Seizing the opportunity to benefit from China's political transition

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China's current political transition offers a window of opportunity to improve Washington's relations with Beijing. In his second term, President Barack Obama should move quickly to grasp this opportunity rather than risk a continuing downward spiral in the critical U.S.-China relationship.

At November's 18th Party Congress, China began a once-in-a-decade process of leadership change. A new generation of leaders is coming to power with a mandate to address the country's daunting domestic challenges - including corruption and cronyism within the Communist Party, environmental degradation, frequent "mass incidents," economic imbalances, inflation and glaring social inequalities.

The new leaders who will take office in March - including President Xi Jinping and Premier Li Keqiang - know first hand some of the worst excesses of the Communist Party. They were victims of Mao's Great Proletarian Cultural Revolution, when an entire generation of young people - many from prominent families - were "sent down" to rural areas for years to perform backbreaking manual labor.

Having experienced and survived widespread human rights abuses that occurred between 1966 and 1976, the year of Mao's death, China's new leadership will be more receptive to calls for political reform from the country's middle class and liberal intellectuals.

China's new leaders will welcome overtures from the United States along with any U.S. policies that aim to assist China in meeting the challenges it faces. But harsh American trade measures or heightened U.S. military pressure will likely be met with a tough response, as the new leaders seek to prove their mettle and their capability to defend China's national interests.

Increased tensions with China could have dire consequences. They could lead to a military conflict over Taiwan's political status, over whether Japan or China holds sovereignty to a group of uninhabitable islands in the East China Sea, or over the ownership of small islands and energy resources in the South China Sea. In a worst-case scenario, those conflicts could escalate, by accident or design, to a nuclear exchange.

It is essential to remember that China's rise strengthens America's economy and future prosperity. China is today the largest growth market in the world for U.S. goods and services. Trade with China - America's third-largest export market and the leading market for U.S. agricultural products - has helped America's recovery from the global financial crisis.

From 2000 to 2011, U.S. exports to China increased by approximately 640 percent, from about $16 billion to $104 billion. During this period, American exports to China grew seven times faster than U.S. exports to all other countries in the world except for Canada and Mexico.

As Treasury Secretary Timothy Geithner has pointed out, these exports "are supporting hundreds of thousands of jobs across the nation in all sectors - from high technology to soybeans, aircraft to autos and forklifts to financial services." The United States and China, as Geithner puts it, "have a great deal invested in each other's success."

Looking to the future, the U.S. stands to benefit from billions of dollars in incoming Chinese investment that will reduce production costs for American companies and prices for American consumers, enhance consumer welfare, spur the development of innovative products, and most importantly, result in "in sourcing" - the creation of hundreds of thousands more American jobs.

By successfully negotiating a bilateral U.S.-China free trade agreement and including China in the regional free trade area of the Asia Pacific known as the Trans-Pacific Partnership, the U.S. would unleash unprecedented levels of international trade and investment. These agreements will tear down tariff and non-tariff trade barriers to American goods and services, achieve far greater transparency in China's regulatory practices, and enable the United States to benefit from the economic dynamism of Asia - the new "engine" for global growth.

Improving relations between Washington and Beijing will not only spur American prosperity. It would also strengthen the advocates of human rights and democracy within China while advancing the core foreign policy objective of promoting American political values overseas.

Right now, increased American military pressure on China aids the Chinese Communist Party. All too often, China's leaders use the "U.S. threat" to justify draconian security measures at home that preserve "internal stability."

As former Soviet dissident Natan Sharansky has cogently explained, the "most dependable weapon" available to an authoritarian regime is an external security threat that can unify the people and justify domestic political repression.

Improving relations with China would support wide-reaching political reform and liberalization. It would undercut the repressive internal forces that legitimize one-party authoritarian rule as a means of protecting the country against foreign military threats, particularly from the United States.

In the field of national security, through improved relations the United States can ensure that China is a future partner and not a threat to the interests of America and its allies. The greatest benefit is that the U.S. would avoid a military conflict for the foreseeable future with a country it now considers a major potential adversary.

Other critical security benefits to the United States and its allies include:

• Significantly reducing China's current and potential military threat to Taiwan, thus securing Taiwan's democracy;

• Achieving a pull-back of Chinese military forces from a defined coastal security zone surrounding Japan;

• Increasing security cooperation with China on both regional and global issues, thus allowing the United States to leverage Chinese capabilities for meeting common transnational threats such as nuclear weapons proliferation, international terrorism, energy insecurity, and resource shortages;

• Having China submit its maritime disputes in the South and East China Seas to an independent international judicial body to prevent festering conflicts over uninhabited islands and energy resources from escalating to armed conflict;

• Substantially increasing China's military transparency, especially in the development of new weapons systems; and

• Reducing the scope, scale, and tempo of China's military modernization programs by discrediting the rationale for conducting a focused anti-U.S. buildup, especially since the country has so many other pressing material needs.

Clearly, the best way to overcome the "China threat" and advance the interests of America and its allies in Asia is by achieving a stable peace with China through the resolution of outstanding security and economic conflicts between the two countries. A new policy that relies on superior U.S. power to foster peaceful and prosperous relations with China would best advance the interests of the great majority of Americans, now and in the future.

In his second term, President Obama should seize the opportunity created by the emergence of China's new leadership to stabilise U.S.-China relations - by pursuing a diplomatic strategy that minimises conflict, ensures peaceful coexistence, and achieves a far better level of mutually beneficial Sino-American cooperation.

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Donald Gross, Senior Associate of Pacific Forum CSIS, is a former White House and State Department official, whose new book, The China Fallacy: How the U.S. Can Benefit from China's Rise and Avoid Another Cold War, was published by Bloomsbury on October 25 (www.donaldgross.net).