As the U.S. presidential election swiftly approaches, many wonder what policy approach the next president - be it Barack Obama or Mitt Romney - will take with regard to China. Thomas Fingar, FSI’s Oksenberg-Rohlen Distinguished Fellow, considers how the outcome of the election could impact U.S.-China relations, and how the United States could focus its priorities in Asia.

Q. How does China see a Mitt Romney presidency?

Fingar: Conventional wisdom about China has long held that Beijing prefers Republicans to Democrats, primarily because Republicans are thought to be more interested in trade and less concerned about human rights. I'm not sure that particular characterization of Beijing's views was ever correct, but to the extent that it was, it is of decreasing importance and almost entirely absent now. The Chinese have been anxious about Governor Romney’s positions on China during the campaign, seeing his statements as excessive or unjustifiably critical and indicative of a determination to contain or constrain China's economic rise.

Beijing has expressed concern that Romney intends to act in ways that threaten China's continued rapid economic growth and undermine the communist-led regime. Such concerns were likely alleviated during the final debate when Romney said he views China as a potential partner, not an adversary. However, the Chinese will likely assume that Romney's call for more defense spending is aimed at containing China, since the United States’ only other declared security threat is Iran.

Q. Romney says he would label China a currency manipulator on “day one” of his presidency. Do presidents have the power to do such a thing? Could this trigger a trade war?

Fingar: Presidents can certainly announce rhetorical positions, but it is highly unlikely that such a declaration would lead to actions that could trigger a trade war. It could launch a political and bureaucratic process in which advocates with competing objectives and strategies would seek to fashion policy adjustments in order to achieve them. It would not, however, lead automatically to actions that would damage a relationship in which Americans, as well as the Chinese, have an enormously important stake.

Q. What positive or problematic developments could impact U.S.-China relations if Obama wins a second term?

Fingar: I anticipate many issues and problems, but no crises. The foundation for the relationship – interdependence and mutual benefit – is strong and growing stronger. That said, what happens in China will be important to the United States and command presidential attention. If China's economy continues to slow, it will slow recovery of the U.S. economy, both directly and by reducing Chinese purchases and sales to and from third countries that use earnings from sales to China to purchase goods and services from the United States. Continued deferral of resolving territorial disputes in the Sea of Japan and South China Sea will exacerbate perceptions that the United States should serve as a counterbalance to China, complicating U.S.-China relations. Another issue sure to be on the table is Chinese failure to honor World Trade Organization and intellectual property rights commitments.

Q. Obama’s rhetoric on China has become increasingly aggressive. Do you anticipate a tougher stand toward China if he is re-elected?

Fingar: Nothing that President Obama has said during the campaign suggests to me that he would make significant changes to U.S. policy toward China if he were re-elected. It would be a mistake to read too much into the number of times China is mentioned relative to other countries, as “China” is often used as a proxy for all foreign economic competition and the effects of globalization. Beijing should not take this personally; this is part of the price of becoming the world’s second-largest economy and having the biggest trade deficit with the United States. Far more important than such rhetoric are Obama’s and Romney’s references to seeking a partnership with China and the need for China to “play by the rules” with respect to WTO commitments, intellectual property rights and the treatment of foreign firms operating in China. I am confident Obama has no desire to make China into an enemy and no intention to contain or constrain China’s “rise.”

Q. Some doubt the Pentagon has the resources to deter Iran while pivoting to Asia. Which is more urgent for the new administration?

Fingar: The United States continues to have enormous military capabilities. Moreover, it counts as allies and partners most other major nations and military powers. Iran knows that, but threats to use military force are not likely to persuade Tehran to abandon the potential to acquire nuclear weapons. Indeed, such threats would likely bolster the arguments of people who claim Iran needs nuclear weapons to deter stronger and hostile adversaries.  Diplomacy, backed by international sanctions, and enlightened Iranian self-interest offer a far better path to deterring Iran from acquiring nuclear weapons.

Q. Do you expect the so-called Asia pivot to continue under the foreign policy team of the incoming president?

Fingar: East Asia is the most dynamic region in the world and the United States has many important interests and ties there. We are a Pacific power and a Pacific player and must remain heavily engaged in the region. The “pivot” toward Asia is a misnomer because it implies that we left and are now returning. We never left and never will. The “rebalancing” toward Asia is intended to reduce uncertainty about American intentions and to help prolong the period of peace and stability that has been critical to the achievement of prosperity and interdependence in the region. I hope the new administration, whoever wins, will redouble efforts to build a new, inclusive security arrangement for the region.

Thomas Fingar, who has observed developments in U.S.-China relations since "ping-pong diplomacy" in the early 1970s, spoke with China-based Leaders Magazine about the significance of—and hype surrounding—the Obama administration's "Asia pivot." The following is an edited version of the interview transcript.

President Obama recently announced a new military strategy, in which he stated that budget cuts will not weaken the U.S. presence in the Asia-Pacific. How do you interpret this?

The Asia-Pacific is the most economically dynamic region in the world, and it has the largest military forces and the most nuclear powers. U.S. interest has always been there. Our interest, our stake, and our involvement as a Pacific power is very great.

President Obama has been talking about our overall budget deficit and the need to reduce spending, including on defense. Some savings have already come from ending the war in Iraq and winding down the war in Afghanistan, which then increases the relative percentage of the military budget for East Asia. In the process of balancing its budget, the United States is not going to do anything to destabilize the region.

Is this just the policy of the Obama administration, or is it a longer-term strategic shift that could lead to a cold war?

I would distinguish between the rhetoric of "pivoting" toward Asia and the fact that the United States never left Asia. The George W. Bush administration did not send representatives to a number of ASEAN meetings and that troubled people in the region. But U.S. economic and political involvement and military deployments in the region, as well as the alliance structure, have not changed for decades.

American engagement has been important to the threat of nuclear weapons and to the freedom of the seas in the Asia-Pacific. Our allies and China can be confident that this policy is not aimed against anybody—it is not a cold war.

Some experts say that relations between Washington and Beijing are actually doing much better than the media portrays. Do you agree with this perspective?

I do agree with it. I have been involved in U.S.-China relations since "ping-pong diplomacy" in 1972, and we still have ups and downs and swings in our relationship, but the pattern is clear and the magnitude of the swing is much smaller than it used to be. In recent years, we have bumped up against one another in more places around the world, on more issues, because we are both global players. Most issues are handled pretty smoothly, however, and in a pretty routine fashion. The strength of the bilateral relationship—the depth of the interdependence—keeps growing.

From your experience, will there be a big impact on bilateral relations when the new Chinese leadership takes office later this year?

I think it used to be the case that personalities mattered a great deal, but it does not make so much of a difference now in both countries. I do not expect China’s policies and objectives to change, or its perceptions of the United States. In addition, if we elect a new presidential administration, I also do not expect a change in American perceptions of the opportunities and challenges China poses.

Which issue in U.S.-China relations most concerns you?

Mutual suspicion concerns me the most. Some people in China believe the United States will attempt to stop China’s rise or to contain it at some point. In the United States, the things we do not understand about China's intentions and aspirations lead to a similar kind of “worst case” thinking. I think the two countries need to do more to talk directly to one another about their concerns, and to find new approaches. For example, China does not like the bilateral alliance structure the United States has in Northeast Asia. The United States is quite prepared to acknowledge it is an arrangement that was developed for a different time and conditions. What kind of a new collective security arrangement can we have in the region that then? We are a long way from figuring it out, but we need to start talking about it together. 

Original article

"American experts discuss the significance and outcomes of the 'Asia pivot'"
(in Chinese)

Newly printed “no smoking” signs went up across China when the government rolled out a nationwide public indoor smoking ban in May 2011. A sticky gray layer of smoke residue now coats many signs, representing the challenges China’s growing tobacco-control movement faces against a multibillion-dollar government-run industry and deeply embedded social practices.

How has the cigarette become so integrated into the fabric of everyday life across the People’s Republic of China (PRC)?

To get to the heart of this question, historians, health policy specialists, sociologists, anthropologists, business scholars, and other experts met Mar. 26 and 27 in Beijing for a conference organized by Stanford’s Asia Health Policy Program. They examined connections intricately woven over the past 60 years between marketing and cigarette gifting, production and consumer demand, government policy and economic profit, and many other dimensions of China’s cigarette culture.

Anthropologist Matthew Kohrman, a specialist on tobacco in China, led the conference, which was held at the new Stanford Center at Peking University. In an interview, he spoke about the history of China’s cigarette industry, cigarettes and society, and the tobacco-control movement.

The early years

Tobacco first entered China through missionary contact in the 1600s, says Kohrman, but it was not until the early 20th century when cigarettes began gaining popularity. The first cigarette advertising was a “confused tapestry” of messages as marketers figured out what spoke to the public. “There were just as many images of neo-Confucian filial piety as there were of cosmopolitan ‘modern women,’” says Kohrman.

Through improved marketing and aggressive factory building, British American Tobacco and Nanyang Brothers, China’s two largest pre-war firms, helped increase the demand for cigarettes. The Sino-Japanese War (1937–1945) disrupted the cigarette supply, but their popularity had taken hold. Some cigarette firms shifted during the war to the relative safety of southwest China, where tobacco production has remained concentrated ever since.

Post-1949

After the founding of the PRC in 1949, the tobacco industry was nationalized and strong relationships between the central government and cigarette manufacturers in the provinces were formed. Cigarettes also began to be viewed as a part of everyday life. “Ration coupons for cigarettes were issued alongside grain, sugar, and bicycle coupons,” says Kohman. “The Maoist regime legitimized cigarettes as the right of every citizen."

During the Deng Xiaoping era (1978–1997), China’s cigarette industry really took off as manufacturers competed with one another for foreign currency to purchase cutting-edge European equipment and newer varieties of tobacco seed stock. Increased production and the return of full-scale advertising fueled greater consumer demand, and manufacturers began producing more and more varieties of cigarette. Vendors displayed glass cases filled with a colorful patchwork of cigarette packs bearing names like Panda, Double Happiness, and Red Pagoda.

The tobacco industry remained under government control as other industries privatized in the 1980s and 1990s. Party-state management of the cigarette became even more centralized in the early 1980s with the creation of the China Tobacco Monopoly Administration and its parallel external counterpart, the China Tobacco Corporation.

Since 1949, provincial protectionism has marked the cigarette market. It is now possible to purchase Beijing cigarettes in Kunming, Chengdu brands in Shanghai, and so on, but to distribute cigarettes in another province, a manufacturer must cut a deal with provincial government officials. Provincial administrations are loath to cut such deals because central government policy dictates that the portion of cigarette sales tax which does not go to the central government always is channeled to the finance bureau of the province of original production. China’s 2001 entry into the World Trade Organization opened the market ever so slightly to international brands like Marlboro and Kent, but domestic brands continue to dominate because of fierce protectionism.

...If it chooses to do so, China is in a position to lead and change the landscape in a very profound way.
-Matthew Kohrman, Professor of Anthropology, Stanford
A new era

In 2003, the World Health Organization established the first global health treaty, the Framework Convention on Tobacco Control (FCTC). Although the United States still has not yet ratified the FCTC, China signed the treaty in 2003 and ratified it in 2005. Kohrman says China’s tobacco industry giants fear competition from international cigarette brands more than they worry about tobacco-control measures related to the FCTC.

Nonetheless, the FCTC ushered in a new era of public health research about tobacco and has helped increase public awareness about the dangers of smoking. New restrictions have been imposed on print and television advertising for cigarettes, and international organizations, such as the Bloomberg Family Foundation, have begun funding anti-tobacco work in China.

A big challenge to tobacco-control campaigns, says Kohrman, is the sheer amount of money that tobacco companies have available for marketing. “In 2010, China’s tobacco industry posted profits in excess of U.S. $90 billion—that’s huge. Tobacco control research and advocacy now annually receive a few million dollars, and much of that is coming through outside funders, which have very specific projects in mind.”

China’s tobacco advertisers have adapted to the new restrictions that prevent them from openly promoting cigarettes in the media. They have instead moved to point-of-sale and soft-marketing tactics, including misinformation campaigns about the “dangers” of quitting smoking. “The actual expenditure on marketing probably hasn’t dropped very much,” says Kohrman.

Cigarettes and society

Strong marketing and the legitimization of cigarettes as a part of everyday life have led to the deep integration of cigarettes into Chinese society. While only 3 to 4 percent of women in China smoke, cigarettes are an important part of male identity and social mobility. The wide range of cigarette brands has led to the growth of high-end varieties favored by businessmen and politicians, with some brands costing as much as $50 a pack. The custom of cigarette gifting has existed in China for decades, and it is difficult for a young man to turn down a package of cigarettes from a senior colleague or supervisor.

There is also the fact that nicotine is highly addictive, and quitting is difficult in an environment where smoking cigarettes is socially sanctioned. Kohrman says, “When you take an incredibly addictive substance like nicotine and throw it into the mix of all of these norms and customs, it creates a pretty toxic brew.”

The future?

Tobacco control presents a formidable challenge in China, one that requires understanding the historical context and complex dimensions of the cigarette industry. “Cigarettes have been insinuated into so many aspects of daily life across China, and the market for this product has now become so closely enmeshed with matters of government finance and operations,” says Kohrman.

What happens in China could have implications for the entire world. “There’s a tobacco-induced human annihilation unfolding right now in almost every country and questions about how society and Big Tobacco are enmeshed, and how cigarette culture and government finance have become mutually supportive are pivotal,” says Kohrman. “Every country except Bhutan has legalized cigarette sales and is subject to many of the same general issues as China—only in China they’re on a much larger scale. But if it chooses to do so, China is in a position to lead and change the landscape in a very profound way.”