The West Confronts China

The recent disruption caused by the COVID19 pandemic and the simultaneous social unrest has acted as a “smokescreen,” diverting public attention from the most important geopolitical event of our lifetimes: the beginning of the Sino-American Cold War.

Much like U. S. involvement in World War II, the Sino-American Cold War has come upon us suddenly and unexpectedly.  While China’s role in COVID19 may resemble the 1941 attack on Pearl Harbor, today’s “state of play” has far more resemblance to Germany’s 1938 annexation of Czechoslovakia.  Now, as then, most people are in denial.  They want to “put the genie back in the bottle.”  They believe we can simply return to “the good old days,” with a few apologies and a few diplomatic handshakes.  In short, like Chamberlain in Munich, they believe “just a little more appeasement” will satisfy an insatiable monster which has simply gotten bigger and fiercer with each passing day.

Consider the facts.

The deteriorating relationship between the world’s two 21st century superpowers—the United States and China—have already entered a period of grave danger.  An emboldened Chinese Communist Party (or CCP) is on the move in Asia and globally.  Increasingly, its behavior constitutes a threat to peace and security in Asia as well as a threat to the core national interests of the United States.

The hour is late, but there is still time to act.  Whether the United States and its allies execute the strategy and display the resolve required to meet this threat will determine the world order in the coming decade and beyond.

Over social media and through its multi-billion-dollar global propaganda machine, the CCP now spreads a three-part message in multiple languages, 24-7.  It says: 

1. that democracy is an inferior system of government to China’s efficient dictatorship;

2. that China is a peaceful, selfless, and generous rising power, seeking merely to “help a world in need”; and

3. that the U.S. epitomizes the inability of democracies to cope effectively with big problems like COVID19 while failing to mention that the CCP’s own “negligence” (or malevolence) unleashed it on the world.

However, the message of “benevolence” and “harmony” that the Chinese Communist Party is trying to promote through its overt and covert global media operations is belied by several obvious contradictions.

First, the brutal subjugation of its Uighur Muslim population in Xinjiang which is literally “a crime against humanity.”

Second, its assault on civil liberties and the rule of law in Hong Kong, which violates international agreements.

Third, it so-called “sharp power” tactics designed to penetrate, corrupt, and coopt democratic institutions around the world.

Fourth, its neocolonial exploitation of “debt diplomacy” and political corruption to swindle developing countries out of their critical infrastructure and natural resources.

Fifth, the breathtaking pace of its military expansion and modernization, aided by the most audacious, comprehensive, and sustained campaign of technology theft in global history. And,

Sixth, its increasing military adventurism and belligerence in Asia, particularly in the South China Sea.

Faced with this reality, the modern world has arrived at a critical juncture in human history.

As David Pilling of the Financial Times observed in 2013, “Deng Xiaoping was fond of quoting the ancient Chinese proverb: ‘Hide your brightness, bide your time.’” For two generations of American scholars and policymakers, the hopeful interpretation of this phrase was that China would have a peaceful rise to great-power status, becoming what former Deputy Secretary of State Robert Zoellick termed “a responsible stakeholder” in global affairs. But as Orville Schell, one of America’s premier China watchers, concluded in a recent landmark analysis of nearly half a century of America’s “engagement policy” with China, “that hope died tragically in 2020 due to neglect.”

There were plenty of mistakes on the American side, but the key cause of death was that the status quo no longer served the interests of China, the CCP, or its leader, Xi Jinping.  And this is not simply because Xi is more domestically ruthless and globally ambitious than any other leader of the post-Mao era.  It is also because engagement, which never delivered equivalence and reciprocity from the Chinese side, had outlived its usefulness.  In his prescient essay seven years ago, Pilling said of Deng’s famous quote that, “The idea was to keep China’s capabilities secret until the moment was right to reveal them.”  Now, Chinese leaders clearly believe that moment has arrived.

This is unambiguously demonstrated by recent developments that signal a new authoritarian bravado and belligerence on the part of the CCP.  And the four most worrisome aspects of this are

1. the betrayal of Beijing’s commitment to Hong Kong’s autonomy;

2. the escalating pace of militarization by the People’s Liberation Army (or PLA);

3. China’s military muscle-flexing in the South China Sea; and

4. the growing existential challenge to the freedom and security of Asia’s most liberal democracy, Taiwan.

On June 30, 2020, the CCP finally lowered the boom on Hong Kong, adopting the draconian national security law that it had announced, but not detailed, in May.  The new law gives the government in Beijing carte blanche to arrest anyone in Hong Kong it claims is committing acts of “secession,” “subversion,” “terrorism,” or “collusion with foreign powers.”  The language is so broad that it can apply to anyone (even abroad) who is advocating for the civil and political rights of Hong Kongers, as guaranteed both in international charters and in the 1984 Sino-British Declaration.  Procedurally, this delivers the death knell to the rule of law in Hong Kong, since it will be enforced by a secretive committee, dominated by the Beijing authorities, whose decisions “shall not be amenable to judicial review.”  And since the penalties for violating the law can include life in prison, it should be clear to the people of Hong Kong what they are up against if they continue to try to exercise what was once their rights of free expression.

Notably, on the day after the law went into effect, ten Hong Kongers were arrested under its provisions (including a 15-year-old girl), and another 360 were taken into custody as new protests erupted.

As a result, fear now stalks what has been one of Asia’s most civically vibrant cities. The police no longer need search warrants to monitor suspects or seize their assets. Activists are deleting their Twitter accounts and writers are deleting their posted articles from news sites.  Booksellers confess to being “paranoid” that their customers could be government spies.  And, the New York Times reports, “A museum that commemorates the 1989 Tiananmen Square massacre is rushing to digitize its archives, afraid its artifacts could be seized.”

To be sure, Hong Kong’s brave democrats are not simply bowing in the face of Beijing’s bullying.  Over 600,000 people turned out in mid-July for a remarkably disciplined and well-staged primary election organized by the pro-democracy camp to choose its candidates for the September Legislative Council elections.  The vote took place in defiance of official warnings that it might violate the new national security law.  Protests continue, and pro-democracy activists vow to carry on the struggle at the ballot box and on the streets.  But tactics must now be more creative and oblique (blank posters now sometimes stand in place of explicit statements of resistance).  A few opposition figures have already left, and as the vise tightens, more people will emigrate.  Beijing’s strategy is to instill fear, demoralize opposition, compel submission, coopt the wavering, and gradually increase repression until Hong Kong’s robust society realizes that resistance is futile.  But this is not simply Beijing’s strategy for Hong Kong, it is the means by which it seeks to secure dominance over all of Asia.
 

Believing now that they have finally secured Hong Kong’s submission, China’s communist leaders are looking to the South China Sea as their next conquest.  A cursory review of a map showing China’s so-called “Nine-Dash Line” reveals the absurdity of its sovereignty claims to over 85 percent of these waters, which include rich fishing and mineral rights, as well as sea routes through which one-third of all global shipping passes.  Most of the Nine-Dash Line veers far from the Chinese mainland deep into the proximity of Vietnam, Malaysia, Indonesia, and the Philippines; this was recognized in 2016 by the Permanent Court of Arbitration in The Hague when it upheld a case brought by the Philippines against China’s expansive claims.  Nevertheless, China has spent the last several years militarizing the South China Sea, in part by creating islands from dredged sand and then converting them into military bases.

As geopolitical experts Robert Manning and Patrick Cronin have recently observed, China has also been seeking “to coerce its maritime neighbors to abandon their claims and territorial rights under international law and irrevocably alter the status quo.” Increasingly, China harasses fishing boats from the other four countries, sinking a Vietnamese fishing boat in disputed waters in April.  It also threatens oil and gas projects in waters that lie within the exclusive economic zones of Malaysia and Vietnam. The escalating maritime harassment, Manning, and Cronin write, is stoking fears “that China is trying to disrupt and gradually strangle Malaysian and Vietnamese oil and gas operations in the area and erase their territorial claims.”

Although the Obama Administration nominally backed the ruling in the Hague as “final and binding,” a more vigorous American posture is now needed.  In early July, Secretary of State Mike Pompeo dismissed China’s territorial claims in the region as “completely unlawful,” while two American “aircraft carrier strike groups” sailed into the South China Sea.  These are the kinds of actions that will need to continue in order to deter and contain China’s aggressive intent.

For it is not only Hong Kong and the rich, strategic waters of the South China Sea over which Beijing is determined to extend its dominance. It is also Taiwan, which the CCP leaders have always claimed is a renegade province that must be reunited with the mainland.  Every Chinese leader since Mao has vowed to achieve this.  But in the post-Deng era of “hiding strength and biding time,” no ruler seriously contemplated using force to resolve the question absent a declaration of independence from Taiwan.  That may now be changing for three reasons.

First, the era of China’s communist leaders “biding their time” on the global stage is over. They now seek to upend the postwar liberal order, to remake international institutions and norms, and to restructure the balance of power in Asia and beyond.

Second, in contrast to his two predecessors, who left power after two five-year presidential terms, Xi has done away with term limits and plans to rule for life. Thus, he can no longer pass the Taiwan “problem” on to his successor and claim he “inched” the CCP’s prospects forward. For his domestic legitimacy, and to realize his ambitions for China’s global rise, he must “recover” Taiwan before it slips away.  And,

Third, Xi may now realize that the “United Front” tactics of penetration, propaganda, corruption, and cooption will not pluck Taiwan away from the west. That scenario looks especially unlikely in the wake of the crushing defeat of the KMT Party’s Beijing-friendly presidential candidate, Han Kuo-yu, in Taiwan’s January 2020 presidential election; and this was further emphasized by Han’s ignominious “voter recall” from his position as Mayor of Kaohsiung.  The CCP now senses that no amount of money, misinformation, infiltration, or coercion is going to lure Taiwan into the political arms of the CCP.  And that’s particularly true after events in Hong Kong recently proved the idea of “one country, two systems” to be a grotesque fraud.

For these reasons, the coming years will present the greatest challenge to peace and security in Asia since at least the Vietnam War.  In an important and insightful new Foreign Affairs essay, Michael Green and Evan Medeiros, who served Presidents George W. Bush and Barack Obama respectively, as National Security Council Senior Directors for Asia, ask “Is Taiwan the next Hong Kong?”  They observe that the danger of countries annexing former possessions increases when they know they can get away with it.  For instance, when “Putin decided to invade Ukraine and annex Crimea in 2014, he was drawing on lessons from his 2008 invasion of Georgia.” The lack of a decisive Western response in Georgia “created a permissive environment for the Crimean invasion.” According to Green and Medeiros, China’s leaders will weigh the U.S. response in Hong Kong when they consider “future aggression in Asia.”  Notably, they have already begun dropping the “peaceful” part of “peaceful unification” in some of their public speeches about the future of Taiwan.
 

This is particularly ominous when we consider a momentous historical parallel: Hitler’s seizure of the whole of Czechoslovakia, obliterating the September 1938 Munich Agreement in much the same way Xi has negated the Sino-British Joint Declaration promising Hong Kong autonomy through 2047.  One of America’s most respected China scholars recently stated, “I look at Hong Kong now as Czechoslovakia, and an assault on Taiwan would be the equivalent of Hitler’s invasion of Poland.”

Wishful thinkers thought Hitler would be satisfied with a part of Czechoslovakia called the Sudetenland. Next, they imagined he would be satisfied with the whole thing.  But then he invaded Poland.  And less than a year after that he had taken over almost all of Western Europe, was ready to bomb London and was planning to invade the Soviet Union.  The rest of that story describes the most destructive war in human history.

That is why the Munich Agreement has ever since been synonymous with international appeasement and blunder.  It shows that there is no greater folly than trying to appease an authoritarian aggressor.  And that’s what is at stake now in East Asia!

That is why it so imperative for the United States to stand resolute in support of Hong Kong’s autonomy and democratic rights.  And, rather than using COVID19 pandemics and the current racial conflicts as excuses to look inwardly, we need to recognize that both were either enabled or exacerbated by China.

That is why the west must impose serious sanctions on the leaders of China and Hong Kong who are responsible for the assault on those rights.

That is why we must work with our allies across the Indo-Pacific region and NATO

• to counter Chinese bullying and intimidation
• to ensure open sea lanes, and
• to ensure the peaceful resolution of disputes.

And that’s why we must leave no doubt in the minds of China’s leaders that we will, in the words of John F. Kennedy, “pay any price” and “bear any burden . . . in order to assure the survival and success of liberty” in east Asia, and in other parts of the world in which China acts to impose its will and displace western influence.

Given this trend, we offer the following forecasts for your consideration.

First, the nations of the world will coalesce into three distinct groups based on common interests and values.

One group will align with the United States, a second group will align with China, and a new “Non-Aligned Movement” will seek to benefit from the competition between the two “superpowers.”  While Britain refused to embrace Czechoslovakia in 1938, the United will move to guarantee the sovereignty of Taiwan and support the people of Hong Kong.  Meanwhile, the implosion of Hong Kong will damage the Chinese economy and create a public relations disaster for China.  As a result, China will be able to recruit only “Pariah and orphan states” into its orbit.  The geopolitical realities are spelled out in trend #2.

Second, using America’s overwhelming military and economic power, the administration will force the PLA increasingly into confrontations where it will be forced to back down.

This will undermine China’s credibility and force it to spend heavily on defense at a time when it faces intense economic pressure from international sanctions. This means focusing on China’s strategic vulnerabilities while exploiting massive and sustainable qualitative and quantitative advantages that the United States and its allies have in terms of sea, air, and space power.  To enable this, the United States will reinvigorate its National Defense Industrial Base as explained in trend #5, this month.

Third, the United States and its allies will make China pay a big price for running rough-shod over the people of Hong Kong and its related treaty obligations to the West.

The administration has been waiting for exactly such a pretext to unleash the full power of economic and political warfare against China.  As we’ll soon see, the CCP cannot survive without the OECD, but the reverse is not true.  This will be explained further in trend #3, this month.

Fourth, intensifying economic and political warfare against China and its allies will accelerate the exodus of multinationals from China benefiting the rest of East and South Asia, as well as North America.

 
Except for a few high-end brands, a lucrative Chinese consumer market has never materialized for multinationals.  Meanwhile, labor costs have risen and tariffs are making it harder to export.  As a result, most multinationals were planning to curtail operations in China, even before the COVID19 pandemic and the crackdown on Hong Kong.  Increasingly, the only arguments for staying in China will involve irrelevant “sunk costs.”  Meanwhile, the coming reconfiguration of global supply chains will be a boon to other Asian economies and solidify the American-led alliance.

Fifth, the Sino-American Cold War will become an important issue in the 2020 elections.

As we’ve predicted, the arrival of a vaccine and the continued decline of COVID19 deaths in the United States will refocus the public on broader issues.  As the threat recedes, Americans will want to know how we prevent another “CCP-caused pandemic”; how we ensure that we aren’t dependent on another country for our medicines; and how we punish those who did this to us.  Meanwhile, the administration will drive home China’s ongoing cyberwarfare, public disinformation campaigns, and industrial espionage programs.  The social justice obsessed Democrats seem ill-prepared to address these broader geopolitical realities. And,

Sixth, most U. S. businesses, consumers, and workers with benefits from the Sino-American Cold War.

As we saw in the 50s and 60s, a Cold War can be good for an economy.  First, the civilian application of defense technologies will super-charge the deployment phase of the Fifth Techno-Economic Revolution and largely side-line a major competitor.  Re-shoring American manufacturing jobs and ending the theft of U. S. intellectual property will be a net plus for American businesses and their workers.  According to an analysis by Bank of America, each of the millions of direct labor jobs in manufacturing, which will return to the United States, will create six indirect jobs across the economy.  Furthermore, relocating supply chains to new locations in Asia as well as Latin America will give multi-national companies greater resiliency and increased negotiating leverage.  Meanwhile, the United States is unlikely to lose any significant sales of agricultural or energy products because China’s shift to other suppliers will simply mean that other consumers will turn to us.  In fact, the aging Chinese consumer is less appealing to most firms than the young consumer in India or Vietnam.

References

1. The Atlantic. May 2020.  R. McMaster.  How China Sees the World And how we should see China.
https://www.theatlantic.com/magazine/archive/2020/05/mcmaster-china-strategy/609088/

2. MisInformation Review. June 8, 2020.  Vanessa Molter & Renee Diresta.  Pandemics & propaganda: how Chinese state media creates and propagates CCP coronavirus narratives.
https://misinforeview.hks.harvard.edu/article/pandemics-propaganda-how-chinese-state-media-creates-and-propagates-ccp-coronavirus-narratives/

3. Journal of Democracy. July 2020.  Nedege Rolland.  China’s Pandemic Power Play.
https://www.journalofdemocracy.org/articles/chinas-pandemic-power-play-2/

4. The American Interest. July 17, 2020. LARRY DIAMOND.  The End of China’s “Peaceful Rise.”
https://www.the-american-interest.com/2020/07/17/the-end-of-chinas-peaceful-rise/

5. Hoover Institution Press. August 1, 2019. Larry Diamond & Orville Schell.  China's Influence and American Interests: Promoting Constructive Vigilance.
https://www.amazon.com/Chinas-Influence-American-Interests-Constructive/dp/0817922857

6. Financial Times. December 11, 2013.  David Pilling.  No one is immune from Beijing’s ‘gravity machine.’
https://www.ft.com/content/32470bd8-619d-11e3-b7f1-00144feabdc0

7. The Wire China. JUNE 7, 2020. Orville Schell.  The Death of Engagement.
https://www.thewirechina.com/2020/06/07/the-birth-life-and-death-of-engagement/

8. com June 30, 2020.  Helen Regan.  China passes sweeping Hong Kong national security law.
https://www.cnn.com/2020/06/29/china/hong-kong-national-security-law-passed-intl-hnk/index.html

9. The New York Times. July 1, 2020.   In Hong Kong, Arrests and Fear Mark First Day of New Security Law.
https://www.nytimes.com/2020/07/01/world/asia/hong-kong-security-law-china.html

10.  China Power. October 10, 2019.  China Power Team. How much trade transits the South China Sea?
https://chinapower.csis.org/much-trade-transits-south-china-sea/#:~:text=The%20United%20Nations%20Conference%20on,one-third%20of%20global%20shipping

11.  July 12, 2016. Stephen McDonell.  South China Sea: Tribunal backs case against China brought by Philippines.
https://www.bbc.com/news/world-asia-china-36771749

12. Foreign Affairs. July 8, 2020.  Michael Green and Evan Medeiros.  Is Taiwan the Next Hong Kong?
https://www.foreignaffairs.com/articles/east-asia/2020-07-08/taiwan-next-hong-kong