A long overdue reassessment of how the United States should deal with the People’s Republic of China is finally taking place, with governments across the West jarred into action by the devastation wrought by the pandemic and by the Chinese government’s prevarication and lack of transparency since the crisis began. Despite a concerted and aggressive propaganda campaign by the Chinese Communist Party through various channels in the West to deflect blame for the cover-up and mishandling of the initial stages of the Wuhan epidemic, in country after affected country, momentum is building to fundamentally reorder relations with China. As the pandemic cuts ever-deeper into our social fabric, devastating our economies and increasing the likelihood we will be set back a generation when it comes to growth and prosperity—with a deep recession or even depression a real possibility—the systemic vulnerability brought about by offshoring the production of critical medicines and supplies to an adversary state is plain for all to see. As national debts track for levels unseen since 1945, pre-pandemic assumptions about overall global and regional power balances, their long-term trends and the durability of legacy security institutions have been called into question.
During the Cold War, the Soviet Union constituted an immediate security threat to the West, but it never had the means to become an economic competitor; in contrast, the communist Chinese state credibly challenges us in both arenas. After three decades of globalization, the People’s Republic of China is for the first time in a genuinely competitive position vis-à-vis the United States when it comes to manufacturing, its technological base, and financial reserves, and it is using the resources it has accumulated to rapidly expand its army and navy, as well as its military capabilities in other domains.
Because of how thoroughly the Wuhan virus has short-circuited all the processes that analysts assumed would drive the evolution of the global security equation, the next several years ought to prove decisive. Growing public awareness of the disadvantaged situation we find ourselves in vis-à-vis our chief strategic competitor, coupled with the realization that the forces of modernization have not transformed our adversary into a mirror of ourselves (liberal, democratic), have made “hard decoupling,” the strategic decision to disentangle our supply chains from China, increasingly likely.
Decoupling is but the first necessary step on the road to what is and will remain an enduring competition between the United States and the People’s Republic of China for years to come. This competition is not only over markets or technology; rather, it requires confronting China’s thoroughgoing revisionism that seeks to reorder both the global distribution of power and the normative structures in place since 1945. To prevail, we must recognize that we are facing not “China” as a civilization, but rather a communist power whose ideology has always been at its core totalitarian. What is unfolding before our eyes—and has been underway for three decades since the end of the Cold War—is the second, and possibly decisive and final stage of conflict between liberal democracy and communism.
Unfortunately, over the years we have taught ourselves not to be able to see such things. We are in a more disadvantaged position vis-à-vis our adversary today than when President Truman launched the strategy of containment to save the postwar West from the onslaught of the triumphant Soviet communist state, flush with self-confidence following its victory over Nazi Germany. Containment was well-suited to American society in 1947, for we enjoyed unprecedented social cohesion and trust in democracy. In short, a wealthy and self-confident America confronting a war-ravaged Soviet state could afford to engage in what was essentially a defensive strategic concept, with the stipulation that time would be (and indeed was) on our side.
Today, the dominant segments of our business and policy elites fundamentally misread the deeper undercurrents of post-Cold War history, and many still embrace a kind of reductive optimism about globalized markets being self-evidently and on balance a good thing. These assumptions have helped hasten the de-industrialization of the United States, in the process destroying entire streams of a technological culture that took generations to build. It has also caused U.S. corporations to become dependent on the Chinese government, which with each passing decade has grown more adept at extorting IP for market access and eradicating competitive counter-pressures by radically centralizing supply chains and market networks. And while our corporations spent the past three decades undergoing a process of “de-nationalization” in pursuit of the best marginal rate of return wherever they could find it, our policy elites have grown distant from the citizenry, at times exhibiting borderline disdain for the very people whom they are supposed to serve but to whom they have come to feel less and less accountable.
As we search for a strategy to stop the global expansion of China’s brand of commercial communism, we must recognize that we are in an existential struggle against an enemy we have largely created through our own venality. Today our society is polarized to the point where the idea of a national interest and the common good has been all but willed out of existence by partisan group interests, corporate priorities, group grievance and simple greed. Hence, an essential component of this strategy has to be the restoration of a larger national purpose and sense of community that can only be brought about by returning the idea of American patriotism to the center of our political culture. We must also resurrect the notion that our elites earn the right to take the helm only if they bring with them a deep commitment to serving the people they purport to lead.
Our venality not only helped strengthen our adversaries, it has been instrumentally useful for them as well. China has mounted a serious and multifaceted effort at influencing Western societies that has been remarkably successful at tapping into our elites’ platitudes about globalization-driven progress. And as it encouraged happy talk about win-win trade outcomes for its own ends with one hand, it has stolen with the other. The practically unrestricted access that China has had to our social, corporate, government, and educational institutions over the past four decades has allowed Beijing to craft ever-more sophisticated and selective information campaigns and ever-more brazen industrial espionage operations to tap into our technology and know-how, eventually moving beyond theft and copying to contracting directly with our scientists and researchers for cutting-edge research to be transferred exclusively to China. Congress needs to take a hard look at where Chinese funding has been channeled, regardless of how unpalatable such scrutiny may prove to be, for we may discover that ties to our business, policy, and academic communities run deeper than we expected. For starters, the Chinese Communist Party’s Confucius Institutes should be shuttered, and strict controls on sales and technology transfers (akin to dual-use restrictions imposed on the Soviet Union during the Cold War) should be put in place. The United States’ government must also have a plan ready to protect the broken companies that will emerge post-pandemic to ensure that they do not become easy targets of Chinese acquisition.
The next steps will admittedly be more difficult. U.S. access to Chinese society remains limited and internally tightly controlled. That has to change. We need a comprehensive program for strategic messaging directed at PRC citizens, aimed at countering official propaganda and providing the Chinese population with alternative sources of information. Here lessons from the Cold War should be dusted off and updated for today’s digital space. This is especially urgent today as the PRC is well on its way to transforming its “walled-off” internet domain into a fully functional tool of communist government control.
We should also take a long, hard look at our own existing digital monopolies and evaluate what kind of risks they represent to national security. The social media space is huge, with 3.5 billion people online at any moment out of the total 7.8 billion global population. Social media increasingly dominates how we consume news, how governments communicate with the citizenry, how the latter engages in politics, and even how we engage in commerce, interact with our families, find partners, and so forth. It is also increasingly a space where governments can engage in information operations to shape the politics and culture of their adversaries. This level of network centralization poses a single-point-of-failure risk when it comes to information flows. It also simplifies the adversary’s task when it comes to information operations, and as such constitutes a risk to national security. Just as we urgently need to shift to diffused regionalized supply chains with built-in redundancies when it comes to manufacturing, the same imperatives apply to the digital space. Though the solutions and remedies are far from obvious, the questions need to be asked and thought through.
Restoring the kind of self-confidence we enjoyed in 1947 will involve rethinking some of the heretofore “sacred cows” when it comes to how we do business at home. The “securitization” of the American economy and shift to financial transactions as the increasingly dominant share of our economic activity has left the U.S. Treasury with a declining source of revenue, in the process contributing to our exploding public debt. Over the past three decades, financial transactions have become a growing portion of world GDP, and yet have all but escaped taxation. While several modest proposals to levy taxes on such transactions have been introduced in the United States, all have been effectively killed through lobbying, even though the Tax Policy Center estimated in 2016 that taxing financial transactions would raise about $74 billion a year for the U.S. Treasury. The same goes for the continued tax exemption for internet commerce revenues, as well as for the internet giants who have paid virtually nothing on their revenue from advertising and data collection. It is high time to bring more equity to the tax system and redirect a portion of the digital revenue to rebuilding America.
Finally, any strategy aimed at stopping the Chinese surveillance capitalism will require us to reconnect to the traditional democratic values that rest on the autonomy of the individual. We need to start by restoring— especially among the young—an appreciation of the fundamental decency of the American political project, notwithstanding our shortcomings over the years, and most of all, returning ownership of the state back to the citizens. No businessman has the right to define the national security interest any more than the military should be allowed to chart the overarching strategic objective in war, or physicians should be allowed to run the economy during a pandemic. These are all deeply political decisions that must be made by our elected representatives. For while the businessmen, soldiers, and doctors are specialists within the confines of their areas of expertise, only political leaders accountable to the electorate can legitimately make these tough choices, and only they are properly accountable in our democratic societies. The mantras of “free trade” and “globalization” of the past three decades should no longer serve as an excuse for the business class to get rich at the expense of the citizenry; they are free to maximize their wealth provided they bring the citizenry with them.
At its most fundamental level, our new China strategy must be about returning American democratic capitalism to its roots—about restoring a sense of commonality, patriotism, and civic responsibility to our business, politics, and culture—regardless of our station in life and our social class. With it, we must abandon optimistic globalist cant about convergence and start to see communist China not as a future member of the liberal international order but as its destructor. And having sized up our challenge, we must re-invest in societal resilience by rebuilding national cohesion and reaffirming the republican principles that have propelled this country throughout its existence. If America and its allies can restore a sense of national unity and national purpose, the task before us becomes manageable, if not exactly simple. Re-shoring our manufacturing, finding ways to limit adversaries’ access to our free societies and cultures without destroying our freedoms, tackling the challenge of digital monopolies on information flows both at home and abroad—none of these are easy tasks. Nevertheless, I remain optimistic that we will prevail yet again in the second global battle against the totalitarian impulse. The challenge is before us.