Likeminded allies and partners must strengthen themselves, their alliances, and the rules-based system for a new era of great-power competition. Competition in most domains, such as athletics, is generally more about improving oneself than about bringing down a competitor. Great-power politics is no different. By bolstering themselves, likeminded allies and partners will be in a stronger position regardless of the choices made by China’s leaders.
Strengthen likeminded allies and partners at home
Foreign policy begins at home. To strengthen their overseas positions, likeminded allies and partners must begin by reinforcing the domestic underpinnings of their power.
Launch National Innovation Initiatives. As likeminded allies and partners strengthen themselves for a new era of great-power competition, innovation must be a top priority. For years, China has unscrupulously closed the gap in technological development with the West by stealing intellectual property, conducting industrial espionage, forcing technology transfers from companies looking to enter the Chinese market, and subsidizing their own national champions. Likeminded allies and partners must take necessary steps to reinforce their innovation edge if they are to maintain their economic and military advantage in the decades to come.
Likeminded allies and partners should prioritize emerging technology, including artificial intelligence, 5G wireless technology, and quantum computing, given their importance for future economic growth and national security. Some argue that the United States and other open market democracies should copy China and adopt a state-led industrial policy, but they should not undermine the effectiveness of their proven innovation model in order to adopt the myriad problems of a state-planned economy. Likeminded allies and partner governments can, however, play a constructive role in stimulating the next era of innovation and technological advancement. Most importantly, they should increase public and private research-and-development (R&D) spending.
While many Western governments do not have a formal industrial policy, they can set standards and encourage the development of key technologies through their procurement practices. Governments are major technology customers, especially for technologies with defense applications, and they should utilize that power to encourage the development of new technologies.
Furthermore, likeminded allies and partners should encourage production in advanced-technology industries. While the United States does an excellent job of producing groundbreaking inventions, it is not always as effective at scaling production to achieve a significant portion of global market share. High labor costs and other expenses regularly dissuade industries from production in the United States. The United States and likeminded governments should offer financial incentives to companies to build capital-intensive facilities and to produce emerging technologies, such as semiconductors. These incentives could take several forms, including the creation of a bank to support domestic investment in these emerging technologies and financial support to companies that move operations back to likeminded countries.
Likeminded allies and partners need to continue cultivating and attracting human capital. They should aim to improve the quality of, and access to, education, especially in the STEM fields and multidisciplinary programs on security and economics. Likeminded governments should invest in STEM education and bolster their world-leading higher-education institutions. Investment in universities should be targeted at research in emerging technologies, and it should include research funding, scholarships, fellowships, and support for entrepreneurs. Governments should work to create a pipeline of top-level talent that will ultimately apply its knowledge and skillset to strengthen national defense. This will also require reducing inequities, especially uneven access to high-level STEM education and universities. High-level secondary and vocational STEM education, and more affordable postsecondary education, should be available to all citizens. This will require new efforts to make postsecondary education affordable. Moreover, to ensure talent remains in likeminded countries after graduation, governments should increase the number of visas so foreign students and technology experts are more likely to remain in, or come to, their countries. The governments should consider removing visa caps altogether for advanced-degree holders.
Likeminded governments should also pursue public-private partnerships with the technology sector. Unlike China’s “civil-military fusion” policy, Western democracies should not mandate private-sector cooperation with government technology efforts; there are other steps governments can, and should, take that are consistent with market principles. This could include financial collaboration to bolster startups and small businesses to ensure the technology sector remains competitive. Assistance could also come in the form of exchanging data, information, and research. The governments could support artificial-intelligence development, for example, by making data available to researchers that can then be used to advance AI systems. Making these data widely available will allow a broader set of researchers to develop AI and machine-learning technology.
In addition, the national security community must continue its engagements with the technology community to help Silicon Valley understand the national security implications of its work. Big tech should not be indifferent about the China competition. It must understand that it benefits from living in a free and open society, and that it has a stake in the outcome of this competition. Progress has been made in recent years, but more work remains.
Likeminded allies and partners also need to secure their supply chains to mitigate the damage adversaries can cause to the technology sector. The United States is a world leader in designing semiconductors, for example, but production is usually performed abroad. To address this, likeminded allies and partners should develop a reliable network of semiconductor suppliers to reduce the risk of foreign interference. The partnership with Taiwan Semiconductor Manufacturing to open a new production plant in Arizona is an example of the kind of partnerships that are needed. Likeminded allies and partners should also place export controls on semiconductor-manufacturing equipment and invest in developing new designs and manufacturing capabilities to maintain their advantage. The United States should restrict sales of semiconductor-manufacturing equipment to China.
Finding and cultivating new sources of rare-earth minerals is another urgent necessity. These minerals are critical for technologies ranging from electronics to missile-guidance systems, but China controls most of the supply chain for these materials. To reduce dependency on China, likeminded allies and partners should expand mining and processing operations outside China and work with one another to develop a more secure supply chain for rare-earth minerals. Indeed, securing supply chains should be oriented toward strengthening commercial and economic ties among likeminded allied and partner states, not pursuing economic autarky. Countries should also invest in research to develop artificial substitutes for rare-earth minerals. Japan has already made great strides in this regard, reducing its imports of rare-earth materials from China from 82 percent of the total in 2010 to 58 percent in 2019.
Democratic governments should also begin dialogues with each other and their publics about developing norms for the use of new technology consistent with democratic norms and safety standards. How do they balance privacy concerns with the need to collect data to train AI algorithms, for example? How do they balance the move to driverless cars and smart cities when democratic publics have legitimate concerns about placing their safety in the hands of machines? Given its combined economic and regulatory weight, if the free world can agree upon common standards, then these will likely become global standards.
Invest in Infrastructure. Likeminded allies and partners should also invest in domestic infrastructure to fuel the next round of economic development and growth. This should include roads, bridges, ports, and airports, but also emerging technology, such as widespread broadband access and 5G. A fall 2019 report conducted by the World Economic Forum found that the United States, for example, ranks thirteenth in quality of infrastructure. As the United States enters a new era of competition with China, maintaining its edge in the economy and innovation will require improved infrastructure. There is bipartisan agreement on the need to revitalize US infrastructure, and Congress should act to make it a reality. Similarly, other likeminded allied and partner countries should work to strengthen domestic infrastructure to put themselves in a better position to thrive as emerging technologies begin to transform the global economy.
Address Environmental Issues. Likeminded allies and partners should also address the myriad environmental issues already affecting their citizens. Carbon emissions in likeminded allies and partners are already dropping as a result of the transition from oil to US shale gas; however, in order to maintain an edge over China, likeminded allies and partners must commit to investing in green technologies. Green technologies, such as solar panels, will come to play an outsized role in the twenty-first century economy and it is critical that the free world not be left behind. Moreover, likeminded allies and partners should begin developing standards for pricing carbon, through either a carbon tax or a system of cap and trade.
In the United States, the Department of Homeland Security (DHS) should play a larger role in managing the response to all environmental issues. According to an Atlantic Council report in September 2020, climate change will pose the greatest threat to critical US infrastructure over the next century. DHS should address this threat by upgrading and protecting critical infrastructure from climate change, as well as the new, non-military threats of the future.
Increase Resilience against Disinformation and Misinformation. Likeminded allies and partners must also commit to combatting disinformation and misinformation campaigns. The CCP and other autocratic governments have used these tactics to advance pro-CCP narratives and sow doubt about the legitimacy of democratic practices. Combatting these campaigns will help to strengthen the democracies at the core of the rules-based system.
Distrust of news media also decreases resilience to disinformation. In societies where distrust of news media is high, individuals are usually exposed to fewer sources of political information, and they are unlikely to approach them critically. Building resilience will require governments to foster trust in the media by not labeling them as dishonest, and it requires the media to engage in fair, responsible reporting rather than “clickbait” to drive website traffic. It also requires initiatives at both the grassroots and leadership levels to overcome political divisions and restore trust in the democratic system.
To combat efforts to sow disinformation and misinformation, likeminded allied and partner governments should share best practices. Taiwan and Finland, frequent targets of CCP and Russia misinformation, respectively, have developed effective policies and countermeasures. The EU Hybrid Center of Excellence in Helsinki was established for the purpose of collecting and disseminating lessons learned in this space, and can serve as a resource for likeminded democracies. One lesson learned is to encourage corporations, particularly media companies, to adopt a strict no-tolerance policy for foreign disinformation and misinformation campaigns.
Rebuild Domestic Support for Democracy, Free Markets, US Global Leadership, and a Rules-Based International System. Likeminded allies and partners should rebuild domestic support for democracy, free markets, global engagement, and a rules-based system. These have been among their greatest sources of strength, but, as discussed above, there is a growing lack of confidence in the West. Western governments need to place these priorities front and center in their foreign policies and to bring their publics along with them.
Political-science research shows that most democratic citizens do not have firm views on foreign policy and their opinions are strongly shaped by elite cues. Unfortunately, in recent years, political elites have not made a clear and consistent case for global engagement, open market democracy, or a rules-based system. To make matters worse, some politicians have grandstanded against traditional models of global engagement, either due to sincere or misguided beliefs or an attempt to curry electoral favor.
Nevertheless, there remains a reservoir of domestic support for global engagement. For example, a 2019 survey from the Chicago Council on Global Affairs indicated almost 70 percent of Americans support the United States playing an active part in world affairs, more than 70 percent believe military alliances make the country safer, and almost 90 percent thought international trade is good for the US economy.
To build on these reservoirs of support, democratic leaders should communicate to their publics the previously outlined benefits of a rules-based order undergirded by strong alliances, free markets, and democracy. Democratic politicians and foreign-policy elites should routinely connect their foreign-policy proposals to the concerns of their people. In concrete terms, they should explain how global engagement makes the average citizen safer, richer, and freer. They should also explain that if likeminded allies and partners do not lead, hostile states will fill the vacuum, with negative consequences for the interests of the average citizen and democratic publics worldwide.
Strengthen alliances and partnerships and revitalize the rules-based system
Having strengthened themselves at home, likeminded allies and partners must seek to collectively strengthen their positions abroad. This begins by bolstering their alliances, partnerships, and the rules-based international system. Revitalizing the rules-based international system requires deeper collaboration among democratic nations, expanding and deepening partnerships to new nations beyond this traditional core, and promoting democracy and free markets by example.
Deepen Collaboration among Democratic Nations at the Core of the Rules-Based System.
The advanced, consolidated democracies of Europe, North America, and the Indo-Pacific should deepen their collaboration to address shared challenges and seek new opportunities. These nations formed the core of the previous rules-based system, and they will need to continue to play that role as the rules-based system is revitalized and adapted for new challenges. Strengthening this platform at the heart of the rules-based system will put these states and the world in a stronger position, regardless of how China behaves. Moreover, it will enable them to better manage the China challenge. Beijing prefers to divide these nations and address them one at a time. The nations of the free world will be better able to confront and engage Beijing if they present a unified front.
Strengthen Diplomatic Cooperation within the Free World. Meeting the China challenge will require new structures and processes for consultation and coordination among democratic partners. Globally, the world’s leading democracies increasingly face similar challenges, including from the rise of China. Accordingly, leading democracies across Europe, North America, and the Indo-Pacific are working together more than in the past. When they pool their collective resources and influence, these states can have a decisive influence on global outcomes. Too often in the past, however, intra-democratic coordination has occurred on an ad hoc basis. Establishing more formalized processes and institutions for democratic collaboration globally can reduce these transaction costs, strengthen habits of democratic cooperation, and more effectively implement a combined free-world strategy for China.
The free world should elevate and expand the G7 to a D-10 grouping of leading democracies. The D-10 should include the current members of the G7, but grow to include leading democracies in Asia, including Australia and South Korea (and possibly India). The D-10 should take on a broader range of responsibilities beyond the global economy to include global security and governance. The D-10 should function as a steering committee of the democratic core of the rules-based international system. It should be the main platform for democratic states to come together, forge shared threat assessments, and develop common strategies for a broad range of issues, including China.
The D-10 could also serve to connect global resistance to Chinese aggression with regional efforts, especially in the Indo-Pacific, the center of gravity of strategic contestation. For instance, the D-10 could engage with minilateral groupings—notably the Quadrilateral Security Dialogue of India, Japan, Australia, and the United States—and with more inclusive bodies such as the Association of Southeast Asian Nations (ASEAN) and the wider ASEAN-centric forums like the East Asia Summit. The goal would be to establish shared principles in protection of the rights and interests of nations large and small, through strengthening a regional rules-based system.
Reassert Influence within Multilateral Institutions. Likeminded allies and partners must reassert their influence in the multilateral institutions of the UN-based system. These leading democracies were instrumental in creating and utilizing these bodies, such as the World Trade Organization (WTO), the WHO, and the Human Rights Council (HRC). In recent years, however, China has engaged in “competitive multilateralism” to gain influence within these organizations and undermine their founding missions. In response, some in the West advocate abandoning these institutions. Instead, the free world should also engage in competitive multilateralism. Even as the free world establishes the new bodies called for above, the legacy UN institutions will continue to exist and play an important role. Moreover, because of their international legal status and global membership, they will continue to enjoy broad international legitimacy. It would be a mistake to cede authority in these bodies to hostile states. Rather, the free world should reaffirm its support for these bodies, maintain or increase funding levels, put forward candidates for leadership positions, and ensure that these bodies carry out their historic mission. Moreover, these multilateral institutions can become an important arena for both contesting China and seeking engagement on issues of shared interest.
Strengthen Economic Cooperation within the Free World. Likeminded allies and partners should strengthen economic cooperation within the free world in the areas of trade, technology, and infrastructure. Through enhanced economic cooperation, they can strengthen the prosperity of their people and their states’ economic capacity. This will bolster their soft and hard power for the coming competition with China. Moreover, due to their economic heft, international economic standards set by the leading democracies will become the global standards that China must accommodate.
Strengthened economic cooperation begins with a recommitment to free and fair trade. The free world should work toward a global Free World Free Trade Agreement. The agreement could stitch together the US-Mexico-Canada Agreement with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Transatlantic Trade and Investment Partnership (TTIP). As intermediate steps, the United States should rejoin CPTPP and negotiate new trade deals with the United Kingdom (UK) and the EU.
In addition to enhanced prosperity, these agreements will help standardize global rules on intellectual property, subsidies, labor, and the environment.
Likeminded allies and partners should also work together to reform the WTO to account for and prevent predatory Chinese behavior while, at the same time, including China in the reformed structure. They should reform the criteria for “developing-country” status to exclude China, the world’s second-largest economy. They also need to reform the dispute-settlement mechanism so that disputes can be adjudicated more rapidly, and strengthen enforcement against prohibited practices such as subsidies for state-owned enterprises. Rather than allow this pillar of the post-World War II global economic order to falter, the free world can take these steps to adapt it to modern needs, secure robust global trade governance, and create a powerful platform to confront China’s unfair trade practices.
Likeminded allies and partners should also work together to sharpen their technological edge. In the new-tech arms race, China has the advantage of scale against any of its competitors alone, but this advantage would be dwarfed when confronted with a coordinated free-world approach to technological development and standard setting.
Likeminded allies and partners should create a D-10 technology alliance. The United Kingdom has proposed just such a body. A D-10 technology alliance could conduct joint research and development and could pool resources, such as data for AI development. It could coordinate on matters concerning the leakage of sensitive technology to China by developing common approaches to restricting Chinese investment in technology sectors and developing export controls. This body could also work together to develop common guidelines on Huawei 5G infrastructure in likeminded countries and cultivate alternative producers of 5G technology in the free world. The Open Radio Access Network (Open RAN) is a promising concept to guide these efforts. Likeminded countries could diversify supply chains for critical materials such as rare-earth minerals. This body could also establish global norms for developing and using emerging technologies, including the responsible uses of artificial intelligence, surveillance, autonomous vehicles, and smart cities.
Likeminded allies and partners should also increase infrastructure investment in the developing world. These projects would serve as an alternative to China’s Belt and Road Initiative. While these leading democracies may not wish to match China’s public lending, they can unleash their private sectors. They should encourage and incentivize private-sector lending in Asian infrastructure. They can strike investment treaties and use public funding to spur private investment in projects abroad. They should help Indo-Pacific nations implement economic and legal reforms to make them more attractive to foreign investors. They should also devote more resources toward connecting private companies with opportunities in the Indo-Pacific. While some recipient countries see China’s no-strings-attached approach to lending attractive, leading democracies should emphasize the benefits of their approach, which encourages the growth of effective government and economic institutions, and maintains high standards for transparency, anti-corruption, the environment, and labor protections. Likeminded allies and partners should also accept Beijing’s invitation to join the Asian Infrastructure Investment Bank in order to improve its lending standards and counter China’s influence in the body.
Strengthen Security Cooperation within the Free World. Likeminded allies and partners should increase cooperation in the security sphere. In the past, US alliance networks were arranged regionally, but China presents a global challenge and democracies globally, worried about China’s rise, should form new security architectures. Under these new arrangements, they should conduct joint threat assessments of the China challenge and develop common defense and military strategies and capabilities. Rather than thinking of these alliances as a mechanism by which the United States providessecurity to its allies, leading democracies should work together to contribute to a joint defense of the free world.
Later sections of this report will go into detail on necessary military steps, and this section will focus on security architectures. The D-10 should become a primary venue for global security cooperation among likeminded allies and partners. Sharing of intelligence assessments should be a high priority within the D-10, as a precursor to more ambitious intelligence-sharing and security-cooperation arrangements.
In the Indo-Pacific, likeminded democracies should form a multilateral alliance to deal with the China challenge. Already, “the Quad” of Australia, India, Japan, and the United States serves as a forum of nations looking to counter China in that region. They should build on this and form a broader, formal or informal, organization of security partners in the Indo-Pacific. Likeminded allies and partners in the region should put aside or resolve disputes among themselves, especially Japan and South Korea, both of which have seen relations decline in recent years. A strong trilateral relationship is necessary for cooperative efforts to counter China.
The China security challenge is global, however, and Transatlantic security organizations also have a role to play. NATO should work with Asian allies to coordinate security and defense strategy. NATO has already established partnerships with Australia, Japan, Mongolia, New Zealand, and South Korea. It should build on these efforts to become a forum for NATO and non-NATO allies to share intelligence and assessments on China’s activities and capabilities. NATO should also play a greater role in freedom-of-navigation operations with Pacific partners. As will be discussed in more detail below, NATO could also issue declaratory statements, backed with threats of concrete repercussions, aimed to deter armed Chinese armed aggression against its neighbors.
Over time, this grouping of leading democracies cooperating in the security realm could evolve into a global NATO. Or, alternatively, the Alliance of Free Nations (to be discussed below) could take on a more explicit military role to counter the threats to the free world, including from China.
Expand and deepen partnerships to new nations beyond the traditional core
There are many other leading democracies that could be brought into this coalition, including Sweden, Indonesia, Brazil, South Africa, and others. In addition to the D-10, therefore, the world’s leading democracies should also establish a new formal entity: an Alliance of Free Nations (AFN), or Alliance of Democracies. Whereas the D-10 is limited to a small core group of like-minded states, AFN membership would be open to all recognized democracies around the world—large and small—committed to the shared principles of a rules-based system. AFN founding members will need to define clear criteria for membership in this club of democracies. In doing so, they should draw on widely accepted guidelines for ranking democracies, such as those prepared by Freedom House. The AFN would serve as a platform for strategic cooperation on the world’s most pressing challenges. The AFN would align the collective resources of its members, and facilitate burden sharing and allocation of responsibilities. The AFN would serve as a body for consultation among democracies for addressing major strategic challenges to the rules-based system, including those posed by China. These common threat perceptions can form the basis for an effective alliance. As a first step toward this goal, the world’s democracies should convene in a major Summit for Democracy.
India, as the world’s largest democracy, is a vital partner and a potentially pivotal player in counterbalancing against China in the Indo-Pacific region. In the competition with the autocrats to win over friends and allies around the world, continued aggressive behavior from China will push neutral states into the US camp. Already, once-proudly nonaligned countries, such as India, are working more closely with the US alliance system in Asia as a counter to China. While the United States and its democratic allies should not pressure states to make a binary choice between the United States and China or Russia, they should incentivize nations to work closely with the leading democracies.
Taiwan is a key pillar of freedom in the Indo-Pacific and an important partner of the United States. Likeminded allies and partners should pursue closer diplomatic, economic, and societal ties, including free-trade agreements with Taipei, to help mitigate Chinese efforts to marginalize Taiwan. Likeminded allies and partners should boost security cooperation with Taiwan geared toward safeguarding Taiwan’s freedom and economic resilience, while deterring potential Chinese incursions.
Elsewhere, likeminded allies and partners should help states in the South China Sea resolve disputes that have weakened their ability to come together in response to China’s far-flung territorial claims.
Likeminded governments should embed themselves more deeply in Asian multilateral organizations, such as the ASEAN, East Asian Summit, and Asia-Pacific Economic Cooperation (APEC) forum. The United States should work closely with partners to shape outcomes from multilateral gatherings held via these bodies, and it should ensure high-level officials, especially the president and secretary of state, regularly participate.
Furthermore, China has sought to shape the region through regional forums where the United States is not a member, such as the Shanghai Cooperation Organization. China has used these venues to undermine US interests and build support to counter US endeavors. The United States should work with partners in these organizations to influence the direction of regional bodies that it is unable to join.
Promote open market democracy
Likeminded allies and partners should strengthen the rules-based system by promoting democracy and free markets. Over the past several decades, the rules-based system has benefited from a large number of free-market democracies. Despite their imperfections, these systems have proven better than any other at delivering human dignity, prosperity, and human flourishing. Democratic countries with market economies are more likely to join and comply with the institutions of the rules-based system. For decades, the United States and other leading states advanced a rules-based system by encouraging political and economic liberalization in other states. In a period in which these principles are being challenged by the rise of authoritarian-state-led capitalism and democratic backsliding, leading states should not back away from these principles as some have argued; rather, they should reinforce them.
Leading states should use all the available tools in their toolkit to strengthen open-market democracies. This should include supporting civil-society groups, providing access to information in closed societies, and bolstering institutions in fledgling democracies. They should use conditionality to tie security arrangements and economic assistance to reforms in partner and recipient countries. They should also use public diplomacy to advance positive narratives about the leading democracies, as well as countering disinformation and challenging misleading narratives put forth by China.