China's Dual Challenges

In the wake of Third Plenum of the 18th Central Committee of the Chinese Communist Party (CCP) earlier this month, headlines emphasized the announcements of major market-oriented economic reforms. The meeting also seemed to cement the stature of Xi Jinping as perhaps the most powerful Chinese leader since Deng Xiaoping. In light of declining growth rates, the focus on reforms makes sense, but re-energizing the economy is only one key part of a much larger task. Maintaining strong growth levels has long been seen as a necessary component to the successful implementation of programs to facilitate political and social development. Xi certainly seems to be in a strong position to lead this effort, but there is no guarantee of success. What happens if China's economy stalls and Beijing is confronted by a prolonged period of economic hardship that could threaten these larger goals?

Fears over China's rise to regional preeminence in Asia are logically driven by its expanding economic and military power. In considering the potential for conflict in the future, a relatively straightforward scenario would envision a rising China, boasting capabilities that far exceed those of its neighbors, demanding changes in the existing regional order and precipitating a crisis. The response of its neighbors and their allies, most importantly the United States, would determine whether the crisis escalates into a costly military conflict.

Conversely, in assuming China's steady rise, there is also a much more optimistic possibility. As China continues to grow and its leaders are able to gradually rationalize and perhaps liberalize the economy and society and further integrate China into the existing global economic system, resort to the use of military force and the prospects of regional conflict may become viewed as unattractive and potentially self-defeating by Beijing. A powerful, internally stable, and outwardly confident China would have less reason to resort to coercion and aggression to achieve its goals.

Relaxing the assumption of a rising China, a second potential pathway to conflict emerges. The failure to achieve critical economic goals deemed necessary to maintain social order and stability could drive desperate leaders to find an alternative source of social cohesion: belligerent nationalism. A leadership that views itself as under threat at home could exploit potential crises to improve its own standing and credibility among other elites or the Chinese people. This domestically-driven, or "diversionary," impetus for aggressive behavior could be particularly strong in relation to questions over the status of Taiwan and/or Tibet, but could also fuel longstanding hostility toward Japan. A similar dynamic could emerge if the CCP somehow lost control of the political system and China was thrust into a period of unruly and rapid democratization, where various parties may use the "nationalist card" to garner mass support.

However, conditions within China may not have to deteriorate to that extreme to see this dynamic at work. At a time when, by most indicators, China's leadership is intensely concerned about maintaining levels of growth sufficient to achieve its larger developmental goals and maintaining stability, the use of an external crisis to galvanize domestic support may be increasingly tempting, but leveraging popular resentments and hatreds for political expediency is a dangerous game.

Japan is a convenient target. The ongoing dispute over the Senkaku/Diaoyu Islands has spurred mutual provocation and increasingly heated rhetoric on both sides. After Japan's formal purchase of the islands in September 2012, anti-Japanese protests took place in Beijing and several other large cities. In a nation where such public protests are rarely tolerated, observers noted that the 2012 demonstrations seemed tacitly supported and perhaps even instigated by elements of the Chinese government. This stoking of nationalist fervor only intensified the situation, and while the dispute did not escalate further before both nations pulled back from the brink, an ominous signal had been sent. With recent displays of naval strength in the East China Sea, including China's announcement that it would consider the islands within China's "air defense" zone, the possibility of a crisis that could escalate into a military conflict only increases.

The tasks confronting China's leaders are daunting. In the current global economic environment it may be increasingly difficult for China to maintain the high levels of growth it has become accustomed to. The existence of territorial disputes is also not simply a problem of China's making. However, given its current and potential capabilities, and the sheer disparities in power that exist between China and its neighbors, the leadership in Beijing should be more cognizant of the signals that its statements and actions send to its neighbors in the region as well as key audiences at home.