The United States faces a great-power threat from China. That much was made clear by the National Defense Strategy crafted in 2018 under then-Defense Secretary James Mattis.
“China,” the report concludes “is a strategic competitor using predatory economics to intimidate its neighbors.” Though a simple point, finding effective options to counter China’s strategy of “undermining the international order from within the system by exploiting its benefits while simultaneously undercutting its principles” has proved difficult for policymakers in Washington.
The deadly spread of COVID-19 had reignited the urgency of this debate. Brookings Institution Senior Fellow Shadi Hamid characterizes the global state of affairs best, writing that “after the crisis […] the relationship with China cannot and should not go back to normal.” Hamid justifies the renewed vigor to confront China by chastising the Chinese government for “[censoring and detaining] those brave doctors and whistleblowers who attempted to sound the alarm and warn their fellow citizens.” He further points out that “evidence of China’s deliberate cover-up of the coronavirus outbreak in Wuhan is a matter of public record.”
It is indeed a matter of public record, but the question of what the right American response should be awaits lawmakers after the pandemic is under control. The key to our approach must be to exact punishment on China without placing undue harm on Americans.
Prior to the COVID-19 pandemic, the Trump administration’s theory was that protectionist trade policies aiming to boost American industries would be the best weapon against growing Chinese influence. Disentangling the American and Chinese economies is undoubtedly going to be necessary for American national security interests post-pandemic (more on that later), but the Trump administration’s “tariff-man” approach has hitherto only succeeded in making the dynamic a lose-lose as opposed to a win-lose.
Policy to date has not worked as promised.
One of the first acts of the Trump administration was to follow through on a campaign promise to withdraw from the Trans-Pacific Partnership (TPP) under the mistaken view that “China will enter the TPP through the back door at a later date” despite the agreement being drawn up to deliberately exclude China. TPP was initially negotiated by the Obama administration to include 11 other Pacific Rim countries and, with U.S. membership, was “set to become the world’s largest free trade deal, covering 40 percent of the global economy.”
Experts of all economic persuasions agree the Trump administration reached a faulty conclusion. As Manhattan Institute Senior Fellow Oren Cass observes, “the nations banding together would have a new partnership through which to exert collective pressure against Chinese misconduct.” Cato Institute Adjunct Scholar Scott Linciome concurs that “incorporating the North American supply chain into a broader group of […] Asian-Pacific countries” would have served to “counterbalance China in the region.”
The missed opportunity to liberalize trade between the twelve countries originally involved in the agreement led Lincicome to conclude that a “tremendous sigh of relief was heard from Beijing the day that President Trump withdrew from TPP.”
American Enterprise Institute Resident Scholar Derek Scissors adds that the Trump administration’s tariffs were “not punishing companies that stole IP, or used stolen IP” but were instead “punishing everybody.” To make matters worse, the overbroad imposition of tariffs “[targeted] companies in China which export; some of those companies are American companies.” The fact that the administration sought detente in the trade war before the virus hit should be taken as a sign that current policy has not delivered its intended results.
The Chinese government’s bungling response to COVID-19 and subsequent disinformation campaign attempting to obscure its role in the virus’s spread should not go unanswered. Furthermore, pre-pandemic issues from intellectual property (IP) theft to espionage risks from Chinese state-owned enterprises like Huawei also demand a resounding American response.
Past one-size-fits-all approaches to U.S.-China economic policy will slow any American economic recovery and handicap our future efforts to hold the Chinese government accountable. The goal, simply, should be to isolate the Chinese economy, not ours.
If protectionism isn’t the solution, then what is?
Scissors also suggests that while it is “impossible for trade with China to be reciprocal, because state-owned enterprises are so heavily subsidized,” the U.S. “should be, but isn’t, concentrating sanctions on these firms” to minimize national security risks. Put another way, the current strategy of indiscriminate tariffs should be done away with in favor of going after firms that are effective arms of the Chinese Communist Party (CCP).
American firms are not in an innovative competition with companies committed to the ideals of free enterprise. Instead, they are forced to face companies like Huawei which are propped up by the CCP regardless of market forces and do the bidding of the Chinese government.
Some lawmakers are already attuned to this reality. Congressman Mike Gallagher (R-WI) has introduced legislation to “codify President Trump’s Executive Order that placed Huawei on the Commerce Department’s Entity List” and “provide Congress with the ability to block waivers provided to companies looking to engage in business with Huawei.” This targeted approach directly addresses the threats of anticompetitive business practices and telecommunications espionage posed by Huawei by encouraging competitors to fill the void. Senator Marco Rubio (R-FL) continues this thread, advocating for targeted sanctions against senior CCP leaders involved in the mass internment and forced labor of China’s Uyghur minority.
With regard to the Chinese government’s culpability in letting the virus spread across the globe, Congressman Gallagher has also joined Senator Tom Cotton (R-AR) in proposing the Protecting Our Pharmaceutical Supply Chain from China Act. Of the bill, Congressman Gallagher noted that the “Chinese Communist Party’s outrageous threats to withhold lifesaving drugs from the U.S. endangers public health and should open our eyes to our dangerous over-reliance on China in our medical supply chain.” Given the revelation that Chinese medical supply shipments to Europe under the guise of humanitarian aid were found to be defective, counterfeit, or otherwise unsuitable for use, decoupling our medical supply chain from China is a prudent step.
TPP remains a strong response to blunting Chinese economic influence as well. The United States Senate Republican Policy Committee (RPC) continues to push for rejoining the agreement. In response to the notion that joining TPP would hamstring American policymakers concerned about a growing China, the RCP’s analysis counters that “by creating an alliance of market economies in the region, TPP weakens China’s ability to make unilateral demands on individual members.” Giving these nations access to the enormous economic power of the United States to the explicit detriment of China’s regional influence is what makes the agreement so beneficial.
The tailored approach represented by the above suggestions does far more to ensure a price is exacted by the Chinese government that we are not also forced to pay.
The future for U.S.-China relations.
The superiority of liberal democratic capitalism was the jewel in the crown that facilitated the United States’ success in countering our national security threats throughout the 20th Century, and there is no reason to believe that same system is not equipped to meet the challenges of the 21st Century. While this is a truism, it does require us to carefully weigh specific policy choices to meet their specific circumstances.
If the United States wants to adequately rise to the current and future challenges presented by China in the wake of COVID-19, lawmakers should be willing to dust off the options that leverage the strengths that come with being the global economic leader. Smart policies are going to require fresh thinking.
From exposing state-owned enterprises like Huawei to supply chain shifts to using free trade as a counterbalance to Chinese economic coercion, there is no shortage of policy proposals to take the Chinese Communist Party to task without the boomerang effect of hurting the U.S. too.
