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Sabre-rattling at Washington risks opening Pandora's box

February 10, 2010

By Geoff Dyer
Financial Times (UK)
February 9, 2010

It is almost two months now since the Copenhagen
climate change conference, but one incident from
the meeting is still causing a buzz in Beijing.
It was the moment in one of the tense final
sessions when, according to witness accounts, a
Chinese official started to jab his finger at Barack Obama, the US president.

More than anything else, that incident has
symbolised what many see as a newly aggressive
Chinese approach to diplomacy. As a European
diplomat said: "If one of the deputy heads of the
planning ministry can behave like that to the
American president, how are they going to treat the rest of us?"

Almost every day there appears to be a new source
of irritation between China and the US about
Tibet or Taiwan or the Chinese currency. That is
on top of Google, Iran, tyres and chicken feet.
And it is not just the Americans: similar stories
are being told by Indians, Russians and assorted Europeans.

There is a ritualistic quality to some of these
disputes, especially Taiwan and Tibet. But China
seems to be raising the stakes threatening
sanctions on US companies selling arms to Taiwan,
including Boeing. In lots of ways, China's
pushier approach is understandable. Everyone has
been telling the Chinese they are the coming
superpower. It should be no surprise, then, that
China wishes to turn that position into real
influence over "core" issues. "We have to show
the US that today's China is very different from
the China of eight years ago," a Chinese businessman said last week.

Talking tough with the US is popular at home,
where nationalist sentiments are often only just
beneath the surface. The idea of imposing
sanctions on US companies over Taiwan arms sales
was touted on the internet and in some newspapers
before the Obama administration approved the $6.4bn package.

Chinese frustrations with the US include some
surprises. China's foreign currency reserves of
US dollars are usually seen as a strength, but
many in China complain the government has been
talked into buying assets whose value, they
think, will inevitably collapse. A headline in
yesterday's China Business News reads: "The US
frequently uses cunning tricks to force China to buy its bonds".

Some of the rhetoric might also reflect growing
internal political battles, over the potential
for inflation, for instance, or the leadership succession.

But even if such talk is good domestic politics,
China is playing with fire if it takes a
genuinely harder line with the US. Beijing has a
lot to lose if these disputes become more than just a war of words.

The most obvious risk is that Chinese sanctions
on US arms companies could help provoke a trade
war. There is a cupboard full of bills in the US
Congress threatening tariffs on Chinese goods if
Beijing does not let its currency appreciate,
which are just waiting to be dusted off -
especially if unemployment remains high.

More broadly, Beijing's more abrasive approach
risks undermining a decade or so of highly
successful diplomacy that has helped sustain
China's booming economy. Beijing has managed to
neutralise a lot of potential tensions about the
"China threat" by settling border disputes,
increasing its participation in international
organisations and distributing aid. The
cornerstone of this strategy was making sure
relations with the US did not become too fraught.

But if Beijing follows through on some of its
sabre-rattling, it could lead to a cascade of
tactical adjustments on how to deal with China.
In its first year, the Obama administration
emphasised engaging China, but it could lean more
towards containment. Japan, Australia and India,
for instance, might be pulled in a similar
direction and neighbours in central Asia and
south-east Asia could become more wary of being
dominated by China. The result would be to make
it more difficult for China to do energy-supply
deals and open new markets for its products.

China is too powerful to keep following statesman
Deng Xiaoping's advice to "adopt a low profile".
But as China's leaders ponder how to exert more
influence abroad, they need to ask: "Is it really
worth tearing up a winning strategy?"
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