Enlisting NATO to Address the China Challenge

By Carisa Nietsche, Jim Townsend and Andrea Kendall-Taylor

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China’s penetration of Europe through its high-tech capabilities and low-tech acquisition of ports and rail lines can pose problems for NATO, including slowing military mobility, providing Beijing (and possibly Russia, at some point) with intelligence on allied force movements, and compromising NATO command and control. Undue Chinese influence in some allied capitals can also be used to coerce those governments from joining consensus at NATO on issues considered inimical to Chinese (or Russian) interests.

To combat this influence, NATO must make sure that allies are able to fill their capability gaps through homegrown solutions, not purchases of Chinese technology. NATO should also work with the European Union, including to jointly develop a review mechanism that considers Chinese purchases of critical infrastructure in Europe and supply chain security.

The United States should continue to press NATO allies to meet their defense spending requirements, which would allow the United States to direct greater resources toward the Indo-Pacific. At the same time, the Department of Defense (DoD) should work with allies to reassess what expenditures count toward the 2 percent target, broadening the definition to include 5G and counter-hybrid investments that address China and Europe’s evolving security landscape.

The United States should keep pushing the China challenge in NATO and identify opportunities to work with NATO in the Indo-Pacific, including deepening joint military engagement there through military exercises with partners that will signal to China that any aggression will be met with alliance unity and resolve.

Introduction

The 2017 National Security Strategy and 2018 National Defense Strategy identified China as a “strategic competitor,” placing Beijing at the front and center of U.S. foreign policy.1 Europe too has grown more sober in its assessment of China. Although Europe has primarily seen China as an economic challenge, the EU has begun to frame China in increasingly geopolitical terms, labeling Beijing as a “systemic rival” in 2019.2 The global pandemic has further heightened Europe’s geopolitical concerns about China, making the time ripe for greater transatlantic cooperation on the issue.

Europe too has grown more sober in its assessment of China.

Moving forward, the DoD should enlist NATO in efforts to address the China challenge. As a first step, the United States should work to foster a shared transatlantic assessment of the challenges China poses. As NATO Secretary General Jens Stoltenberg acknowledged, China is moving closer to the alliance. Aside from playing a bigger role in the Arctic, Africa, and cyberspace, China is making investments in new infrastructure and weapon systems.3 Its growing footprint and influence in Europe, as well as its deepening cooperation with Russia, create new challenges for NATO, outlined here.

Second, the Department of Defense should seek new approaches to working with NATO to manage China’s rise. Although the European Union is in many ways better positioned to counter China’s growing influence (through investment screening and export control mechanisms, for example), DoD should more effectively incorporate NATO in its efforts to address the most significant security challenge to the United States.

Challenges China Poses to NATO

China does not pose a direct military threat to most NATO allies. But Beijing’s economic and commercial investments in Europe and its growing technological dominance—in areas ranging from artificial intelligence to cyber and robotics—are creating new challenges that influence NATO’s threat landscape. China’s growing footprint and influence in Europe present NATO with the following challenges:

Eroding NATO cohesion and unity. China is undermining European cohesion by negotiating with European governments bilaterally, through the 17+1 and Belt and Road initiatives. Beijing’s divide-and-rule tactics allow it to use its economic influence to buy political leverage, which strains NATO cohesion. Already, shortly after China invested in Greece’s Piraeus Port, Greece blocked an EU statement in the UN Human Rights Council that criticized China’s human rights record.4 China could use its significant economic influence with other NATO members, such as Montenegro and Italy, to coerce those allied governments away from joining consensus at NATO on issues considered inimical to Chinese (or eventually Russian) interests.

Beijing’s economic and commercial investments in Europe and its growing technological dominance are creating new challenges that influence NATO’s threat landscape.

Jeopardizing NATO interoperability. China’s sustained technological prowess and innovation present challenges for both the United States and Europe. If the transatlantic partners pursue different approaches to competing technologically with China—either because of differing risk assessments or by implementing different regulations—this would lead to a transatlantic decoupling of technology systems. For example, if some NATO members opted to include the Huawei kit in their 5G networks, NATO (and the United States) could need to exclude those countries from NATO communications and intelligence networks, including the Federated Mission Network. Similarly, while China is supercharging its artificial intelligence (AI) development, the United States and Europe are implementing AI systems at different rates and proposing divergent regulatory approaches to govern the use of AI, which could threaten the interoperability of these systems.5

Eroding NATO’s military edge. The Chinese Communist Party’s military-civil fusion strategy to build the People’s Liberation Army (PLA) into a world-class military hinges on China’s ability to procure dual-use tools, including semiconductors and robotics technology, from the United States and Europe. China seeks to gain a military edge by bolstering its research and development (R&D) spending, investing in critical technologies, and engaging in unfair trade practices such as intellectual property theft and forced technology transfers to acquire Western capabilities. In 2018, China spent $462 billion per year on R&D funding—more than all of Europe’s R&D budgets combined.6 China’s battle for the military edge is evident in artificial intelligence; it seeks to “become a global leader in AI by 2030,” in order to skip a generation of military technology.7 The Chinese Communist Party is working toward this goal by attempting to manufacture advanced semiconductors, to acquire robotics companies and others that underpin AI technology, and to purchase semiconductor manufacturing equipment. These steps will allow China to build its own domestic capacity.8 Over time, Chinese efforts to harness high technology to improve the lethality of their military forces could erode the U.S. and allied military edge. This edge has always depended on using advancements in military technology to win against adversaries who have more forces and assets.

Disrupting NATO’s mobility and operations. Since 2008, the PLA has increased its naval operations in European waters and begun periodic deployments in the Mediterranean, Baltic, and Arctic Seas. These deployments underscore that the People’s Liberation Army Navy (PLAN) is not limited to the Pacific but has a global presence that could factor into a European conflict.9 To support its global presence, Beijing has invested in port infrastructure along European waterways. In 2015, China attempted to acquire berthing in the Azores—which is about one-third of the way to the United States—and began operating hydrographic research ships in the South Atlantic.10 Today, China holds about 10 percent of all European port capacity, primarily along the Mediterranean Sea and the Atlantic Ocean.11 China has also recently pushed for additional investments on the Baltic Sea, including Klaipeda Port in Lithuania.12 Chinese control of a port could cause problems for NATO and the United States, especially if it were a port of debarkation critical to offload U.S. reinforcements to Europe. In a crisis, should China wish to assist Russia, the Chinese could find “technical reasons” for the port to be unusable for cargo operations, thereby slowing U.S. reinforcements.

Since 2008, the PLA has increased its naval operations in European waters and begun periodic deployments in the Mediterranean, Baltic, and Arctic Seas.

Similarly, Chinese investment in railways also could hinder NATO movement if use of these railways were at the mercy of China, or if the railways were not built to carry heavy equipment. In recent years, China has invested in several rail projects in Europe, becoming a major shareholder in the Budapest-Belgrade Railway in 2015, as well as in railway terminals in Zaragoza and Madrid in late 2017.13 An inability to move heavy equipment quickly by rail could hinder NATO mobility in a time of crisis.

Finally, China could disrupt NATO operations through its role in supply chains. In 2019, reports indicated that U.S. and UK F-35 fighter jets included core circuit boards from a Chinese-owned company.14 China could write vulnerabilities into code or build in low-quality parts that would cause failures when the weapon system was fielded.

Posing an espionage risk. The uptick in China’s naval operations in European waters and investment in port infrastructure along the Mediterranean Sea, Atlantic Ocean, and Baltic Sea could enable China to collect intelligence on NATO exercises and on troop and asset movement. Already, China’s investment in the Haifa Port in Israel—a liberty port for U.S. Navy ships transiting the Mediterranean Sea—has raised concerns about China’s ability to collect intelligence on U.S. troop and asset movement.15 The implementation of Huawei 5G technology in Europe poses an additional espionage risk to the alliance. Huawei could bake vulnerabilities through bugdoors (backdoors) into the networks, and this would enable Huawei to collect information flowing through the networks, including on NATO’s Federated Mission Network.16 5G networks present a particular challenge because of the sheer volume of data flowing through them, and because 5G networks underpin energy grids, artificial intelligence, Internet of Things (IoT) devices, and future military capabilities—all of which could be weaponized. Furthermore, China’s National Intelligence Law requires companies to surrender information to the Chinese state upon request.17

Growing Russia-China cooperation. In recent years, cooperation between China and Russia has deepened, bringing the China challenge more directly to Europe’s front door. There has been an uptick in joint military exercises between the two actors in the Mediterranean and Baltic Seas, including joint naval exercises in the Mediterranean in 2015 and Joint Sea 2017, marking the first time the PLAN operated in the Baltic Sea.18 Aside from exercises, growing cooperation between Russia and China raises the risk that China could share with Russia intelligence pulsing through 5G networks or collected at ports controlled by Chinese companies, use its growing ownership of European infrastructure to slow a NATO response to Russian aggression, or use its economic leverage to quietly dissuade an already reluctant NATO member state from responding to Russia’s hybrid tactics.19

Recommendations

To address these challenges, the Department of Defense should work with NATO partners to pursue a strategy that tackles the risks China poses to the NATO alliance. DoD should work more effectively through NATO on the shared China challenge.

Encourage burden sharing, but rethink what counts toward the 2 percent. In order to free up U.S. military resources for the Indo-Pacific and potentially help offset the impending U.S. defense budget decline, the United States should continue to press the issue of burden sharing with allies. In doing so, however, the United States and its allies should together revisit what defense expenditures can be applied to the 2 percent target upon which the NATO allies agreed at the 2014 Wales Summit. The threat landscape in Europe is evolving. To prepare for this, NATO can use defense spending targets to encourage allies to take steps, including investing in secure 5G networks, cybersecurity, infrastructure and other areas that improve military mobility in Europe. These measures will help NATO adapt to meet the China challenge and other evolving threats in Europe’s security landscape.20

Push the China challenge in NATO, while pressing for greater NATO-EU coordination. The United States should continue to press the China issue at NATO, working to build a shared perception of the challenges that China poses. Such efforts are likely to be most effective if U.S. officials start slowly, building NATO support for the issue in a few European capitals. Perhaps most important, the United States should continue to make the case for strengthening NATO-EU cooperation.21 Coordination would include hosting a NATO-EU Council meeting on China and enhancing consultations on these issues more broadly, conducting joint monitoring of specific acquisitions or takeovers especially ports.

The Department of Defense should work with NATO partners to pursue a strategy that tackles the risks China poses to the NATO alliance.

Broaden beyond the transatlantic players. NATO should create an Indo-Pacific Council to build cohesion and share best practices for managing China’s challenges with NATO’s close global partners, such as Korea, Japan, and Australia.22 Increasing these lines of communication would signal to Beijing that the cohesion of the United States and all of its allies in addressing shared challenges. As part of increased engagement, the alliance should deepen military liaison through joint exercises with these partners.23 Additionally, a number of European countries—including France, Germany, and the United Kingdom—currently participate in Rim of the Pacific (RIMPAC) exercises.24 The United States should consider adding a day or two after the conclusion of RIMPAC for NATO allies to conduct their own exercise under the NATO flag. NATO could also consider a freedom of navigation exercise in the South China Sea that would send the diplomatic message that the United States is not alone in disputing China’s claims

Maintain the U.S. and European military and competitive edge. NATO is an important vehicle for spurring joint innovation. The United States should work through NATO’s Defense Planning Process to identify allied military gaps that are vulnerable to being filled by purchases from China. To avoid this, NATO defense planners should develop allied innovation goals that can help alliance members find other ways to fill these gaps. NATO member states should prioritize jointly building at home future technologies that will underpin military capabilities, such as quantum computing, artificial intelligence, and 6G. Allies will need to begin developing AI technology and its regulations in concert to ensure that systems remain interoperable, and that China does not secure the upper hand in this pivotal technology.25

To maintain their competitive edge, allies will need to increase and protect U.S. and European joint innovation. The alliance should prioritize securing supply chains and ensuring procurement processes that prevent Chinese goods from inclusion in mission-critical tools. Further, NATO should participate in export control dialogues with EU member states to ensure that semiconductor manufacturing equipment and other foundational technologies are controlled multilaterally. As part of this effort, NATO should coordinate with the EU to establish baseline risk assessments for the adoption of critical technologies from Chinese providers, such as 5G, to ensure that risk mitigation strategies are developed and implemented with possible military use in mind.

Identify opportunities to limit Russia-China cooperation. Moscow is growing increasingly concerned about the asymmetry in its relationship with Beijing. Over time, the allies should work to shape Moscow’s calculus such that the Kremlin perceives some cooperation with the United States and Europe as possible and preferable to its overdependence on Beijing. In the NATO context, this means that as the allies continue to unify and strengthen their defenses, they should also offer to engage with Moscow if the Kremlin moderates its actions. If relations improve, NATO could offer to restart joint military exercises in areas such as search and rescue, accident prevention, and emergency response.

Conclusion

The challenge China poses to NATO has clear implications for U.S. national security. In a worst-case scenario, China could hobble NATO mobility in a time of crisis. Meanwhile, China could use its increased presence in Europe to undermine NATO cohesion, gather information for Russia, corrupt information and network security, fracture interoperability, and erode U.S. and European competitiveness. To address these challenges, the U.S. Department of Defense should recognize the clear threat that China poses to NATO and work through NATO to address these vulnerabilities. The next National Defense Strategy should pursue a plan of action that enables Europe to bolster its own defense, starting with a few critical European capitals, and that broadens beyond transatlantic allies. Ultimately, the plan should aim to preserve and protect NATO’s military edge vis-à-vis China.