Xi Jinping

On virtually every front—from trade and investment to technology and innovation—it has become clear that the U.S.-China relationship has entered a new, increasingly contentious period marked more by overt confrontation and competition than by coordination and cooperation.  In testimony before the House Committee on Foreign Affairs, C. V. Starr Senior Fellow and Director for Asia Studies Elizabeth C. Economy argued “smart competition” means the U.S. must know what it is competing for, understand its competitor, and marshal the necessary resources to achieve its objective. While the Trump administration and Congress deserve credit for identifying and responding to many of the new threats posed by Xi Jinping’s China, the current strategy is falling short. To be successful and compete smartly, the administration must move beyond its reactive and defensive strategy to adopt policies that reflect a more sustainable path to effective competition with China. To hear Dr. Economy’s testimony on how the U.S. can best do this, watch here.

A new memo from the Center for Preventive Action by Michael S. Chase details how the United States can prevent a cross-strait crisis or de-escalate one should it occur. 

Forty years of finessing Taiwan’s status may be coming to a dangerous end.

Vice President Mike Pence’s October 4 speech on China, which many commentators have referred to as the administration’s defining China moment, was a leaden litany of Chinese vices and a hyped-up assessment of the U.S. role in shaping Chinese history. The United States did not, as the vice president claims, derail China’s stock exchange nor did it rebuild China over the past 25 years. The responsibility for both of those rests squarely with China itself. Nevertheless, the Trump administration has an important story to sell around U.S. policy toward China—and more broadly toward Asia—that is more multilateral and principles-based than is immediately evident. Yet the White House does not know how to tell the story, much less sell it. Notwithstanding the rhetoric of competition and containment, the administration has recognized that the true challenge China presents is not fundamentally one of a rising power threatening to replace an established power. Instead it is the challenge that China poses to the fundamental principles embraced by market democracies globally: free trade and open markets, freedom of navigation, and good governance (as defined by the rule of law, transparency, and individual civil and political liberties). This is expressed broadly in the concept of the Free and Open Indo-Pacific Strategy (FOIP), which has been championed by Japan, Australia, India, and the United States, and embraced in some form by ASEAN and others. Understanding the nature of the challenge is the first step toward developing an appropriate strategy to address it. The White House has also contributed to spur awareness in other countries of the need to rethink—or even to reset—China policy in the face of a Xi Jinping-led China. Take, for example, the ongoing U.S.-China trade dispute. While other countries may not support the Trump administration’s imposition of tariffs—because they don’t believe tariffs accord with global norms or will yield the outcome the administration desires—they do support the White House’s efforts to level the playing field for multinationals doing business with China. Like the United States, Germany, France, Japan, and others are unhappy about Chinese theft of intellectual property, China’s high tech industrial plan Made in China 2025, and Chinese efforts to acquire their most advanced technologies (legally or illegally). The head of the European Union Chamber of Commerce in China, Mats Harborn, while expressing concern about the ongoing tariff war between the United States and China, nonetheless stated in a June 2018 interview, “We must remember, however, that the root of the problem began in China.” Several countries, including France and Germany are now revising their investment laws, reflecting concerns similar to those of the United States with regard to protecting their countries’ core technologies from being hollowed out. In addition, the broader U.S. foreign policy bureaucracy has moved ahead to shore up multilateral partnerships—both formal and informal—in Asia and beyond. In April, a U.S. aircraft carrier made a port visit to Vietnam for the first time in forty years. In July, India and the United States called for freedom of navigation in the South China Sea and outlined a set of common principles for the region. And this September, the United States and Japan held joint military drills over the East China Sea and the Sea of Japan, flying F15 fighters and B-52 bombers over the Senkaku Islands. At Singapore’s Shangri-La Dialogue in June 2018, British Defense Minister Gavin Williamson stated that British warships will “work closely with our friends and allies across the region—demonstrating our resolve, alongside our friends, to protect international rights and freedoms.” And in early September, a British navy ship passed near the Paracel Islands in the South China Sea provoking a critical response from Beijing. The UK’s actions are an important reminder that the South China Sea is a battle sea not between the United States and China but rather between China and international law. The Hague’s international tribunal determined that China’s sovereignty claims had no basis in international law; China chose to ignore the ruling. And with regard to China’s grand-scale infrastructure initiative, the Belt and Road (BRI), the United States has joined with others to recognize the benefits and challenges of Belt and Road projects and to offer constructive alternatives where necessary. Former Secretary of State Rex W. Tillerson, for example, was early to call out the potential downsides of China’s weak environmental, labor, and economic governance for BRI host countries; and a number of countries are now scrutinizing potential BRI investments far more closely. Over the past several months, the administration has also begun to put some money where its mouth is. It has joined Japan, India, and Australia to offer alternative sources of infrastructure financing and established a new agency, the International Development Finance Corporation, to provide financing assistance to U.S. companies involved in development projects abroad. The U.S. Agency for International Development (USAID) has also announced a new initiative to provide capacity building to countries interested in understanding the financial as well as social impacts of proposed new infrastructure projects. And the European Union has revived its “connectivity strategy”—calling for linkages not only between Europe and China but between Europe and the rest of Asia. While not overtly criticizing China, the EU emphasizes “sustainability” through investments that “respect labour rights, [do] not create political or financial dependencies, and guarantee a level playing field for businesses.” Perhaps most surprisingly, the United States has not abandoned its commitment to human rights. While President Trump has not demonstrated real interest in the issue, Congress is focusing significant attention on Chinese government repression of Uighur Muslims in the far western autonomous region of Xinjiang with calls for sanctions against responsible Chinese officials, as well as consideration of sanctions against companies that contribute to China’s massive surveillance system. It has been reported, for example, that western countries have prevented Beijing from buying a laser surveillance tube that offered the highest quality picture. The equivalent Chinese product is one thousand times slower, resulting in far poorer quality pictures. At the United Nations, as well, the United States stood alongside other market democracies to criticize China’s internment camps at a November 2018 UN human rights review in Geneva. The White House has a good story to tell, but it could be better. It needs to articulate more clearly the content of the Free and Open Indo-Pacific Strategy (FOIP), which remains of interest but still mysterious to many potential allies and partners. In addition, the U.S.’s broader trade strategy in the Asia Pacific is in tatters as a result of the withdrawal from the Trans-Pacific Partnership process. The lack of a regional trade strategy leaves a three-legged stool wobbling on two legs—if not crashing to the floor. There is also the need for the United States to remember that neither cold war nor hot conflict is a desirable outcome in the U.S.-China relationship. Both Washington and Beijing need to find areas of common purpose, whether drug trafficking, public health in lesser-developed countries, standards around infrastructure investment, or something else entirely. And finally, there is a “Where’s Waldo?” quality to the administration’s China and Asia Pacific policies. With the exception of bilateral trade deficits and North Korea denuclearization, it is unclear the extent to which the president is present in the formulation and implementation of U.S.-Asia policy. For example, is he fully supportive of the concept of FOIP? Is he outraged by what is transpiring in Xinjiang? Is he committed to working with China on global issues to keep the relationship on solid footing? If he is, it would be enormously beneficial to U.S. standing in the region, as well as to U.S.-relations with its allies and partners, for him to stand-up and articulate his support. Of course, if he isn’t, it is probably better for the rest of the administration to keep Waldo in hiding for a little while longer.

This is a guest post by Sophia Lian, intern for Energy and Climate Policy at the Council on Foreign Relations.  Since the collapse of the Soviet Union, Beijing and Moscow’s shared goal of reorienting the Western-dominated global order has led them to cooperate on many fronts, including energy infrastructure and institutional development.  Despite lingering mistrust, the two countries recognize their complementary strengths and have pushed forward in their opportunistic partnership. Much needed Chinese investment in Central Asia, the Russian Far East, and the Arctic will tap vast energy stores and provide institutional support in remote locales.  As Moscow keeps wary watch over increasing numbers of Chinese migrants in its backyard, Beijing is careful to alleviate concerns of encroachment by publicly deferring to Moscow’s leaders while highlighting regional benefits of Chinese investment. In securing a foothold in Russian territory through the eastern stretch of the Belt and Road Initiative (BRI), China is laying the groundwork for future geopolitical plays.  Strategically consolidating Chinese influence through economic development in the Russian Far East, Central Asia, and the Arctic aligns with President Xi Jinping’s more activist brand of foreign policy.  Based on one’s perspective, Beijing has already been treading a fine line between Russian collaborator and competitor. Chinese Collaboration in Russia’s Backyard: Russian Far East, Central Asia, and the Arctic The Russian Far East is a region of strategic importance and historical sensitivities.  This icy region abounds with natural resources and is the site of Russia’s only warm water Pacific port (Vladivostok).  Russia’s coveted possession of a Pacific outpost was realized in the late 19th century when it successfully compelled a weak China to sign over control of the region whose loss China has not gotten over. Against this historical backdrop, Russia has closely guarded its sparsely-populated eastern hinterland, and has until recently rebuffed Chinese business forays into the region.  However, the collapse of its relationship with the West over Ukraine has left Russia little choice but to turn to Beijing for finance and economic development assistance, and Russia’s moment of weakness is opportune for an energy-hungry China eager to diversify its energy sources and enhance its strategic positioning. Economic development has been quick to come to the Russian Far East.  Chinese capital now accounts for 45 percent of the total foreign investment in the regional capital, Khabarovsk.  A little ways south in the port city of Vladivostok, Chinese money has transformed the area into a tourist center, when only a few years earlier both far eastern cities lagged far behind their European Russian brethren.  Similarly, China has taken an interest in Central Asia as a potential hub for expanding Eurasian trade flows and has secured energy development, transport, and infrastructure projects as part of its BRI.  China claims its collaboration in the Arctic will help develop the region’s untouched bounty of natural resources.  In undertaking these projects, however, Beijing contends with Russian territoriality as the Kremlin is weary of privileged Chinese access to areas that could ultimately jeopardize Russian sovereignty. Chinese Accelerating Arms Exports, Development of Traditional and Nuclear Power, and Ownership of Critical Infrastructure Arms Exports: China’s consolidation of geopolitical assets through infrastructure investment extends to the Middle East, Africa, and Europe, which could challenge Russia’s traditional role as a major energy and arms supplier.  Russia’s economy and influence is highly dependent on its energy and arms exports, whose domain its southern “frenemy” has increasingly encroached upon.  While Russia has been developing new weapons systems, China is now poised to become a dominant arms exporter after decades of copying and appropriating Russian technology, and integrating such technology into both its defense and private tech industries.  Moscow’s economy is not as resilient in that its defense-driven economy cannot fall back on civilian demand like China’s economy can (through dual-use technologies).  China is gaining ground in countries with troubled human rights records and has recently been successful in arms sales to several African countries (e.g., Algeria, South Africa, Kenya, Cote d’Ivoire) in addition to continued large sales to regional buyers Pakistan and Afghanistan.  Development of Traditional and Nuclear Power: The Kremlin has made clear its aims to become a dominant energy power in the Middle East and has recently inked several business deals in the region.  But China is close behind, staking out Mideast energy deals, especially in Iran and Iraq.  The recently acquired 80.1% stake of the South Pars gas field (taking up a 50.1% stake from French energy giant Total, which is withdrawing because of U.S. sanctions) will mean China could become a natural gas exporter in competition with Russian firms Gazprom and Novatek. The competition is direct since Russia views its energy exports as not only a means to needed petrodollars but also as a geopolitical tool to build spheres of energy dependence. China emulates the same ends via its BRI, and more recently through its planned expansion into the nuclear energy export market. China is playing the long game in this regard, and its patience has paid off as the UK has recently given the green light for the Hinkley Point C power station of which an important piece of infrastructure is Chinese.  This is hugely significant as no western country has opened up their strategic infrastructure to a non-ally in this way. Britain’s approval, which brought consternation from the U.S., could jumpstart China’s reach to the rest of the world. Beijing envisions building 30 nuclear plants along its BRI path by 2030, and though Beijing and Moscow collaborate in developing nuclear technology, Russia is sure to chafe at China’s ambitions.  Chinese activity in nuclear power directly competes with Russian natural gas sales to Europe, as do energy associated with other Chinese sources, including wind farms, exports of solar panels, and eventually battery storage. Ownership of Critical Infrastructure: China is also buying other critical infrastructure in eastern and southern Europe and Greenland, further extending its reach to the west.  Deals worth at least $255 billion across the European continent have resulted in almost 360 companies having been taken over and China also is now partially or wholly owning at least four airports, six seaports, wind farms in at least nine countries, and thirteen professional soccer teams.  Last but not least, long considered the world’s largest rare earth producer, China has a chokehold on cheap access to these essential elements, and recently concluded an agreement aligning uranium and rare earth mining activities between the Greenlandic and Chinese governments, giving China almost exclusive control of this domain. Outward Collaboration Over the previous decades, China’s influence has strengthened to the point where it can now challenge traditional hegemons like Russia -- but for now, a partnership is still preferred.  Though Moscow is wary of the myriad Chinese projects being undertaken and of the increasing numbers of Chinese migrants in its backyard, it is currently managing its insecurities quietly since it recognizes the need for Chinese capital and manufacturing expertise to tap undeveloped resources and to build needed infrastructure, partly to counter its souring relations with the West.  The two countries have thus found common cause on a number of issues, from mutual diplomatic support on the UN Security Council, to military reinforcements and economic collaboration.  Naval exercises in the Sea of Japan, South China and Baltic Seas showcase solidarity in areas of tension with Washington.  Of course, these displays are meant to project a united image that is not so sanguine under the surface.  China has, over the years, avoided inconvenient entanglements and has demonstrated its utility as a source of capital, infrastructure, and arms.  Now, stronger and under more expansionist leadership, China’s reach is set to expand much farther afield under its ambitious BRI. For now, China appears willing to refrain from overt challenges to Russia, as Beijing’s immediate need for imported raw materials and desire to focus on its BRI ambitions requires a cooperative Russia. Beijing has tried to ease Moscow’s insecurities about perceived Chinese encroachment by promising economic benefits, and staying relatively respectful of Moscow’s Eurasian security interests while it focuses on economic and industrial development.  So far, the arrangement has worked for both parties and has even led to an interesting turn of events, where Chinese troops were invited to participate in the massive 2018 Vostok war games -- Russian military exercises historically meant to prepare for border confrontations with China.  It is unlikely that Russia suddenly considers its long-time adversary an ally, but the two will continue to outwardly collaborate until it is no longer in either’s interest to do so. Future increases in energy export and investment competition in Europe and beyond could be the first signs of strain in the uneasy relationship.  

China is changing under President Xi Jinping. In my new book, The Third Revolution: Xi Jinping and the New Chinese State, I argue that Xi has taken unprecedented steps to consolidate his authority, has overseen the expansion of Communist Party’s role in Chinese political, social, and economic life, and has constructed of a virtual wall of regulations to control more closely the exchange of ideas and capital between China and the outside world. Beyond its borders, Beijing has recast itself as a great power, seeking to reclaim its past glory and to create a system of international norms that better serves its more ambitious geostrategic objectives. In the October 2018 edition of Asia Policy, reviewers David Shambaugh, Liselotte Odgaard, Yongjin Zhang, and Michael Auslin dissect the themes of the book, discuss the depth of Xi’s reforms, and debate whether a true revolution is occurring in China. I then have a chance to respond to their comments. Read the book review roundtable here.

In The Third Revolution, Economy reveals Xi Jinping’s new China model—more controlling and authoritarian at home with a more ambitious and activist role abroad—and asks us to fundamentally rethink how the United States and others approach this complex and increasingly powerful country.

The opening of a new U.S. diplomatic compound in Taipei doesn’t mark a major change in ties, but the Trump administration has taken new approaches to dealing with China over Taiwan.

Perhaps President Trump will succeed in reducing the bilateral trade deficit with China simply by reducing bilateral trade.