How to Break the 'Mutually Assured Misperception' Between the U.S. and China

1. Sorry, but on balance, the Chinese economic model is probably sustainable.

On the sustainability of Chinese economic growth as the continuing basis of Chinese national power, on balance we should assume a Chinese growth rate in the medium to medium-high range (i.e. in excess of 6 percent) as probable for the period under review. This takes into account both official and unofficial statistics on the recent slowing of the rate. It also takes into account lower levels of global demand for Chinese exports, high levels of domestic debt, the beginning of a demographically driven shrinking in the labor force, continued high levels of domestic savings, at best modest levels of household consumption, an expanding private sector still constrained by state-owned monoliths, and a growing environmental crisis. But it also takes into account the vast battery of Chinese policy responses to each of these and does not assume that these are by definition destined to fail. Furthermore, if China’s growth rate begins to falter, China has sufficient fiscal and monetary policy capacity to intervene to ensure the growth rate remains above 6 percent, which is broadly the number policy makers deem to be necessary to maintain social stability.It is equally unconvincing to argue that China’s transformation from an old economic growth model (based on a combination of high levels of state infrastructure investment and low-wage, labor-intensive manufacturing for export), to a new model (based on household consumption, the services sector and a strongly innovative private sector) is also somehow doomed to failure. This is a sophisticated policy blueprint developed over many years and is necessary to secure China’s future growth trajectory through different drivers of demand to those that have powered Chinese growth rates in the past. There is also a high level of political backing to drive implementation. The process and progress of implementation has so far been reasonable.

“It would be imprudent in the extreme for America’s China policy to be based on an assumption that China will either economically stagnate or politically implode.”

Moreover, to assume that China’s seasoned policy elites will somehow prove to be less capable in meeting China’s next set of economic policy challenges than they have been with previous sets of major policy challenges over the last 35 years is just plain wrong. China does face a bewildering array of policy challenges and it is possible that any one of these could significantly derail the government’s economic program. But it is equally true that Chinese policy elites are more sophisticated now than at any time since the current period of reform began back in 1978, and are capable of rapid and flexible policy responses when necessary.For these reasons, and others concerning the structure of Chinese politics, the report explicitly rejects the “China collapse” thesis recently advanced by David Shambaugh. It would also be imprudent in the extreme for America’s China policy to be based on an implicit (and sometimes explicit) policy assumption that China will either economically stagnate or politically implode because of underlying contradictions in its overall political economy. This would amount to a triumph of hope over cold, hard analysis.

2. Xi is a powerful leader the U.S. can do business with if it chooses.

Three concepts define how Xi Jinping’s leadership differs from that of his predecessors:1. His personal authority2. His deep sense of national mission3. And an even deeper sense of urgencyXi’s audacious leadership style sets him apart from the modern Chinese norm. Both in personality and policy, he represents one part continuity and two parts change. Xi is the most powerful Chinese leader since Deng (Deng Xiaoping 邓小平), and possibly since Mao (Mao Zedong 毛泽东). Whereas his predecessors believed in, and by and large practiced, the principle of collective leadership, Xi Jinping is infinitely more primus than he is primus inter pares. As a Party blue blood, he also exudes a self-confidence that comes from someone utterly comfortable with the exercise of political power.Xi is driven by a deep sense of personal integrity, personal destiny and the decisive role that he is to play in bringing about two great historical missions for his country: first, national rejuvenation, thereby restoring China’s place as a respected great power in the councils of the world; and second, saving the Communist Party itself from the cancer of corruption, thereby securing the party’s future as the continuing political vehicle for China’s future as a great power. Xi is both a Chinese nationalist and a Party loyalist. He is deeply and widely read in both international and Chinese history, including an encyclopedic knowledge of the history of the Communist Party itself.His core, animating vision centers on his concept of the “China Dream” (zhongguomeng 中国梦) which in turn has two objectives: to achieve a “moderately well-off China” (xiaokang shehui 小康社会) by 2021 when the Party celebrates its centenary; and “a rich and powerful” (fuqiang 富强) China by 2049 on the centenary of the People’s Republic. Realizing the China Dream, according to Xi, requires a second phase of transformative economic reform. He sees no contradiction in prosecuting deeper market reforms to achieve his national objectives, while implementing new restrictions on individual political freedom. In fact, he sees this as the essence of “the China Model” (zhongguo moshi 中国模式) in contrast to the liberal democratic capitalism of the West which he describes as totally unsuited to China.

“Xi, unlike his predecessor, has the personal authority and policy flexibility to be a potentially dynamic interlocutor with the United States.”

For Xi, China must seize the moment of “extended strategic opportunity,” following 10 wasted years when necessary reforms were postponed, and corruption allowed to run rampant. China’s domestic policy needs are now integrally bound up with the country’s foreign policy direction. In Xi’s worldview, an increasingly “rich and powerful” China must now start playing a much bigger role in the world. No longer will China “hide its strength, bide its time, and never take the lead” (taoguang yanghui, juebu dangtou 韬光养晦决不当头), Deng Xiaoping’s foreign policy mantra for decades. China must now pursue an “activist” (fenfa youwei 奋发有为) foreign policy that maximizes China’s economic and security interests, and one that begins to engage in the longer term reform of the global order. Xi speaks for the first time of China’s “grand strategy” needing to embrace “a new great power diplomacy with Chinese characteristics” (you zhongguo tese de xinxing daguo waijiao 有中国特色的新型大国外交), in order to craft a “new type of great power relations” (xinxing daguo guanxi 新型大国关系) with the United States. Xi, in short, is not a status quo politician. He is the exact reverse. And in pursuing his sense of national mission and personal destiny, he is prepared to take calculated risks in a traditionally risk-averse Communist Party culture.Xi Jinping’s sense of personal and national urgency is animated by a formidable, Confucian work ethic, which he also expects of his Party colleagues and policy advisors. He is results-driven. He is frustrated by the interminable processes of the Chinese bureaucracy, and its predisposition for formulaic responses to real policy challenges. He is very much a man in a hurry.For these several reasons, Xi, unlike his predecessor, has the personal authority and policy flexibility to be a potentially dynamic interlocutor with the United States, albeit always within the framework of his nationalist vision for China’s future, and his definitive conclusions concerning the continuing role of China’s one-party state. When, therefore, Xi uses the term “win-win” (shuangying 双赢) to describe his desired relationship with the U.S., it should not be simply discarded as a piece of Chinese propaganda. Xi does see potential value in strategic and political collaboration with the United States.In short, there is still reasonable foreign and security policy space for the U.S. administration to work within in its dealings with Xi Jinping, although it is an open question how long it will be before policy directions are set in stone, and the window of opportunity begins to close. I argue that Xi is capable of bold policy moves, even including the possibility of grand strategic bargains on intractable questions such as the denuclearization and peaceful re-unification of the Korean Peninsula. It is up to America to use this space as creatively as it can while it still lasts.

3. China sees America as deeply opposed to China’s rise, and driven to do whatever it takes to prevent China usurping American regional and global power.

China’s worldview, as for all nation-states, is deeply shaped by its past. In China’s case, this means one of the world’s oldest continuing civilizations, with a continuing written language and literary tradition over several thousand years. For China, the mark of history is profound, as are the scars of collective memory. This applies to China’s philosophical tradition; its core, continuing values; its historical experience of its neighbors and those which invaded it; and its cumulative perceptions over time of the United Kingdom, the United States and the collective, colonizing West.China also takes great pride in its civilizational achievements; the glories of its imperial past; and the resilience of its people across the millennia, celebrating the material and cultural achievements of the Han (汉) people. Within those achievements, China has also generated a self-referential body of philosophical thought and way of thinking (siwei 思维) that does not readily yield to the epistemological demands and intellectual taxonomies of the Western academy. And within this philosophical system, Confucianism in its various forms lies at the core. Westerners may find Chinese public formulations arcane. But that is the way the Chinese system conducts its official discourse, in which case we have some responsibility to understand what these formulations really mean, rather than once again simply dismissing them as propaganda.

“Confucianism in its various forms lies at the core of China’s governing system.”

Chinese intentions are shaped not simply by the deep value structures alive in Chinese tradition and in China’s modern political mind-set. They are also shaped by China’s national historiography - its narrative about its own place in history, as well as its historical account of its dealing with its neighbors, the phalanx of Western colonial powers eager to carve up its territory, and the United States. China’s lived experience of the outside world, as well as how it recalls that experience in the current period, exercises a profound impact on how China now views the world. The main thematics that emerge in China’s own account of its historical engagement with the world are as follows:

First, China, at least over the last 500 years, has been the innocent party and did nothing by way of its own offensive actions against the West or Japan to provoke the imperial carve-up of its territory and its people in the modern period;
Second, China has therefore been the victim of international aggression, rather than a perpetrator, particularly during the so-called “century of foreign humiliation” from the First Opium War to the proclamation of the People’s Republic;
Third, Chinese national losses during the Japanese invasion and occupation were of staggering proportions even by global standards, explaining Beijing’s unique and continuing neuralgia toward Tokyo, both in terms of the official Japanese historical record of the war as a basis for any effective long-term reconciliation with Japan, and in terms of any evidence today of Japanese remilitarization or revanchism;
Fourth, Russia too has loomed large in the Chinese national memory and has been predominantly seen as a strategic adversary through most of its history, rather than as a strategic partner;
Fifth, throughout its past, right through to the present period, China’s national pre-occupations have been primarily, although not exclusively domestic: governing a quarter of humanity rather than dreaming of carving out even more territory for itself;
Sixth, China, after 150 years, has now regained its proper place in the community of nations, as a product of its own efforts to build national power, rather than depending on anybody else; and
Finally, Chinese leaders have a profound sense that China’s time has now come for China to have its own impact on the region and the world; but they are concerned that others (principally the United States) will now prevent it from doing so because this will challenge U.S. global dominance.

The current relationship between the United States and China has been characterized privately by one Chinese interlocutor as one condemned to a future of “Mutually Assured Misperception.” The report argues that there is considerable truth to this, as each side engages in various forms of mirror imaging of the other. As another senior Chinese interlocutor said during the preparation of this report:The problem is the United States believes that China will simply adopt the same hegemonic thinking that the United States has done historically, as seen under the Monroe Doctrine and the multiple invasions of neighboring states in the Western Hemisphere that followed. Since the Second World War, there has barely been a day when the United States has not been engaged in a foreign war. As a result, the United States believes that China will behave in the same way. And this conclusion forms the basis of a series of recent policies towards China.Americans offer their own variations on the same theme concerning Chinese mirror imaging. Nonetheless, the report argues that Chinese leaders have begun to form a worrying consensus on what they believe to be the core elements of U.S. strategy towards China, despite Washington’s protestations to the contrary. These are reflected in the following five-point consensus circulated among the Chinese leadership during 2014, summarizing internal conclusions about U.S. strategic intentions:

To isolate China;
To contain China;
To diminish China;
To internally divide China; and
To sabotage China’s leadership.

While these conclusions sound strange to a Western audience, they nonetheless derive from a Chinese conclusion that the United States has not, and never will, accept the fundamental political legitimacy of the Chinese administration because it is not a liberal democracy. They are also based on a deeply held, deeply “realist” Chinese conclusion that the U.S. will never willingly concede its status as the pre-eminent regional and global power, and will do everything within its power to retain that position. In Beijing, this assumption permeates perceptions of nearly all aspects of U.S. policy, from campaigns on human rights, political activism in Hong Kong, arms sales to Taiwan, and America’s failure to condemn terrorist attacks by Xinjiang separatists, to support for Falungong and the Dalai Lama.

“The United States has not, and never will, accept the fundamental political legitimacy of the Chinese administration because it is not a liberal democracy.”

As a result, senior Chinese interlocutors conclude that the U.S. is effectively engaged in a dual strategy of undermining China from within, while also containing China from without. American arguments that U.S. policy toward China bears no comparison with the Cold War-era containment of the Soviet Union are dismissed by Chinese analysts. China points to the U.S. strategic decision to “pivot” or “rebalance” to Asia as unequivocal evidence of this. Beijing also points to Washington’s de facto support for Japanese territorial claims in the East China Sea, and its alleged abandonment of neutrality on competing territorial claims in the South China Sea in support of the Philippines, Vietnam and other South-East Asian states at the expense of China, as further evidence of containment.Finally, China adds the most recent examples of the Trans-Pacific Partnership (which excludes China) and failed American efforts to dissuade its allies from joining the AIIB. All the above, as seen from Beijing, are designed to deny international space to China in policy domains ranging from hard security, to economics and trade diplomacy. The report notes that the U.S. disputes each of the above, and instead argues that Chinese foreign policy appears geared for an attempt to push the United States strategically out of Asia.It is against this unhappy background that, in 2013, Xi Jinping elevated the concept of “a new type of great power relationship” as a centerpiece of his diplomacy towards the U.S. Xi argued it was time to liberate the bilateral relationship from “a cold war mentality” (lengzhan siwei 冷战思维) and the politics of “a zero sum game” (linghe youxi 零和游戏). While disagreements inevitably arose over the definition of Chinese and American “core interests” (hexin liyi 核心利益). the U.S. administration initially welcomed the proposal. But this concept soon fell victim to a deeply partisan debate within the United States on the administration “conceding strategic and moral parity to China” and has since disappeared from the public language of the administration. The report argues that mutual strategic misperceptions between the U.S. and China, informed both by history and recent experience, are likely to endure.I argue that the only real prospect of altering the present reality in a substantive and durable way lies not in discovering some magical declaratory statement. Instead, the U.S. and China should set out an explicit, agreed road map of cooperative strategic projects (bilateral, regional and global) to build mutual trust and reduce deeply rooted strategic perceptions, inch by inch, year after year. The gains from such an approach will be slow and grueling, the reversals numerous. But it is the only way to arrest the political and policy dynamics that flow from China’s conclusion that the U.S. will do whatever it takes to retain its status as the preeminent power.

4. The U.S. rejects it is undermining or containing China. Instead, it sees China as seeking to push the U.S. out of Asia.

After two years in office, and substantial engagement with American interlocutors, the American perception is that Xi Jinping is significantly different, some say radically different, to his predecessors. He is seen as significantly more powerful. As a product of the power of his intellect, his political experience and the force of his personality, Americans conclude unprecedented power consolidation has taken place in a short span of time. Americans have found him to be self-confident, well read, well briefed, and rarely reliant on official written notes to argue, explain, and defend the Chinese position. Not since Deng have Americans encountered a Chinese leader able to range across wide subject areas and to engage spontaneously on most matters raised with him. While Xi is seen as polite, as required by the normal conventions of Chinese diplomatic discourse, he is also seen as capable of being direct. And while Americans may not appreciate the answers they may receive, they do not feel that they are left having to decipher multiple layers of Chinese “diplomatese” to understand the bottom line of what is being communicated. This has led many American officials to conclude that at least at a personal level, including his style, manner, and method of personal communication, Xi Jinping is someone with whom you can do business.Regarding policy, however, there is less appreciation from American elites as to how different Xi Jinping’s domestic and international agenda is from that of his predecessors. At a general level, Xi is seen as more nationalistic than his predecessors, primarily due to his responses to what he has perceived as challenges to “core” Chinese interests in the East and South China Seas. But beyond this generalized conclusion, and because the bilateral relationship at the time of his ascension was already anchored in a 40-year-old framework, there has been a tendency on the part of some in Washington to assume that the fundamentals of the relationship will therefore not change. These fundamentals are based on:

The content of the three U.S.-China Communiqués;
The conclusion that China has embarked on an irreversible long-term program of economic globalization;
The parallel conclusion that this will so deeply integrate China into the global economy that it will not only remake the Chinese economy in the image of the West, but also eventually change Chinese values, society, and politics as well;
The underlying assumption that the Chinese leadership will ultimately realize that these changes are in China’s long-term self-interest, and that China will therefore increasingly behave as a “responsible global stakeholder” within a global order that has demonstrably served its interests so far; and
The fact that short of the increasingly unlikely possibility of a political and security crisis over Taiwan, and because the military gap between China and the United States remains so vast, there is a negligible risk of China fundamentally challenging American strategic predominance in the Asia-Pacific region, or elsewhere.

As noted above, Xi Jinping does not necessarily share these assumptions. He would agree that the Communiqués remain sacrosanct. He would also agree that China’s domestic market reforms and global economic integration are not only irreversible, but will increase in their scope and intensity. But he would explicitly reject any assumption that the “China model” will therefore change the political construction of the Chinese state and the values that under-pin it. In fact, Xi argues for a radical counter-model for China’s long-term future, and does not see the current Chinese political system as a “managed transition” to some kind of “small- S” Singaporean political future.

“Xi argues for a radical counter-model for China’s long-term future.”

Nor does Xi accept the view that China should simply be a “responsible stake-holder” in a global and regional order designed to suit the interests of the United States and the rest of the West. Rather, China should actively shape the new rules of the order, including some of the values underpinning it, hence his increasingly frequent use of the terms “righteous” (yi 义), “fair” (gongping 公平) and “just” (zhengyi 正义), in discussing the future of the international order, drawing on classical Chinese concepts, rather than simply translating Western ones.On U.S. military preponderance, Xi, as a strategic pragmatist, recognizes this reality. But he does not see this as an impediment to a vigorous Chinese foreign policy both in the region and beyond, while Chinese military capability is gradually enhanced over time to temper American unilateralism in Asia, rather than to directly challenge it. As for Taiwan, Xi does not necessarily see Taiwan as being progressively “solved” by peaceful and economic means, as the Taiwanese domestic political reaction to current Chinese strategy begins to harden.Within the United States analytical community, there are glimpses emerging of this “new reality” under Xi Jinping, but it is far from definitive. On the one hand, the inherited post-72 orthodoxy, and its conclusions concerning the fundamentals of the relationship, continues to hold significant sway. On the other hand, the competing American view that China is a long-term strategic threat to U.S. interests is being reinvigorated, with the notion of “long-term” now being replaced by many as “looming” because of recent conclusions concerning the assertiveness of Chinese actions in support of its maritime and territorial claims.American strategic perceptions and responses to Xi Jinping’s China are therefore in a period of transition, just as China itself is now in transition. During times of transition, therefore, there is often a risk of radically underestimating or over-dramatizing the significance of the profound changes underway. Rising China is no longer “business as usual” for America. But neither, for the decade ahead, is this new China becoming a major direct military threat to U.S. interests. Instead, the U.S. sees China as actively competing for political, diplomatic and security policy space in Asia at America’s expense; to the extent that China is increasingly seen as pursuing a long-term policy aimed at pushing the United States out of Asia altogether with a view to establishing its own sphere of strategic influence across the region over time.

5. Armed conflict between the U.S. and China is highly unlikely in the coming decade.

Xi Jinping is a nationalist. And China, both the U.S. and China’s neighbors have concluded, is displaying newfound assertiveness in pursuing its hard security interests in the region. But there is, nonetheless, a very low risk of any form of direct conflict involving the armed forces of China and the U.S. over the next decade. It is not in the national interests of either country for any such conflict to occur; and it would be disastrous for both, not to mention for the rest of the world. Despite the deep difficulties in the relationship, no Cold War standoff between them yet exists, only a strategic chill. In fact, there is a high level of economic interdependency in the relationship, which some international relations scholars think puts a fundamental brake on the possibility of any open hostilities. Although it should be noted the U.S. is no longer as important to the Chinese economy as it once was.However, armed conflict could feasibly arise through one of two scenarios:

Either an accidental collision between U.S. and Chinese aircraft or naval vessels followed by a badly managed crisis; or
Through a collision (accidental or deliberate) between Chinese military assets and those of a regional U.S. ally, most obviously Japan or the Philippines.

In the case of Japan, the report argues that, after bilateral tensions reached unprecedented heights during 2013-14, Beijing and Tokyo took steps in late 2014 to de-escalate their standoff over the Senkaku/Diaoyu islands. Hotlines between the two militaries are now being established, reducing the possibility of accidental conflict escalation. However, the same cannot be said of the South China Sea, where China continues its large-scale land reclamation efforts, where tensions with Vietnam and the Philippines remain high, and where mil-to-mil protocols are undeveloped. Xi Jinping has neither the interest, room for maneuver or personal predisposition to refrain from an assertive defense of these territorial claims, or to submit them to any form of external arbitration.Of course, Xi Jinping has no interest in triggering armed conflict with the U.S., a nightmare scenario that would fundamentally undermine China’s economic rise. Furthermore, there are few, if any, credible military scenarios in the immediate period ahead in which China could militarily prevail in a direct conflict with the U.S. This explains Xi’s determination to oversee the professionalization and modernization of the People’s Liberation Army (PLA) into a credible, war-fighting and war-winning machine. Xi Jinping is an intelligent consumer of strategic literature and would have concluded that risking any premature military engagement with the U.S. would be foolish. Traditional Chinese strategic thinking is unequivocal in its advice not to engage an enemy unless you are in a position of overwhelming strength. Under Xi, the ultimate purpose of China’s military expansion and modernization is not to inflict defeat on the U.S., but to deter the U.S. Navy from intervening in China’s immediate periphery by creating sufficient doubt in the minds of American strategists as to their ability to prevail.

“Despite the deep difficulties in the relationship, no Cold War standoff between them yet exists, only a strategic chill.”

In the medium term, the report analyzes the vulnerability of the U.S.-China relationship to the dynamics of “Thucydides’ Trap,” whereby rising great powers have historically ended up at war with established great powers when one has sought to pre-empt the other at a time of perceived maximum strategic opportunity. According to case studies, such situations have resulted in war in 12 out of 16 instances over the last 500 years. Jinping is deeply aware of this strategic literature and potential implications for U.S.-China relations. This has, in part, underpinned his desire to reframe U.S.-China relations from strategic competition to “a new type of great power relationship.”In the longer term, neither Xi Jinping nor his advisors necessarily accept the proposition of the inevitability of U.S. economic, political and military decline that is often publicized in the Chinese media and by the academy. More sober minds in Xi’s administration are mindful of the capacity of the U.S. political system and economy to rebound and reinvent itself. Moreover, Xi is also aware of his own country’s date with demographic destiny when the population begins to shrink, while the populations of the U.S. and those of the North American Free Trade Agreement economies will continue to increase.For these reasons, the report concludes that the likelihood of U.S.-China conflict in the medium to long term remains remote. This is why Xi Jinping is more attracted to the idea of expanding China’s regional and global footprint by economic and political means. This is where he will likely direct China’s diplomatic activism over the decade ahead.

6. Chinese political, economic and foreign policy influence in Asia will continue to grow significantly, while China will also become a more active participant in the reform of theglobal rules-based order.

As noted above, a core geopolitical fact emerging from the report is that we are now seeing the rise of what Evan Feigenbaum has described as “two Asias”: an “economic Asia” that is increasingly dominated by China; and a “security Asia” that remains dominated by the United States. China is now a bigger trading partner with every country in Asia than the United States. The U.S. is either an ally or strategic partner of the bulk of maritime Asia. By contrast, China’s only strategic “ally” is North Korea, which has become a greater strategic liability than an asset. If strategic tensions drove the U.S. and China into adversarial postures, regional states would face increasingly irresistible pressure to make a zero sum strategic choice between the two.China continues to build on its economic strength in the wider region through its recent institutional innovation. While the BRICS Bank, or the New Development Bank, has a global mandate, the AIIB has an exclusively regional focus. As for the Silk Road Fund, the bulk of its investment will focus on Southeast, South and Central Asia. Concurrently, many regional states are strengthening their security ties with the U.S., compelled by their long-term strategic anxieties over an increasingly powerful China. Strategic polarization across Asia is therefore likely to intensify in the future.The report examines different approaches to regional architecture and mechanisms todeal with Asian security challenges. The U.S. and the West are, at best, peripherally aware of China’s preferred institutional arrangements for the region as reflected in Xi Jinping’s “Asian Security Concept” (Yatai anquanguan 亚太安全观). Delivered at the May 2014 Conference on Interaction and Confidence Building Measures in Asia, Xi outlined an integrated concept of “common security,” “comprehensive security,” and “cooperative security” for the entire region. Provocatively, however, Xi made plain that his “Asian Security Concept” did not include the United States:When it comes to Asian Affairs, they should fundamentally be handled by the people of Asia; when it comes to the problems of Asia, these should be fundamentally managed by the people of Asia; when it comes to the security of the Asia, it should be upheld by the people of Asia. The people of Asia are capable and wise enough to strengthen cooperation among themselves, in order to achieve the peace and stability of Asia.The broad contours of Chinese strategic thinking on the future of regional architecture are beginning to take shape: Asia’s security architecture should not include the U.S. or its alliance structure, according to Xi; whereas the regional economic architecture of the future is negotiable. Xi’s security architecture template appears to be CICA. A revitalized Asia-Pacific Economic Cooperation Forum, including the Free Trade Area of Asia Pacific rather than the TPP, is his preferred economic structure.

“China is now committed to becoming an active participant in the reform of the current global order.”

The report argues that the time is ripe to consider alternative institutional approaches that integrate both China and the U.S. into a common regional arrangement, and witha mandate to tackle both security and economic challenges. If competing structures are established, these will exacerbate regional division. Furthermore, the report argues that any explicit attempt to exclude the U.S. from the regional security architecture is more likely to strengthen existing U.S. military alliances, rather than weaken them. Rather than playing an institutional tug-of-war, it would be far more constructive for the U.S. and China to join hands in building pan-regional institutional arrangements. This will not solve all regional security challenges. But it will help to manage, and reduce, them over time. Confidence-building measures could cascade into a more transparent security culture and, in time, a more secure Asia. But this can only happen if both powers decide to invest common capital into a common regional institution. Otherwise, we really do find ourselves in the world of the “zero sum game.”Beyond Asia, and in the reform of the global order more broadly, China has a long-stand- ing commitment to greater “multipolarity” in the international order. For this reason, it has long been a member of most multilateral institutions within the UN and the Bretton Woods systems. China has used multilateralism as a means to expanding its diplomatic influence in the world, particularly through its membership of the UN Security Council, at a time when its national power was limited. This has now begun to change.Xi Jinping stated clearly in his November 2014 address to the Party’s international policy work conference: China is now engaged in “a struggle for the international order” (guoji zhixu zhizheng 国际秩序之争). This is an unusually sharp statement from the Chinese leadership and suggests that the international community should prepare for a number of new Chinese reform proposals of the current multilateral system. This may manifest itself through the normal review processes of the UN and other multilateral agencies as their treaty or regulatory systems come up for periodic review.China is now committed to becoming an active participant in the reform of the current global order. There is no evidence to suggest that China wishes to abandon the current order. What is clear, however, is that China does not see the current system as set in stone. What we will therefore see is an increasing tempo in China’s multilateral policy activism, and a growing range of Chinese institutional initiatives. This represents a new, forthright Chinese voice in the world, in radical contrast to its previous approach of “hide your strength, bide your time, never take the lead.”

7. Constructive Realism for a Common Purpose: Toward a common strategic narrative for U.S.-China relations.

Before “détente,” in the latter period of the Cold War, a joint narrative between the U.S. and the Soviet Union was not possible. Both sides were not only ideological enemies. They were declared military enemies. They fought proxy wars. And they were in a permanent state of readiness to go to war directly, and in extremis, to destroy one another in a nuclear exchange. Over time, however, the U.S. and the Soviet Union did develop basic protocols to avoid crises and unintended confrontation.By contrast, despite the difficulties, the U.S.-China relationship remains in decidedly positive territory. Since 1972, U.S.-China relations have remained more functional than those between the U.S. and the Soviet Union ever were, and have never escalated to a comparable level of hostility. As noted above, both China and the United States have private and semi-public strategic narratives about each other. But as yet they do not have a shared strategic narrative between each other. Such a common strategic narrative for U.S.-China relations may be difficult, but it is certainly not impossible. And given the stakes involved for the future, it is increasingly necessary.A common strategic framework for U.S.-China relations would offer many advantages.

First, in Washington, it would help provide strategic direction to government agencies competing for policy attention and space, as well as those multiple agencies engaged in aspects of the China relationship but not on a daily basis, thereby helping to provide policy coherence in engaging on an inter- agency basis, as well as with Chinese interlocutors;
Second, in Beijing it would go beyond that because of the more hierarchical nature of the political and bureaucratic decision-making process, providing direction to the system at large; and
Third, for both powers, a coherent strategic framework would also inject additional positive ingredients: a common determination to manage significant differences effectively in order to avoid unnecessary confrontation; a common commitment to collaborate in difficult policy areas with a view to resolving them; and a common sense of purpose to build political capital and strategic trust over time.

For these reasons, the report argues that the ideational content of a common strategic framework for the relationship should be: “realist” about those areas of the relationship which are not possible to resolve within the foreseeable future; “constructive” about those areas that could be resolved with high-level political effort at the bilateral, regional and global levels; and guided by a “common purpose” to build strategic trust, step by step, over time, not based on declaratory statements, but instead on common action in resolving common problems.