There is a dominant train of thought in Washington policy circles — perhaps even a consensus now — that the US is engaged in a great power competition with China. It is explicitly stated in the Trump administration’s strategy documents. It is bi-partisan. And it is well-reflected in a frenzy of China-focused legislative proposals over the last couple years — some of which are actually good ideas.
Indeed, the US and China do have fundamental disagreements about the shape of the international order, and several diametrically conflicting regional interests — most notably over the future of Taiwan, but also the South China Sea, East China Sea, the Mekong and other areas.
Taken as a whole, very clearly, the Chinese are pursuing a hegemony in the Western Pacific that the US cannot and will not abide.
What’s more, the rivalry is compounded by opposing founding philosophies involving the relationship between man and the state/party. For this reason, Americans and their government are always going to have something to say about the rights of the Chinese people. This extends, then, the tension to areas like Tibet, Xinjiang, and Hong Kong. It makes religious liberty an issue.
The US must challenge Beijing across the full range of these interests and values. Not only this, but the US must marshal and deploy its resources across domains — diplomatic, information, and military — to best position it to do so.
Those who believe this we can fairly call “China hawks.”
However, one domain often listed among these three, “economic,” doesn’t belong. It doesn’t fit because in the American system, economy is not a function of government. It belongs to individuals making investment decisions and trading with one another, within borders and beyond them. It involves risk which these persons willingly take for gains they are entitled to for their trouble.
When the government interferes in these decisions, it compromises the virtue of the free market and arbitrarily distorts its outcomes to deleterious, often unintended effect.
Let’s look at a few examples:
1) The US government today is aggressively pursuing a trade offensive against China. The expressed objective is variable. It is one of the following: Curbing the theft of intellectual property, a geopolitically-motivated decoupling of the US and Chinese economies, correcting the trade deficit, or increasing federal revenues.
The first, protecting intellectual property rights, is a laudable cause with a policy approach that is failing. After two years, there is still no agreement to stem China’s abuse.
The second, decoupling, is not possible. Note the latest report by Rhodium that American investment in China is actually up this year. Perhaps this is behind President Trump’s misguided demand that American companies disinvest. It’s like wage and price controls. Once the government starts trying to dictate economic outcomes, the effort assumes its own freedom-sapping logic.
The third, the trade deficit, is principally attributable to structural problems in America’s own economy and should otherwise not be a cause for concern.
The final, raising money for the government, is actually working. But, like anytime taxes are raised, money is being taken out of the pockets of Americans who could better spend it on their own. Not incidentally, it is also provoking retaliation that is hitting certain sectors harder than others, and in fact, pushing farmers onto the dole.
2) The BUILD Act signed into law in just last year combines government business support and financing services into one new wholly-owned government corporation, the IDFC. Most notably, the act doubles to US$60 billion the liability available for government loans, guarantees, and investment insurance, and permits the government to take minority equity positions alongside private investors. The purpose is to leverage the American private sector into places of strategic importance that would not otherwise attract investment.
This is like “mom and apple pie” to American geopoliticians. There is virtually no dissent among them. Yet, nowhere in the statute is the word “China” even mentioned. Moreover, the BUILD Act’s biggest selling point is that it costs nothing because it does not spend money; it just incurs liabilities. This is dubious. If the purpose of the BUILD Act is to compete with China, the IDFC is going to have to compete in riskier places. It’s very likely, therefore, that it’s either going to throw good dollars after bad yuan or just add gravy to company bids in areas of little strategic importance. This, in a world full of private credit options.
3) The third example, action taken against leading Chinese tech companies like Huawei (華為) and ZTE (中興), is more complicated. The US government is absolutely right to ban genuine security threats from its procurement processes. It is right to prevent these same companies from participating in the buildout of the nation’s 5G network, as well, if it has good reason to suspect a serious threat to its communications network. And it is right, for security reasons, to control American exports to these same companies. That’s what export controls are all about.
It has to be kept in mind, however, that these moves all come at a cost to Americans — in the availability of market-enabling telecommunications technology and in domestic economic impact. The US should stay open to the possibility of a compromise that can fully address security concerns while minimizing consequences for American businesses and consumers. Technology changes. US policy should be prepared to change with it.
Look, there is no question that China and the US are competitors. Any doubt about this should have been resolved many years ago. However, when the Administration and Congress bring economics into the strategic competition, they tread on ground that should be left to individuals. Those who think the US must restructure its own economy by government fiat because that’s what the Chinese do should have the courage of their convictions. The contradictions inherent in “market socialism” will condemn China to chronic underperformance, unless and until it resumes reform. In the meantime, the US can push back — much harder than in the past — in the specific areas where its interests and values are implicated. We don’t need to jeopardize our own economic freedom to do that.
Walter Lohman is director of the Heritage Foundation’s Asian Studies Center.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under