As the Bo Xilai saga continues, China watchers are struggling to make sense of what Brookings Institution scholar Cheng Li calls the biggest political crisis to strike China since at least the Tiananmen Square Incident on 1989. To many, however, it is increasingly clear that China’s modern rise lies at a crossroads. And despite the drumbeat of unity, elites remain sharply divided over the way forward, with intense debate on a range of policy issues. Among these, one important discussion that has attracted scant media and scholarly attention is China’s ethnic policies.

Inter-ethnic conflict appears on the rise across the mainland, with levels of violence not seen since the Cultural Revolution. The brutal pogrom of nearly two hundred (some claim a thousand) residents of Ürümqi in July 2009 shocked the nation. To many, the Ürümqi incident and the previous year’s unrest in Tibet were powerful signs of a systemic policy failure. And while there’s still no consensus on how best to fix the problem, government officials are now joining academics (and the wider public) in calling for a major policy rethink.

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Many of the most salient disputes between China and its neighbors involve maritime issues. Moreover, as demonstrated by the current standoff between Beijing and Manila over Scarborough Shoal, China is often seen as assertive and uncompromising.  Nevertheless, maritime talks held with Japan this week suggest that China can be more flexible in managing its maritime disputes than most outsiders believe.

China and Japan agreed to establish this high-level consultative mechanism on maritime affairs in December 2011 during Prime Minister Yoshihiko Noda’s first trip to Beijing. These talks, which will be held twice a year, are designed to enhance crisis management by increasing communication among related government agencies in both countries. As a press release from China’s Ministry of Foreign Affairs (MFA) noted, the talks will serve a “platform” for increasing dialogue and communication, promoting cooperation, and managing disputes at sea.

Such a consultative mechanism is sorely needed. As the September 2010 crisis over the detention of a Chinese fishing captain near the Senkakus demonstrated, maritime disputes can escalate into a crisis.  In addition to the dispute over the sovereignty of the Senkakus, China and Japan have other maritime conflicts: the demarcation of their Exclusive Economic Zones in the East China Sea, China’s development of the Chunxiao natural gas field near the median line that Japan claims, fishing operations, and survey activities, among others.

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U.S. citizen and Al Jazeera reporter Melissa Chan was recently expelled from China.  This event may have already been lost in the cavalcade of news coming out of that country. It is, arguably, a minor story compared with the remarkable fall of Politburo member Bo Xilai and the ongoing controversy swirling around the fate of activist Chen Guangcheng.  Yet it shouldn’t be overlooked by those with an interest in making sense of the political situation within China, and the state’s relationship with the rest of the international system.

Beijing denied Chan a renewal of her journalist’s visa.  As a result, she was forced to leave the country.  Since she is the network’s sole correspondent within China, and Beijing has stated it can’t send a replacement, this development has shuttered Al Jazeera’s operations in the country.  While most Americans may not be especially concerned about either Chan or her employer’s fate in China, they should take particular note of what this development reveals about the degree of insecurity that has begun to take root in Beijing.  In other words, more is at stake here than simply the issue of press freedom and censorship.

The general motives behind Chan’s expulsion are quite clear. She recently became well known in China watching circles for filing a series of reports that have been quite critical of China’s handling of a variety of domestic issues. Her own network aired a documentary last year that criticized China for the ongoing use of prison labor within its borders.  In other words, it’s not surprising that Chan and Al Jazeera were not especially popular with the Chinese leadership. 

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China’s public security apparatus and all its friends in the propaganda and censorship departments must be exhausted – I know that I am exhausted just trying to keep up with them. Within the past month, they’ve had to figure out what to do about a blind political activist who escaped from illegal house arrest and traveled hundreds of miles to Beijing to take refuge in the American Embassy. They’ve had to keep an eye on 300 million Chinese micro-bloggers to determine who might have crossed a line here or there as the weibosphere has gone nuts over tales of leadership corruption and Chen Guangcheng’s harrowing journey. And they have had to keep watch over all those pesky foreign journalists who have had the temerity to practice actual journalism. Then, of course, there is the 800 pound gorilla – mapping out a strategy for managing the investigation and subsequent trials of former Politburo member Bo Xilai and his wife, Gu Kailai, who have been charged with “serious disciplinary infractions” and murder respectively.

But with all of this effort, what have they really achieved? No doubt those whose job it is to block and stop have a lot of resources at their disposal – chief among them is an internal security budget that exceeds the country’s defense budget. When they tell China’s Internet providers to shut down a micro-blog or two, the servers do it. One popular micro-blogger, whose account was blocked in recent weeks, said in an interview with the South China Morning Post [paywall], “The closure was not carried out by Sina.com voluntarily…but I am not shocked by the decision, given that anything can happen in the country.” Whatever the intention behind closing down his blog, clearly he hasn’t been deterred from speaking out.

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Over the last several weeks, as Western media has followed the unfolding of events of Chen Guangcheng’s dash  to the U.S. embassy in Beijing, which came on the heels of the Bo Xilai scandal, Chinese media has shifted its gaze elsewhere. In the South China Sea or West Philippine Sea, depending on which party you ask, tensions are being stoked in the form of provocative editorials, reporting, and the actions of Chinese journalists. Such reporting – nothing more than old fashioned jingoism – sets a dangerous precedent in an area of the world that is already rife with tensions. And, while such coverage is useful for turning the page on China’s internal political soap operas, fueling the fires of Chinese nationalism can only inject a dangerous element that, if left unchecked, could make it harder for either side to compromise. 

To be fair, sensationalist Chinese reporting is nothing new, nor exclusively Chinese. Yet, as events in the recent spat between China and the Philippines have unfolded, Chinese reporting has becoming increasingly aggressive.

Nothing demonstrates the recent tilt towards jingoism more than the example of a journalist from Dragon TV who decided to plant his nation’s flag on the Scarborough Shoal/Huangyan Island/Panatag Shoal. Such symbolism couldn’t be any stronger, short of taking up defiant residence.  There was, however, a strange oddity to the footage, namely that the rock both sides are squabbling over was barely large enough for the journalist to stand on. In fact, part of the shoal submerges during high tide.  Yet with large deposits of natural resources, fisheries, and important trade routes close by, it’s no wonder both parties are so interested. The issue is complicated by the fact that the South China Sea is claimed in some part by not just China and the Philippines, but Taiwan, Brunei, Vietnam, Malaysia and others as well.

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That’s something I’ve argued before, and in September 2010, I created Peking University High School International Division as a laboratory to see if and how creativity can be taught in China.

Last week, twenty students and I traveled to Israel for six days to study what makes Israel “a start-up nation,” as Dan Senor and Saul Singer call it in their New York Times bestseller.  With a diverse population of eight million, Israel lacks water, oil, and land, is encircled by hostile neighbors, and is a terrorist target. (Not to mention the international condemnations it gets for its treatment of the Palestinians.)  

Yet, despite all this, it has become arguably the world’s most dynamic economy.  It has 4,000 start-up companies, attracts almost one-third of the world’s venture capital, and more Israeli companies are listed on the NASDAQ exchange than companies from Europe.  Start-Up Nation tells us that Israel is so innovative because of its culture of “tenacity, of insatiable questioning of authority, of determined informality, combine with a unique attitude toward failure, teamwork, mission, risk, and cross-disciplinary creativity.” 

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The Bo Xilai and Chen Guangcheng incidents have added some excitement to what would otherwise have been a dreary political atmosphere in China. China watchers have spent much time commenting on the likely impact the incidents will have on China’s future. But in the meantime, I’ve been following the response of the Chinese government and the people to these incidents.

Many on the left believe that the United States is becoming increasingly active in Chinese politics, especially since Wang Lijun’s meeting at the U.S. consulate in Chengdu. Wang was head of Chongqing’s Public Security Bureau, and met with U.S. officials in early February. They also see Bo’s fall and the Chen Guangcheng case as opportunities seized by the United States to try to influence Chinese thought.

How?

Commentators on the left note that the Wang incident occurred shortly before a visit to Washington by Xi Jinping, who is expected to succeed Hu Jintao as president. The Chen incident occurred as U.S. Secretary of State Hilary Clinton was visiting China for a dialogue. If the Wang timing was coincidental, in their minds, the Bo case affirmed to them the U.S. intention to try to influence Chinese thought.

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Before blind lawyer Chen Guangcheng took refuge in the U.S. Embassy, Western debates about China policy focused on the so-called “trust gap” in U.S.-China relations.  A recent report by the Brookings Institution painted a dismal picture of Chinese fears of U.S. containment clashing with American anxiety over Chinese military expansion, cyber infiltration, and economic policy. But the diplomatic crisis that Chen’s escape provoked has revealed the real source of the trust gap: profound ideological differences over human rights and the social contract. These differences affect not only human rights policy but also spill over into “hard power” issues such as military and economic policy, and will only grow worse with time.

Chen’s plight is an extreme manifestation of a basic disjuncture between the Chinese government’s increasingly heavy handed approach to internal governance and the United States’ democratic culture. The zero-sum Chinese attitudes about U.S.-China relations depicted by Party insider Wang Jiaso in the Brookings Institution report are fundamentally at odds with American desires to promote liberalism abroad. This basic disconnect spills over into the economic and military arena, as U.S. advocacy for greater economic liberalization in China conflicts with Beijing’s neo-mercantilist economic strategy, and a suspicious Washington seeks greater transparency on Chinese military modernization and cyber operations.

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Most attention in China recently has focused on the Bo Xilai and Chen Guangcheng sagas, as well as the dispute with the Philippines in the South China Sea. But there’s been another issue confronting the Chinese government, one that is at least as complicated as the Bo drama – relations with North Korea.

North Korea’s proximity to some of China’s booming regions mean any problems in the Hermit Kingdom risk having repercussions in China. North Korea defied international (including Chinese) opinion last month in going ahead with its bid to launch a satellite, and the outside world has since been speculating that North Korea is planning a third nuclear test. China for its part has expressed concern through the United Nations about the possibility of another North Korean nuclear test, and joined other Security Council members in urging Pyongyang to refrain from such a move.

The reason is obvious. Any military-related action by the North will lead to some sort of response from the United States, Japan and South Korea. These countries will have a perfectly legitimate reason to expand their military presence in the region, or else in the case of South Korea and Japan, work to develop even more sophisticated military responses.

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The messy resolution of the Chen Guangcheng case, with the blind lawyer and rights advocate in Chinese custody and encouraged to apply to study in the United States “through normal channels,” has won the U.S. government poor reviews from journalists and human rights activists. But the administration actually deserves high marks for its skill in dealing with the delicate politics of the party-state in a transition year.

On Wednesday, the Chen case had China’s Foreign Ministry at its most fire breathingly infuriated. In an official statement (Chinese link): “It is clear what America must do – and it must not continue to muddy the waters.  America must cease its extraordinary exertions to conceal its role in this matter, and absolutely must not continue to meddle in China's internal affairs.”

Five days later, the issue has subsided enough that high-level bilateral talks were able to proceed without the pro forma punishments – most commonly suspensions of military-to-military relations – that usually accompany disputes between China and the United States, or the years of mistrust which followed the Tiananmen Square massacre. Relations have returned to a local maximum, with both sides praising the other’s cooperation and goodwill.

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