Vice President Mike Pence’s speech at the Hudson Institute last month was a watershed in U.S.-China relations. Pence trumpeted what is obvious of late, that the relationship has shifted from competition mixed with guarded but extensive engagement to out-and-out strategic rivalry. Tellingly, the speech generated little pushback, including from Democrats. On the contrary it seemed to capture the zeitgeist of a growing consensus in Washington that it is time for a harder line on China.
Bipartisan Frustration with Beijing
Earlier this year, Kurt Campbell, who served as Assistant Secretary of State for East Asian and Pacific Affairs during the first four and a half years of the Obama administration and Ely Ratner, who was Deputy National Security Adviser to Vice President Biden, published a piece in Foreign Affairs rebutting what they claim is a longstanding U.S. assumption that sustained engagement with Beijing will put China on a more liberal path. While Campbell and Ratner criticize the Trump administration for unilateral actions on trade, questioning the worth of alliances and inattention to human rights; they ultimately determine that the 2017 National Security Strategy, which labels China a “strategic competitor” is “a step in the right direction.”
Trump’s tougher approach to China reflects growing bipartisan frustration with Beijing in Washington. As George Washington University Sinologist David Shambaugh observes “there now exists a quite strong bipartisan consensus for pursuing a toughened China policy.” He notes that this is particularly evident in Congress where “strange bedfellows” have crossed party lines to craft legislation targeting China. For example in February a disparate group of senators: Diane Feinstein (D-CA), Patrick Leahy (D-VT), Marco Rubio (R-Fl) and Ted Cruz (R-TX) cosponsored a resolution commemorating the anniversary of the 1959 Tibetan uprising and urged China to respect the human rights and religious freedom of the Tibetan people.
More consequentially, bipartisan legislation to improve screening of Chinese investments in high-tech industries by expanding the oversight authority of the Committee on Foreign Investment in the United States’ (CFIUS) was incorporated into the 2019 National Defense Authorization Act (NDAA) and signed in to law by President Donald Trump this August. Specifically, the legislation extends oversight to joint ventures and minority stake investments, and expands the definition of critical technologies that trigger CFIUS reviews. According to the legislation’s sponsor Senator John Cornyn (R-TX) the goal is to prevent China from acquiring “the know-how on intellectual property they need in order to gain access to this cutting-edge, dual-use technology” with potential to harm U.S. national-security interests.
An underlying driver of bipartisan willingness to get tough on China is that the American business community, a traditional champion of U.S.-China engagement, has developed its own deep frustrations with China’s mercantilist practices. As Daniel Russel, Campbell’s successor as the top U.S. diplomat for Asia (2013–2017), cautioned a Hong Kong audience this January : “What we’re hearing widely is that we’re approaching a point of no return, that it’s too much, that American companies simply cannot operate in the Chinese environment in a way that’s remotely equivalent to the way that Chinese companies can operate in the U.S.” Lack of market reciprocity, and predatory Chinese practices such as forced technology transfer and intellectual property theft, have eroded private sector opposition to protectionist measures towards China. This is evidenced by American businesses’ muted response (outside of export dependent sectors such as agriculture) to the successive rounds of tariffs the Trump administration has imposed on China over the course of 2018.
A Hard Sell in Asia
In Asia, the Trump administration has accurately diagnosed the problems posed by China from mercantilism to bullying of smaller neighbors. However, the administration’s China policy has been bedeviled by the same issues that have hamstrung its overall foreign policy approach: bellicosity, a proclivity to act unilaterally, lack of a clear strategic framework, and under-resourcing of the non-military instruments of US foreign policy. This is problematic for key US allies in Asia, who are wary of becoming collateral in a U.S.-China spat. As Van Jackson observes in a piece entitled “Competition with China isn’t a Strategy”: opposition to Chinese transgressions versus the US and international community is “long overdue” but that “continuing to talk tough about China without advancing a more detailed pitch for how you’ll cope with the threat will only alienate those it needs to reassure” (i.e. U.S. allies and partners in Asia). Effectively dealing with China in the current East Asian geostrategic environment requires a foreign policy that is more subtle and flexible than the Trump administration seems capable of implementing.
The China challenge cannot be met by drawing a line in the sand (or water) and telling Asia “you are either with us or against us.” Troublingly, there are indications that the administration may be embarking on this type of zero-sum path. In his speech, Pence cited China hawk Michael Pillsbury’s claim that “China has opposed the actions and goals of the U.S. government” and “is building its own relationships with America’s allies and enemies that contradict any peaceful or productive intentions of Beijing.” This suggests a mindset that America’s Asian allies and partners have no legitimate autonomous interest in maintaining their own ties with China, and that all such relationships are now to be viewed solely through the prism of U.S.-China competition. This attitude, which is widespread in Washington, flies in the face of an oft-heard refrain from Asian countries, which is that they “don’t want to have to choose sides” between the United States and China. Nevertheless, I have heard privately from several administration officials different variations on the theme of “not choosing is a choice.”
Already the administration has forced its North American trade partners, Canada and Mexico, to choose. An important, but underreported provision of the recently signed U.S.-Mexico-Canada Agreement (USMCA) is a clause precluding trade negotiations with any “non-market country” (a euphemism for China). This works in North America because Canada and Mexico’s economies are overwhelmingly dependent on the United States; in 2016 around 74 percent of both Mexican and Canadian exports, respectively, were destined for the U.S. market. It is not going to work in Asia, where China is economically as (or more) integral to the region as the United States. Unless they perceive an existential threat, Asian countries are simply not going to sacrifice lucrative trade opportunities with China.
Singaporean Diplomat Bilahari Kausikan laments America’s tendency to “view diplomatic interactions as if they were sporting events where a country must be on one side or another, and where one side wins and the other loses.” As Bilahari notes, Southeast Asia’s omnidirectional foreign-policy approach is based not on sentimentality, but on self-interested realism informed by “long and bitter experience” that has taught the region that the best strategy is to use major competition “to advance our own interests” and preserve “as much autonomy as possible.”
Rather than racing to sign up for Cold War 2.0, America’s Asian allies and partners have continued their longstanding policy of hedging, preserving economic linkages with China while maintaining tight security ties with the United States. This is the case not only for Southeast Asian countries who have a long history of bobbing and weaving between the great powers, but also for longstanding U.S. allies in Northeast Asia, South Korea and Japan, who are also marching to the beat of their own drum.
Stuck in the Middle
South Korea and Japan rely on the United States as a security guarantor, but it’s important not to underestimate the degree to which these countries are economically dependent on China, particularly as an export market and a node in manufacturing supply chains. Tokyo’s experience in 2012 when tensions with Beijing escalated over Japan’s nationalization of the disputed Senkaku Islands and Diaoyu lslands is illustrative. China responded with a consumer boycott of Japanese goods, and in the following year, Japanese automobile exports to China (its second largest export destination after the United States) plummeted by 32 percent or $1.9 billion. South Korea suffered a similar experience after it deployed the United States’ THAAD system, which is intended to protect against North Korean aggression, but that China claims could undermine its own nuclear deterrence capabilities. China responded with punitive economic measures, including cutting off tourism to South Korea, and hampering Korean companies’ ability to operate in China (per the Bank of Korea these de facto sanctions slashed South Korea’s expected 2017 growth rate by 0.4 percentage points).
After its experience with Chinese economic coercion in 2012–2013, Japan took pains to reduce its economic dependence on China, but these efforts have largely come to naught. Per CNBC, through the first eight months of 2018, Japanese exports to China increased 14 percent, a primary driver of “the country’s entirely export-driven 1 percent economic growth” rate. Japanese bilateral trade with China from January to August was $206.1 billion with the United States “a distant second” at $143.8 billion.
As tensions between the Washington and Beijing have increased, Japan and China have experienced warming relations. Late last month, Prime Minister Shinzo Abe became the first Japanese leader to make an official visit to China in seven years. In contrast to the rivalrous rhetoric emanating from Washington, Abe pledged “a new era” in Sino-Japanese ties declaring that relations have shifted “from competition to coexistence.” Abe and Xi signed fifty deals on projects ranging from energy to healthcare. In an indication that Abe does not see strong economic ties with the United States and China as mutually exclusive, the two leaders discussed lowering trade barriers on Japanese agricultural exports to China.