YALE School of Management April 5, 2012 US-CHINA RELATIONS PAST, PRESENT, FUTURE by Jeffrey E. Garten YALE School of Management

OVERVIEW BACKGROUND TO MY VIEWS PAST – EIGHT PHASES OF US-CHINA RELATIONS PRESENT – WHY MORE COMPLEX, DIFFICULT KEY IMPERATIVES FOR POLICY A FINAL WORD ABOUT STUDENT EXCHANGES CONCLUDING THOUGHTS Q&A

EIGHT PHASES OF US-CHINA RELATIONS 1898 – WORLD WAR I PHILIPPINES/OPEN DOOR/ IMMIGRATION WORLD WAR I – WORLD WAR II CONTAINING JAPAN, DOLLAR DIPLOMACY WORLD WAR II CHINA AS ALLY; ROOSEVELT’S POST-WAR VISION COLD WAR (1949-1972) CHINA AS ENEMY; CONTAINING COMMUNISM; KOREAN WAR; US DOMESTIC POLITICS

EIGHT PHASES OF US-CHINA RELATIONS NIXON OPENING, CARTER NORMALIZATION, TAIWAN 1980’S OPPOSING USSR (“CHINA CARD”); ARMS SALES; BORDER MONITORING; TAIWAN 1990’S HUMAN RIGHTS, TAIWAN, TRADE/WTO 2000’S TRADE, CURRENCY, CHINA’S GROWING GEOPOLITICAL FOOTPRINT – ASIAN WATERS, AFRICA, LATIN AMERICA

EIGHT PHASES OF US-CHINA RELATIONS KEY SUMMARY POINTS LIMITED NUMBER OF ISSUES CONTAIN JAPAN CONTAIN CHINA ITSELF CONTAIN USSR MARKET ACCESS IMMIGRATION TAIWAN HUMAN RIGHTS US ALWAYS THE RISING OR DOMINANT POWER; CHINA PLAYING WITH WEAK HAND CHINA OFTEN THE DERIVATIVE OF SOMETHING ELSE MOSTLY BILATERAL

LOOKING AHEAD A LOT IN COMMON FORMULA FOR CAPITALISM ENERGY AGEING OLD GOALS AND DRIVES LESS VIABLE IN NEW ENVIRONMENT US MISSIONARY GOAL, GLOBAL “LEADERSHIP-COMPLEX” CHINA “MIDDLE KINGDOM COMPLEX,” FREE RIDER HABIT

LOOKING AHEAD BROADER, MORE DIFFICULT AND COMPLEX AGENDA SPECIFIC TRADE DISPUTES → SHAPE OF TRADING SYSTEM SPECIFIC CURRENCY RELATIONSHIPS → SHAPE OF MONETARY SYSTEM NEW, INTENSE DISCUSSION OF ECONOMIC REFORMS; KEY TO WESTERN RECOVERY GLOBAL COMPETITION FOR RESOURCES AND GEOPOLITICAL CONSEQUENCES (EXAMPLE: MIDDLE EAST)

LOOKING AHEAD MILITARY RIVALRY IN ASIAN WATERS; DEFENSE SPENDING GOING OPPOSITE WAYS; OPACITY IN CHINA’S POLICY; WORRYING TRENDS NUCLEAR NON-PROLIFERATION (IRAN, NORTH KOREA) CLIMATE CHANGE COMPETITION IN CYBERSPACE; NEED FOR RULES NOT JUST US ADVANCING IDEAS; NOW CHINA, TOO BOTH GOVERNMENTS SERIOUSLY HANDICAPPED OR CONSTRAINED PSYCHOLOGICAL IMPACT OF RISING AND (RELATIVELY) DECLINING POWERS

KEY IMPERATIVES REALISTIC EXPECTATIONS DOMESTIC RENEWAL IN US BROADER REFORMS IN CHINA GREATER EMPHASIS ON MULTILATERAL (G-2 NOT FEASIBLE)

KEY IMPERATIVES GUARD AGAINST FLASHPOINTS MAJOR DOMESTIC UPHEAVAL IN CHINA CYBERATTACK NAVAL CONFRONTATION WAR ON KOREAN PENINSULA DECLARATION OF TAIWAN INDEPENDENCE NEED FOR CONTINGENCY PLANNING/ CRISIS MANAGEMENT PLANNING

POST SCRIPT – STUDENTS MASSIVE INCREASE IN NUMBERS OF CHINESE STUDENTS COMING TO THE US NUMBERS AND % INCREASE STEADILY RISING 43% INCREASE IN UNDERGRADUATES IN 2011 OVER 2010 21% INCREASE IN GRADUATE STUDENTS; ALMOST HALF OF FOREIGN GRADUATE STUDENTS IN US 27.5% STUDYING BUSINESS 19.2% STUDYING ENGINEERING 11.5% STUDYING PHYSICAL/LIFE SCIENCES 10.6% STUDYING MATH/COMPUTER SCIENCE ≈70%

POST SCRIPT – STUDENTS NOT EASY TO EVALUATE IMPACT GREAT FOR CHINA; GREAT FOR US TWO IMEPRATIVES FOR US SEND MORE TO CHINA LIBERALIZE VISAS FOR ALL FOREIGN STUDENTS IN KEY CATEGORIES OF SKILLS

CONCLUSION CAUTIOUSLY OPTIMISTIC LEADERSHIP RECOGNIZES STAKES RECORD SINCE NIXON REMARKABLY GOOD REGARDING BOTH GOVERNMENTS