Rick Waters is the managing director of Eurasia Group’s China practice. He previously served as the U.S. State Department’s inaugural director of the Office of China Coordination (China House) and as Deputy Assistant Secretary of State for China, Taiwan, and Mongolia in the Biden administration.
In a recent interview with James Chau of China-US Focus in Tokyo, Rick Waters addresses potential risks and possible cooperation between the U.S. and China.
James Chau:
Rick Waters, it’s great speaking with you. You’ve been the “China person” for the United States over many years, up until very recently. And in that Rolodex of memories and moments, there have been some troubling episodes, including, as you’ve brought up recently, the U.S. bombing of the Chinese embassy in Belgrade in 1999 and what happened in Hainan in 2001. How have both sides managed to negotiate their way through, around and beyond those crises? What can we take from those major incidents in recent history and reapply today?
Rick Waters:
I would say two or three things. First, those crises came at a time when the relative power dynamics between the U.S. and China were very different. Even in the 1990s, nationalism was a very powerful force. And it meant that channels of communication closed. It meant that it was very difficult to even restore some channels to de-escalate. But I think the second thing is that there was a larger stake in the relationship at that time on both ends. There was greater people-to-people involvement. There was a relative horizon for economic possibilities that is very different from the retrenchment we see today. And I worry about the loss of those residual buffers, because I think it’s the change in the relative power equation and the loss of buffers that can make future conflicts, future periods of tension, even harder to manage.
James Chau:
What about constructing new residual buffers? If you look at the shared challenges that they have today, what could some of those points of partnership be? Or are we being naive in thinking that partnership is still a shared interest and shared goal?
Rick Waters:
Well, I think for the current administration, that’s a lot of what Joe Biden and Jake Sullivan have been working on. They call it “guardrails.” But I think really what you’re saying is, let’s start at the very basic level — that neither President Biden or President Xi have any interest in unintended conflict. And that’s actually not an inconsequential thing. So their teams have set about to ensure that on issues where there have been long-standing differences, there is some boundary, some buffer, some clear channel of communication to make sure that each side does not misunderstand the other’s intentions. And I think we have to give some credit to the so-called strategic channel that Jake Sullivan has with Wang Yi. Since 2022, they have largely maneuvered on the Taiwan issue in a way that has avoided unintended consequences.
James Chau:
Does fentanyl play a role in this? Does it have a role in this equation? It’s highly important. It’s highly urgent. It can also be highly emotional. Because we’re not talking about policy, we’re talking about people’s lives too.
Rick Waters:
This issue I think cuts to the core of every American community at this point. Fentanyl is not solely a problem of the U.S.-China relationship. It’s a problem of an incredibly powerful synthetic drug that can be manufactured in very small quantities, making it easy to sneak into the U.S. and bring devastating effects. In the context of U.S.-China relations, this issue has gone from being a sore point to a point of cooperation multiple times. I think the most notable was under the Trump administration, when a combination of leader-level diplomacy and congressional involvement helped persuade the Chinese to prohibit the marketing, sale and production of fentanyl in China.
But then two things happened. One is that banning fentanyl doesn’t prevent the chemical industry in China from producing the precursors. The second is that events in 2020, particularly the highly polarized environment around COVID, meant that China’s cooperation stagnated, and it took several years to restore it. I think the progress that was made at the Woodside Summit in November 2023 was actually quite consequential. You had clear actions by the Chinese side to go after precursor producers, to pull down their websites from the internet, to go after the money flows. And, look, it’s not perfect. It’s a very hard thing to do. But I don’t see an alternative to U.S. cooperation with China on that issue, because there’s simply no other way to conduct law enforcement within China’s territory.
James Chau:
Let’s cut to another core issue, which is, of course, the Taiwan Strait. Are there concrete steps there that can reduce the risk of unintended escalation at potential flash points? And do you think at this stage, if we really are honest about it and look at the whole package, are Beijing and Washington doing enough at this time, when they have so many other issues to balance?
Rick Waters:
Well, I don’t think that Beijing is rushing to an imminent invasion. I think the strategy is much more subtle and complex. It’s meant to apply pressure on the parts of Taiwan politics and society that are viewed as pro-independence and to create inducements for the parts of society that might be more willing to reunify, by Beijing’s definition, at some point. I don’t think there’s a fixed timeline, but I do think there’s a sense of urgency under the current Chinese leadership that may not have been present in the past. I think the broader context is the deterioration of U.S.-China relations. And the massive modernization effort within the PLA, which is creating pressure in the U.S. and in Taiwan, to some extent, to increase Taiwan’s asymmetric defense capabilities and build out its whole of society resilience, like the Baltic states, so that a combination of civil mobilization and asymmetric defense keep Beijing from ever concluding that there is a viable military option at a cost acceptable to President Xi and the leadership.
I think where this issue stands now is a very fragile state, where there’s mistrust between the two sides. There are arms race-like dynamics underway. But where I’m a little bit more positive in the near term is I don’t see any desire from the Chinese or the Taiwan side to fall back into a crisis like 2022. I think miscalculation risk is what worries me more. Which is why it’s important in the few channels that do remain, such as the one between Wang Yi and Jake Sullivan, that there is some clear communication about the intentions in Washington and Beijing on the issue.
James Chau:
Let’s finish deconstructing just a bit. As someone who’s invested so much of your life not only in the relationship with China but also in public service in the United States (and through that to the world), what do you want for the U.S. and China? What do you call on China to do, to think about, to consider?
Rick Waters:
My hope is that in the areas that matter most to ordinary Americans — whether it’s fentanyl or the consequences of China’s supply led industrial policy model — there will be a greater degree of introspection about the political implications those create in other countries, not just the U.S. During the FOCAC summit, it was interesting to see that [South African President] Cyril Ramaphosa expressed concern about some aspects of the bilateral economic relationship with China. And I do think that introspection, that feedback, is important not just for the U.S.-China relationship but for China itself. I’m convinced that China’s economic growth and the prosperity of its people is actually a global good. It’s something that’s important to the global economy and to the stability of U.S.-China relations.
But I’m not as sure that the current approach will yield those results without putting immense pressure on the global trading system and on the very populist reactions in other countries that have corroded bilateral relationships — not just with China but in many other contexts in the past.
