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for new supplies and consumers conserve and

President George W. Bush calls U.S.-China

relations "good" but "complex."39 Lately the

switch to cheaper alternatives. If the U.S. gov-

ernment interferes with the market process,

emphasis has been on "complex." Yes, U.S.-

future production will suffer, and U.S. energy

China relations are "complex," but they have

companies will find it more difficult to oper-

always been so. Allowing Congress to steer

ate in foreign countries.

those relations only adds to the uncertainty

Washington would be wise to heed the

and complexity. The United States needs a firm

advice of Prime Minister Lee Hsien Loong of

commitment to engagement, and China needs

Singapore, who in his July 12 speech to the

to adhere to "peaceful development." Little will

U.S.-ASEAN Business Council said, if the

be gained by constantly treating China as a

United States values its influence in Asia, it

threat, on the basis of presumed intentions. At

must take "a considered, long-term approach,

the same time, we must not underestimate the

upholding its commitment to free markets,

willingness of hardliners in the Chinese

free trade, and international rules." However,

Communist Party--who have little regard for

"if it yields to short-term political pressures

the rule of law and want to retain their monop-

and turns protectionist, the damage to U.S.

oly on power--to revert to military means to

interests in Asia and its standing worldwide

achieve their ends, especially in the case of

China's challenge

will be long lasting."42

Taiwan. Consequently, we need to be realistic

is to move more

and cautious, but not unreasonable.

Instead of centering foreign policy on hypo-

The administration appears to be moving in

thetical "intentions," it would be more fruitful

rapidly toward

that direction. In a pathbreaking speech to the

to rely on observed actions and fulfilled

privatization and

National Committee on U.S.-China Relations in

promises. In the case of CNOOC, there was no

the rule of law.

New York on September 21, Deputy Secretary of

energy security threat, nor was there any signif-

State Robert B. Zoellick avoided confrontation

icant risk to national security. Derek Butter, an

and instead called upon the PRC "to become a

energy analyst with Wood Mackenzie in

responsible stakeholder in the international sys-

Edinburgh, argues that CNOOC's bid for

tem."40 At the same time, the United States must

Unocal had "little to do with security of supply

for China." Instead, it had to do with the

recognize that China is a rising normal power

Chinese wanting to create a company that "can

and will pursue its own interests. As Liu Jianfei, a

compete with the other international compa-

journalist with the China Daily, recently wrote:

nies, and has the skills in the future to negoti-

"Currently the biggest obstacle in Sino-U.S. ties

ate its way into large projects."43

comes from misgivings held by some Americans

towards China and their Cold War mentality. If

People who would deny China access to

such an outdated view is overcome, the two

U.S. markets or assets on the basis of "eco-

nations can build a strategic mutual trust and

nomic security" would do well to remember

open new co-operation in the future."41

what AEI director of economic policy studies

Kevin Hassett has noted--namely, that "any

It is a grave mistake to use the national

economic harm we do to China by impeding

security card to deny Chinese firms the right

it will be as harmful to our own citizens as it

to purchase natural resources in the open

is to the Chinese." In his view, U.S. foreign

market when there is no credible security risk.

policy should support, not oppose, econom-

Beijing will view such behavior as yet another

ic engagement with the PRC. The reasons are

attempt by the United States to widen its

straightforward: (1) "free trade is a powerful

power at the expense of China's development,

force for economic good"; (2) "our policies

further increasing anti-American sentiment.

can't do enough economic damage to China

China's thirst for oil and natural gas has

to be politically meaningful"; and (3) "China

driven world demand upward and increased

is too small economically to corner the mar-

prices, and that trend is likely to continue.

ket in anything significant."44

Over time, production and consumption will

respond to higher prices as producers search

Sticking to our free-trade principles, rather

9