America Needs a “Cold War” Strategy for China

America Needs a “Cold War” Strategy for China

America needs a comprehensive strategy that organizes and coordinates America’s considerable policy tools to achieve victory—especially in the economic arena.

 

Protecting American data has also been a key stated priority. The Trump administration sought to address this issue in 2019 by adding Huawei, China’s leading telecommunications company, to Commerce’s Entity List and later announcing Huawei’s indictment under the Racketeer Influenced and Corrupt Organizations Act (RICO) Act in 2020 for trade espionage. The Biden administration in 2022 doubled down on this effort by banning the sale and import of equipment made by both Huawei and ZTE in the United States, in addition to banning TikTok from federal government agency devices. Huawei, ZTE, and TikTok are the most high-profile cases of China’s access to Americans’ data, but gaps still exist in other sectors, such as healthcare, that need policymaker attention.

One of the greatest challenges that both administrations faced was how to generate more domestic production through “reshoring” initiatives while simultaneously decoupling from China in core technologies such as semiconductors to reduce dependencies. Although President Biden’s CHIPS and Science Act aims to increase the United States’ domestic production of semiconductors, especially in advanced technology, it is still unclear how the United States is going to decouple from Chinese production of “legacy” chips that are also fundamental to our day-to-day activities. The October 2022 announcement of the Department of Commerce’s newly expanded export controls to deny China cutting-edge semiconductor chips and equipment reinforced this effort, but once again, only focused on high-end manufacturing.

 

Cooperation with Global Partnerships

One theme that has been consistent across both administrations is utilizing a strong network of like-minded partners to compete against China economically and uphold the free and open system for all nations. Despite signing the BUILD Act, a move meant to counter China’s Belt and Road Initiative with economic statecraft, the Trump administration’s efforts to rally international partners largely fell flat. This was in part to the administration’s attempts at the time to re-negotiate long-standing trade deals with key U.S. allies and demand nations pay their fair share for defense, as well as hitting some friends with tariffs. This made real economic cooperation with China politically untenable at home for many of America’s global partners.

The Biden administration has sought to bring something more tangible to the table by launching the Indo-Pacific Economic Framework (IPEF) in 2022. Although this framework offers coordination with Indo-Pacific nations to discuss trade, supply chains, and anticorruption issues, the IPEF will likely fall short of countering China’s commanding economic position in the Indo-Pacific without concrete trade provisions such as market access agreements. In contrast, the Biden Administration’s newly signed 2023 agreement with Japan and the Netherlands to curb China’s ability to manufacture high-end semiconductors is a prime example of the types of agreements and partnerships that the United States should be forging to make gains in this competition.

America Needs a Strategy Tied to Objectives and Means

If America stands any chance of prevailing against the threat from the CCP, U.S. policymakers must begin implementing policies that are driven by a clear strategy—especially in the economic arena. Identifying the United States’ desired end states and core objectives, and means to achieve them, should be the foremost priority. The United States already has an arsenal of policy tools at its disposal that could be used, but a lack of strategic direction has meant that key economic agencies within the Departments of State, Commerce, Treasury, Defense, and the United States Trade Representative are simply not incentivized to compete with China.

The United States must maintain the economic might to defend its interests, ensure that the free and open system remains the dominant global economic model absent of authoritarian control, and undermine China’s malign economic policies. U.S. economic strategy must include targeted strategic decoupling to ensure the United States is reducing its dependence on China, optimizing the U.S. bureaucracy and legal system for competition, and creating alternative economic power centers with like-minded allies and partners.

First, targeted strategic decoupling from China will likely be the most challenging of these three efforts given the extent of the United States’ economic entanglements with China. This administration, and future ones, should continue to take steps to fully decouple from China in leading-edge technologies that could be used to give China an economic or military edge, including supply chains, manufacturing processes, and R&D efforts that are 100 percent free of Chinese influence. In addition to semiconductors, the United States should focus on other sectors that are vital to the security of the United States, such as China’s role in the manufacturing of pharmaceuticals and next-generation clean energy production. Policymakers should also identify “choke points” that the United States could leverage to deny China the critical components they need for the manufacturing of high-end technology for military operations.

Second, a competitive spirit must now infuse the work of the U.S. bureaucracy to optimize the United States to defeat its rival. One of the biggest ways this could occur is to have clear guidance from the White House that directs the creation of a coherent and expansive “lawfare” strategy that would maximize the entirety of the U.S. policy “tool kit” for one purpose—to undermine China’s strategy. The United States already has a robust set of export, tariff, sanctions, and investment authorities available to hold China accountable that need to be coordinated, organized, and implemented with a clear objective in mind. More robust attempts to weaken China’s military-industrial complex should be an easy starting point for U.S. policymakers.

Lastly, when it comes to allies and friends, America must focus on taking concrete steps to strengthen its tools for economic statecraft—prioritizing the use of positive trade tools instead of punitive ones. Defending against China’s malfeasance is not enough. The United States must help build alternative economic power centers across the globe. This is especially true in the Indo-Pacific as deepening our economic relationship could reinforce the Department of Defense’s efforts to strengthen its position in the region and help the United States and its allies better prepare for a regional conflict. Bilateral trade agreements with nations such as the Philippines, given their strategic significance and basing opportunities, should be prioritized by the U.S. Trade Representative and Congress, with an additional focus on more targeted bilateral or even multilateral agreements in mutual areas of interest, such as supply chain resilience or building a new global technology ecosystem.

The United States’ policy on China has changed dramatically during the Trump and now Biden administration in ways that even a decade ago would not have been feasible. Confronting the threat from China will be challenging and require sacrifice. But America has faced similar challenges before and prevailed—and it can do it again with the right strategy that leverages the tools and relationships America has invested in for decades to defend the free and open order for all nations.

Randy Schriver is Chairman of the China Economic & Strategy Initiative.

Dan Blumenthal, Senior Fellow at the American Enterprise Institute, is the Vice Chairman of the China Economic & Strategy Initiative.

Image: Christian Lue/UnSplash.