Chinese leadership decides to shed caution

China is not only adopting a higher global profile, but is increasingly ready to take positions that earn global disapproval.

After he launched China on to a market-led course in 1978, Deng Xiaoping counselled caution in international relations. China should, he advised, keep a low profile while enriching itself and not alarm the countries whose markets for its exports would replace deficient domestic demand.
Hu Jintao, the president of China, and his leadership colleagues must have decided that the time has come to shed such caution. China not only adopts a higher global profile, but is increasingly ready to take positions that earn the world's disapproval, be it on the valuation of its currency or its support for regimes in Sudan, Iran and Burma. And now that more muscular approach by Beijing confronts the Obama administration's drive to reassert Washington's interest in Asia.
China not only adopts a higher global profile, but is increasingly ready to take positions that earn global disapproval.
This could provide a testing experience for both sides of the so-called G2, a concept that has never really taken off, if only because of the rocky path of Sino-US relations since President Barack Obama's visit to the People's Republic a year ago.
The flashpoints are evident. The assertion by Hillary Clinton, the US secretary of state, that freedom of navigation in the South China Sea runs straight up against China's claim to sovereignty over the waters to its south. Washington's growing closeness to India, including backing New Delhi's claim to a permanent seat on the UN security council, is not to Beijing's taste.
The US-Japan relationship remains a constant source of concern for China. The same goes for US-South Korean links. US arms sales to Taiwan rile Chinese leaders who insist that the island is part of the People's Republic.
During my recent three months in Beijing, I was struck repeatedly by the sharp tone adopted towards the US not only by ideologues and media propagandists, but by senior economists who insist that the failure of American economic policy is responsible for the world's ills.
The fact that the US Federal Reserve's new bout of quantitative easing (QE2) went down like a lead balloon at the Group of 20 (G20) leading and emerging economies summit in Seoul showed that China is not short of allies.
Before the G20 meeting, co-operation over global warming seemed at a dead end. China still values investments by companies such as Intel, yet promotion of domestic companies in its stimulus package and an increasingly tough regulatory climate for foreign firms complicate a business relationship that has flourished since the 1980s. As the mainland moves up the technological and value chain under its next five-year plan, trade tensions are set to rise.
China trade was once all about cheap exports. But if Chinese development goes to plan, import substitution for big-ticket items will become the order of the day. In a little-noticed development this month, China unveiled a prototype of a 150-seat airliner due to go into service by 2016, complicating Boeing's sales to the world's second-biggest market for commercial aircraft, not to mention the impact on Airbus.
Speaking at a European Central Bank conference in Frankfurt recently, Ben Bernanke, the US Federal Reserve chairman, hit back at Chinese criticism, noting that "currency undervaluation by surplus countries is inhibiting needed international adjustment and creating spillover effects that would not exist if exchange rates better reflected market fundamentals".
Mr Hu's visit to Washington in January will be the touchstone. In an interview with The Australian newspaper, Mrs Clinton said China's current policies in the region were designed to test other nations and insisted that Beijing should abide by international law. The problem is that the law is extremely vague on key points of conflict, notably the sovereignty of rocky islands that may sit on top of large energy reserves.
The US-China spat has greater resonance because of the way Washington backed Japan in the row over the detained Chinese trawler and the flurry over China's decision to halt exports of rare earth minerals to Japan. A survey by the Japanese newspaper Yomiuri Shimbun published this month found that 87 per cent of Japanese respondents considered China to be untrustworthy and 90 per cent thought relations between the two countries were bad.
A simultaneous poll by China's Oriental Outlook Weekly, run by the state news agency, found similar figures on views of Japan held by Chinese. On top of this Vietnam, with US approval, declared its port at Cam Ranh Bay open for foreign naval ships and, to Beijing's displeasure, hosted the US aircraft carrier George Washington.
If the relationship continues its downward spiral, Mr Hu's visit risks turning into a confrontation. Such a stand-off is dangerous for both countries - and the world. It could lead to damaging protectionism.
Depicting China as an enemy may be an attractive electoral gambit for an Obama administration that feels the need to display its muscles. Beijing will respond in kind.
High-level and dispassionate statesmanship is required, with each party giving some ground and trying to scale down the currency rhetoric while engaging in serious discussion on common approaches to environmental measures. Whether either party has the wherewithal remains in question. On their performances so far, one can only remain pessimistic.
Jonathan Fenby is the China director of the research service Trusted Sources and author of The Penguin History of Modern China
* Yale Center for Study of Globalization