development. During the coming decade, the international economic order, the global industrial structure and international competition will all face profound adjustments and accelerated transformations, which will set a higher standard for China to build a favorable external environment for development. China must participate more actively in international competition and cooperation by using its growing international influence and by meeting the needs of its domestic transformation and sustainable development. In addition to seeking new channels for China’s foreign trade, investment, access to important resources through a combination of bilateral and multilateral, global and regional efforts, China must have a broader vision to create favorable external conditions for its development.

First, China must resolve the potential risks and unfavorable factors in the transformation of the international order. Though it may be difficult for the TTIP or TTP to reach major breakthroughs in the short-run, their potential impact and negative effects on China cannot be ignored. By advancing negotiations on Sino-EU and Sino-American investment agreements and actively participating in and guiding the Regional Comprehensive Economic Partnership (RCEP) negotiations, China could gradually dilute and resolve the impacts of the TTIP and TTP.

Second, China must be cautious of the risks that may arise from the changing nature of the international resource structure. The impact of potential American energy independence on the international energy pattern and geopolitical structure should not be underestimated – it may lead to a reduced protection of the energy transportation route in the Middle East. China should make comprehensive preparations for this change, including an adjustment in its overseas energy supply policy, jointly exploring new cooperation with the United States and other countries to maintain the security of international energy transportation lines and improving the capacity to respond to the geopolitical situation in the Middle East.

Third, as the single largest carbon emitting nation, China faces great pressure from various countries on the climate change horizon, and China’s own environment and economic development are also being severely affected. China should embark on the path of balancing sustainable global and national development and take a more proactive role in the international management of these issues. At the same time, China should strengthen its cooperation in the use of environmental technology.

Fourth, China must combine the goal of creating a favorable external environment with the advancement of domestic reform. If China does this, it will promote reform by opening-up, break the domestic barriers by using external pressure, and promote the overall implementation and effectiveness of its reform plan.

 Source: China International Studies March/April 2014 51-70

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