What are the realistic options the United States has to challenge China? In part 1, I covered why the standard cliches about confronting China are unrealistic. Factors like the WTP, TPP, and working with allies are all good things and should be done but have little to no efficacy or impact on altering Chinese behavior and have a range of problems even in adopting them as strategies. Their ability to materially impact Chinese behavior is wildly oversold. Part II covered what is the general position of China specifically focusing on what type of conflict China believes they have entered vis a vis the United States and what there internal framework is for viewing the state of the world and how to proceed in the not a trade war trade war. Here we learn that China will be enormously resistant to any type of material change seeing it as fundamentally oppositional and dangerous to their entire systems of governance and something the Great Leader has sworn to avoid.

To date, the primary logical strategy here has been to eliminate strategies that are unlikely to be effective and lay the groundwork for why other strategies would be effective. Arguably the biggest problem with proposals about how to approach the not a trade war trade war is that well meaning people provide profoundly reasonable that are reacting primarily to Trump rather than thinking through the mechanisms and channels to induce material changes to Chinese economic policy (TPP, WTO, and allies do not), the internal framework with China, and the nature of the conflict. This does not mean many writers are unreasonable, it only means their motivation has been reacting to the President rather than taking the nature of the conflict and the adversary as the starting point. Tinged with a healthy amount of unrealistic assumptions about China and how to induce change and we are left with weak thinking about how to address the challenge posed by China.

Before considering specific ideas, we need two more points that lay the foundation of how I believe we should consider any idea about how to approach China. First, any strategy must be materially different from historical policy on China and demonstrate how it can mechanically produce higher quality outcomes given the criteria I have laid out in Parts I & II. For instance, many supporters of a WTO heavy policy to challenge China fail to demonstrate how it is materially different from pre-January 2017 policy or that if the US filed new litigation how it would result in significant change to Chinese behavior. Law suits were filed and the US won numerous cases against China and yet China became a more centralized, less free economy, with greater and more varied forms of national discrimination and non-tariff barriers. As another example, many have argued that the Trump administration simply needs to engage in more good faith negotiations with China to extract material changes in behavior. However, as they point to a myriad of agreements reached pre-2017 that were rapidly breached by the Chinese side and resulted in no net shift in Chinese behavior. This then falls back on them asking us to either trust them or utilize methods tried before that accomplished nothing. Any new strategy must be materially different from historical strategic policy and demonstrate how it can produce higher quality outcomes and not rely on a personality or individual skill. If one wants to rely on liberal international systems and allies to produce change, one must demonstrate that allies and systems have both the same focus and then the ability to produce change. Neither has been proven currently or historically.

On a quick tangent, one of the debates that has been simmering in Washington DC and foreign policy circles under a variety of different guises is the legacy defense of US foreign policy towards China pre-2017. Debates have focused on a variety of sub-issues such as whether China should have been allowed into the WTO and whether American diplomats were too optimistic that China would become a democracy. I think these are distracting tangential academic or legacy protection debates to the more policy focused fundamentals we should be worry about: in its bilateral and multilateral centered relations with China, was the United States successful in generally pushing acceptance of its values and policy aims? Since China entered the WTO, it difficult to see how the US attained broader acceptance of its values and realized material policy objectives vis a vis China. Put another way: US policy has not even achieved most of its aims compared to China leaving aside any discussions about whether China democratized. In saying this, we must note the difference between reaching an agreement and then having the agreement adhered to or following through with material policy moves even if not covered by an agreement. The US record with regards to China is one of significant failures at both the big picture framework and specific policy outcome level. The United States has not succeeded in pushing its values and has stood relatively idly by as China ignored bilateral and international agreements. The best that can be said of US policy with regards to China pre-2017 is that current critics do not have a record of success to point to in dealing with China.

Second, as a society we must have a clear recognition that challenging China carries with it significant costs. Any broad strategy that does not carry significant costs is not worth discussing as a reasonable framework. There are a couple of notes about this point. My use of the word “cost” here is very broadly defined. It may mean expending political capital, higher taxes and increased spending, revenue foregone by American businesses, and deadweight loss to the economy from higher import costs or supply chain moves just to name a few. Furthermore, given the pre-2017 strategy of investing little and imposing or accepting minimal costs in dealing with Chinese behavior, there was little reason for China or the United States to either change behavior or follow through on agreements. Lacking a cost absorption or imposition mechanism or recognition upon issues in dispute between the United States and China returns US policy to pre-2017 methods with no credible enforcement or punitive follow through measures render any demands or changes subject to the whims and fancies of the CCP. Based upon the historical record, it is not a credible strategy to rely on the benificience of Beijing to execute an agreement or on the personality of an American leader. Any agreement that is personality dependent is not an agreement. This renders any strategy that does not establish a plan to both absorb and impose costs at the outset if necessary not credible.

The challenging part is that this gives us a relatively constrained framework in which to move forward or analyze an agreement or policy options with China within a strategic or logical framework. We have eliminated as viable alternatives most of the common cliched strategies, largely eliminated most historical strategies, and imposed a hurdle for what constitutes a viable strategy going forward that it must include cost recognition with cost being broadly defined. This may sound constraining but I believe there is an important issue to clearly recognize. Significant changes to the international geopolitical landscape necessitate major shifts in foreign policy framework. We cannot adopt the historical frameworks of how to approach and deal with China and the broader geopolitical landscape. Adversaries and enemies have changed with alliances in flux and different countries being pulled between these competing centers. We need major new frameworks.

So before we turn to a more specific question of policy approaches let us sketch out some broad ideas that I think will then help guide our approach in laying out specific policy approaches in dealing with China.

First, the United States must take the leading role in promoting liberal international values including but limited to openness, democracy, human rights, free markets and trade, and rule of law. This may sound obvious but it is neither obvious to recent Democrats or GOP. Since the Obama administration, the Democrats and GOP have had overlapping lack of interest in using or projecting American interests or values abroad, albeit for different reasons with different motivations. The Obama administration famously called for “leading from behind” and the Trump administration has a distaste for international institutions believing they have failed in their missions which is not entirely wrong. Put another way, while the Trump administration may not like international institutions believing them broad failures, the Obama administration effectively operated a benign neglect strategy. While the Trump administration takes a strong inward looking approach to trade with regards to China, their approach has caused worry in numerous Asian allies. This differs from the Obama approach to Asia which was criticized for being non-existent outside of the public relations campaign on the Asia pivot. While they may have different motivations, neither the Trump or Obama administrations have been forceful and consistent international defenders of American values and promoting American values. For all the criticism the Trump administration receives on human rights and democracy promotion issues, the Obama administration was arguably even worse especially if the Trump administration takes concrete steps supporting Uyghurs and Hong Kong democracy. In reality, the thread of soft isolationism after the Iraqi War runs throughout both the Obama and Trump administrations. The United States needs to rededicate itself to being the global leader in promoting openness, democracy, rule of law, free markets and trade, and human rights in both bilateral and multilateral relationships and forums.

Second, we need to rethink what the United States wants and needs from institutions and alliances and how this evolution will need to play out in the brave new great power conflict with China. The United States is confronted, at the same time it confronts a rising expansionist authoritarian state intent on remaking the international order, with an international order of dubious strength, focus, and foundation. While these issues have come to the forefront under the Trump administration, he inherited institutions and alliances in an already seriously weakened state. The US-European alliance had been fraying for some time and to just pick one issue, the lack of any credible European military either at the individual country or on an EU wide basis had been a sore point for many years. Similar criticisms could be made of the UN Human Rights Council. With authoritarian human rights abusers gaining a critical mass that countries like China are keen to exploit, and the US has little ability to stop, the UN Human Rights Council has become a laughing stock. While the Trump administration decision to withdraw could reasonably be questioned, the UNHRC was anything but a well functioning institution that was meeting its original objectives and goals. Even the WTO had understandably been questioned by many for years before Trump over issues such as its weakness in dealing with countries like China to its unwieldy nature of trying to work in an institution where effectively every country has a veto which led to the Doha Round of trade negotiations which began in 2001 still dragging on. Institutional reform across a variety of multilateral institutions and bilateral relationships needs a rethink. The Trump administration inherited an international system that was already in a seriously weakened state. We need to seriously think about what we expect from international institutions and alliances in the new landscape.

Third, we need to think actively about how specifically to project influence and challenge China. For all the US talk about European allies not meeting their security commitments, the US has invested strikingly little in international development assistance. Furthermore, while the US still holds an enormous soft power edge over China or any other country for that matter, China has become quite skilled at exercising influence whether via state owned banks but influence directed from the state. While the US holds an enormous lead in pure soft power, think Friends and hard power think missiles, we need to think specifically about middle grounds of power and influence. One of the most common worries one hears from business and government is how to increase American business investment specifically into emerging and frontier markets that are being actively targeted by China under its Belt and Road Initiative. While the United States and Europe already significantly outpace China by existing stock of investment and even by ongoing flows in most countries, valid questions are being raised about to raise investment and influence. Typically, the US and other developed countries government have played a relatively minimal role compared to China in pushing investment into other countries. Left to the free market, many investors are loathe to accept a variety of risks that accompany investing in frontier markets, especially on longer term investment like infrastructure. What are ways that the United States can further spur factors like private investment abroad and specifically in emerging and frontier markets? What are channels for this middle type of influence or power to be used?

Fourth, we need to think about the costs the United States is prepared to accept going forward to challenge China. When I use the term costs, I mean it in a very broad sense from political to economic and others. However, despite facing an enormous task, there has been very little discussion of accompanying costs to challenging China. This is politically the most sensitive and under discussed foundation of everything we need to talk about with regards to challenging China. Simply from a strategic point of view, no thinker, negotiator, or diplomat can credibly claim to have a plan how to deal with China that does not incur significant costs. As a simple example, throughout most of the post China WTO entry period, the United States has avoided imposing costs upon China due to its non-compliance or misbehavior. Ex-administration officials will cite the agreements they reached but they will studiously avoid any talk of compliance. Lacking a credible threat to cost imposition from non-compliance gives China free reign to avoid complying with any agreement, something they have done repeatedly. Taken from another cost perspective, while we often like to think of the attractiveness of our values in swaying hearts and minds, cold hard cash is frequently a dominating factor with comic book tentpoles merely an accompanying factor or byproduct. If the United States wants to move public and private actors throughout Asia and Africa to at least not comply with China, we will need to invest significant hard financial resources. This may run the gamut from military assets to work with allies to secure the Indo-Pacific region to international development. Finally, costs may mean taking hard decisions or leading in new ways. For instance, given the many years of refusal to increase defense spending, it may mean shifting US military assets out of Germany towards other countries to face more direct risks. It may mean moving the focus of trade agreements away from the WTO towards other multilateral forums. It may mean using conditionality on development assistance to channel investment to countries building up democracies and running sound economic policies. This will require political capital to allocate financial and political resources by what we as a country prioritize. If we want to spread values like openness, human rights, and democracy, we will need to help countries that demonstrate a desire to establish democracies and aid them in that transition. That will also mean cutting off funds to countries that backslide or engage in abuses.

Throughout much of the post-China WTO entry, the US has been an unwilling or uncomfortable leader of the international liberal order. The post WWII order flourished because the United States made the largest sacrifices setting the tone and direction of negotiations, alliances, and international institutions. By binding itself to the institutions and agreements it created, which embodied a specific set of values, and pushing other states and signatories to comply, the United States compelled adherence to a globally recognized set of standards and values. The United States must be prepared to layout a vision for the value it wants to promote, to make the biggest sacrifices to realize those values, share the benefits with aligned countries, and deny benefits to adversary or nonaligned countries.