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The New Reality of Sino-American Relations
Technology Briefing |
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TranscriptAs part of the broader Make America Great Again agenda, the Trump administration has upended many aspects of America’s China policy. For 25 years after the Cold War, the United States executed a strategy based on the idea that a combination of persistent engagement and prudent hedging would ultimately integrate Beijing into the American-led international order, similar to Japan or South Korea. In recent years, however, that strategy unraveled as China became more repressive internally while growing stronger and more assertive externally. In response, a bipartisan consensus has proclaimed that the U.S. must get serious about competing with Beijing. International policy experts Hal Brand of Johns Hopkins University and Zack Cooper of the American Enterprise Institute have identified four basic options for resetting America’s China policy: accommodation, collective balancing, comprehensive pressure, and regime change. These options illustrate the range of possible approaches and capture their distinct analytical logic about the nature of the “China problem” and the appropriate response. At one extreme, Washington could seek accommodation with Beijing in hopes of striking a grand bargain and establishing a cooperative long-term relationship. At the other extreme, the United States could seek regime change or even precipitate a military showdown to prevent China from growing more powerful. However, the extreme strategies of accommodation and regime change are overly risky and likely to fail, perhaps catastrophically. A policy of accommodation simply ensures that China will use espionage and unfair trade practices to supplant the United States and impose its own totalitarian system on all mankind. A policy of regime change might lead to a nuclear exchange that neither side can win or an economic battle that will seriously damage the global economy. That means any realistic solution involves the two middle options: collective balancing and comprehensive pressure.
Probing the logic of these strategies, and assessing their various strengths and weaknesses, is critical to going beyond generic “competition” and adopting a new approach. While both collective balancing and comprehensive pressure are more promising, each still involves significant challenges and risks. For that reason, the Trends editors expect an optimal real-world strategy to represent a middle ground. combining aspects of both. That’s because the real world is messy, and the future is hard to foresee. Both collective balancing and comprehensive pressure rest on plausible scenarios, but they involve different assumptions about the sustainability of U.S. primacy. Informed experts hold diverse opinions on this topic as well, so we can only make informed guesses about which will ultimately be borne out by events. Furthermore, political and diplomatic constraints complicate things. Even if one believes, for example, that comprehensive pressure is the ideal strategy, it may not be possible to get the domestic and international buy-in necessary to make that strategy effective, at least in the short term. Strategic analysis requires clearly delineating options and the ideas behind them, but strategy must be implemented even when clarity is wanting. For these reasons, a hybrid approach fusing elements of collective balancing and comprehensive pressure seems most prudent and resilient. This hybrid strategy, which Brand and Cooper call “collective pressure,” seeks to build a coalition of allies and partners strong enough to deter or simply hold-the-line against Chinese revisionism until such time as the Chinese Communist Party modifies its objectives or loses its grip on power. If China continues to challenge critical elements of that order, and if Chinese power continues to grow in dangerous ways, the United States would gradually intensify the pressure. It would lead the coalition in efforts to reduce (1) China’s geopolitical, economic, and ideological influence; (2) weaken its power potential, and (3) tighten the constraints under which Beijing operates. Today, it appears that the Trump administration is quietly embarking on such a “collective pressure” strategy with respect to China. And while assessments of the specific tactics may differ, there is a growing bipartisan consensus that China has become the chief threat to American objectives in the 21st century. Going forward, implementation of the “collective pressure” strategy will shape the economic, political and military priorities for the next few decades. Given this trend, we offer the following forecasts for your consideration. First, the U.S. and its allies will launch a massive transparency campaign designed to publicize the Chinese Communist Party’s coercive activities, unfair economic practices, growing military capabilities, political repression, and human rights violations. Since the late 1990s, China has used a campaign of deception involving media companies, NGOs and various spokespeople to sell the party’s case for issues ranging from Tibet to Moslem internment camps, to trade, to foreign policy. This American transparency campaign will aim to make clear that the United States remains a friend of the Chinese people but is concerned about the party’s covert, corrupt, and coercive behavior. Most importantly, such a campaign will be essential for building both the international support necessary for effective balancing and the domestic support necessary for a stronger pressure campaign. Second, the U.S. will lead an intensified effort to rally a broad, winning coalition in the Indo-Pacific region and beyond. This is the essence of any collective-pressure strategy. Changing the alignment decisions of regional states may be difficult given relative power trends. Therefore, moving beyond the natural core of U.S. Allies like Japan, South Korea, Taiwan, and Australia, will require a new U.S. approach. Simply highlighting Beijing’s malfeasance is not enough. Washington must provide an attractive and reliable alternative. To this end, the United States will:
Rather than criticizing allies and partners, this approach would seek to attract and empower America’s friends. China’s own decision to integrate Pakistan into its Belt and Road Initiative is already encouraging India’s 1.25 billion people to gravitate toward the United States. Third, the United States will refocus its military, particularly the U.S. Navy and Air Force, on preparing for potential contingencies with China. This includes making critical investments in long-range strike capability, undersea warfare, shore-based anti-ship missiles, and missile defenses, as well as other capabilities that will be critical to defeating Beijing’s anti-access and area-denial strategy. Most importantly, this means honoring U.S. security commitments to countries like Taiwan in the event of a crisis. Meanwhile, the United States will move to protect against Chinese intellectual property theft, which includes imposing greater economic and diplomatic costs in response to such theft. It will also move to avoid any defense industry dependence on China. Fourth, the U.S. trade strategy will become a major tool of comprehensive pressure by encouraging multi-nationals to relocate out of China. China’s EU trading partners who rely on U.S. consumers as well as “the U.S. military umbrella” will recognize the merits of following the U.S. lead. Today, the vast proportion of Chinese exports and related intellectual capital are associated with foreign multi-nationals. The bilateral trade relationship between the United States and China is highly asymmetric. The United States remains the world’s preeminent technological innovator, as well as the world’s largest producer of food, energy, and many other industrial inputs. China is essentially the world’s largest “contract manufacturer,” which no longer has a sustainable cost advantage versus Mexico, Vietnam, or Malaysia. As the United States freezes China out of the global supply chain, it’s highly leveraged financial system will crash or atrophy, undermining China’s Belt and Road Initiative as well as its military-industrial complex. Fifth, implementation of collective pressure will be adjusted based on how far and how fast critical domestic and international audiences can be persuaded to go along, and this will largely depend on China itself. Ultimately, if Beijing grows significantly more aggressive or its power markedly increases, then collective pressure leaves the door open for a toughening of China policy — and prepares the ground for doing so. A hybrid approach is thus appealing because it offers greater competitive pressure than a pure strategy of collective balancing can provide while avoiding the most diplomatically counterproductive and politically divisive elements of comprehensive pressure. For instance, if the Hong Kong demonstrations lead to a repeat of the 1989 Tiananmen Square uprising, we’re likely to see collective pressure escalate overnight. Sixth, China will have to choose between accepting the standards of the global community or beginning a rapid decline in affluence, geopolitical reach, and political stability. With the U.S. and its “allies” adopting a de facto strategy of “collective pressure,” the Chinese Communist Party leadership can still choose to adopt international standards on free trade and human rights. However, political unrest in Hong Kong, the trade war with the United States, and the precarious state of the Chinese banking system mean that it only has a short window in which to make that decision. Great wealth inequality, a rapidly aging and shrinking population, low productivity within the State-Owned Enterprises that serve most Chinese consumers, and extremely high financial leverage are already taking a toll. For example, projects related to the Belt and Road Initiative is “drying up” due to a lack of available hard currency. Quite possibly, China will sign onto a U.S trade deal with the intention of reneging while making promises in other areas. This will give China as well as the U.S. and its “allies” an opportunity to reassess the situation. But no one should be surprised when such a deal unravels in 2021 or 2022. Multi-nationals should treat a deal in 2019 or early 2020 as an opportunity to sharply reduce their financial and supply chain exposure to China. And, Seventh, for U.S. workers, consumers, and investors, a diminished China will be a major plus. Multi-nationals will have to accept that “free market” access to Chinese consumer markets was never going to happen and seek out increasingly affluent consumer markets elsewhere. Emerging markets in Asia and Latin America including Vietnam, Bangladesh, Malaysia, the Philippines, and Mexico will enthusiastically embrace multi-national suppliers as they exit China. Meanwhile, energy-intensive and automation-driven manufacturing jobs will return to the U.S. with less exposure to theft of intellectual property, multinationals will be able to increase their innovation-driven margins. Without state-subsidized Chinese competition from firms like Huawei, tech companies in Europe, Korea, Taiwan, Japan, and the United States will be reenergized. |
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