Brookings: Experts - Kenneth G. Lieberthal

The Road Ahead for China’s Economy

Tue, 16 Apr 2013 09:00:00 -0400

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April 16, 2013
9:00 AM - 4:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

In recent years, China has increasingly confronted new challenges in economic policy, including rising labor costs, low household consumption, rapid urbanization and inefficient domestic investment. While it is now widely acknowledged in Beijing that major structural adjustments are needed to address these issues, implementing serious reforms pose major challenges for the newly installed leadership.

On April 16, the John L. Thornton China Center at Brookings and China’s Caixin Media Group hosted a conference to examine the daunting challenges confronting China’s new leaders. The morning panels featured a discussion of the financial sector as well as the relationship between the domestic agenda for financial reform and China’s evolving strategy for outbound investment. The afternoon panels took a close look at the political obstacles to implementing major economic reform in areas such as tax policy, the household registration system and land transfers, as well as explore the impact of environmental and natural resource constraints on China’s economic growth.

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China Needs Political Capacity, Courage to Force Change

Kenneth G. Lieberthal — Sat, 30 Mar 2013 00:00:00 -0400

Editor's note: In an interview with Business Standard, Kenneth Lieberthal explains what talks about the changes China is likely to see under the new leadership, the prospect of China-India relations and China’s relations with its neighbors. Read an excerpt below.

Business Standard: What does the change of guard in China mean for the nation internally? What does it mean for the outside world?

Kenneth Lieberthal: There's been a 70 per cent turnover of the leadership of the Communist Party of China (CPC), government and military in November last year and March this year. They have a good idea about the challenges China faces. But whether the new leadership has the political capacity to meet these challenges is the question.

The leadership understands that the development model on which China has been operating its economy for the last few decades is no longer viable: it was a natural resources-intensive model that has led to deepening inequalities, environmental destruction and corruption.

The assumptions on which the model was based are no longer valid. The assumptions were that China can develop based on continuing to expand exports rapidly, leveraging a large, cheap, young and flexible pool of labour, and counting on social tolerance of various problems such as inequality, corruption, and pollution as the inevitable costs of transitioning from plan to market.

The new model is significantly different. It sees a bigger contribution to the Chinese economy from services - versus manufacturing - and visualises a bigger contribution by the Chinese private sector. It envisions a much bigger social safety net, accelerated urbanisation and an increase in domestic consumption as a driver in the domestic economy. It wants to see the Chinese economy become innovative and high quality.

Today, while everyone knows what the objectives are, if the political capacity is missing, these objectives cannot be achieved. Will the changes in the political leadership produce the necessary changes in the economy?

Authors

Kenneth G. Lieberthal

Publication: Business Standard

Image Source: © Jacky Chen / Reuters

The 2013 People’s Congress: A New Government, A New Direction?

Kenneth G. Lieberthal — Thu, 28 Mar 2013 17:00:00 -0400

In China, where the 12th National People’s Congress officially selected its new leadership, many economic, domestic and foreign policy challenges persist. My colleagues Cheng Li, Jonathan Pollack, Feng Wang, Ran Tao and I discussed China’s most pressing issues and possible outcomes.

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Examining U.S. Concerns on Trade, Security as China Welcomes New President

Kenneth G. Lieberthal — Thu, 14 Mar 2013 00:00:00 -0400

Editor's note: China officially installed Xi Jinping, already the Communist Party leader, as president for the next 10 years. In an interview with PBS's Judy Woodruff, Kenneth Lieberthal discusses contentious issues of trade, defense, and cybersecurity for China and the U.S. Read an excerpt below.

Judy Woodruff: And let me start with you, Ken Lieberthal. What do we need to know about Xi Jinping? Tell us something about him.

Kenneth Lieberthal: The most important thing we need to know is that he's going to govern China for the next decade.

And the next decade is going to be enormously important for U.S. interests, for China, for Asia and globally. He's worked his way up through every level of the Chinese political system, so he's a very experienced politician and administrator.

He's come in on a program of saying he's going to clean up corruption, he's going to revitalize the Communist Party and keep it in power and use his capabilities to reform the Chinese economic system while maintaining and building military strength.

Authors

Kenneth G. Lieberthal

Publication: PBS Newshour

Image Source: © China Daily China Daily Information Corp - CDIC / Reuters

Environmental Outlook: Air Pollution In China

Kenneth G. Lieberthal — Tue, 05 Mar 2013 00:00:00 -0500

Editor's note: In an interview with NPR's Diane Rehm, Kenneth Lieberthal to talk about the catastrophic air pollution crisis in China. Read an excerpt below.

Diane Rehm: Ken Lieberthal, to what extent are Chinese leaders, number one, taking this into account, number two, acknowledging it publicly and number three trying to do something about it?

Kenneth Lieberthal: Public acknowledgement has increased a lot just over the past year. Interestingly, that was largely forced by the U.S. Embassy's measuring air pollution at the embassy compound in Beijing and putting out a Twitter feed live all the time that tells you what that rating is.

And what it turned out was that the official statistics put out by the Chinese Ministry of Environmental Protection were systematically, dramatically lower than those of the embassy so that caused an uproar. The Chinese then improved their game.

They began measuring those very dangerous pollution, the small particulate pollution and they began giving more accurate figures with more measurement. That is now a Cause célèbre in China.

In terms of what they're doing about it, though, frankly it is fundamentally a combination of their approach to economic development, which is to drive GDP growth every day all the time. With most of that GDP growth being in manufacturing and in construction and with officials everywhere benefiting the most when they can build big projects and drive GDP growth by big capital, intensive projects, those tend to be the most polluting things out there.

And they're supported by things like cement and aluminum and so forth, all of which are highly polluting. So at the end of the day, this is a model of development just built into the genetic code of the current political system. And they need to change that model of development dramatically as part of the solution to this catastrophic air pollution. So this is not going to happen quickly or easily.

Authors

Kenneth G. Lieberthal

Publication: NPR's The Diane Rehm Show

Cybersecurity and China

Kenneth G. Lieberthal — Fri, 22 Feb 2013 18:24:00 -0500

As recent news reports highlight, the U.S. government and cyber security firms are now naming names as they accuse the Chinese of a wide ranging state-directed campaign of cyber espionage. Pinpointing who has actually directed such intrusions and data theft is technically difficult. But there is now convincing evidence that state-supported players in China are undertaking massive, organized efforts to penetrate foreign networks and steal information of commercial, diplomatic and security value to various Chinese interests.

These activities are increasing tensions in U.S.-China relations and warrant serious diplomatic efforts to address. But there are no quick fixes in this arena, and it is especially important therefore to be clear about what can and cannot be accomplished through negotiations.

Put simply what could American negotiators feasibly accomplish if the Chinese side is willing to engage in serious, sincere talks to reach agreements on cyber space norms and activities? The following answers assume that Beijing will insist that the U.S. and the other major advanced industrial countries hold themselves to any rules that are negotiated.

Espionage

Americans are alarmed and infuriated by Chinese intrusions into our defense, intelligence, and diplomatic networks and by Beijing’s acquisition of information on how to penetrate (and potentially attack) the systems that control our critical infrastructure such as power plants, the electrical grid, dams, and financial services networks. All of this falls under into the category of espionage – acquiring nonpublic information that can give one state an advantage over another. But nobody has ever figured out a way to stop states from engaging in espionage wherever they are able to do so, and the new cyber realm is unlikely to prove an exception to this.

Information on American cyber espionage is largely classified, but it is unrealistic to assume that the United States as a matter of principle does not exploit these opportunities on a large scale, including against China. It is, moreover, hard to imagine that the relevant Washington agencies would agree to negotiate limitations with China on what information the U.S. government will be allowed to gather in the future. Even if we did so, our allies would almost certainly not go along.

There are a lot of ways to try to render a foreign power’s espionage efforts ineffective or even counterproductive. But establishing self-limiting rules of the road is almost certainly not among them.

Commercial Data

The U.S. would have much less trouble advocating a multilateral agreement to prohibit the use of government-sponsored cyber intrusions to steal data (proprietary technology, negotiating strategies, bid prices, etc.) to provide to the country’s corporations or other profit-making bodies a competitive advantage. The U.S. government does not engage in such activity itself.

But even here, there are constraints. For example, the United States has repeatedly identified foreign firms, including in China, that have engaged in nuclear proliferation or other activities that violate U.N. sanctions or American law. Undoubtedly, the U.S. government has at times learned of these activities through cyber intrusions into corporate networks abroad. In addition, the French government is widely reputed to engage in corporate cyber espionage to benefit French companies, and this may also be the case for some other American allies.

Differentiating intrusions for legitimate security purposes from those for commercial competitive advantage may prove very difficult in practice. Beijing may thus have a lot of company in opposing any agreement to prohibit intrusions for commercial gain.

Warfare

Cyber warfare means using cyber weapons to disrupt another country’s security capabilities and/or inflict direct harm on its people. It may be possible to identify certain types of cyber attacks that by common agreement are prohibited and would warrant severe retaliation (the 21st century equivalent of the post WWI agreement to prohibit the use of poison gas as a weapon of war). Applying already-accepted international principles such as those prohibiting targeting civilians and requiring efforts to minimize noncombatant casualties from an attack may prove feasible in the cyber realm. Negotiations aimed at reaching such agreements can also increase understanding of redlines that various countries have and the rationales behind them. This in itself can potentially reduce the risk of cyber attacks that escalate into major conflict.

But any blanket effort to restrict the use of cyber weapons to achieve military objectives is almost certainly a reach too far. The United States, for example, reportedly worked with Israel to employ cyber weapons (most notably the Stuxnet virus) to disrupt Iran’s nuclear program. All advanced militaries, including China’s PLA, moreover, have developed and deployed various offensive and defensive electronic warfare capabilities. Various militaries will have strong views on what types of capabilities, if any, they feel they can sacrifice in the context of multilateral negotiations to constrain cyber warfare capabilities and actions.

Criminal Activity

Utilization of cyber space in criminal activity comes in all shapes and sizes – such as fraud, identity theft, bank account raids, child pornography, money laundering, gun running, and a vast array of other endeavors.

Criminality is an arena that may well hold the most promise for reaching meaningful and enforceable multilateral agreements, as many (but by no means all) types of crimes are recognized as such by all major governments. Negotiations may progress most effectively if they begin with clear-cut shared concerns (such as child pornography) and then move on to more complex issues only as mutual trust is created and understanding develops as to feasible international enforcement measures.

In sum, Chinese activities rightly produce anger and frustration in the U.S. and elsewhere, but figuring out what the United States itself is prepared to put on the table and what types of agreements to seek with China and others requires cool-headed calculations of what is feasible. Simplistic ideas of demanding that the Chinese curtail the full array of their obnoxious and offensive behavior will raise the temperature but will also fall far short of producing constructive outcomes, especially given that the U.S. government would not itself accept many of the restrictions on conduct that many feel we should require of Beijing.

The above brief overview provides some introductory thoughts about what types of activities can and cannot be addressed by negotiations to establish international agreements in cyber space. This brief overview does not address either enforcement or the technical details of the cyber world that add another huge level of difficulty, especially as the relevant technologies are constantly changing. A Brookings monograph I coauthored with Peter Singer, Cybersecurity and U.S.-China Relations, elucidates these complexities and recommends a path forward.

As that monograph explains, a process of engaging the Chinese to map out what might be negotiable is, if carefully constructed, potentially very worthwhile. The negotiating process itself can: generate common vocabularies and concepts that are essential to future agreements on approaches and rules; better inform each side about perspectives of the other side; clarify what is feasible to try to accomplish; and nurture growing familiarity and, possibly, trust. None of these will fully resolve the outstanding problems, but all potentially enhance the ability to manage the increasing dangers cyber issues pose to United States and to U.S.-China relations. In a realm where there are no quick fixes, that is an objective worth pursuing.

This post has been revised.

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Kenneth G. Lieberthal

Image Source: Reuters

Bringing Beijing Back In

Kenneth G. Lieberthal — Thu, 17 Jan 2013 00:00:00 -0500

The U.S. rebalancing strategy (pivot) toward Asia has produced desirable results, but the current strategy could increase security conflicts with China. Kenneth Lieberthal drafted this memorandum to President Obama as part of Big Bets and Black Swans: A Presidential Briefing Book.

What steps can President Obama take to solidify and strengthen America's bilateral relationship with China?
What should the U.S. expect from Xi Jinping as a leader?
How could Xi react to U.S. efforts to engage and cooperate? What policy positions should President Obama make explicit to Xi?

Download Memorandum (pdf) | Download the Presidential Briefing Book (pdf)

TO: President Obama

FROM: Kenneth G. Lieberthal

Your rebalancing strategy toward Asia has produced desirable results, including convincing China that the United States is serious, capable and determined to be a leader in the region for the long term. But this strategy is also generating dynamics that increasingly threaten to undermine its primary goals. It is therefore time to rebalance judiciously the rebalancing strategy, and China’s leadership change provides you with an opportunity to do so.

Your objective should remain an Asia that, five-to-10 years from now, will contribute substantially to global and U.S. economic growth and will mitigate security dilemmas that drain American treasure and reduce the region’s economic dynamism.

Unfortunately, at this point your current strategy is in danger of actually enhancing rather than reducing bad security outcomes. Most notably, territorial disputes have become sharper, and Beijing is largely operating under the false assumption that the flare-up of these disputes reflects an underlying U.S. strategy to encourage Japan, Vietnam, and the Philippines to push the envelope in the hope that Chinese responses will lead those countries — and ASEAN — to become more united and dependent on the United States.

Welcome mats for our increased security engagement are now being laid out around the region. This is satisfying in the short term but carries longerterm risks. U.S. friends and allies are encouraging the United States to enhance its security commitments, but they are also tying their economic futures to China’s growth. The United States is thus in danger of having Asia become an ever greater profit center for China (via economic and trade ties) and a major cost center for the United States (via security commitments), especially if the Trans-Pacific Partnership (TPP) does not develop as hoped.

Recommendation:

To shift this trajectory, you should take the initiative this spring to solidify and strengthen the core bilateral relationship with China while continuing to provide reassurances to allies and partners of U.S. staying power in the region. Nobody in Asia wants to have to take sides between the United States and China, and none any longer fear a G-2. All seek “wise management” of U.S.-China relations. An initiative that improves U.S.-China relations and contributes to regional stability can, therefore, potentially enhance U.S. position throughout Asia.

Background:

China’s leadership change presents an opportunity. Xi Jinping fears serious challenges to the Chinese system if he cannot improve relations with a population that has become increasingly vocal, critical and nationalistic. Xi knows he must significantly alter a development model that is exacerbating social and political tensions, even as the rate of growth slows.

Early indications are that Xi is more open and politically agile than was Hu Jintao, but his specific priorities and capacity to effect change are not yet known. He may take a strong stance on regional issues to signal China’s determination or he may welcome a chance to tamp down international tensions to focus more on domestic transformation. You should give him a clear option to pursue the latter approach.

Specifically, you should offer Xi a game-changing opportunity to put U.S.- China relations on a more predictable long-term footing that protects critical Chinese equities but also requires that China engage more positively on key bilateral, regional and global issues. Any U.S. policy that moves the needle on China’s behavior will be welcome throughout Asia.

Beijing is bureaucratically incapable of taking the initiative to suggest the ideas recommended below. Xi will want the United States to put cards on the table to which he can then respond — and then the real negotiation will begin. That lets you shape the opening agenda.

The strategy is to offer Xi full good-faith efforts to deal with key irritants, provided China works with your administration on the areas of major U.S. concern indicated below. You can do important things to change Beijing’s calculus of American intentions while also advancing specific U.S. interests.

I recommend that you engage with Xi Jinping early on in order to establish a strong personal relationship with him. Use this to propose working out a four-year framework for U.S.-China relations that establishes a solid foundation of trust for the next one-to-two decades and provides substance to China’s mantra of “a new type of major power relationship.” Suggest that at least four times per year you and he hold half-day summits – not onehour bilaterals — on the margins of multilateral events. Substantively, you might raise the following for consideration:

• The current Strategic & Economic Dialog (S&ED) is structurally very awkward for China and has never produced a sustained dialogue across the economic and foreign policy spheres. Propose that it be repackaged into a political and military (pol/mil) dialogue that is sustained (rather than a brief annual meeting) and a separate economic dialogue that closely parallels the Strategic Economic Dialogue that former Treasury Secretary Paulson led.

• For the pol/mil dialogue, suggest an enhanced Strategic Security Dialogue (SSD) that convenes four day-long meetings a year, with each side establishing a working group for ongoing liaison. The Strategic Security Dialogue, which met briefly twice under the S&ED, is the only formal U.S.-China dialogue that brings together military and foreign policy leaders in the same room. At least two of the enhanced SSD meetings should exclusively address overall U.S. and Chinese security postures in Asia a decade hence – basic thinking, pertinent doctrine, core concerns/interests, and areas where mutual restraint may benefit both sides. The United States has never held such discussions with China, and they may be critical for building strategic trust.

U.S.-China military-to-military (mil-mil) relations lag far behind those of their civilian counterparts. Suggest several initiatives to relieve some of the strain in that sphere. The PLA sees restrictions on inviting them to military exercises as indicative of hostile U.S. expectations of the relationship. You can indicate the possibility you will use your waiver authority to permit PLA participation in various future U.S.- organized military exercises (Defense Secretary Panetta has already done this for RIMPAC 2014). You might also offer serious discussions on military cooperation to assure better the ongoing flow of reasonably-priced oil from the Persian Gulf.

Relatedly, maritime territorial disputes are feeding China’s wariness about U.S. strategy in the region. You can offer to clarify authoritatively our principles to reduce Chinese suspicions. Such clarification would make clear that: The United States will take no position on sovereignty in territorial disputes to which it is not a party; the United States supports an ASEAN collective negotiation with China on a Code of Conduct in order to reduce the potential for territorial disputes to escalate, but does not seek Chinese negotiation with all of ASEAN on resolving territorial disputes; and the United States will adhere to its core principles of peaceful management of disputes, freedom of navigation (including in Exclusive Economic Zones), and normal commercial access for American and other firms to maritime resources.

You can suggest various initiatives to enhance economic cooperation. These might include, for example, intensifying negotiations for a U.S.- China Bilateral Investment Treaty; inviting China to engage on the TPP when Beijing feels it is able to do so; completing the years-long technology export policy review, which can help U.S. business while also removing serious irritants in U.S.-China economic relations; directing the Department of Commerce and the U.S. Trade Representative to establish a consultative arm to help Chinese firms understand the pertinent U.S. investment laws and regulations; and indicating U.S. interest in working with China at the Clean Energy Ministerial to develop cooperative ways for major emitters to improve their capacity to deal with climate change.

The above highlights the scope and some of the content of what you might indicate to Xi that you are prepared to move forward on as a package, if Xi will put together a comparable level of efforts on the following issues:

• Mitigation of tensions over maritime territorial disputes
• More extensive U.S.-China mil-mil engagement and discussion of longterm strategic postures in Asia
• North Korea’s nuclear and missile programs
• Opening additional areas of the Chinese economy (especially in the service sector) to American investment
• Strengthening enforcement of intellectual property protections and engaging on cyber-security threats
• Joint initiatives on climate change

Conclusion:

Xi may be unable or unwilling to respond significantly to your offer. But taking this wide-ranging initiative early on costs little or nothing, since you would be seeking to begin a reciprocal negotiation, not to commit the United States to unilateral actions. The payoff is potentially very large in reshaping Chinese and American behavior in ways that will make our overall rebalancing strategy a long-term region-wide success.

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Kenneth G. Lieberthal

Image Source: © Gary Cameron / Reuters

President Barack Obama’s Second Term: Big Bets and Black Swans

Thu, 17 Jan 2013 13:00:00 -0500

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January 17, 2013
1:00 PM - 3:00 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

President Barack Obama begins his second term at a critical moment in world affairs, facing the many challenges that an unstable world—much of it in turmoil—presents. In response to these many challenges, Brookings Foreign Policy scholars have prepared a Presidential Briefing Book with memos to President Obama that detail the “Big Bets” that he should place in foreign policy, and the “Black Swans”—low probability, high impact events— that could unexpectedly dominate President Obama’s second term. The “Big Bets” include: a nuclear deal with Iran; a new approach to China; securing free trade agreements with Asia and Europe; outlining an Obama doctrine for the use and deployment of drones and cyberweapons; and establishing the United States as a leading energy exporter. The “Black Swans” include: a U.S.-China confrontation over Korea; revolution and war in China; the collapse of the House of Saud; the unraveling of the eurozone; the unraveling of the Palestinian Authority; and the impact of rising seas and climate change-related migration.

On January 17, Foreign Policy at Brookings hosted the launch of “Big Bets and Black Swans: A Presidential Briefing Book.” The first panel focused on the transformational policies that could shape a new global order. The second panel focused on the low probability, high impact events that might derail the president’s second term agenda. Vice President Martin Indyk, director of Foreign Policy, provided introductory remarks. David Gregory, host of NBC’s Meet the Press, moderated both panel discussions.

Visit the Big Bets & Black Swans interactive map »

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Low Carbon Development in the United States and China

Fri, 14 Dec 2012 10:00:00 -0500

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December 14, 2012
10:00 AM - 11:30 AM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The United States and China are the two leading emitters of greenhouse gases in the world. The individual approaches and results achieved in both the U.S. and China, including the success or failure of efforts at meaningful collaboration between the two countries will have a major impact on the global picture. China has decided to establish trial cap-and-trade systems in seven localities with a view to rolling out a nationwide system in 2016. The United States has also experimented with various approaches locally and nationally to reducing greenhouse gas emissions.

On December 14, the John L. Thornton China Center at Brookings hosted Qi Ye of the Climate Policy Initiative (CPI) and Tsinghua University for the launch of CPI’s third Annual Review of Low-Carbon Development in China. Professor Qi, who is known throughout China as a leading expert on local level compliance and reporting on national environmental policy, discussed China’s past experience with facilitating low-carbon development and its future prospects, with a focus on China’s planned cap-and-trade system. He was joined by Brookings Managing Director William Antholis, a former White House climate change official, who discussed national and local action on climate change in the United States, and reflected on his own travels across China and India earlier this year. Brookings Senior Fellow Kenneth Lieberthal, who leads Brookings’s yearly U.S.-China Clean Energy Conference, moderated the discussion.

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America and China in the Aftermath of Election and Succession: Paths and Pitfalls

Mon, 19 Nov 2012 09:15:00 -0500

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November 19, 2012
9:15 AM - 12:00 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The reelection of President Barack Obama and the convening of China’s 18th National Congress only days later highlight converging political calendars that may set the contours of U.S.-China relations and East Asian politics for years to come. However, uncertainties remain, with China’s political, economic and strategic trajectories subject to major internal and external pressures. At the same time, the United States confronts a daunting, long deferred set of fiscal challenges that could reshape U.S. foreign and security policy options.

On November 19, the John L. Thornton China Center at Brookings hosted a discussion assessing possible developments in Chinese foreign and domestic affairs in light of the political transitions in both countries.

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No Fundamental Change in China's Economic Policy

Kenneth G. Lieberthal — Fri, 16 Nov 2012 00:00:00 -0500

With China’s new leadership selected during the 18th Party Congress of the Chinese Communist Party, and with President Obama about to embark on a second term, the U.S. and China must consider a path forward for their sometimes bumpy but critically important relationship. Moreover, the U.S. must understand that China has to sort through a host of domestic issues as well.

Senior Fellow Kenneth Lieberthal says China’s new Premier Li Keqiang will take on the task of China’s economic and trade policies; he may have some new ideas in these matters but he won’t be able to institute reforms or make decisions on his own.

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No Fundamental Change in China's Economic Policy

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Kenneth G. Lieberthal

Challenges for China's New Leadership

Cheng Li, Kenneth G. Lieberthal, Jonathan D. Pollack and Jeffrey A. Bader — Fri, 16 Nov 2012 14:48:00 -0500

China’s new leadership will take the reins of government early next year. This new collective, led by Xi Jinping, will have a slate of critical issues to address with China’s stagnating economy topping the list. Brookings experts Cheng Li, Kenneth Lieberthal, Jonathan Pollack and Jeffrey Bader delve into the issues that await China’s leaders and the likely action the group will take.

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Xi Jinping's Challenge

Kenneth G. Lieberthal — Wed, 07 Nov 2012 00:00:00 -0500

Now that the U.S. election finally is over, it's time to focus on the other most important leadership transition in the world: China's.

Like the United States, China is also at a turning point, and though the specifics differ, the crux of the problem is the same: major structural change is critical to sustained future growth and stability, but the country's current leaders have been unable, or unwilling, to implement the necessary reforms to shift its economy onto a path of sustainable development.

If anything, China's heirs apparent have the harder task.

Unlike Barack Obama, for instance, the incoming leader Xi Jinping won't be able to choose most of his own team. Beginning Nov. 8, when the Communist Party convenes its 18th Party Congress, and continuing in March 2013, Beijing will in two steps replace about 70 percent of the incumbents in its top communist party, government, and military bodies. China watchers expect Xi Jinping and Li Keqiang to ascend to the most powerful two spots on the Politburo Standing Committee, the country's highest decision-making body, but nobody outside a small circle of insiders knows who will fill the other 5-7 spots -- let alone what those individuals think about how to run the world's second-biggest economy and one of its major military powers.

Read the full article at foreignpolicy.com »

Authors

Kenneth G. Lieberthal

Publication: Foreign Policy

Foreign Policy and the Presidential Election: A Post-Debate Analysis

Wed, 24 Oct 2012 16:30:00 -0400

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October 24, 2012
4:30 PM - 5:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

With just two weeks to go before the U.S. election, President Barack Obama and Governor Mitt Romney will engage in their final presidential debate on Monday, October 22. In this next debate, the candidates will focus on a wide range of foreign policy issues, including the U.S. mission in Afghanistan, U.S. counterterrorism efforts, the Iran crisis, and U.S.-China relations. Given the tone of the Obama-Romney town hall meeting and the critical U.S. and global security issues on the agenda, the foreign policy debate promises to be equally intense.

On October 24, Foreign Policy at Brookings hosted a discussion on the issues raised during the final presidential debate. Susan Glasser, editor-in-chief of Foreign Policy magazine, moderated the panel, which included Brookings Senior Fellows Robert Kagan, Suzanne Maloney, Kenneth Lieberthal and Bruce Riedel. Brookings Vice President Martin Indyk offered opening remarks.

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The Candidates Debate Foreign Policy – The Takeaways

Shadi Hamid, Kenneth G. Lieberthal, Ted Piccone, and Marvin Kalb — Tue, 23 Oct 2012 15:00:00 -0400

On October 22, President Barack Obama and Governor Mitt Romney met in the last presidential debate of 2012, this time focusing on foreign policy. In this second part of a two part compilation, read the reactions to the debate by Brookings Foreign Policy experts: Shadi Hamid analyzes statements both candidates made on U.S. Middle East policy; Kenneth Lieberthal examines three themes on China both Romney and Obama focused on during the debate; Ted Piccone explores why Latin America was left out of the debate; Bruce Riedel comments on Romney's defense of Obama's Afghanistan-Pakistan policy; Marvin Kalb reflects on lessons of the Cuban Missile Crisis and how they apply to U.S. foreign policy today.

Discussion of Middle East Would Leave Arabs Confused
Shadi Hamid, Director of Research, Brookings Doha Center and Fellow, Saban Center for Middle East Policy
CNN

This debate, if nothing else, showed us that U.S. discourse on the Middle East bears little resemblance to how Arabs see their own region. I joked on twitter that if you had a split-screen of randomly selected Arabs watching, they’d probably be beyond confusion. To begin with, Romney’s foreign policy message crumbled under the weight of its own contradictions. In his October 8speech on the Middle East, he echoed the Bush “freedom agenda” in calling for a more pro-active approach to democracy promotion. But his first response on the Arab Spring suggested an exclusively security-oriented approach, with a region reduced to violence, terrorism, and “tumult.” He cited the free election of an Islamist president in Egypt as an example of the “dramatic reversal in the kind of hopes we had.”

Republicans and neoconservatives, to their credit, once prioritized democracy promotion. But the fact that Islamist parties tend win free elections has rendered “neoconservatism” incoherent. It is simply impossible to support democracy, on one hand, and oppose the rise of Islamists, on the other.

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Publication: The Brookings Institution, CNN, Foreign Policy

Putting Candidates' Assertions of “Getting Tough with China” in Context

Kenneth G. Lieberthal — Wed, 17 Oct 2012 00:00:00 -0400

Editor's Note: On October 17, 2012, Kenneth Lieberthal answered questions from PBS's Jeffrey Brown on how China plays into the 2012 U.S. presidential election. Watch the interview at pbs.org, and read an excerpt below.

JEFFREY BROWN: Ken Lieberthal, same question to you. And you heard the president say the currency has appreciated.

KENNETH LIEBERTHAL: I think it is a serious problem to brand them a currency manipulator. First of all, a lot of countries around the world intervene to affect the value of their currency. Japan has many times over the years and so have many others. We haven't branded any of them a currency manipulator ever. Secondly, the Chinese currency now is very close to a market clearing price would be. You see that reflected in China's current account balance. The bottom line is, the current account balance is now well within the standards that we, ourselves, have advocated, saying that if it is within those standards, it really is not a big problem. The Obama administration has pressured China from the start on currency values. They are now close to a market clearing rate. But the big issue is twofold. One, currency value is not, by any means, the biggest issue in U.S./China economic and trade relations. So it diverts attention from the big issues. And, secondly, to brand them a manipulator would be to single them out in a way that would start off the next administration on a very bad foot and risk a trade war.

Authors

Kenneth G. Lieberthal

Publication: PBS Newshour

Campaign 2012: The Global Economy and China

Tue, 09 Oct 2012 13:00:00 -0400

Event Information

October 9, 2012
1:00 PM - 2:30 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

United States-China relations have been at the forefront of domestic and foreign policy discussions throughout this campaign season. Since joining the World Trade Organization in 2001, China’s economy has been established as a major player in the global economy and continues to grow. The country’s rise has significant implications for U.S. trade and defense policies, particularly on contentious issues like the global financial crisis, nuclear proliferation, military operations in nearby waters and air space and intellectual property rights. As both nations face daunting political and economic challenges, how can the next president improve relations with China while ensuring America’s success in the global economy?

On October 9, the Campaign 2012 project at Brookings held a discussion on the global economy and China, the last in a series of forums that have identified and addressed the 12 most critical issues facing the next president. Campaign 2012 Project Director Benjamin Wittes moderated a panel discussion with Brookings experts Kenneth Lieberthal, Jonathan Pollack, Richard Bush, and Joshua Meltzer, who presented recommendations for the next president.

Participants may follow the conversation on Twitter using the hashtag #BIChina.

Download papers from the event:

Establishing Credibility and Trust, by Kenneth G. Lieberthal and Jonathan Pollack
Continue Progress on an Key Trade Relationship, by Joshua Meltzer
Thoughts on China and American Elections, by Richard Bush

Campaign 2012: Twelve Independent Ideas for Improving American Public Policy is an indispensable guide to the key questions facing White House hopefuls in 2012.

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Audio

Campaign 2012: The Global Economy and China

Transcript

Uncorrected Transcript (.pdf)

Event Materials

China’s Prospects on the Eve of the 18th Party Congress

Thu, 20 Sep 2012 14:00:00 -0400

Event Information

September 20, 2012
2:00 PM - 5:15 PM EDT

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

This fall, most of the top leaders of the Chinese Communist Party will be replaced during the 18th Party Congress. The leadership realignments will affect the most important leadership bodies of the country – the ruling Politburo and its Standing Committee, the State Council and the Party’s Central Military Commission. What social, economic and foreign policy challenges await the new generation of Chinese leaders, and how might the new leadership respond?

On September 20, the John L. Thornton China Center at Brookings hosted a discussion analyzing the major issues that will confront China’s new leadership, including tensions in U.S.-China relations, the China-Japan South China Sea dispute, and the country’s future economic and military development.

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Transcript

Uncorrected Transcript (.pdf)

Event Materials

20120920_china_congress

U.S.-China Strategic Distrust a Major Problem

Kenneth G. Lieberthal — Mon, 30 Jul 2012 00:00:00 -0400

Editor's Note: On July 30, 2012, Yoichi Kato of The Asahi Shimbun interviewed Kenneth Lieberthal, director of the John L. Thornton China Center and senior fellow in Foreign Policy and Global Economy and Development at Brookings, about U.S.-China relations.

Yoichi Kato: What do you mean by “strategic distrust”?

Kenneth Lieberthal: The United States and China have, on balance, a relatively successful relationship. And we have learned how to deal with each other on major issues so that we are able to prevent disagreement in any one area from upsetting the entire relationship.

Having said that, in more than 30 years of U.S.-China diplomatic relations, we have not succeeded in persuading each other of our long-term good intentions in the relationship, so that each side distrusts what the other side will do over a 10 or 15-year period. That is what we term “strategic distrust.” Strategic, not meaning strictly military; meaning long-term and comprehensive.

Kato: What kind of negative impact could it have on the bilateral relations?

Lieberthal: The problem with “strategic distrust” is that it makes it difficult to take the initiatives that could actually build greater trust over time. So that, for example, on the military side we not only have a broad military policy that seeks engagement with China, but we also hedge. And there is a tendency in life for hedges eventually to become the mainstream policy. So this is, potentially, a very costly situation.

Kato: Your report warns that the problem is becoming more serious. What makes you think so?

Lieberthal: Since 2008 (when the Lehman shock and the global financial and economic crisis occurred), China’s footprint in the world has grown dramatically, in comparative terms, both because China is doing more and because the industrialized world has been faltering.

This, in 2010, created a perception, in the U.S. at least, that China was beginning to act in assertive terms, with the U.S. being a little unsure what the future held in that regard. I think we have seen since then great debate in China as to what China’s role ought to be, what its progress will be, and so forth.

But this question of our relative positions and responsibilities, bilaterally, regionally and globally has been raised in a way that was not nearly as pressing before 2008. And I think we do not have a comfortable sense of each other’s final answers to those questions, and that has increased this uncertainty and distrust.

Read the full interview »

Authors

Kenneth G. Lieberthal

Publication: The Asahi Shimbun

Image Source: Jason Reed / Reuters

The Real National Security Threat: America's Debt

Kenneth G. Lieberthal and Michael E. O'Hanlon — Tue, 10 Jul 2012 00:00:00 -0400

Drones, kill lists, computer viruses and administration leaks are all the rage in the current political debate. They indeed merit serious scrutiny at a time when the rules of war, and technologies available for war, are changing fast. That said, these issues are not the foreign policy centerpiece of the 2012 presidential race.

Economic renewal and fiscal reform have become the preeminent issues, not only for domestic and economic policy but for foreign policy as well. As the former chairman of the Joint Chiefs of Staff, Adm. Michael G. Mullen, was fond of saying, national debt has become perhaps our top national security threat. And neither major presidential candidate is doing enough about it. This issue needs to be framed as crucial not just for our future prosperity but for international stability as well.

The United States has been running trillion-dollar deficits, resulting in a huge explosion in the country's indebtedness. Publicly held debt now equals 70% of gross domestic product, a threshold many economists consider significant and highly worrisome. Making matters worse, half of our current deficit financing is being provided by foreigners. We are getting by with low interest rates and tolerable levels of domestic investment only because they find U.S. debt attractive, which may not last.

According to the nonpartisan Committee for a Responsible Federal Budget, President Obama's long-term budget plan would allow publicly held debt as a fraction of GDP to rise further, up to 75%, within a decade. Mitt Romney's proposal, featuring tax cuts and defense spending increases and as-yet-unspecified (and thus less than fully credible) entitlement reform, appears worse. It would probably drive publicly held debt to 95% of GDP over the same period. Put differently, though both are serious and pragmatic men, neither major party's presidential candidate is adequately stepping up to the plate, with Romney's plan the more troubling of the two.

Why is this situation so serious? First, we are headed for a level of debt that within a decade could require us to spend the first trillion dollars of every year's federal budget servicing that debt. Much less money will be left for other things. That is a prescription for a vicious cycle of underfinancing for our infrastructure, national education efforts, science research and all the other functions of government that are crucial to long-term economic growth. Robust defense spending will be unsustainable too. Once we get in this rut, getting out will be very hard.

Second, such a chronic economic decline would undercut what has been 70 years of strong national political consensus in favor of an activist and engaged American foreign policy. One reason the United States was so engaged through the Cold War and the first 20 years of the post-Cold War world was fear of threats. But the other reason was that the strategy was associated with improvements in our quality of life as well. America became even more prosperous, and all major segments of society benefited.

Alas, globalization and automation trends of the last generation have increasingly called the American dream into question for the working classes. Another decade of underinvestment in what is required to remedy this situation will make an isolationist or populist president far more likely because much of the country will question whether an internationalist role makes sense for America — especially if it costs us well over half a trillion dollars in defense spending annually yet seems correlated with more job losses.

Lastly, American economic weakness undercuts U.S. leadership abroad. Other countries sense our weakness and wonder about our purported decline. If this perception becomes more widespread, and the case that we are in decline becomes more persuasive, countries will begin to take actions that reflect their skepticism about America's future. Allies and friends will doubt our commitment and may pursue nuclear weapons for their own security, for example; adversaries will sense opportunity and be less restrained in throwing around their weight in their own neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely become less stable. Major war will become more likely.

When running for president last time, Obama eloquently articulated big foreign policy visions: healing America's breach with the Muslim world, controlling global climate change, dramatically curbing global poverty through development aid, moving toward a world free of nuclear weapons. These were, and remain, worthy if elusive goals. However, for Obama or his successor, there is now a much more urgent big-picture issue: restoring U.S. economic strength. Nothing else is really possible if that fundamental prerequisite to effective foreign policy is not reestablished.

Authors

Publication: The Los Angeles Times