Sydney, Australia

American policy toward China is defined by a debate between the ‘functionalists’ and the ‘strategists.’ This time last year, ‘strategists’ were being sidelined as impractical trouble-makers and the functionalists were ascendant. But China’s increased assertiveness over the past few months has changed the Barack Obama administration’s approach.  In the competitive and sometimes nasty world of international politics, strategists now hold sway and functionalists are increasingly on the defensive.

First things first: what do these two sides believe? Strongly supported by many Democrats, the functionalists are mostly economists, or those who focus on the benefits of the economic relationship. Usually urbane and warning against the demonization of China, they argue that the United States and China are so economically intertwined that both sides have an overwhelming interest in avoiding war. Functionalists openly admit that serious disagreements exist. But they argue that the best way to proceed is to treat China as a strategic partner since this will promote win-win cooperation rather than zero-sum competition. Since tensions are due largely to misunderstanding rather than fundamental disagreement, closer economic and strategic integration will dissolve the most serious bilateral problems.   

On the other hand, strategists – or at least the good ones in both the Republican and Democratic parties - acknowledge the complex reality of the economic relationship but nevertheless believe that there is an irreversible rivalry between the two countries. Strategists seek tactical cooperation where available but view strategic competition with China as inevitable and already occurring. Some point to disparate political values while others emphasize incompatible national interests - especially in Asia. The bottom line for strategists is that the United States and China have fundamental disagreements that can be precariously managed but never solved unless one country is prepared to change – which is not likely.

Functionalists come in many forms – from Zbigniew Brzezinski’s G2 idea to James Steinberg’s ‘strategic reassurance’ idea. Importantly, in the first 12 months, it also appeared that President Barack Obama was a dyed-in-the-wool functionalist – if his earlier attempts to charm, accommodate, or appease Beijing was anything to go by. After all, Obama’s decision to transform the Strategic Economic Dialogue into the Strategic and Economic Dialogue, take human rights off the bilateral agenda, and prioritize the bilateral relationship with China over existing allies such as Japan was founded on the premise that cooperation rather than competition could and should be the driving force behind the bilateral relationship.

Yet, the latter part of 2009 profoundly demonstrated the failure of Washington’s functionalist approach: President Obama’s humiliating visit to Beijing in November followed by Chinese intransigence at the Copenhagen Climate Change conference the following month.

The first six months of 2010 has not been much better. As the United States struggled with the consequences of the Global Financial Crisis, a normally cautious China has become more confident and antagonistic. There was the U.S. siding with Google when it threatened to pull out of China over censorship concerns, and the routine dispute over U.S. arms sales to Taiwan. But it seems that the final straw for Obama was increased Chinese assertiveness over the majority of the South China Sea which Beijing sees as its ‘territorial waters’. Beijing has long made the same declaration but has only recently characterized reclaiming the South China Sea as amongst its ‘core interests’ – seemingly equating the busy and resource-rich waters with other ‘core interests’ such as reclaiming Taiwan and preventing independence movements in Tibet and Xinjiang.

Since the Copenhagen Summit, there has been a steady stream of whispers in Washington that Obama – displaying tougher rhetoric against the Chinese - will finally abandon the functionalists and join the strategists. Recent signs suggest this is finally happening. At the ASEAN meeting in Hanoi last week, Secretary of State Hillary Clinton upped the ante by offering to work with all parties and declared a peaceful resolution to the South China Sea issue as in America’s ‘national interest.’

This is significant for two reasons. First, to the immediate chagrin of Beijing, this explicitly signals American preparedness to lend its considerable if not decisive weight to resolving disputes over an issue China treats as its ‘core interest.’ Second, it signals a renewed American preparedness to join with regional allies and partners in checking China’s ambition. It is no coincidence that last week also witnessed another step toward restoring full military ties between America and Indonesia when Secretary of Defense Robert Gates announced that Pentagon will resume training with Koppassus, Indonesia’s Special Forces unit. Restoring full military-to-military ties with Indonesia is a process that began under George W. Bush.          

These are still early days for ‘Obama the strategist.’ He has yet to make any statement about Washington’s grand strategy to manage China’s rise. Be that as it may, the functionalists are cowed for the moment, maybe lost for solutions. But they are far from defeated. After all, to paraphrase Benjamin Franklin, ‘every fancy needs to consult the purse.’ America might pay a heavy economic price were it to seriously contain China’s rise. But managing and constraining Chinese ambitions is precisely what most of Asia is quietly rooting for.

John Lee is a foreign policy research fellow at The Centre for Independent Studies and a Visiting Fellow at the Hudson Institute in Washington, D.C. He is the author of Will China Fail?