Joseph V. Micallef is a best-selling military history and world affairs author, and keynote speaker. Follow him on Twitter @JosephVMicallef.
The COVID-19 pandemic has brought U.S.-China relations to a multi-decade nadir.
The Trump administration has sharply criticized Beijing for its handling of the novel coronavirus pandemic and has called on American companies to repatriate their China-centered supply chains. President Donald Trump even mused publicly that perhaps the U.S. should abandon his administration's trade agreement with China and "cut China ties."
The state of Missouri is suing the Chinese Communist Party for damages resulting from the pandemic, and legislation has been introduced on Capitol Hill to punish China for the damage to the U.S. economy, possibly by canceling U.S. government bonds held by China's Central Bank.
U.S.-China relations have been deteriorating for several years, arguably ever since Chinese President Xi Jinping unveiled a more aggressive Chinese foreign policy in 2013.
In January 2019, the Pentagon's National Defense Strategy (NDS) elevated Russia and China to the status of near-peer rivals and labeled both countries as revisionist powers whose attempts to remake the international system pose "the central challenge to U.S. prosperity and security."
The COVID-19 pandemic was not the cause of the deterioration in U.S.-China relations, but it has contributed to it, further aggravating relations between Beijing and Washington.
What will U.S.-China relations be like after the COVID-19 pandemic? What does Beijing really want and how should Washington respond to the Chinese challenge?
The COVID-19 Pandemic and Sino-American Relations
There is no question that the first case of human infection from the SARS-CoV-2 virus occurred in China. It's unclear whether the outbreak was the result of a zoonotic transmission that occurred in the Wuhan "wet market," the result of an accidental escape from the Wuhan Institute of Virology or some other, still unknown, explanation.
The issue is what did Beijing know, when did it know it, and when did it share it with the rest of the world? Initially, based on the information supplied by Chinese medical authorities, the World Health Organization advised member countries that the disease was not spread by human-to-human contact. The reality proved quite different. The disease, it turned out, was very contagious.
Beijing's critics have faulted China's response on three counts.
First, they claim that China deliberately suppressed information about the disease outbreak, caused samples of the disease pathogen to be destroyed to keep it out of the hands of Western scientists, and knowingly spread false information about the outbreak in order to allow Chinese medical authorities to stockpile critical supplies and medical equipment.
It's unclear whether China's actions were the result of ignorance about the true nature of the disease, not altogether surprising for a new pathogen; bureaucratic confusion and suppression of information by local officials; or a deliberate decision by Beijing to forestall warning the international community.
Secondly, Beijing's critics argue, China failed to curb international travel out of Wuhan, even though it halted domestic travel from the city. Is this a case of bureaucratic ineptitude, or did Beijing, as its critics assert, once it realized the extent of the economic damage the virus would wreak, deliberately allow its citizens to travel abroad to seed the virus around the world and level the economic playing field? Between November and January, millions of Chinese citizens, including residents of Wuhan, traveled to the United States and Europe, furthering the global spread of the virus.
Thirdly, Beijing's critics contend the Chinese government has refused to provide critical information about the disease, forbade Western scientists from visiting Wuhan and has attempted to deflect public attention from its role, whether inadvertent or intentional, in the spread of the disease. At one point, the Chinese government even tried to argue that, "while the disease was first identified in China, that did not mean it had originated there," and claimed that the disease pathogen had been deliberately introduced by "U.S. bio-warfare agents" posing as military athletes during the World Military Games held in Wuhan in October, in order to "cripple the Chinese economy."
Even under the best of circumstances, these suspicions would have posed a significant challenge to Sino-American relations. Coming, as they have, after almost a decade of steadily escalating tensions, they have resulted in a sharp deterioration in relations between Washington and Beijing.
Does China Want a New World Order?
It is tempting to see in the deterioration of U.S.-Chinese relations a repeat of the breakdown of the U.S.-Soviet alliance after World War II and the subsequent emergence of the Cold War.
The comparison is misplaced. The competition with the USSR was predominantly military and diplomatic. The Soviet Union was not deeply integrated into the capitalist economic system. It was an exporter of raw materials to the West, especially oil and gas, and an importer of Western technology, when it could obtain it. Outside of the military sphere, there was little that Soviet industry or technology produced, especially when it came to consumer goods, that the West was interested in.
China, on the other hand, poses little military threat to the United States at this time. It certainly poses a threat to its East Asian neighbors, especially to regions where it feels it has a historic claim -- most notably Taiwan and portions of the South and East China Seas that are held by adjoining countries.
China does have a nuclear arsenal of around 90 intercontinental ballistic missiles, 66 land-based and 24 submarine-based. The U.S. arsenal, by comparison, is almost five times larger. China can use its military to intimidate its smaller neighbors, but its ability to project military power globally is limited. Against U.S. forces, it is still outclassed and likely will be for the foreseeable future.
China's power is economic rather than military, even though its economic rise has financed a massive modernization of its military forces. It's the world's single largest consumer of most commodities, especially petroleum and most base metals, and its relentless urbanization will likely continue that role. With a 2018 gross domestic product of roughly 13.6 trillion USD, it is the world's second largest economy, and is about two-thirds the size of the U.S. China represents about 16% of global output, up from 2% in 1980.
With a GDP of $20.8 trillion, the U.S. represents about 25% of global output. That percentage has been relatively stable. In 1960, the U.S. represented 28.7% of global GDP. The U.S. became the world's largest economy in 1871, when it represented 8.9% of global GDP, and it has retained that position to this day. Based on current growth rates, the U.S. will remain the world's largest economy for at least the next decade.
After becoming chairman of the Chinese Communist Party (CCP) in 2012, Xi Jinping articulated a broad set of objectives for China that he termed the China Dream. The details of the China Dream have never been specifically defined. At its core is the goal of rejuvenating China, politically, socially, economically and militarily. The idea of the China Dream -- of restoring China's great power status after a period of weakness and chaos -- is not new. It's a recurring theme in Chinese history and literature.
According to Xi, the China Dream revolves around the Two Centenaries: transforming China into a "moderately well-off society" by doubling per capita GDP between 2010 and 2021, the 100th anniversary of the founding of the CCP, and transforming China into a fully developed nation by 2049, the centenary of the founding of the People's Republic.
The Dream would make China the leading country in the world economically, diplomatically, militarily and scientifically. It would result in a China-centric world order with many of the world's economies revolving around and closely integrated with China. The China Dream is not specifically anti-American or anti-Western, but the role that China aspires to would displace the U.S. and Europe from the roles they currently play in the world.
H.R. McMaster, Trump's former national security adviser, has described Beijing's tactics as:
"The party has no intention of playing by the rules associated with international law, trade, or commerce. China's overall strategy relies on co-option and coercion at home and abroad, as well as on concealing the nature of China's true intentions. What makes this strategy potent and dangerous is the integrated nature of the party's efforts across government, industry, academia, and the military."
To achieve this dream, Beijing is rapidly modernizing its military, while also developing the ability to project military power and to secure military bases around the world to facilitate this. It now has two aircraft carriers, with three more under construction. When fully deployed, China will have the second largest carrier fleet. The U.S. has the largest, with 11 conventional carriers and another 9 amphibious assault ships, sometimes considered light aircraft carriers, with flight decks for jets and helicopters.
Much of China's current military efforts focus on denying U.S. forces operational access to China's periphery, in particular the South and East China Seas, and to a lesser extent the Western Pacific and the Eastern Indian Ocean. Chinese military strategists have argued that China should push the U.S. military back to what they term the "third island chain," essentially clearing it from the region west and north of Guam.
China's economic ambitions revolve around the continued modernization of the Chinese economy and specifically on leap-frogging U.S. companies in key technological domains like 5G telecommunications equipment, quantum computing, AI, robotics and biotech. These are seen as transformative technologies whose deployment will radically shape the global economy over the next century.
Xi's China 2025 initiative intends to make it the global technology leader by 2025. To that end China has pursued a number of interlocking policies, from sending 360,000 Chinese students to study in American universities, to massive investment in research and development, mostly internally, but also indirectly via American venture capital, to outright theft of the intellectual knowledge of Western companies.
The de facto technological race between the U.S. and China has been underscored by American efforts to limit Chinese telecommunications company Huawei access to U.S. technology and to persuade other countries not to adopt Huawei's 5G network equipment for fear that it would be a backdoor for Chinese intelligence agencies to spy on Western telecommunications traffic.
Huawei is just the tip of the iceberg. There is a de facto competition between the U.S. and China to develop the first COVID-19 vaccine, a competition underscored by the FBI's warning that Chinese firms are attempting to steal U.S. medical research pertaining to a vaccine. As China further develops its homegrown technology, additional conflicts will emerge between Chinese companies and their American competitors.
China is both the world's largest commodity importer and, potentially, the world's largest consumer market. Beijing has proven to be extremely adept at leveraging access to China's markets to extract technology and economic concessions from other countries and to expand its political and diplomatic influence.
Criticism of China's policies brings swift retribution. When Daryl Morey, the general manager of the NBA's Houston Rockets, tweeted his support for the Hong Kong protesters, China's state broadcaster, CCTV, suspended its broadcast of team games and several Chinese companies canceled their sponsorship agreements. The move cost the Rockets tens of millions of dollars.
Likewise, efforts by Australia's government to call for an international independent investigation of China's handling of the COVID-19 pandemic quickly brought an 80% retaliatory tariff on Australian barley exports to China and a suspension of meat imports.
This potential censorship is particularly worrisome when you consider that every major American broadcast news network is owned by companies that have extensive business interests in China. Beijing does not need a heavy hand; American business executives are well aware that criticisms of China's policies will result in significant economic retaliation.
China's political and diplomatic soft power has been enhanced by its economic success, its efforts to curry influence in international organizations, as well as far-ranging initiatives like the Belt and Road Infrastructure projects it has funded throughout the world, or the creation of China's Asian Infrastructure Investment Bank.
Beijing has also been particularly adept at currying favor with the universal solvent of cash. Chinese grants to Western universities, often through the framework of China's ubiquitous Confucius Institutes, plus the leverage of Chinese student tuitions, has meant that many universities have avoided criticizing Beijing and have ignored Chinese theft of academic research. Chinese students spend more than $10 billion a year on tuition at U.S. universities.
Likewise, China has curried favor with America's political elites by offering family members lucrative opportunities to invest in China. This issue cuts across both political parties. U.S. intelligence agencies have warned that Beijing is engaged in a massive, multibillion-dollar effort to cultivate influence in the U.S., spanning the gamut from lucrative bilateral deals with American media companies to using social media platforms like LinkedIn to persuade Americans to post comments favorable to China. These efforts are in addition to what the FBI has described as a massive Chinese intelligence operation in the U.S.
What would a China-centric world look like? Presumably, it would hold sway in East Asia and dominate the region, economically, militarily and diplomatically. Chinese companies would be even more visible, especially in Africa and South America. Life in the U.S., for the most part, would appear unchanged. The U.S. dollar would lose its role as the world's preeminent currency, but it would still be an important reserve currency -- although Washington's ability to finance its deficits would be constrained and its ability to impose economic sanctions as an instrument of its foreign policy would be curtailed. Likewise, America's ability to fund its defense budget would also be limited and likely result in a smaller military force.
Meeting China's Challenge
How should the U.S. respond to China's efforts to remake the international system?
First, the U.S. needs to reduce its dependence on Chinese-centered supply chains for items that are critical to American national security. This spans the gamut from antibiotics to medical supplies to electronic components.
On the other hand, China is a major global market, and it is not in America's interest to cut itself off completely from Chinese consumers. Selling China soybeans or Jack Daniels, or importing Chinese textiles does not come with any national security concerns. American consumer brands are very popular in China because they are seen as safer and more reliable than many domestic brands. Its status as China's largest export market gives Washington considerable leverage with Beijing.
Moreover, repatriating supply chains poses varying degrees of difficulty. In some cases, it's a straightforward process: simply switching from a Chinese supplier to an American one. There is no reason, for example, why the U.S. can't be self-sufficient in personal protective equipment. There are plenty of American manufacturers of these items, they simply need to expand their capacity. The prices might be higher, but that's the cost of security of supply.
In other cases, repatriating supply chains is more complicated. China is the world's principal supplier of rare earths. Until other sources are developed, there is no alternative. U.S. companies have approximately $120 billion of direct investment in China, predominantly in the form of joint ventures. Mostly, they produce goods geared to China's domestic market, but some items are exported to the U.S. These joint ventures are not easily unwound. Doing so precipitously only means that Chinese joint venture partners end up buying U.S. interests for pennies on the dollar.
At the same time, the U.S. needs to continue to put pressure on China for a more balanced trade relationship. Excluding its trade with China, the U.S. trade balance is largely even. In 2019, the U.S. trade deficit was $616 billion, two-thirds of which was represented by China. Excluding China, that deficit is only about one percent of GDP.
Secondly, the U.S. should insist on reciprocity in its relationship with China. It's ludicrous that Chinese companies can register on U.S. stock exchanges and raise money from American investors but are exempt from adhering to the same rules of transparency and financial disclosure that U.S. companies must meet. In some cases, that has meant that American investors have financed factories that turn out military equipment that someday might be used against the U.S. or its allies.
Likewise, China has a much freer hand to operate here than the U.S. has in China. The U.S. has nothing like the Confucius Institutes that China is allowed to operate in the U.S. Washington should insist on the right to set up "Jefferson Institutes" in Chinese universities or close the Confucius Institutes. Likewise, Chinese State Television can operate its own broadcast news network, China Global Television Network (CGTN) in the U.S., while Washington has nothing remotely similar in China.
The Trump administration has already moved to limit Chinese venture capital investments in U.S. high-tech startups, although some investments still take place. However, according to The Wall Street Journal, China has used its Thousand Talents Plan and hundreds of similar programs to pay "scientists around the world to moonlight at Chinese institutions and facilitate technology transfers to Chinese Universities, often without disclosing the work to their primary employers," even though the primary funding is coming from U.S. government sources.
Simply put, the U.S. should insist on the same degree of access to China's society and economy as it grants to Beijing in the U.S. If that's not forthcoming, then it needs to limit China's access.
Thirdly, insisting that China must play by the same set of rules as the rest of the developed world must be a U.S.-led multilateral effort, otherwise it secedes too much of the diplomatic arena to Beijing, and allows it to play the U.S. off against Europe. That means an America First policy of unilateralism is less effective. One unintended consequence of the COVID-19 pandemic has been widespread international criticism of Beijing's behavior and lack of transparency. The Trump administration needs to marshal that consensus into a broad international coalition to hold Beijing accountable for its behavior.
Fourthly, Henry Kissinger once observed that a key goal of U.S. foreign policy is ensuring that China and Russia do not value their own relationship more than they value their bilateral relationship with the U.S. Russia may still have a vast nuclear arsenal, and is desperately trying to hang on to the vestiges of great power status, but it no longer poses the kind of military threat it once did to the U.S. and Europe. Its ability to undermine U.S. interests around the world and to stymie the objectives of American foreign policy, however, especially in places like Venezuela or the Middle East, remains significant.
Over the last decade, Russian President Vladimir Putin has played a weak hand brilliantly, creating the illusion of Russian resurgence and military might. In the long term, Moscow has as much to fear from Chinese ambitions as does the U.S., especially given the continued expansion of Chinese influence in central Asia.
The U.S. needs to reset its relations with Russia. That means a reconciliation with the Putin government and, however disagreeable the U.S. might find the Kremlin kleptocracy, with Moscow's ambition to maintain a sphere of influence in the peripheral states of the former Soviet Union -- what it calls the Near Abroad.
Fifth, the U.S. must abandon the charade that Taiwan is not a sovereign country. As a modern, democratic state, it deserves American support and recognition. Indeed, its most important future role is to serve as an example to China's citizens of what they should aspire to be.
McMaster has argued that Beijing sees a narrow window of time in which it could refashion the international system to its liking before a rapidly aging population and mounting economic problems limit its options. Notwithstanding its impressive growth, China's economy has serious structural flaws that Beijing has been unable to fix and only deferred their consequences by ever rising levels of debt. Eventually, that strategy will run out of runway.
Moreover, it's likely that Sino-American relations will emerge as a significant issue in the 2020 U.S. elections. American voters will look for someone to blame for the damage wrought by the pandemic. The Trump campaign appears to be testing the "Blame China" theme. If China becomes an issue in the election, it will lead to a further deterioration in U.S.-China relations. So, too, will China's confrontational policies in Hong Kong and, most recently, along the Indo-Chinese border.
When China emerged from behind the "Bamboo Curtain," the presumption among Western leaders was that a modern, successful China would become more liberal and democratic. Forty years later, it's obvious that is not the case. Economic modernization has instead enhanced Beijing's authoritarianism.
Rather than becoming more like the rest of the modern world, China is trying to refashion the rest of the world to be more like China. The United States must ensure that an all-pervading, high-tech surveillance-based authoritarianism does not become China's most successful export.
The future of the American Republic depends on it.
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