US-China: A New Consensus for Strategic Competition in Washington

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By Satoru Mori

In the past, whenever a dramatic event or an action created tension between the United States and China, it would be followed by a phase of reduced tension and stability. Are we witnessing another phase of this tension-stabilization cycle, or are we on the cusp of a qualitatively new mode in the U.S. approach toward China, epitomized by the phrase “strategic competition with China”? Will U.S. efforts to push back on China intensify to the point where the United States can accept and absorb the consequences of the “decoupling” of the two nations? These are questions that have implications beyond the Trump administration and potential repercussions not only for the United States but also for the rest of the world.

The Tension-Stabilization Cycle

U.S.-China relations have seen episodes of tension, which would then be followed by an easing of tensions. The Tiananmen Square incident created a major uproar in the United States, but the George H. W. Bush administration worked to maintain Most Favored Nation (MFN) status for China. Tensions flared over the Taiwan Strait between 1995 and 1996, but the Clinton administration ultimately supported China’s entry into the World Trade Organization (WTO). The government of George W. Bush called China a “strategic competitor” and tensions again spiked after the so-called EP-3 incident in 2001, but the U.S. eventually built a cooperative relationship with China in the wake of the 9/11 terrorist attacks and launched the Strategic Economic Dialogue (SED). President Barack Obama essentially maintained a cooperation-based approach toward China, in order to tackle climate change, pandemics and other global issues even in the face of Chinese assertiveness in maritime Asia and significant incidents of Chinese cyber theft and economic espionage.

These tensions in U.S.-China relations were always followed by stabilization because there were factors that functioned as “ballasts” in the U.S.-China relationship. There used to be at least three kinds of “ballasts” – strategic, economic and ideational. During the Cold War, it was counter-Soviet strategy that bonded the United States and China, and after the Cold War, it was business interests – U.S. manufacturing industries started operating in China to capitalize on cheap local labor, and the U.S. financial sector made investments in China. As U.S.-China economic relations developed, the so-called engagement approach toward China was further justified on two beliefs: that engagement would urge China to politically liberalize, and that China would eventually embrace the same rules and norms as those cherished by liberal democracies to become a “responsible stakeholder.” In short, during the two decades following the end of the Cold War, economic interests and two expectations drove U.S. domestic actors to work to stabilize the U.S.-China relationship whenever tension increased between the two countries.

The Formation of a Counter China Coalition

U.S.-China relations began to exit the traditional tension-stabilization cycle to enter a period of intensifying competition because the conventional “ballasts” waned out over the past decade due to several reasons. First, Chinese policies of forced technology transfer, intellectually property theft and other unfair trade practices have enabled Chinese state-owned enterprises to deprive the U.S. of sources of its industrial competitiveness and aggressively grab profits that otherwise would have been earned by U.S. companies. Economic conditions such as rising wages in China and falling profits earned by U.S. companies operating in China have further caused U.S. companies to lose interest in playing the role of stabilizer in the bilateral relationship. Second, Chinese authorities’ domestic exercise of power have reduced political freedoms in China and disillusioned those in Washington who believed that engagement would create conditions conducive to political liberalization. President Xi Jinping’s speech at the 19th Party Congress in the fall of 2017 and the removal of the limit to his term in power seems to have further eroded any positive expectation toward China’s liberalization. Third, Chinese external behavior in the South China Sea and East China Sea, its malicious cyber activities, and influence operations overseas have caused those who expected China to become a “responsible stakeholder” to lose any confidence that they had left in China.

As a result, factors that once served as brakes on the U.S. drive to confront China have dissipated, especially over the past several years. Meanwhile, the fact that China is catching up by cheating and trying to overtake the United States on industrial and economic terms has created a strong sense of urgency to “protect” U.S. interests from a rule-violating adversary who rose to power by cheating on the rules that it had seemingly committed to. The perceived need to protect U.S. interests has turned the U.S. manufacturing industry into a constituency of “economic nationalism,” and turned the U.S. high-tech industry subjected to Chinese espionage into a constituency of “techno-nationalism.” Moreover, since manufacturing and advanced technology have national security implications, the need to protect the sources of U.S. economic growth, competitiveness, and security of the U.S. industrial base have resonated with a U.S. defense establishment that has long been skeptical about Chinese intentions and willing and able to take up the challenge of the long-term strategic competition with China. The expressions China’s “economic aggression,” and “economic warfare,” and the recognition of the need to protect the “national security innovation base” as well as the phrase “economic security is national security” in the 2017 National Security Strategy epitomize this convergence of push back forces within the United States. This convergence was also clearly manifested in the speech by Vice President Mike Pence in October 2018, which was essentially a comprehensive list of U.S. complaints against China.

The Washington Push Back

The American turn toward the competition approach has so far consisted of U.S. enforcement actions in various issue areas. U.S. executive branch agencies – ranging from the United States Trade Representative, and the Departments of Defense, Commerce, Justice, State and others – as well as the U.S. Congress are now out for a full-court press on China.

In the economic domain, it is widely known that a series of punitive sanctions have been imposed on China for its unfair trade practices based on the Section 301 findings. A Chinese officer working at the Ministry of State Security was arrested in Belgium and extradited to the United States in October 2018 for stealing U.S. trade secrets, and Huawei’s chief financial officer was arrested in Canada for deceiving international banks into clearing transactions with Iran and violating sanctions. The U.S. Justice Department’s China Initiative is aimed at countering Chinese economic espionage.

In the area of technology security, the John S. McCain National Defense Authorization Act of 2019 (NDAA 2019) expanded the scope of regulation of inbound foreign investment with national security implications through the Foreign Investment Risk Review Modernization Act (FIRRMA) and of outbound critical technology through the Export Control Reform Act (ECRA). Section 889 of the NDAA 2019 also prohibits executive branch agencies from procuring or contracting for certain covered telecommunications equipment or services from Chinese companies such as Huawei and ZTE.

In the area of geopolitical competition in the Indo-Pacific, the United States is advancing its free and open Indo-Pacific strategy that centers on infrastructure investment and development finance backed up by the BUILD Act, digital connectivity, cyber security, energy access and security. The United States is also joined by allies such as Australia, Japan, France and the United Kingdom to support and uphold international law in the South China Sea through freedom of navigation operations. The U.S. Congress has also passed the Taiwan Travel Act, the Reciprocal Access to Tibet Act, and the Asia Reassurance Initiative Act.

In the area of national defense, the Department of Defense is vigorously moving ahead with its defense innovation efforts to apply cutting edge technology such as artificial intelligence, robotics, hypersonics, quantum information science, among others for national defense purposes. The U.S. military is devising the concept of joint operations, such as multi-domain battle, and exploring new command and control models to enhance its capability to retain conventional overmatch.

The Rising U.S. Consensus for Strategic Competition with China

Do the whole-of-government push back efforts represent a new Cold War consensus in the United States? How solid and firm is the U.S. national resolve to persist and endure in the strategic competition with China? U.S. history shows that a national consensus to confront an adversary emerged whenever the notion that the American way of life was threatened not only from abroad but also from within the country spread throughout the entire nation – perhaps a major characteristic of an open society founded on immigration. When communism was seen as an ideological threat to American society, McCarthyism was rampant at the same time that the United States set out to contain the Soviet Union. The fear of terrorism persisted after the 9/11 attacks as the Patriot Act was enacted to surveil and hunt down terrorists who infiltrated the United States while the U.S. waged the global war on terror.

Does the same kind of internal/external threat model apply to present-day China? It appears that the fact that the Chinese government was conducting influence operations inside the United States and that China has been depriving U.S. intellectual property and advanced technology – the very sources of U.S. national wealth – and privacy-related information of U.S. citizens through illegal and legal means is beginning to cause an internal allergic reaction. The U.S. public may merely hold a negative image of China and may not be fully aware of the specifics of China’s intrusive and aggressive activities at the moment, but the U.S. government’s effort to eject a malicious Chinese presence in forms such as digital equipment and chips will spread to U.S. companies, and would likely impact the U.S. public’s view of China. China’s defiance toward U.S. demands that it stop rule violations, malicious activities and human rights violations may also further aggravate the perception of the U.S. public.

An ideational mold is emerging in which American political leaders from both sides of the aisle could increasingly justify their China policy within a notional framework that China is undermining American prosperity and security. Similar confrontational narratives on China have been used in the past, especially during the election year, but as mentioned earlier, the underlying structure is fundamentally different. Current developments signify the emergence of a new consensus for strategic competition in Washington.

Whether this consensus will spread to the U.S. public remains to be seen. However, if it rises to the level of a nationwide consensus, the U.S. government would be able to engage in strategic competition with China by persevering the associated costs and risks.

The changes in the ways and means of the U.S. approach toward China are evident. The ways have clearly changed from inducement-based engagement to pressure-based competition. The means and measures are being activated by various branches of the U.S. government, as we have seen. There may be differences in views within Washington about the ends of the competition – whether the goal is to change problematic Chinese practices and behavior and compel compliance or to weaken China’s momentum towards top global power status. Nevertheless, the United States is activating ways and means to wage strategic competition across the board, and if China continues to retaliate against and resist U.S. rule enforcement measures, then an increasingly larger portion of the Washington community may veer toward the latter goals rather than the former.

Trump could reach a deal with Xi Jinping on measures aimed to reduce U.S. trade deficits and he may decide to postpone activation of additional tariff measures – a short-term political transaction that would merely create a temporary lull. Trump probably wants to show his supporters in 2020 that he made good on his promise to reduce trade deficits so he is likely to make a deal to allow China to deliver results for 2019 trade statistics by demanding that the U.S. conduct periodic reviews into 2020. If the trade deficit is reduced, then he can claim victory, but if not, he can just raise the tariffs and tell his supporters that he is being tough on China – either way he will be able to justify himself in 2020. These political transactions on trade may create short-term lulls to create the impression that the tension-stabilization cycle is back. However, U.S.-China relations driven by deeper competitive dynamics in various issues areas and a strong revulsion against Chinese intrusive predatory activities will likely drive the relationship toward intensified competition, creating a zig-zag upward trajectory. It is becoming increasingly difficult for diplomacy to adjust and manage fundamental frictions between the two countries. China would have to demonstrate and deliver – rather than promise – comprehensive and genuine domestic reform and major moderation in its external behavior in order to avoid a full-scale long-term competition with the United States. If it cannot, then this century will likely witness all the risks and calamities of U.S.-China strategic competition.