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New Atlanticist October 29, 2020

Five big questions as America votes: China

By Asia Security Initiative

As part of the Atlantic Council’s Elections 2020 programming, the New Atlanticist will feature a series of pieces looking at the major questions facing the United States around the world as Americans head to the polls.

The COVID-19 global pandemic crisis has seen US-China relations deteriorate to perhaps their lowest point since the aftermath of Tiananmen Square. As China adopts a more assertive diplomatic, economic, and military footing in the Indo-Pacific and beyond, the United States has been accelerating efforts to coordinate a global response to China’s rise. With the US presidential election less than a week away, these developments raise important questions about the nature and trajectory of US-China strategic competition in the post-pandemic world and how the next US administration should approach the challenge posed by China.

Below are the five major questions facing the United States on China as the US elections approach, answered by five top experts:

How is the COVID-19 pandemic changing US-China strategic competition?

“Many observers suggest that the historic pandemic that is still unfolding across the world—having killed over one million people and with its origins once again in China—is serving simply as an accelerating factor on top of pre-existing geopolitical trends. That suggestion is inaccurate. While there certainly were elements of our current geopolitics before the virus erupted in late 2019 in Wuhan, China, things are different. The geopolitical rivalry between China and the United States has escalated dramatically, and there are signs that it will not return to the relative calm experienced before.

“There are two main reasons for this change. First, the United States government has taken the strategic decision to confront the Chinese Communist Party (CCP) regarding its aggressive practices over recent decades across economic, military, technological, informational, and other spheres. Rather than continue with status quo policies that assumed convergence between China and the community of free-market democracies, the United States, correctly, has begun to push back on China in these domains and now is seeking to rally its democratic allies and partners around this cause. Moreover, this appears to be a relatively bipartisan approach, a rarity in Washington these days.

“The second factor is a ramped-up, aggressive approach by China this year in its diplomacy, in its unprecedented military coercive operations against Taiwan, India, and in the South China Sea, in its advocacy for countries to do business with its subsidized, state-owned enterprises such as Huawei and TikTok, and in other areas. This new approach reflects a Chinese perception that the United States is significantly distracted and weakened, and that now is the best time to begin to surge into a position of global leadership.

“As I have written elsewhere, this suggests that the CCP is much less risk-averse than it used to be, and that China under Xi Jinping increasingly will seek to exert its influence in the world to achieve its foremost goals. This will translate into sustained attempts to export its authoritarian model across the globe and to exert its will on key issues on every continent. At some point, countries will face a clear choice of whether to resist Chinese pressures by working multilaterally with like-minded partners, or whether to relent.

“We are in for a tumultuous decade.”

Barry Pavel, senior vice president and director of the Atlantic Council’s Scowcroft Center for Strategy and Security.

What should be the US strategy for sustained economic competition with China, particularly on technology and innovation?

“The American ethos exalts the idea of competition. But when it comes to the face-off between the US and Chinese technology sectors, this is not a true competition at all.

“The United States’ market-driven economic model, for all its faults, is far superior to China’s state-driven authoritarianism in driving innovation. On an even playing field, US companies should therefore welcome the opportunity to challenge their Chinese counterparts—and much more often than not, expect to win. Yet what we see today across the technology and advanced manufacturing sectors—comprising fields such as artificial intelligence and 5G—is anything but an “even playing field.”

“Beijing supports its tech national champions unapologetically. The Made in China 2025” program was a recent iteration of this policy, but government protection and favoritism within the tech sector dates back many decades. The rise of Huawei is one recent example: a 2019 WSJ investigation showed that company alone has been gifted up to $75 billion in tax breaks, handouts, and financing from the Chinese government; this is in addition to the support it receives from China’s foreign policy establishment, which routinely pressures other countries to ensconce Huawei systems as a cost of doing business with Beijing. Other firms similarly receive countless subsidies from both their local and central governments, devoid of transparency, and access capital at preferential rates—in some cases, for nothing at all.

“Chinese tech firms have historically been among the country’s most aggressive perpetrators of intellectual property theft and forced technology transfer, practices that reportedly cost US companies as much as $300-600 billion per year. And all this while Beijing bars most foreign competition at home, ensuring these entities are also gifted protected home markets to bankroll their growth.

“So what are US policymakers to do? The answer is not to watch from afar as US companies run uphill on a playing field irreparably tilted against them. If Beijing refuses to pull back extraordinary support for its champions then the US government must actively target those companies that benefit, sanctioning them as necessary and driving them out of business in cases of particularly egregious behavior, such as what we saw in recent years with unrepentant and repeat sanctions violator ZTE.

“Ceding key next-generation sectors to China by not acting would be a grave mistake, and would bring the two countries closer to—not farther from—actual confrontation. If Washington doesn’t act in moderation now, it will be forced to act with greater severity down the road.”

Leland Miller, CEO of China Beige Book and nonresident senior fellow in the Scowcroft Center for Strategy and Security’s Asia Security Initiative.

What is the current trajectory of US-China strategic competition, and is it sustainable over the long term?

“We are in a different era of US-China relations. While the two countries under the leadership of Presidents Donald Trump and Xi Jinping were still able to sign the Phase One trade deal despite strategic competition, the COVID-19 pandemic has accelerated the ongoing decline of US-China relations even further, making it clear that the relationship has broken fundamentally from the trajectory of the past four decades. There seems to be a large degree of bipartisan consensus that the bilateral relationship will continue to be competitive going forward, even under a Biden administration.  

“The key question is whether the United States and China can decouple completely in the long-term and if so, how much the United States, China, and the rest of the world are ready for the decoupling. To answer this question, one important thing to note is that stakeholders in the Indo-Pacific that are involved in this US-China decoupling, directly or indirectly, have different understandings about the decoupling. China’s ‘dual circulation’ strategy laid out by President Xi Jinping to cut its dependence on overseas markets and technology in the long-term and focus on domestic production, distribution, and consumption is obviously a major policy shift brought by the US-China strategic competition and decoupling. The ‘dual circulation’ strategy is driven by major efforts and commitment to high-tech infrastructure development such as 5G, Artificial Intelligence (AI), big data, and electric vehicles, which is a main area of competition that is likely to continue regardless of the next US administration.

“In an era of strategic uncertainty, effectively managed US efforts to compete with China are crucial to updating and revitalizing the rules-based international order that the United States is seeking to protect in the first place. Prolonged economic confrontation, particularly with efforts to decouple completely, could create chaos in the current global economy, just as ratcheted-up military tensions could see geopolitical flashpoints in the South China Sea and Taiwan Strait explode into global armed conflict. At the same time, many of the greatest challenges threatening the global system today cannot be solved solely through competition, as potentially existential threats such as global pandemics, climate change, nuclear proliferation, and disruptive technology demand a coordinated global response.”

Miyeon Oh, director and senior fellow of the Scowcroft Center for Strategy and Security’s Asia Security Initiative.

How should democratic values shape US strategy for long-term competition with an authoritarian China?

“Some argue that the US competition with China is only about power, but they are mistaken. Democratic values should shape US strategy for China in several ways. First, as I argue in my new book, The Return of Great Power Rivalry: Democracy versus Autocracy from the Ancient World to the Present, we must consider the “hard power” aspects of our democratic values. America’s democratic system provides it with many strengths that it can exploit in this rivalry. The CCP, on the other hand, has many of the common weaknesses of autocracies. By leveraging our democratic strengths against their autocratic weaknesses, we can develop an effective long-run competitive strategy.

“Second, the threat that China poses is shaped by Beijing’s autocratic system. It is unlikely that a democratic China would be picking militarized border disputes with its neighbors, systematically preying on the international economic system, or engaging in ethnic cleansing.

“Third, Washington can use the rallying cry of freedom versus tyranny to mobilize partners in the free world. Some of our European partners do not feel a pressing military threat, but they are more concerned in some cases than Washington about the gross human rights abuses taking place in China.

“By considering these important ideological aspects, Washington will formulate a more effective long-term strategy.”

Matthew Kroenig, deputy director of the Scowcroft Center for Strategy and Security and director of the Scowcroft Center’s Global Strategy Initiative.

How should US strategy account for the key structural challenges that China faces in the decades ahead?

“Even as China’s economy returns to growth, the recovery masks a troubling reality. Policymakers are once again relying on a debt-producing investment splurge and a renewed emphasis on the state sector could crowd out the private sector. In response to surging trade and political tensions with the world, Chinese policymakers are pushing the “double circulation” strategy, which aims to lessen the country’s reliance on exporting to the world, and instead depend much more on the spending power of its own people. Resurrecting a Mao-era slogan, top Chinese officials too are talking ever more frequently of self-reliance or zili gengsheng.   

“That however will be very difficult: stalled reform of the household registration system or hukou, and the dual land system, ensure that some one half the population—migrants workers and their relatives in the countryside—are treated as second-class citizens and struggle to join the middle class. As I explain in my new book The Myth of Chinese Capitalism that is why Beijing has struggled to lift domestic consumption as a proportion of gross domestic product above 40 percent, far lower than the global average of 60-some percent.  China is becoming increasingly polarized as a troubling wealth gap widens, now exacerbated by the pandemic. While China’s wealthy are spending once again on luxury vehicles and property, income growth for the less-well off has stagnated as workers are shed in the low-wage service trades where many work; that is reflected in weaker sales for mass market goods. As China struggles to deal with these tensions and the possibility of growing domestic unrest, it could lash out in the South China Sea or Taiwan Strait—refocusing the attention of its people away from the party’s own problems and directing their ire towards what Chinese state media increasingly portrays as a hostile world.   

“The United States should try to once again strengthen people-to-people exchanges with China and reverse the present trend—pushed by officials in both countries—of politicizing long-established educational and cultural links. The more than 100 US-China government-to-government exchanges that have dealt with everything from trade in agriculture goods to financial services investment should be resurrected after several years of dormancy. Washington too should work to rebuild the tattered relations it has with its allies and other countries that may share a concern about China’s increasingly assertive global stance. A go-it-alone approach to dealing with China will be far less effective than through multilateral means and could well fail.”  

Dexter Tiff Roberts is a nonresident senior fellow in the Scowcroft Center for Strategy and Security’s Asia Security Initiative, fellow at the Maureen and Mike Mansfield Center, and an adjunct instructor in political science at the University of Montana.

Related Experts: Barry Pavel, Leland R. Miller, Miyeon Oh, Matthew Kroenig, and Dexter Tiff Roberts

Image: People wearing masks following the coronavirus disease (COVID-19) outbreak are seen near a Chinese national flag outside Beijing Railway Station, during the holidays of Mid-Autumn Festival and National Day in China October 1, 2020. REUTERS/Carlos Garcia Rawlins