The increasing economic, diplomatic and political role of China in the world has spawned an entire industry of China-watchers paid to uncover the grand Chinese conspiracy for world dominance. To reach their dire predictions, they assume that the current period of economic growth will continue indefinitely, ignore that other countries will adapt to Chinese expansionism, and forget that China’s new status as a world power will also earn it new responsibilities.

As numerous economic researchers have shown, China’s current economic growth is remarkably unstable and ultimately unsustainable. Its high-tech industries rely heavily on foreign corporations which are unlikely to be displaced by domestic producers because “one-party politics have bred a timid business culture.” (Gilboy, “The Myth Behind China’s Miracle,” Foreign Affairs, July/Aug. 2004.) As a result, Beijing cannot adopt mercantilist policies, because import restrictions would also limit the activities of foreign corporations and drastically decrease China’s exports. More importantly, most of the country’s lingering structural economic problems remain unresolved. The banking industry remains unstable and party-controlled economic policy ensures high risks in most domestic markets. These policy problems can be glossed over, but only so long as Beijing retains an open trade policy and relatively peaceful diplomacy.

Yet China-watchers fail to see this obvious reason why Beijing will not engage in serious trade disputes. A systematic error in their thinking precludes them from seeing the natural results of their own worst-case scenarios. Another common example is the outrage over Chinese management of the Panama Canal. China-watchers can see this current situation, and envision how the country might use it to its advantage by restricting or controlling traffic between the Atlantic and Pacific. But they fail to see that this aggressive policy would mean the loss of this contract and the end of its associated revenue and power.

This is not a unique situation, but characteristic of great power behavior. To be a great power means creating interests that are not related to the state’s survival, but which give it greater power and reach. Yet such exploits always have the associated cost of defending past gains. As China expands its power, it will also necessarily take on new responsibilities and acquire new, and expensive, interests. If an increasingly-rich, well-governed China were completely contained, it would be left with vast material resources and nothing it needed to defend, the perfect recipe for military development and nationalist sentiment.

A far preferable policy, and the de-facto state of all American foreign policy, is irrationality. As Dr. Edward Luttwak has pointed out, any systematic attempt to face China will be short-sighted or short-lived. (“Why we need an incoherent foreign policy,” The Washington Quarterly, Winter 1998.) The realities of America’s fractured and interest-driven political system naturally result in an incoherent, but beneficial, policy. The combination of Wall Street’s desire for closer trade, the Pentagon’s continual anti-Chinese planning, the State Department’s conciliatory diplomacy and human rights advocates’ hopes for democratization is a vast mix of contradictory signals, any of which may come to dominate the policy agenda. The conflicting signals provide a clear incentive for Chinese leaders: if they avoid actions arousing American fear, the Pentagon’s paranoia and human rights groups’ protesting will remain in the background. On the other hand, if they choose to aggravate foreign tensions or worsen the human rights situation, they will only drive these groups higher in the American policy consciousness. In short, by remaining uncommitted, America can leave open the possibility for peace or for conflict.

The internal dynamics of America’s own political system already guarantee that Washington will respond to diplomacy with even kinder diplomacy and to threats with far more dangerous threats. Let Chinese leaders learn to operate with this fair logic, or let them be punished by it.