BEIJING -- When the U.S. Department of Justice announced its recent indictment against five members of the Chinese People's Liberation Army (PLA), the bilateral economic relationship between the U.S. and China effectively entered into "Peaceful War" mode, which is now in the public domain.
This unprecedented 31-count criminal indictment involves corporate cyber-theft, cyber-espionage, and fraud by the PLA against leading U.S. companies. It has also reported that China stole American intellectual property at the rate of $300 billion a year -- the largest theft in human history, according to Time magazine.
The question is: Will there be miscalculations that might launch a "cool," if not cold, war between these two intractably interdependent economic superpowers?
Unlike the Cold War period, however -- in which the Soviet Union was isolated from the global economy -- commercial interests and trade secrets seem to underpin the intrinsically entangled Sino-American economic relations.
Security or Espionage
For the Obama administration, traditional espionage on enemies -- and even friends -- for national security reasons is fair game. Spying is as an old institution as prostitution; for millennia, it was common to have a circle of spying eunuchs and concubines in China. Likewise, the United States -- from the beginning of the Committee on Correspondence to the Office of Strategic Services, the predecessor to the Central Intelligence Agency -- has had spying operations to protect the nation against potential domestic and foreign adversaries.
The Justice Department, however, differentiated the distinction between spying for national security and the Chinese hacking of American corporations for commercial advantages. According to the Obama administration, the former is fair game; the latter is illegal.
With the revelations of Edward Snowden, Beijing has fittingly dismissed the nuanced American distinction between espionage for national security and China's commercial cyber attacks to obtain intellectual properties and trade secrets for the benefits of SOEs. Snowden revealed that the NSA has infiltrated into Huawei Technologies, a high-tech Chinese multinational company. A recent Foreign Policy article confirmed that an elite NSA ultra-secret China hacking group "successfully penetrated" Chinese computers and its telecommunication industry for the past 15 years.
Consequently, China swiftly condemned the American charges against the PLA operatives. Beijing retaliated to these indictments by prematurely canceling the recently initiated cyber-security dialogue, which was just beginning to build mutual confidence and trust. Diminishing American moral authority inflicts further damage on the formerly improving Sino-American relationship. For example, when U.S. Senator Ron Wyden accused Director of National Intelligence James Clapper of complicity in an ongoing "culture of misinformation," America's international credibility was undermined. These incidents impede the emerging spirit of military-to-military cooperation.
The Powerless America
In all this, the public display by the Justice Department is widely perceived as a sign of American weakness by the Chinese. For them, it was a classic public relations maneuver of an unpopular Obama in the mid-term elections. President Barack Obama's rhetoric and conflicting messages to his allies and friends in the East and South China Seas are viewed as ambiguous and misguided. Beijing likely interprets this as a twisted kind of "speak softly, and carry a big stick" diplomacy that was championed by President Theodore Roosevelt; Obama speaks eloquently of cooperation but nevertheless deploys military forces to disputed maritime regions.
At the same time, China has quietly applied American foreign policies and doctrines to its own advantage. Despite Beijing's proclaimed "peaceful rise," a newly powerful China is taking lessons from President Ronald Reagan's "Peace through Strength" strategy in the East and South China Seas. China's assertive behavior in these contested territorial waters can be regarded as Beijing's own Monroe Doctrine.
Economic reformer Deng Xiaoping advised to his posterity to "patiently wait for our time, build our own abilities" to regain power. President Xi Jinping's Chinese Dream -- an extension of the American Dream with Chinese characteristics -- is a brilliant stratagem to both galvanize the growing Chinese middle-class and reassure the U.S. audience of Beijing's new American-sounding vision.
Beijing consistently demands that U.S. should be an equal partner and firmly engages in "Peaceful War" to gain "respect" for "win-win" cooperation. When Xi introduced his concept of "new type of major country relations," the Communist Party leader may not have imagined acting in a global public square with accusations and counter-accusations. Yet, China has quickly adapted to Obama's rhetoric and noises about freedom. Beijing responded quickly and effectively to the U.S. indictment, knowing that PLA officials would never face American justice.
The higgledy-piggledy distinction between national security and corporate interests is hardly convincing to the Chinese, especially when the U.S. revolving doors conveniently inhabit the space between government service and corporations during both Democratic and Republican administrations. Just like the Sino-American relations in commercial intercourse, economics triumphs over ideology in the partisan world of American politics.
On China's side, its intertwined national and economic interests are enshrined in the peculiar institution of the State-Owned Enterprises (SOEs). This is a very different animal than the private corporations in the United States.
Survival Strategies
In a rapidly changing world, a firm foundation of Confucian traditions and historic laurels has permitted the world's oldest and continuous civilization to evolve and remain resilient. Sino-Russian energy and political ties, for example, underscore perceptions of declining American geostrategic power in Eurasia, the Middle East, and the Eastern Europe. The growing U.S. national debt and shrinking economic resources due in part to the sequestration and the Budget Control Act contributes to the perception of declining American might in parallel with a diminished moral authority and prestige after more than a decade of costly wars in Iraq and Afghanistan.
This perception of declining American power is, however, misplaced. The U.S. armed forces have the power to deploy its expeditionary forces to every corner of the world within a 24-hour period. Neither China nor Russia desires to have or even has the will to boast the power to project this kind of global force -- at least in the near future. The so-called indispensable nation now has drones and stealth weapons watching over every action of all nations and their leaders.
Does this omnipotent power really matter? President Obama said that "I have this remarkable title right now -- President of the United States" but he admitted that his determination to use the levers of American power (referring to Crimea, Nigeria, Syria and elsewhere) is limited. However, the mere existence of that power as a presidential choice is itself deterrence.
In the end, neither the superior capabilities of one nation nor another nation's glorious past matters. What matters is a shared future. Surely there will be human conflicts, political disagreements, and military miscalculations. But by making this distinction between national security and corporate espionage to China, the Obama administration sent a tortuous message to the world.