The Global Importance of the U.S.-China Relationship

The current, confrontational approach to China is not working. It is time for a new strategy.

The Trump administration has made great power competition generally, and China specifically, the centerpiece of its National Security Strategy. While this orientation may seem obvious and inevitable, competing with China was not always the consensus view in Washington. Many anticipated U.S. support for China’s entry into the World Trade Organization (WTO) would result in an open, reform-minded, liberal China. This hope was ill-founded.

Some analyses have been more clear-headed about China’s trajectory. In The China Fantasy, James Mann concluded that U.S. engagement and outreach to Beijing would paradoxically result in a more authoritarian China.

I have observed that there are three “species” of China hawks in Congress: national security hawks, largely Republicans who see China as an existential threat in the vein of the old Soviet Union; economic hawks, largely Democrats concerned about the loss of American jobs caused by China’s economic policies; and human rights hawks, members of both parties for whom China’s treatment of minorities, dissidents, and vulnerable populations is the paramount concern. In the past, these species of hawk rarely cooperated, but under the Trump administration their interests are aligned. In Congress, they represent a powerful coalition that complicates engagement with China.

Ultimately, the consensus on China has shifted radically in less than two decades: China is no longer a growing power that will liberalize as its economy becomes more globally interconnected. Instead, China is a Great Power competitor, and the focus of U.S. policy must be two-fold: compete if necessary or cooperate when possible.

In this paper, I will argue that the Trump administration’s confrontational approach to China, while based on a reasonable desire to reverse past miscalculations, will fail to achieve national security and economic gains for the United States. Instead, I will propose an alternative strategy oriented around four guiding principles: recognizing existing areas of conflict and competition; expanding the playbook to include both offensive and defensive measures to compete with China; identifying areas where bilateral cooperation is in both nations’ interest; and getting our own house in order. This approach will need to encompass all areas of domestic and foreign policy, including education, trade, and security.

The Sino-American relationship is not simply a matter of bilateral or regional importance, as it might have been in the past; it is a matter of global importance.

China’s growth as a major world power and its growing economic, political and military activities will continue to affect U.S. interests, and global governance. The U.S.-China relationship will also have significant implications for other countries around the globe.

It has become clear in recent years China has developed an integrated, whole-of-society strategy and playbook for advancing its interests and values across the Asia-Pacific, Eurasia and elsewhere around the world. China is implementing this strategy and playbook with determination, patience, deep pockets and tactical flexibility. As others have remarked, China is playing a long game.

Make no mistake about it, the rise of China is an increasing threat. China’s whole-of-society strategy poses a fundamental challenge to U.S. interests and values, including human rights and democracy, and the post-WWII international order. It is unlike any challenge the United States has previously faced, particularly in terms of the economic strength of the challenger. China is different from the Soviet Union, which was the undisputed leader of the communist world because China’s primary objectives are not ideological. And China is different from the threat from modern Russia because of its economic might — China’s GDP was more than eight times Russia’s in 2018, per the IMF.

This rising threat from China requires a strategic response from the United States. The administration has chosen to respond with a tariff-focused approach that can only be described as tactical.

I agree with the administration and the hawks in Congress on what the problem is- IP theft, forced tech transfers, market access, state-owned enterprises, forced joint ventures, repression of Uyghurs and other religious minorities, and aggression by the Chinese in the South China Sea and the region. But I disagree on the tit-for-tat tactics put forward by the president.

Instead, I believe the United States must develop, adequately resource and implement its own integrated China strategy and playbook for defending and promoting the post WWII international order and advancing U.S. interests and values. Given this rising threat from China, America’s approach must be a whole of government strategy. U.S. policymakers must create robust diplomatic, informational and economic pillars. A strategy that relies too much on the military will not succeed. This strategy and playbook must not be solely reactive or defensive in nature, as the best that a reactive, defense-only strategy can achieve is a draw. There are issues and places around the world where achieving a draw would not serve U.S. interests and values. Consequently, the strategy and playbook must include proactive elements for advancing U.S. interests, improving American competitiveness, spreading U.S. values and broadening the reach of the U.S.

This white paper outlines some features of the initial version of an integrated, whole-of-government, proactive U.S. strategy and playbook for China. As foreign policy is a dynamic space, this document will evolve as developments warrant.

Four-Pillar Strategic Plan by Issue Area

1. Education

In 2016, China produced more scientific publications than the U.S. China has more supercomputers than the U.S. and is setting the pace in fields like nanotechnology and Artificial Intelligence (AI).

Some lawmakers and scholars in the U.S. have shown alarm over China’s rise in advanced sciences. To meet Chinese competition in emerging scientific fields such as AI, robotics, quantum computing and nanotechnology, the U.S. must educate and train a workforce with the skills necessary to succeed in the global economy. In addition to Science, Technology, Engineering and Math (STEM), greater federal investment in foreign language skills is critical, as is increased U.S. support for international programs that educate international students about U.S. history, culture and values. Other lawmakers are alarmed by the rise of Confucius Institutes while at the same time allowing for decreased funding in U.S foreign language programs. Instead of simply closing Confucius Institutes, Congress should put more money into foreign language programs, so students can have access to Chinese language instruction without pro-China propaganda. And consistent with the Pentagon’s concern about Confucius Institutes, the Department of Defense should provide some of this funding and explore policies to incentivize Chinese-language education in the general population and among servicemembers.

Some in Congress have called for limiting foreign students at US universities over espionage concerns around sensitive research. The fact that the world’s brightest students want to attend American universities to pursue an education is a massive strategic advantage in terms of intellectual capital and exposing young people to American society. Instead of broadly establishing obstacles for international students, the United States should pursue a “small yard, high fences” approach that protects the most sensitive research while ensuring foreign students can continue to come to the United States.

Recommendations:

● Congress should make it easier for smart and talented students to study in the United States. Congress should also encourage high schools and universities to expand civics education for all students — U.S. and international.

● Congress should decrease visa barriers for international students and graduates, so talent stays in the United States.

● Increase and ensure sustained education funding, especially for community colleges and technical schools.

● Expand job training and high-quality apprenticeships to increase the resilience of the American workforce and ensure workers have the skills to compete in the global marketplace as new technologies transform industries.

● Increase funding for emerging sciences such as AI, the National Quantum Initiative, nanotechnology (National Nanotechnology Initiative), quantum computing (Intelligence Advanced Research Projects Activity) and supercomputers (Department of Energy Exascale Computing Project).

● Prioritize and improve access to advanced robotics

o Ask the Department of Education for a report on access to computer science classes for K-12 students in order to assess shortfalls in this field.

o Ask the National Science Foundation for data on their support for K-12 computer science education, computer science summer camps and K-12 national competitions in scientific fields.

o Issue grants to enable smaller universities to establish and maintain robotics labs

o Incentivize large research universities to expand robotics partnerships with local colleges and universities, or online, like the Robotarium at Georgia Tech.

● Lift barriers for joint scientific cooperation with China when it is in U.S. self-interest by amending the current ban barring NASA and the Office of Science Technology Policy from using appropriated funds for scientific cooperation with China.

● Commission a study to understand the causes of declines in international student applications and undertake a campaign to promote US universities abroad.

● Within the U.S., instruction of foreign language lags, which limits Americans’ ability to compete globally. Congress should increase funding for the Foreign Language and Area Studies Program, Boren Scholarships and other programs that support study abroad.

● Congress should support and expand more programs like the Flex Program and the Yes Program and expand the similar Pentagon program.

o Ask Department of Education for report on foreign language education at elementary and secondary schools and colleges and universities, with focus on critical languages, including information on Chinese language programs and Confucius Institutes or other Chinese government-funded programs.

● Encourage states to increase funding for public colleges and universities Chinese language programs, like at the University of New Hampshire.

● Congress should request information from the State Department on funding patterns for the Learning English service.

● Congress should also receive regular updates on EducationUSA centers and restrictions by China and other countries on the centers.

2. U.S. Business, Trade, and Investment Interests

The United States should pair Committee on Foreign Investment in the United States (CFIUS) reform with policy changes to incentivize China to open its economy and ensure transparency in its overseas investments and financial activities. The administration’s tariff-forward approach plays into China’s hands by targeting allies and competitors alike. In contrast, China has pursued reciprocal tariffs in a targeted manner, according to analysis by Chad P. Brown of the Peterson Institute for International Economics. Before the “trade war,” all imports to China faced an average 8% tariff. By December, US imports will face an average tariff of 25.9%, while tariffs on non-US imports will have been reduced to 6.7%

However, the US is not alone in frustration with China’s asymmetric economic relationship with the rest of the world. Instead of the current tariff-driven approach, the U.S. should lead a multilateral effort to spotlight and urge reform of China’s unfair economic practices, including IP theft, forced joint ventures, restrictions on market access, favorable treatment of state-owned enterprises, forced tech transfers and other barriers to trade.

Some analysts and elected officials view China’s Belt and Road Initiative (BRI) as a threat to U.S. interests and standing in Asia. The U.S. should expand current efforts to increase transparency around specific BRI projects, including loan terms. But rather than responding to BRI with alarmism, the U.S. should reinvest in existing programs that promote trade, investment, development and economic diplomacy. These programs and agencies include the Export-Import Bank (Ex-Im) and the U.S. Trade and Development Agency (USTDA). While the U.S. may not be able to compete dollar-for-dollar with Chinese investment, the U.S. has several qualitative advantages to leverage. For example, the U.S. can and should play a leadership role in organizations like the World Bank and Asian Development Bank. Additionally, the U.S. can be an attractive alternative to China by employing a strategic approach that combines development assistance, protections for the environment and worker rights, and support for good governance and the rule of law. The BUILD Act, introduced by Representatives Ted Yoho and Adam Smith and signed into law by President Trump, is an excellent foundation for these efforts.

Ultimately, being opposed to BRI is not a strategy. The U.S. must lead like-minded countries in offering alternative, high-quality development opportunities.

Recommendations:

● Support efforts to rejoin the Trans-Pacific Partnership (TPP) and encourage multilateral trade agreements

● Ensure that recent CFIUS reforms can be coordinated with countries like Germany and South Korea which invest in the U.S. and which also receive Chinese investment to ensure continued foreign investment in the U.S. and present a unified front against Chinese predatory investment.

● Work multilaterally to pressure China to open up more industries and put constraints on state owned enterprises.

● Position the US as a leader in international green technology by reducing barriers to “green trade” with a focus on renewable energy technology and other products that decrease carbon emissions

● Restore U.S. global leadership in addressing climate change and reverse recent decisions to weaken laws supporting clean water and air, and lands conservation.

● Per the U.S.-China Economic and Security Review Commission, Congress should: “Direct the Office of the U.S. Trade Representative to identify the trade-distorting practices of Chinese state-owned enterprises and develop policies to counteract their anticompetitive impact.”

● Support U.S. government agencies that promote U.S. business and trade, including the Export-Import Bank and USTDA.

● Create small business development in Southeast Asia modelled after the Small Business Development Centers (SBDC) program in the U.S.

● Asia-Pacific Economic Cooperation (APEC) is a good news story in foreign affairs. To help APEC’s mission, Congress should increase funding within State Department for Bureau of East Asian and Pacific Affairs, which oversees APEC.

● Support and lead international organizations that oversee projects which spur development and create opportunities for U.S. firms in Asia, including the World Bank and Asian Development Bank. Use this leadership to reform these organizations. Congress should also request an assessment of projects supported by the World Bank in China.

● Increase development aid and United States Agency for International Development (USAID) and Millennium Challenge Corporation involvement in Africa. Support initiatives that reinforce fundamental American values like respect for women and minority rights.

● Increase funding for USAID programs such as Power Africa and Trade Africa, which improve Africa’s ability to engage in trade and investment with U.S. firms and aid U.S. business operations in Africa, with a major focus on telecommunications.

● Prioritize educating women and fostering female entrepreneurship in Africa. This is consistent with U.S. values and an excellent way to distinguish U.S. aid from our competitors.

● Encourage greater U.S. trade and investment in Africa, rather than trying to match Chinese investments in Africa dollar for dollar. Emphasize the high quality of U.S. goods and services, the transparency and non-corrupt nature of U.S. business practices and increase U.S. business familiarity with the business environment and market opportunities in Africa.

● As an alternative to the Belt and Road Initiative, the U.S. should support regional trade organizations and coordinate our trade, investment, and development responses with key political-economic allies, such as the EU and Japan, and present third-party countries with economic development and growth options not tied to China.

● Stop imposing punitive tariffs on America’s strongest allies and trading partners, like Canada and Europe.

● As an alternative to BRI, revisit and expand upon the 2011 New Silk Road initiative.

● Consider investing in the infrastructure of overseas ports or encouraging U.S. companies to invest in international ports

3. Military

China’s growing military strength is alarming. Chinese expansion and militarization of disputed landforms in the South China Sea greatly expands their anti-access/area denial capabilities in the region. And Chinese investments in shipbuilding, space operations, and emerging technology represent a real challenge to the way the U.S. military conducts modern operations.

Hearings in the House Armed Services Committee and reporting in other venues have correctly identified the challenge posed by China to American military supremacy. But there has been far less consensus regarding what the U.S. policy response should be. Instead of responding unilaterally, the U.S should continue to lead a multilateral approach.

The military portion of this integrated, whole-of-government strategy is oriented toward preserving and enhancing the U.S.-led security architecture in the Asia-Pacific region and prevent China from becoming a regional or global hegemon. Essential to these goals is achieving closer ties with U.S. allies and strengthening international support for the rule of law, while preserving the opportunity to operate cooperatively with the PLA to address issues of mutual interest. These military-diplomatic goals should go hand-in-hand with investment in technologies critical to modern and future warfare.

Recommendations:

● Invest in robust U.S. military forces for the Asia-Pacific region, with a focus on capabilities that help overcome the “tyranny of distance” in the theater.

● Invest in advanced and potentially disruptive new military technologies, including artificial intelligence, supercomputing and quantum computing, robotics and autonomous vehicles, nanotechnology and directed energy.

● Develop, refine, resource, and train on operational concepts that allow US forces to operate in contested airspace and within an adversary’s anti-access/area-denial zone.

● Increase funding for the Intelligence Advanced Research Project Activity and Defense Advanced Research Projects Agency.

● Enhance acquisition authorities and streamline acquisition procedures to facilitate the rapid transition of new technologies into fielded capabilities.

● Increase training and funding for cybersecurity within Active, Guard, and Reserve. and encourage coordination between DoD, the State Department, and the intelligence community regarding efforts to counter Chinese influence and information operations.

● Rediscover the value of unveiling surprises in U.S. capabilities and operations as a way of enhancing deterrence relative to China by throwing off Chinese calculations of U.S. capabilities and operational patterns.

● Deepen U.S. security relationships with allies and partners and continue efforts to shift the U.S.-led security architecture over time from a collection of bilateral arrangements (i.e., the hub and spoke architecture) to a series of overlapping/interlocking triangular and quadrilateral arrangements. For example, the U.S. can work to strengthen the Japan-Australia security relationship.

● Encourage Japan to spend more on its conventional military forces, and to get more value out of that spending by taking further actions to make its forces more joint and more interoperable with U.S. forces.

● Deepen the emerging security relationship with India, including working with India on plans for securing joint U.S.-Indian interests in the Indian Ocean, and for increasing Indian naval presence in Southeast Asia.

● Expand International Military Education and Training and other programs that foster U.S.-foreign military cooperation and interoperability skills.

● Offer enlistment bonuses for ROTC cadets who study a critical foreign language and provide resources and authority for U.S. military training academy students to engage in overseas courses of study.

● Study military and IC approaches to foreign language training and pursue reforms as necessary.

● Encourage increased Japanese and Australian naval operations in the South China Sea.

● Encourage European allies such as the UK and France to expand on their recent actions to deploy naval forces to the Asia-Pacific and continue to take interest in regional security.

● Encourage increased Chinese transparency regarding defense budgets, force planning, equipment acquisition, overseas basing and deployments and operations.

● Provide Senate consent to U.S. ratification to the United Nations Convention on the Law of the Sea (UNCLOS), to demonstrate U.S. leadership in the region.

● Work to expand the Code for Unplanned Encounters at Sea (CUES) to include aviation and U.S. Coast Guard ships.

● Continue freedom of navigation operations (FONOPS), particularly in the South China Sea, but also hold seminars, conferences and workshops, both in the Asia-Pacific and around the world, to explain and promote the U.S./Western view of international law regarding freedom of the seas.

● Expand and refine bilateral and multilateral joint exercises with allies and regional allies.

● Receive briefings from intelligence agencies, Department of Defense and allies on Chinese influence operations and develop policy responses accordingly.

● Encourage China to adhere to security-related international laws and norms

4. Bilateral Relationship

Overall, this strategy is oriented towards increasing American competitiveness. But this does not mean that the bilateral Sino-American relationship should be purely confrontational. In the pursuit of American self-interest, the bilateral relationship will sometimes be collaborative and sometimes adversarial. But when confronting China, policymakers should avoid engaging in tit-for-tat hostility, instead adopting a long-term, strategic approach. The bilateral relationship is too important and nuanced to be reduced to retaliatory escalation in every case of bad behavior.

Recommendations:

● Complete a trade deal that reduces tariffs and advances the interests of U.S. consumers, taxpayers, and industries by addressing longstanding concerns with China’s anti-competitive economic practices.

● Work with China to decrease greenhouse gas emissions and transition to renewable energy sources, including finding alternatives to coal.

● Increase technical collaboration with China to help them better understand power markets and grid operations, increasing environmental and energy data accuracy, validation and transparency.

● Rejoin the Paris Climate Agreement and use international agreements and forums to push China to strengthen environmental commitments.

● Promote clean, renewable energy across industries- particularly in transportation and infrastructure- and supporting the development of energy efficient technologies.

● Continue to promote human rights and cultural diversity as fundamental foreign policy values, helping to draw attention to the status of minority groups in China, like Uighurs.

● Be vocal about U.S. support for democracy and ensure China is not eroding “one country, two systems” in Hong Kong.

● Consider restarting negotiations on the BIT.

● Work to allow U.S. State Department access to Tibet.

● Continue to work with China on areas of mutual interest, like global health, Afghanistan/Pakistan stability, counterterrorism, nuclear nonproliferation, peacekeeping and counter-narcotics, including fentanyl.

The current, confrontational approach to China is not working. It is time for a new strategy.

Faced with increased competition from China, policymakers have responded by going on the defensive. Like a football team with only a defensive playbook, this strategy is doomed to fail in the long term. On education, trade, technology and diplomacy, isolating the United States from China and the world threatens to erode the foundation of American prosperity.

This China Strategy White Paper is clear-eyed about the threats and challenges China poses and contains both defensive and offensive “plays” to increase U.S. competitiveness and global leadership. The advantage of this strategy, with a larger focus on skills, education, and multilateral relationships, is it enhances American competitiveness, not just vis-à-vis China, but worldwide. To win in this competition, America must get its own house in order first.

As co-chair of the U.S.-China Working Group, I authored this white paper to sketch an alternate strategy to the emerging consensus of isolation, decoupling and confrontation. It represents my views only but is the product of my review of a variety of scholarship on China and extensive conversations with leaders in academia, think tanks, labor, government, international relations and industry.