By Kaleb J. Redden
They have transformed a poor society by an economic miracle to become now the second-largest economy in the world. . . . They have followed the American lead in putting people in space and shooting down satellites with missiles. Theirs is a culture 4,000 years old with 1.3 billion people, many of great talent. . . . How could they not aspire to be number 1 in Asia, and in time the world? . . . It is China’s intention to be the greatest power in the world.
—Lee Quan Yew, former prime minister of Singapore1
China today represents the “most consequential long-term challenge we face as a nation.”2 While many actors and trends present challenges to U.S. interests, only China has the potential to challenge the United States across so many aspects of national power—to challenge its economic influence and technological lead in key sectors, to challenge its military in scenarios in which it has long held dominance or assumed sanctuary, or to present an alternative governance model that undermines the norms and values that the United States has sought to preserve at home and promote abroad.3 To be clear, China faces many headwinds that may inhibit its rise.4 Yet China has signaled ambitions to be a dominant global power; its economic trajectory, if it continues, would provide significant means to pursue its aims.5 As a result, today China alone can contend with the United States for hegemony within a region and has the potential to mount a serious challenge to the U.S. ability to shape the character of the international system.6
This article provides a U.S. strategy for this challenge.7 It begins from a view that the United States benefits from its leading position in the international order of the past 75 years.8 It embraces the diagnosis of our current national strategies that U.S.-China relations have become more competitive, but diverges on some of the approaches it recommends to succeed in that competition. It posits that, while the primacy the United States once enjoyed may no longer be attainable, the United States still maintains the wherewithal to prevent Chinese hegemony in Asia and to sustain its leading role in shaping the character and direction of global affairs—and that the U.S. political aim should be to do so.9 It argues that the United States can achieve this aim by reinforcing deterrence in Asia, building a balancing coalition to check China’s rise, and bolstering domestic strengths to extend U.S. influence and sustain the international order until China either moderates its ambitions or suffers setbacks. In other words, the United States should not panic, but it must focus.
The Strategic Context: International and Domestic
China’s Trajectory, Ambitions, and Strategy. Over the past 40 years, China has witnessed an unprecedented economic transformation, rising from a poor, isolated state to become the world’s second largest economy, largest merchandise exporter, second largest destination of foreign direct investment, and largest manufacturer.10 Throughout most of that time, China’s leaders were mindful of Deng Xiaoping’s dictate to “hide your capabilities and bide your time,” creating space for its rise while allowing the world to believe it might become a “responsible stakeholder” in the international system.11
The arrival of President Xi Jinping in 2012, however, ushered in a new era of Chinese confidence and assertiveness. China is hiding its capabilities no longer; it portrays itself as a world leader and casts the United States as retreating from the global stage. Under Xi’s leadership, China has sought to reorient global economic corridors through its Belt and Road Initiative (BRI), militarized extraterritorial claims in the South China Sea, undertaken a massive military modernization campaign, and set goals to dominate key technology sectors by 2025. Perhaps most significant, Xi’s articulation of a new “Chinese Dream” set ambitious national objectives that, according to some interpretations, aim to supplant the United States economically, militarily, and culturally by 2049.12 Ultimately, China seeks to achieve dominant influence in its near abroad and to displace the United States from its historical role as the de facto leader of the international order so that it can reshape that order to its preferences.13
China’s strategy to achieve these aims has increasingly come into focus. It seeks to increase its leverage through trade and economic tradecraft so that nations, corporations, and organizations are reticent to contest or even criticize China’s activities; increase its military capabilities to deter U.S. military intervention in Asia; weaken the U.S. alliance system, particularly in Asia; erode confidence in U.S. credibility and staying power; cast doubt on the U.S. economic and political model; and increasingly present itself as a leader in global institutions and in the eyes of the world.14 It seeks to do so while avoiding a conflict with the United States, but it is increasingly confident of its prospects should one emerge.15 A successful U.S. theory of victory must be designed to defeat this Chinese theory of victory.16
U.S. Domestic Context: Advantages and Atrophy. As these dynamics have become more evident, a consensus has emerged in Washington that the United States must move aggressively to stop this erosion.17 Donald Trump’s National Security Strategy may have given official voice to a more competitive U.S.-China relationship, but there is a growing bipartisan consensus on the gravity of this issue, which is rare in Washington today.
Despite this sense that its dominance is eroding, the United States today still enjoys a number of enduring strengths that China lacks. These include an unparalleled alliance network,18 unrivaled military power projection capabilities, a highly efficient and innovative economy,19 systemic fiscal and economic advantages,20 abundant natural resources and energy reserves,21 a comparatively uncontested near abroad,22 and an open society and comparatively transparent government with greater legitimacy, elite educational institutions,23 more favorable demographics,24 and a historic position as de facto leader of the international order.25 And China faces significant challenges often overlooked in narratives of its inevitable rise, including widespread corruption, poor health care, an aging population, and many others.26 In short, China is not preordained to supplant the United States globally.27
Yet the United States has frittered away many of its advantages. At home, it has underfunded education and infrastructure, insufficiently prioritized research and development, abandoned immigration policies that have underwritten U.S. economic competitiveness, and allowed other domestic strengths to wither.28 It is experiencing new levels of political polarization and national debt that leave it less able to stem this atrophy or respond to other crises. And abroad, an “America First” foreign policy has put strains on U.S. alliances,29 undercut U.S. attractiveness,30 created a vacuum in international institutions that China has moved to fill,31 and, most important, left the world less confident of U.S. leadership.32
Moreover, while Washington has become seized with this problem, it is unclear that the American public has done so. Some polling suggests that the public is less focused on China than political elites.33 The public already expects a level of services incommensurate with taxation; the United States was running nearly trillion-dollar deficits even before the coronavirus pandemic. To put it simply, the public does not appear prepared for the commitment that a long-term U.S.-China competition might entail. Whether the United States will sustain its advantages is therefore unclear; this strategy must demonstrate why the public should be willing to support doing so.
F-35B Lightning II fighter aircraft with Marine Medium Tiltrotor Squadron 265 (Reinforced), 31st Marine Expeditionary Unit, prepares to take off from flight deck of amphibious assault ship USS America, South China Sea, April 18, 2020 (U.S. Marine Corps/Isaac Cantrell)
U.S. National Interests and How China Threatens Them
The United States must weigh Chinese actions by the degree to which they threaten its national interests. While formulations for national interests have varied, they are typically variants of security, prosperity, and the values we seek to preserve at home and promote abroad.34 China poses significant challenges to each.
Protecting U.S. Security. The United States remains the world’s preeminent military, with unrivaled global power. But regional balances of power are what matter vis-à-vis China—because the potential flashpoints today are proximate to China, and Beijing has been investing in capabilities specifically designed to challenge Washington in such scenarios.35 Unless the United States is postured to blunt Chinese aggression initially, it faces the unwelcome choice of either seeking to roll back Beijing’s advances or backing down. With the former come risks of escalation against a nuclear power; with the latter comes weakened U.S. credibility and norms against nonaggression.36 Put simply, U.S. military deterrence in Asia, which numerous allies trust for their own security, is eroding, and the risk of conflict is rising as a result.
Long-term trends are also bleak. The United States has spent the past two decades focused on counterterrorism and counterinsurgency—investing in legacy systems and consuming readiness as quickly as possible. As a result, China today rivals the United States in key technologies such as artificial intelligence, quantum computing, and hypersonics.37 It appears capable of using cyber capabilities to hold at-risk critical infrastructure, penetrating military networks critical to our power projection, and engaging in social manipulation to cripple the public’s will.38 It is eroding U.S. advantages one by one, often by stealing technology that required billions of dollars and years to develop.39 Put simply, the character of warfare is changing, and China has done more to prepare for it.
Promoting U.S. Prosperity. China has eclipsed the United States as the primary trading partner for nearly all the world’s nations, reversing a dominant U.S. position of only 20 years ago.40 The International Monetary Fund estimates that if China achieves its 2049 goals, its economy would be three times that of the United States.41 While scholars rightly point out that China must also provide for more than four times the U.S. population, this sheer economic heft would give China enormous benefits of scale as well as significant leverage in almost any bilateral relationship.
To grow and sustain these advantages, the goals of “Made in China 2025” make clear China’s intent to dominate key technology areas it believes are essential to future growth—a goal that implies displacing U.S. leadership in many cases.42 To do so, it restricts foreign companies’ access to Chinese markets, supports state-owned enterprises, forces companies to share intellectual property (IP), and steals IP it cannot otherwise obtain. The Commission on Intellectual Property Theft estimates that cyber theft costs the United States between $180 billion and $540 billion annually—the equivalent of 1 to 3 percent of U.S. gross domestic product.43 Intangible assets such as IP represent 80 percent of the value of the Standard and Poor’s 500 by some estimates, so vulnerability to such attacks is consequential for both economic prosperity and national security.44
Moreover, China reinforces this leverage with tools of economic statecraft, most notably its Belt and Road Initiative. Most estimates suggest China plans to spend more than $1 trillion globally under BRI, which will reorient global trade corridors toward China.45 As part of this effort, China engages in predatory lending—simultaneously linking these nations to China’s economic system, generating coercive leverage, and undercutting international norms.46 The United States has no compelling alternative to these offerings.
As a result, even as states become more wary of China’s motives, its economic leverage provides a powerful tool to promote its preferences and undermine U.S. influence. At least one analysis of Asian power trends now rates China as the most diplomatically influential nation in Asia.47 In Latin America, China is using this leverage to pressure states to drop diplomatic recognition of Taiwan.48 In Europe, U.S. efforts to convince nations not to allow Huawei to build 5G networks have fallen flat.49 Nations increasingly want U.S. security but still want Chinese economic benefits, and they try to avoid being forced to choose.50
Advancing U.S. Values and Influence. China’s governance model presents the most credible alternative model to Western democracy since the fall of the Soviet Union. Chinese citizens cede political freedom in exchange for economic gain,51 allowing the Chinese Communist Party to create an unparalleled surveillance state.52 Xi has arrested thousands of activists, expelled foreign journalists, and worked to suppress protests in Hong Kong. Most egregiously, China has detained more than 1 million Uighurs, Kazakhs, and other Muslim minorities in “reeducation camps,” with torture and forced labor being reported.53 U.S. experts have comforted themselves with the thought that China’s model lacks foreign appeal.54 Yet recent behavior suggests China increasingly sees its model as something it should export.55 If it spreads, not only will millions of people be less free, but current norms that guide nation-state behavior will be at risk as well. Such a future presents a challenge to our values and portends a darker world where unrest and conflict are more common—potentially undercutting long-term global stability as well.56
Desired Ends, Theory of Victory, and Assumptions
The United States must decide if it wishes to confront this challenge or seek some form of accommodation with China. This strategy argues that the United States is unlikely to reach any accommodation that would be sufficient to protect its own interests yet satisfy Beijing over the long term.57 China’s ambitions are at odds with core tenets of U.S. foreign policy: preventing a foreign hegemon in Asia, supporting allies and partners who feel threatened by China’s rise, and reluctantly conceding regional spheres of influence in which China would dictate the norms of behavior. It is always possible that China’s aims are less ambitious. U.S. strategy, however, must account for the possibility that they are not.
As a result, the U.S. political aim should be to deny China regional hegemony and to sustain the leading role of the United States in shaping the character and direction of global affairs. The United States still maintains the wherewithal to do so today, even if it is unlikely to regain the primacy it enjoyed following the collapse of the Soviet Union. To do so, this strategy offers a theory of victory designed to counter China’s strategy: the United States must reinforce deterrence in Asia to mitigate vulnerabilities today, build a balancing coalition to check China’s rise, and bolster U.S. domestic strengths to extend American influence and sustain the international order until China either moderates its ambitions or suffers setbacks.
Given’s China’s breathtaking rise, we should be clear about the plausible mechanisms for this theory of victory to work. Even as some trends appear significantly in China’s favor, this theory could work by buying time and signaling U.S. commitment that allows states to form a balancing coalition against China,58 buying time for China’s domestic constraints to work against it, either through economic stagnation or more far-reaching domestic upheaval,59 or by simply sustaining U.S. advantages that prove more pronounced than declinists predict.60 Competing with rather than accommodating China is also advisable even if none of these futures transpires, because even if its current position in the international order is not viable indefinitely, the United States benefits from sustaining it for as long as possible.
This approach, however, relies on a number of assumptions. If any of these proved invalid, it would require revisiting the strategy. Key assumptions include the following:
The current international order remains attractive to most nations.61
The United States can convince nations to balance against China.62
China’s leaders can adjust policy without imperiling regime stability.63
U.S. actions designed to deter Chinese behavior will in fact improve deterrence, not drive an escalatory response.64
Other threats (for example, Russia) will not alter Chinese behavior significantly or align with one another in ways that significantly increase the threat they pose to U.S. interests.
The U.S. public will support increased investments necessary to execute this strategy.
Access to Asia’s economy is necessary for U.S. prosperity.
U.S. economic fundamentals (for instance, the dollar as a safe-haven currency) will not shift significantly.
Relative Chinese and U.S. economic and military trends are such that we may see a “period of acute danger” rather than China’s inexorable rise.65
From left, USS Germantown, USNS John Ericsson, USS Antietam, USS Ronald Reagan, USS America, USS Shiloh, USS New Orleans, and USS Comstock break away from formation in support of Valiant Shield 2020, Philippine Sea, September 25, 2020 (U.S. Navy/Oswald Felix, Jr.)
Strategic Objectives
This strategy articulates four key objectives that, taken together, are designed to pursue this theory of victory and achieve the strategy’s political aim:
Bolster conventional deterrence in Asia. This step includes both near-term measures to deter Chinese aggression and longer term efforts to sustain the U.S. military edge.
Build a balancing coalition to check China’s rise. To do so, the United States must reinvest in its alliances, restore perceptions of U.S. leadership and support for the international order, level the economic playing field with China by pursuing reciprocal trade rules and by building alternatives to BRI, and undertake a messaging campaign to expose the gap between China’s narratives and its behavior.
Restore the sources of long-term U.S. domestic strength. This step includes investments at home to revitalize our economy and society as well as discipline to prioritize resources to meet the challenge that China poses.
Pursue “principled engagement.” Even as we take the steps above, we should look to cooperate with China where our interests align to provide ballast for the relationship as competition intensifies, improve crisis stability, and make progress where possible on global issues.
These objectives are designed to be mutually reinforcing and to produce cumulative effects. They could be pursued in parallel, though some of them may necessarily allow for faster action than others.
What follows is a series of “objective instrument packages” that tie the objectives above to specific ways and means. An overarching strategy for China could not possibly account for every specific action the United States should take given the breadth and complexity of U.S.-China competition today. These objectives, however, provide key elements that should guide the U.S. approach and could also inform more detailed Department of Defense (DOD) strategies.
Objective 1: Bolster Conventional Deterrence in Asia. The United States must begin by launching a campaign to bolster conventional deterrence in Asia. The National Defense Strategy provides useful direction on this issue. More needs to be done to implement it, however, and some of its prescriptions are incomplete.
Ensuring there is no opportunity for Chinese aggression is important because it shores up an acute vulnerability. It is also a useful first step because other nations expect it, and because it is a bedrock requirement for stability on which other initiatives can ride: with it as a bulwark, we can work to rebuild other nations’ confidence in the United States and over time enable them to stand with us on economic and diplomatic matters.
This effort must begin with urgently needed investments and changes to capabilities and force posture.66 To do so, DOD must prioritize acquisition of more lethal and survivable platforms (advanced munitions; more resilient command, control, communications, computers, intelligence, surveillance, and reconnaissance), increase U.S. regional force posture and improve its combat credibility (more dispersed and resilient basing),67 develop new operational concepts for defeating Chinese aggression without the all-domain dominance to which U.S. forces have become accustomed since the Gulf War,68 and identify critical infrastructure for U.S. power projection and develop cyber protection campaigns given the importance of U.S.-based surge forces for most Indo-Pacific contingencies.69
Deterrence is not simply about capabilities; it is also about resolve. While the decision to use force will always be made by the President at the time, the United States must be prepared to fight in those situations where we seek to deter.70 To that end, as the United States updates its posture and deploys more advanced capabilities, it should undertake a calibrated messaging campaign to Beijing that signals both our defensive intentions and our unequivocal preparedness to act in the event of significant Chinese aggression against U.S. forces or allies.
The second element of this objective is longer term efforts to sustain our military edge. The National Defense Strategy emphasizes creating a more lethal force but gives little guidance on the relative emphasis on known capabilities versus long-term disruptive technology. As a result, the military departments’ proclivity toward familiar platforms means that DOD has focused more on near-term lethality. DOD has made notable steps in increasing its research and development (R&D) spending,71 but much of this funding has focused on evolutionary rather than revolutionary gains.72 To address this issue, DOD should first sustain its R&D funding increases—even at the expense of force structure or additional readiness—and significantly increase investment in long-term R&D on key technology areas such as artificial intelligence, hypersonics, space systems, and quantum computing. Second, because R&D spending is increasingly driven by the private sector, DOD must not only increase spending but also undertake acquisition reforms to speed up commercial technology integration, experimentation, and fielding.73 And third, DOD, working with the Departments of State and Commerce, should continue to drive export control reforms—improving our ability to protect technological crown jewels while making it easier to share noncontroversial technology with allies.
Objective 2: Build a Balancing Coalition to Check China’s Rise. If China’s trajectory continues, building a balancing coalition of states to sustain a favorable balance of power is the most plausible mechanism to counter China’s rise. Credible deterrence is crucial, but convincing nations to take this step would also require the United States to strengthen frayed bonds among its allies and partners, reestablish perceptions of U.S. leadership and commitment to the international order, develop alternatives to Chinese economic statecraft, and expose China’s malign behavior.
Strengthening U.S. Alliances and Partnerships. The U.S. alliance network is a substantial advantage that China lacks but seeks to undermine. Yet the United States risks taking this advantage for granted. It is no secret that many allies have chafed at President Trump’s “America First” rhetoric and demands for increased burden-sharing at a time when many allies face economic challenges and have just spent the past two decades supporting the United States in Iraq and Afghanistan. In some quarters, these relationships already appear to be fraying. One need look no further than the Philippines’ termination of the Visiting Forces Agreement, the British decision on Huawei, or European nations seeking to create an alternative to the Society for Worldwide Interbank Financial Telecommunication.74 Yet on balance, the United States still has substantial leverage today, is seen by many nations as their de facto security guarantor, and is still trusted more than China—advantages we can leverage but must shore up.75
First, the United States must simply act in word and deed as if its alliance and partner relationships matter. Washington should begin by turning down the rhetoric on burden-sharing in both Europe and Asia and moderating its aims in particular negotiations such as the Special Measures Agreement with the Republic of Korea. It should consult with partners before making significant foreign policy decisions (for example, closing U.S. borders without consulting allies was a self-inflicted wound in the initial coronavirus response). And it should simply be more present and dependable diplomatically (for example, President Trump has attended only two of eight summits in Asia during his tenure).
The United States should couple this shift in diplomatic posture with increased assistance and collaboration. For instance, it could increase and reprioritize its security assistance programs—providing more assistance to states vulnerable to Chinese coercion while also being more direct about specific capabilities—with the goal of incentivizing vulnerable states to become “porcupines” that are difficult to invade and more able to withstand Chinese harassment. DOD should also develop analytic processes to optimize defense capability mixes among sophisticated allied militaries (for example, Japan and Australia) to improve complementary capabilities given new operational concepts. And it should seek to persuade Quadrilateral Security Dialogue nations (Japan, Australia, India, and the United States) and key European allies to increasingly join such activities as Freedom of Navigation exercises, which signal joint resolve and bind these nations to us.
F/A-18E Super Hornet, attached to Eagles of Strike Fighter Squadron 115, launches from flight deck of Navy’s only forward-deployed aircraft carrier USS Ronald Reagan, Philippine Sea, August 31, 2020 (U.S. Navy/Erica Bechard)
Reestablishing Perceptions of U.S. Leadership and Commitment to the International Order. Additionally, the United States should seek to reestablish the perception among nations that it remains committed to and prepared to play a leading role in the international order. For 70 years, the United States has widely been seen as the creator, defender, and de facto leader of the order. Yet as the Trump administration has criticized U.S. involvement in aspects of the order, China has sought to step into this vacuum, portraying itself as a global leader as the United States retreats.76
To shift this trend, the United States must begin by demonstrating a renewed commitment to international institutions. It must increase U.S. participation in international standard-setting bodies, many of which draw few headlines but do critical work. China has been increasingly staffing these agencies, then using its positions to insert official references to BRI or Xi Jinping’s “Community with a Shared Future for Mankind” and shaping norms like the “Responsibility to Protect” to accommodate China’s sovereignty concerns.77 The United States must also make its contributions for United Nations funding on time and without coercive demands. Nations have not forgotten the years of demands for zero real growth that Washington placed on these organizations. Many will view President Trump’s recent decision to withhold funding for the World Health Organization as a politically motivated attempt to shift blame for the coronavirus pandemic. And the United States must reconsider its posture in certain situations to avoid appearing obstructionist. For example, the United States recently blocked the appointment of judges to the World Trade Organization’s dispute resolution court until the court could finally no longer reach a quorum,78 ending 27 years of enforcement.79 Some 67 nations petitioned the United States to shift its position. When Washington refused, the European Union worked with other nations—including China—to create a workaround.80 China looks like a constructive actor here, but the United States does not.
Second, the United States must reclaim its role as a leader on global challenges. COVID-19 provides a near-term opportunity where the world will be watching: the United States could play a leading role coordinating vaccine research, information-sharing, cooperating on industrial mobilization, and providing assistance to impacted nations.81 Looking beyond the present moment, Washington should signal its recommitment by rejoining the Paris Climate Accords. The U.S. withdrawal allowed China to present itself as the more responsible actor on climate change. Given that 175 parties signed the accords and Washington negotiated specifically with Beijing to ensure both nations joined, the U.S. withdrawal makes it appear the obstreperous party.82 The list of other global problems is too long to enumerate here,83 but the basic dynamic for many of them is similar. The United States must reverse this trend by playing a leading role in developing the multilateral responses so that the world sees it as willing to lead and committed to the international order it helped create.
Developing Alternatives to Chinese Statecraft. While the deterrence posture above provides stability, and a return to multilateralism will improve the U.S. image, we must also set the economic conditions to sustain U.S. influence over the long term. Two key elements compose this approach: setting conditions for more reciprocal economic relations and building tools to challenge Chinese economic statecraft.
First, the United States should continue to privately press for fair and reciprocal trade terms in negotiations with China. Today, U.S. firms do not enjoy fair access to Chinese markets, China’s state-owned enterprises receive subsidies that make competing difficult for U.S. companies, and China demands access to foreign firms’ intellectual property and data before it allows them to do business. The Trump administration has pushed back against these imbalances. Having already pressed these concerns, the United States should continue to pursue them in ongoing negotiations while being clear-eyed about the limits of what China may concede and doing so privately to avoid threatening Beijing’s prestige.
This approach, however, has not produced significant results to date—the Phase I trade deal avoided many of these issues. Instead of continuing to press publicly through aggressive unilateral tariffs—a battleground where China has significant countervailing leverage and will also feel pressure to show toughness—the United States should create multilateral pressure by rejoining the successor agreement to the Trans-Pacific Partnership (TPP). Doing so would require accepting some concessions because negotiations advanced in our absence, but it would be a huge signal to allies skittish about U.S. commitments to regional and multilateral institutions. And ultimately, the combined pressure of TPP members makes it more likely that China will feel compelled to accommodate these demands over time.
This step should, however, be coupled with targeted pressure through the dispassionate application of U.S. law. The United States should, for example, increase the scrutiny placed on Committee on Foreign Investment in the United States cases and broaden its mandate to other business dealings like venture capital investments.84 The administration should work with Congress to expand sanctions authorities to cut off Chinese firms that illicitly obtain U.S. technology.85 And the United States should delist Chinese companies that do not meet audit and disclosure requirements for U.S. exchanges.86 Last, given the significant impacts of cyber-enabled IP theft, the United States should revisit the recommendations of the Commission on the Theft of American Intellectual Property. Those recommendations are sufficiently numerous that a full treatment is not possible here. Suffice it to say that a 2017 update to the commission’s report suggested that while the United States has made some progress, many of the commission’s recommendations had not been implemented at that time.87
Second, the United States should build tools to compete with China’s development finance model, in particular BRI. The logic here is also straightforward; it is difficult to “beat something with nothing.” The reality is that for all the handwringing in Washington, Chinese financing responds to significant infrastructure gaps (for example, an estimated $26 trillion in Asia through 203088) that traditional finance vehicles were not meeting. U.S. rhetoric warning nations of predatory loans may make China look bad, but it is unlikely to succeed without a credible alternative.
This strategy argues that creating an alternative to BRI is economically viable, especially if the United States does so with other nations and leverages multilateral institutions. The United States has made some progress with its recent Better Utilization of Investments Leading to Development (BUILD) Act, which overhauls the Overseas Private Investment Corporation (OPIC) and provides $60 billion for loans as well as political risk insurance for U.S. commercial entities. Yet $60 billion will not compete favorably with $1 trillion or more in potential Chinese loans.
The United States could address this gap through three steps. First, it should expand the BUILD Act to grow the funds available to the U.S. International Development Finance Corporation (DFC) considerably. Many U.S. commentators have called for an alternative to BRI yet argue that the United States cannot afford to compete symmetrically. It is well within U.S. capacity, however, to grow DFC by several times its current size. This cost appears substantial at first, until one realizes that DFC will be issuing loans, not grants. In fact, DFC’s predecessor, OPIC, returned a $3.7 billion profit to the Treasury from 2012 to 2017, and its loans have created 275,000 jobs and $75 billion in U.S. exports since 1974.89 There would be costs to capitalize the fund, but at the time of this writing, reactions to the coronavirus have left the United States able to borrow at record low rates—so low, in fact, that in inflation-adjusted terms, it is actually being paid to borrow.90
Second, the United States should expand the alternatives to BRI by working with key allies, the World Bank, and the Asian Development Bank to expand the types of loans available. Several nations have begun to build similar development finance vehicles and to pursue bilateral or multilateral partnerships to deconflict resources. The United States should demonstrate renewed leadership by taking this concept further, creating an Infrastructure Development Coalition that creates an integrated structure with other leading nations in development finance.91
Sailor aboard Royal Canadian Navy ship HMCS Regina relays orders to helm on bridge during replenishment-at-sea with Royal Australian Navy ship HMS Sirius during RIMPAC, August 20, 2020 (Courtesy Royal Canadian Navy/Dan Bard)
And last, it should couple these increased development finance offerings with a modest increase in direct development assistance. The U.S. Agency for International Development currently funds assistance to help nations evaluate loan offerings, the technical feasibility of projects, and a variety of supporting programs (for example, legal assistance to strengthen contract enforcement, streamline regulations, and meet labor standards). The agency’s fiscal year 2020 budget request included $449 million for the Indo-Pacific region (covering other issues as well). An increase of $3 billion to $5 billion would have substantial impact alongside loan offerings while not radically altering the U.S. debt picture or the percentage of the budget that goes to foreign aid.92
Exposing China’s Malign Behavior. China is adroit at messaging campaigns that portray it as a peaceful power and its governance model as superior. China’s actual behavior, however, tells a different story. To reinforce the objectives above and help nations balance with us, the United States should launch a coordinated information campaign that seeks to expose the differences between China’s propagated narratives and its actual conduct. The principal objective should be to expose China’s malign practices to foreign audiences to shape their views. At the same time, such messaging might have the collateral benefit of convincing China to corral some behaviors.
The centerpiece of this campaign should be China’s treatment of ethnic minorities, in particular the gross mistreatment of Uighurs and other Muslim minorities in Xinjiang Province. The United States should hold regular press briefings on these activities, declassify U.S. assessments when possible, and amplify nongovernmental leaks that have begun to emerge in Xinjiang.93 The United States should supplement coverage of this topic with evidence of other human rights abuses and authoritarian behavior, including the detention of regime critics and human rights activists, the expansion of China’s surveillance state, and efforts to suppress protests in Hong Kong. The United States should then encourage other nations to amplify this messaging. It should in particular seek to persuade other Muslim nations that have been reluctant to speak out.
This campaign should combine with a second information campaign documenting China’s lending practices under BRI, economic coercion of states and corporations, and attempts to export its development model. The United States should showcase BRI’s lack of transparency, cases of poor results, and ways in which BRI acts as a tool for geostrategic leverage, not simply assistance. The messaging should be coordinated to highlight aforementioned efforts to build alternatives to BRI and a multilateral consortium to provide such loans. Here again, Washington should press partners to amplify this message among their publics.
Finally, the United States should launch a media outreach effort focused on Chinese business perfidy. It should highlight China’s endemic corruption, use of state-owned enterprises to undercut other nations’ competitiveness in global trade, Internet censorship, IP theft, and use of market access to coerce companies to bow to Chinese demands.94 The United States should look for firms that experienced negative long-term effects and use those firms to amplify this message and display concrete evidence of the impacts Chinese activities have on companies.
Collectively, the elements of this media campaign would reinforce the other objectives above; this effort would not only cast doubt on China’s messaging about its responsible behavior but also implicitly juxtapose this behavior to more benign U.S. partnership.
Objective 3: Restore Sources of Long-Term U.S. Domestic Strength. The previous objectives set the initial conditions to sustain U.S. influence in a competition with China. This competition, however, could last decades. Sustaining our efforts over the long term thus requires the United States to be strong domestically, building on many of its aforementioned advantages. The United States has the resources to do so, but these resources must be revitalized to avoid atrophy. The present access to cheap capital and likely future financial injections to provide economic stability provide a propitious window for such action.95
The United States should begin by taking steps to ensure the long-term vibrancy of its economy. A full accounting of the steps required is not possible here, but key elements include the following:
Technology. The United States should seek to maintain its technological edge by increasing R&D funding in key emerging technologies such as artificial intelligence, where it has been less aggressive than China in recent years.96 Government incentives should be designed to ensure the United States is poised to lead in the technologies and economic sectors most likely to drive future growth (for example, electric vehicle infrastructure, battery technology, solar power, and many others), rather than clinging to legacy manufacturing. It also means promoting a business and regulatory climate designed to support American business and help it to compete against Chinese firms.97 Moreover, such steps must be coupled with a technology protection regime to defend U.S. innovations from Chinese theft, coercive acquisition, or cooption, while enabling cooperative development with allies and partners.
Education and human capital. The United States should couple those efforts with investments to ensure that it has the best human capital. This means reinvesting in the U.S. education system, including not only building on our first-rate universities but also investing in universal pre-kindergarten and greater kindergarten through 12th grade science, technology, engineering, and mathematics education. It also requires developing new training models to support working-class citizens as the Nation moves toward artificial intelligence–enabled automation to handle many basic jobs.
Infrastructure. The United States should revitalize the Nation’s infrastructure, not only updating aging infrastructure but also investing in new elements that would unleash American productivity, such as installing high-speed fiber and broadband nationally, which allows people to access virtual high-quality training, to pursue high-paying jobs that could be done anywhere, and—most critically—to invent.98
Immigration. The United States must expand immigration, which has long been a source of strength and innovation, and reform its approach toward it, including raising the overall cap on visas for advanced degree holders to ensure that the brightest foreign students can stay and contribute their skills to our economy.99
Public health. America’s health is a significant comparative advantage to China. But the United States spends more on health care than any nation in the world yet still has the lowest life expectancy among wealthy nations. The rising costs of Medicare and Medicaid are the largest driver of the Federal deficit. And we were no better prepared for the coronavirus than nations that spend much less. There are multiple health care models the United States could pursue with track records in other countries; almost all, however, have two key elements: some form of universal coverage and measures for cost control.100 Here again, the crisis caused by the pandemic offers an opportunity to adjust the system for the better.
Energy. The U.S. energy windfall over the past decade transformed a strategic vulnerability into a source of strength. Yet the United States does not behave like an energy superpower. The United States should transform its energy grid (which Thomas Edison would still recognize from the one he designed in the 1890s) to improve its resiliency, develop “swing capacity” by having some state-owned oil wells ready to pump as leverage internationally (most other major energy-producing nations do this; the United States does not), develop regulatory regimes around significant liquid natural gas deals that provide preference for U.S. allies, and launch a national-level initiative through the National Laboratories on renewable energy technology.101
Demonstration for rights of Uighurs, Berlin, January 19, 2020 (Courtesy Leonhard Lenz)
These steps are necessarily illustrative, but all would build on advantages the United States has vis-à-vis China, posture the United States to lead in the industries of the future, and sustain domestic vibrancy that will be required in a long-term competition. To support this strategy, the next President should work with Congress to appoint a bipartisan commission with a mandate to bolster U.S. domestic strengths for long-term competition, which should develop a body of proposals, a timeline, and anticipated costs for presentation to Congress or pursued where possible via administration policy.
Additionally, engaging the American people is key to building support for the initiatives outlined here. Given the public’s continued desire for services that outstrip tax revenues and common expectations that U.S. actions abroad should impose no hardships on citizens, the administration must initiate a domestic education campaign to frame the challenge China poses and a parallel campaign on our fiscal health. Both campaigns need to help Americans think about these issues in terms of national security, not simply domestic debates about taxation.102
Next, just as the initiatives seek to shore up our economic strengths, the administration—working with Congress—should launch a parallel education effort to shore up the integrity of our democratic institutions. Rebuilding confidence in our institutions serves three purposes: to lessen the partisanship that has paralyzed the country, limiting its ability to act decisively; to limit China’s ability to portray the U.S. model as dysfunctional and its own model as superior; and to help build buy-in for the commitment of resources needed to sustain a long-term competition with China. A civic education campaign should be the centerpiece of this renewal. Domestic civic knowledge is appallingly bad today.103 Robust education produces positive effects on voter turnout, school dropout rates, and community activism. This campaign should emphasize the Nation’s free press, fair elections, and rule of law—all of which China lacks.104
These efforts are essential to sustain a multidecade competition. Given scarce resources, to pursue them also requires U.S. leaders to exercise stark priority-setting, discipline, and risk acceptance. This is more of a mindset than a list of specific activities.
First, the United States should look to reduce tensions with Russia while still defending U.S. alliance commitments. Critically, this is not a “reset”; we should not chase Russian engagement. Nor should we ignore the risk of Russian threats in Eastern Europe or its undermining of U.S. democracy. But since Russia’s economic and demographic trends do not suggest a long-term, multidimensional challenge as China’s do, we should seek to dial down animosity in this relationship to allow us to focus on the Indo-Pacific region. This should include quiet diplomacy to see where mutual concessions might be possible (while being clear-eyed that none may be) but minimally seeking to lower antagonist rhetoric on both sides. At a minimum, the United States should accept Vladimir Putin’s offer for a simple extension of the New Strategic Arms Reduction Treaty, providing considered stability and removing the potential for a costly competition. Reducing tensions might also decrease incentives for Russia and China’s increasing collaboration. And in the long term, it might even play on traditional balancing dynamics. Over time, Russia might come to see China, which it shares a border with and has fought previously, as a bigger threat.105
Second, the United States should reduce its military presence in the Middle East and rejoin the Joint Comprehensive Plan of Action.106 To do so would signal goodwill to European allies but more importantly would lower the risk, at least for a time, of a principal threat driving U.S. force posture in the Middle East today. This is not to suggest the Iran nuclear deal is perfect, but to acknowledge the enormous opportunity costs to any military action there. Simply put, any administration focused on China should do everything possible to diplomatically defuse tensions and avoid conflict with Iran.107
Objective 4: Pursue “Principled Engagement” with China. Even as the United States undertakes the steps above, it should be prepared to cooperate with China where doing so serves U.S. interests. Such cooperation might be frustrating and produce little at times, but it is still worth pursuing for several reasons. First, it provides a vehicle for pursuing progress on transnational issues. Second, it signals to China and the rest of the world that even as U.S.-China competition intensifies, the United States is not inherently aggressive or bent on dominance. Third, it provides a venue to establish mechanisms for crisis stability—mechanisms that we had during the U.S.-Soviet era but that are less robust with China today. And last, it provides ballast for the relationship as it becomes more competitive in other areas. Contrary to arguments that a competitive posture is incompatible with such cooperation, it could in fact make competitive policies more effective by giving China a stake in the relationship.108
Given the complex nature of the U.S.-China relationship, the agenda for dialogue could take any number of forms. But the motivations above point to some key elements. First, the United States should suggest a dialogue on global issues, starting with climate change. This focus on climate change could be supplemented with dialogue on global health infrastructure, nonproliferation, and humanitarian relief. Second, the defense establishments should build on conversations to date to develop crisis communication channels designed to mitigate tensions and avoid unintended escalation.109 Third, bilateral engagement should include a dialogue focused on norms on the use of emerging technology such as artificial intelligence, where China and the United States both have interests but rules of the road remain nascent.110
AAV-P7/A1 assault amphibious vehicles assigned to Combat Assault Company, 3rd Marine Regiment, unload servicemembers during amphibious landing demonstration as part of RIMPAC, at Pyramid Rock Beach on Marine Corps Base Hawaii, July 29, 2018 (U.S. Marine Corps/Aaron S. Patterson)
Costs and Risks
The costs of this strategy are nontrivial but well within the Nation’s means, provided we can marshal political will to do so. The costs of restoring conventional deterrence are in keeping with levels envisioned in the National Defense Strategy. New investment, such as increased R&D or security assistance, could largely be sourced by reprioritization within DOD’s planned topline.111 Many of the actions associated with the second objective involve diplomacy or messaging; these costs are nominal from an overall budget perspective. The two elements with significant costs are the strategy’s proposal to create an alternative to BRI and the strategy’s objective to renew U.S. domestic strengths. Expanding the U.S. International Development Finance Corporation would also require a significant initial outlay. However, once capitalized, this fund may actually generate revenue, not consume it.
The costs associated with revitalizing U.S. domestic strengths are impossible to estimate with precision but likely would be substantial in the near term. Ideally, such proposals would be offset by action to restore U.S. fiscal solvency—an issue beyond the scope of this article. Absent such proposals, however, the steps above to secure our long-term domestic strengths could still be pursued for some time. The borrowing in response to the coronavirus clearly shows that borrowing funds in the near term is feasible,112 and the current access to cheap capital presents a unique window.113 Moreover, these proposals are ones many experts believe are key to long-term competitiveness. This logic suggests these near-term costs might be recouped by long-term gains of a more vibrant economy with technological advantages and premiere human capital in the sectors that matter for growth.
As with any strategy, this approach entails risks. While a full list is impossible to catalog, several are worth considering:
The American public does not support this approach to China.114
The American public does not support expending the resources to support this strategy
Other threats emerge that divert U.S. resources.
Even absent other threats, U.S. leaders lack the discipline to take risk in other regions.
U.S. actions would cause China to increase aggressive behavior rather than back down.
U.S. actions would sideline moderate voices within the Chinese regime.
China might perceive its relative position worsening as the United States begins to focus more resources; it might then choose to act aggressively while it perceives a window of opportunity before the United States is fully poised to focus on it.115
The set of actions here, even if implemented, would be insufficient to succeed, in which case we have angered China but are unable to deny its objectives.
Some considerations might mitigate some of these risks, however. Most significant, the robust political consensus on this issue may guide public sentiment over time. That same consensus also gives some cause for cautious optimism that U.S. leaders would be able to exercise more discipline in other applications of American power. For those risks involving unexpected Chinese behavior, one can only say that it is impossible to know with certainty what China might do, but there is an equally plausible case that Beijing’s more assertive posture over the past several years is a result of U.S. inaction. The risks of prompting aggressive Chinese reaction are real, but so too are the risks invited by a weak response.116
Moreover, the cost of inaction is also unpalatable. While this strategy might entail some costs or hardship, the long-term alternative is a world in which U.S. companies are less competitive and experience more restricted market access, the United States is less able to influence world affairs, individual liberties are increasingly curtailed, and we potentially encounter military aggression we cannot defeat.117 Examining this alternative future makes clear that the costs of inaction are far greater over the long term. As Secretary of Defense James Mattis stated when issuing the National Defense Strategy, “America can afford survival.”118
In The Sun Also Rises, one character asked another how someone goes bankrupt: “Gradually, and then suddenly” is the reply. U.S. strategists examining China’s rise and U.S. performance over the past few years could be forgiven for fearing the same dynamic. The United States still enjoys a strong position in today’s system, yet China’s growth presents an ominous challenge. This strategy describes ways to extend enduring U.S. strengths and sustain its position in the international system. To borrow and amend a line attributed to Benjamin Franklin: The United States has advantages, if we can keep them. JFQ
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