PacNet #59 – How the new National Security Strategy transforms US China policy

The United States has transformed its policy toward China.

This shift is not plain from the language of the National Security Strategy, released this week, even though that document identifies China as a country with “the intention and, increasingly, the capacity to reshape the international order in favor of one that tilts the global playing field to its benefit.”

Rather, the change becomes visible with the study of speeches by top administration officials, recent presidential executive orders and other actions by the US government.

Previously, the US, along with allies and partners, focused on preventing China from acquiring technology that would improve its military capabilities. The ambition is now much grander: The goal is to constrain the development of China’s high-tech economy, to thwart its rise as a challenger to US (and Western) technological supremacy.

It is a risky strategy and may instead accelerate developments it seeks to thwart.

During the Cold War and the period after, the US approach was one-dimensional—it sought to deny adversaries access to technologies that could better their military capabilities. The policy defined threats narrowly and focused on acquisition through trade.

That perspective reflected the limitations of America’s rival, the Soviet Union, which was unable to muster a challenge beyond that posed by its armed forces.

Today’s primary concern, China, poses a more formidable threat. It is not only a potential military adversary but it can compete with the United States (and the West) economically, in soft power, diplomacy and development aid, and in the contest to develop the most advanced technologies.

It is that latter capacity that is most alarming since leadership in the high-tech arena will determine which country leads the 21st-century economy.

Also worrying is the use of those technologies to construct surveillance systems capable of empowering autocrats or undermining human rights. The technologies strengthen regimes that reject democratic ideals and promote opposing ideologies.

China’s economic success allows it to evade traditional means of controlling tech transfer. China has lots of money, which it can use to invest in or buy companies, or as venture capital to set them up.

The desire by others to crack China’s huge domestic market gives the Beijing government leverage to demand tech transfer as a term of engagement. And the skills of its scientists embed them in the international collaborations that set the frontiers of technology.

US administrations have been tightening the screws for some time. One marker was the adoption, as part of the 2018 National Defense Authorization Act, of the Export Control Reform Act and the Foreign Investment Risk Review Modernization Act. They expanded and strengthened regulations of strategic trade and foreign investment in the US.

The “entities list” that the Commerce Department uses to restrict destinations of goods and technologies has grown steadily longer as more Chinese companies are added. Companies that make technologies that can be used for surveillance or repression are being added, too.

Recent decisions have made clear that the US is going further to block China’s ability to compete.

In early October, the Biden administration announced new rules to limit Chinese access to advanced computer chips and chip-making equipment. Enforcing the foreign direct product rule (FDPR) means that any company that sells advanced chips to Chinese firms or organizations working on artificial intelligence and supercomputing will require a US government license if the company uses US technology to make the chips.

Almost all significant semiconductor companies do. A Boston Consulting Group analysis concluded that there are at least 23 types of chipmaking equipment for which US companies control more than 65% of global supply, making this restriction a powerful chokepoint in the semiconductor supply chain.

That status prompted Gregory Allen of CSIS, the Washington-based think tank, to conclude that the rule signals “a new US policy of actively strangling large segments of the Chinese technology industry—strangling with an intent to kill.”

A second landmark is an executive order issued by President Biden last month that provides direction to the interagency Committee on Foreign Investment in the United States to “ensure that it remains responsive to evolving national security risk.”

This executive order, the first issued since CFIUS was established in 1975, identifies five risk factors that the committee must weigh as it evaluates a transaction: 1) supply chain resilience, 2) US technological leadership, 3) aggregate investment trends, 4) cybersecurity and 5) US persons’ sensitive data.

The second factor is the key. CFIUS must now consider a transaction’s effect on US technological leadership in sectors vital to national security—a category that currently includes microelectronics, artificial intelligence, biotechnology, quantum computing, advanced clean energy, climate adaptation technologies and parts of the agricultural industrial base with implications for food security.

“Leadership” is a broad signifier, and the sectors themselves aren’t part of “national security” as traditionally defined. National Security Advisor Jake Sullivan hammered this point home in a speech last month. First, he noted that “Preserving our edge in science and technology is not a ‘domestic issue’ or ‘national security issue.’ It’s both.”

This merging of economic security and national security has become routine and is a pillar of the national security strategy issued this week.

More intriguing is the claim that “we have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies. We previously maintained a ‘sliding scale’ approach that said we need to stay only a couple of generations ahead.”

But, Sullivan went on to say, “That is not the strategic environment we are in today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”

The US is now alert to deals “that could undermine America’s national security by blunting our technological edge.” This is the context that informs the statement in the National Security Strategy that the United States will “prioritize maintaining an enduring competitive edge over the PRC.” It signals the move away from “traditional national security concerns” that focused on military capabilities toward strategic competition more generally.

To be clear, that does not represent a complete decoupling with China. That is neither possible nor desirable. It is, however, a call to decouple at the high end, on the frontiers of new technologies where potential impacts of advances and breakthroughs are greatest.

It is risky, nevertheless. It assumes that the United States can identify technologies that are key to leadership. It assumes that the United States won’t be disadvantaged by losing access to Chinese skills and successes. (The impact of cutting off Chinese researchers could be greater than feared: if governments in Europe or Asia do not align with the United States, then their projects will be off limits to American scientists.) It also denies, to the United States, insights into what the Chinese are doing.

This policy will confirm to Chinese that their longstanding complaint that the United States seeks to block their rise is correct. Chinese officials criticized the new rules as “sci-tech hegemony” that aims “to hobble and suppress the development of emerging markets and developing countries.”  It will animate the drive to promote indigenous development and production in China. It will harden divisions between China and the United States.

The policy has no chance of success if the United States goes alone. It must have allies and partners in this effort. This has been a pillar of Biden administration policy and the National Security Strategy hammers home this simple truth.

It is not clear how far allies share this outlook, however. The European Union Strategic Outlook toward China, issued in 2019, called that country a “strategic rival,” but there are disputes among members—and even within countries—when distinguishing between “competition” and “rivalry.”

So far, however, the US and chief allies in Asia and Europe appear to be working together. It isn’t clear if that solidarity will be maintained as the new US policy becomes sharper and better defined.

Brad Glosserman (brad@pacforum.org) is deputy director of and visiting professor at the Center for Rule-Making Strategies at Tama University as well as senior adviser (nonresident) at Pacific Forum. He is the author of Peak Japan: The End of Great Ambitions (Georgetown University Press, 2019). This article is drawn from a forthcoming book on the new national security economy. 

An earlier version of this article was published in Asia Times.

For more from this author, see his recent chapter of Comparative Connections.

PacNet commentaries and responses represent the views of the respective authors. Alternative viewpoints are always welcomed and encouraged.

Issues & Insights Vol. 22, WP6 — Chinese Cyber Nationalism During the Pandemic: A Discourse Analysis of Zhihu

Executive Summary

The COVID-19 global pandemic has elicited a rise in cyber nationalism in China, as the world’s most populous nation outperformed the “scientifically” advanced western nations in the handling of the crisis. Chinese netizens on social messaging platform Zhihu cite upsurging cases of COVID-19 and death tolls in western countries as evidence of China’s zero-COVID strategy success, and have generated a new trend of Chinese cyber nationalism. Within this new trend, positive perceptions of western countries and their ideologies declined greatly. As previous studies have predicted, Chinese netizens are becoming more and more disappointed in western countries and “have no choice but to side with China.” This has also prompted China to be more confident in challenging the global narrative and seeking to guide the international order on COVID-related issues amid the China-US rivalry and thus facilitating a strong emotion of “China against the West.” However, this strong surge of emotion does not accurately translate into support of Chinese President Xi Jinping’s zero-COVID-19 policy.

About the Author

Talkeetna Saiget  a MAIA (Master’s in Asian International Affairs) graduate at the University of Hawai‘i at Mānoa, focusing on China. She received a B.A. in Japanese studies at Tsinghua University in Beijing, China. During her years at Tsinghua University, she was nominated as an exchange student to Kyoto University where she got her JLPT N1 certificate. She became increasingly interested in international relations after working at the Republic of Sierra Leone embassy in Beijing. Her research interests include China-US relations, US-Japan relations, Japan-China relations, Japanese history, and Chinese history.

YL Blog #26 – Extended Deterrence in the Age of Trump: Hardware, Software, and Malware

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2019 US-ROK-Japan Trilateral Strategic Dialogue offered an excellent forum to gauge the current strategic thinking and debates in Washington, Tokyo, and Seoul. The event comprised experts’ remarks apropos the extended deterrence in the Asia-Pacific and trilateral cooperation, as well as a two-move tabletop exercise (TTX) that brought alliance management issues to light.

The “hardware” component of extended deterrence was discussed at length, particularly the post-INF developments and implications for the region. The majority of participants agreed that INF withdrawal, albeit problematic in its execution and style, will positively contribute to countering Russian and Chinese previously unchecked advances. Putting aside the basing question, participants agreed that new missiles would strengthen the deterrence posture.

The second element, the “software,” which relies on assurance and credibility, needed more discussions and deliberations. Assuring allies that the United States will honor its treaty obligations in case of an attack is infinitely more challenging than developing a certain type of military equipment. This is what strategists and policymakers grappled with throughout the Cold War. They succeeded by supporting allies economically and politically, and by signaling unified positions despite serious disagreements that were dealt with behind closed doors. In regards to adversaries, the United States consistently communicated that an attack on an ally will automatically precipitate a devastating American response. This, indeed, is the underlying logic of deterrence: an aggressor-state is dissuaded from launching an attack on an ally, knowing that the United States will retaliate on its behalf which would negate any potential gain from launching an attack in the first place.

Since it is a part of the red theory of victory, it comes as no surprise that China, Russia, and North Korea are working hard to break the U.S. alliance structure. What is frustrating to watch is our commander-in-chief making comments that undermine allies’ confidence and play right into our opponents’ hands. For lack of a better analogy, I treat these comments as “malware.” One tweet might not unravel the alliance structure per se, but allow enough of them to roam in your system, and soon enough one will have to scrap the old and install a new infrastructure altogether.

In the recent past, few instances stand out. First, President Trump continues to downplay the importance of North Korea’s short-range missile launches, even though these missiles threaten Japan’s and ROK’s survival and security. Second, bickering over trade deals and troops cost-sharing underscores Trump’s transactional approach to foreign policy and skepticism of alliances writ large. Third, adopting North Korean lexicon and calling defensive military exercises “war games” is not just a diplomatic gaffe, but an insult to men and women in uniform. Put together, these blunders create a dangerous situation and invite aggressors to test our will to defend allies, particularly on the sub-conventional level.

As we are upgrading hardware, Trump unwittingly inserts malware into the trilateral relationship. Particularly unhelpful has been “public-shaming” of South Korea and its contributions for military cost-sharing. Koreans are already overly sensitive when it comes to the U.S. troops and the move to Camp Humphreys. Fueling the anti-American sentiments in the South facilitates North Korean long-held strategic thinking that once the U.S. troops out of the peninsula, South Korea will be ripe for reunification on the DPRK’s terms. Undoubtedly, Kim Jung Un is enjoying the new reality show.

TTX was designed to discern how the U.S., ROK, and Japan would react and respond to Beijing’s and Pyongyang’s coordinated assault on the rules-based international order. Japan and South Korea correctly calculated that the adversaries were seeking to alter the status quo, and that the situation merited a strong response. To demonstrate firm resolve and commitment to the alliance structure, all allied states, in fact, expressed willingness to “escalate to de-escalate.” Moreover, a component of the final move was North Korea’s wielding its nuclear card: a nuclear explosion in the Pacific Ocean as well as a missile launch over Japan. Allies unequivocally conveyed that they will watch the reaction and comments from the White House closely, and that their subsequent steps will be guided by what they observe.

Relatedly, neither Japanese nor South Korean delegates raised issues with Trump’s style of diplomacy, and only a handful of American experts acknowledged Trump’s malign effects on the U.S. standing in the world. One participant alluded that we need to brace ourselves for the partial or complete U.S. troop withdrawal from Korea, given Trump’s intransigence with cost-sharing and his record. The fact that the U.S. credibility was not openly questioned is perhaps a good sign. However, Trump’s foreign policy track record was the elephant in the room. (Remember Paris Accords? JCPOA?).

The extended deterrence framework has played an essential role in ensuring peace in Northeast Asia, but currently it is undergoing major shifts. Allies have a decent understanding of an appropriate response to revisionist states’ attempts to overthrow the status quo. However, Japanese and Korean participants (American as well, for that matter) remain unsure how to deal with self-inflicted wounds. Explicit signaling needs to be a priority; there should be no doubt in Beijing, Moscow, or Pyongyang that regardless of the domain and intensity, the United States and allies will respond and inflict unacceptable damage on the adversary’s forces. More hardware in the region will certainly alleviate some allies’ anxieties. However, returning to basics-updating the software and protecting it from malware-will deliver more bang for the buck.

Disclaimer: All opinions in this article are solely those of the author and do not represent any organization.

 

YL Blog #25: The Advancement of China’s Tech Industry and Their Attitude of Self-Reliance

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For the past 33 years, the Asia Pacific Roundtable (APR) has been a primary convention for policy makers and opinion drivers to engage in meaningful discussions on strategic issues and challenges for the Asia Pacific region. As a first-time attendee, what was most enriching was to learn more from other countries on their perspectives on China in the region and from Chinese scholars on issues like Hong Kong, the trade dispute, and Huawei, China’s top telecommunications equipment company.

China was a hot topic and one of the liveliest discussions from APR, came during the plenary session on The People Republic of China @ 70: Establishment, Evolution & Expectations. Professor Bates Gill, from the Macquarie University in Australia, set the context in which we view China, from the first phase of nation building 70 years ago, to Tiananmen Square, and now, with the constant leadership of Xi Jinping, China is a country that has defied traditional understanding. Moving forward, Professor Gill warned of the increasing tensions that exist within China, its system that the party views to be a real success and a doubling down of party state authority. We can already see this occurring through the Chinese Government’s forced detainment of the Uighur population in Xinjiang and the attention from leaders in the Politburo Standing Committee on the events in Hong Kong and their protests for freedoms they view as being eroded by the central Chinese government. As tensions, both domestically and internationally, build in China, their government seemingly struggles to learn and be accepted.

As Professor Aileen Baviera, President, Asia Pacific Pathways to Progress Foundation in the Philippines mentioned, China as great power is still undefined. As they try to define themselves on their own terms, it is unlikely that they will be successful or accepted because they are not understood. The lack of understanding, across cultures and between nations, was evident to myself, as an American listening to this discussion and throughout APR.

If there is one thing I gained from my APR experience, it is the increased understanding of the Chinese perspective, how the Chinese articulate their own narratives, and how to understand the dialogue in the greater context. Professor Gao Jian, from the Shanghai Academy of Global Governance and Area Studies, spoke extensively on the need that the international community understand China and talk about China in the “Chinese Way”. That the country’s unprecedented rise is viewed as a trail, similar to the Chinese proverb, “We must cross the river, but we still do not know how deep the river is.”

During the concurrent session on Technological Rivalry and National Security, I reflected on these new insights, as speakers discussed the threat of the global 5G value chain due to the US turning Huawei into a ban entity and the impact on consumers, suppliers and giant telecommunication operators. For the Asia Pacific region, Huawei is a reliable company in telecommunications and technology, with almost half the market in China for mobile devices, and is the 3rd largest vendor in the global smartphone market. The company’s expansive network of telecommunications in the region, along with the heavy reliance by countries on the services provided by Huawei, made me think about the precarious situation that they must find themselves in. I felt very fortunate to be a part of the APR Young Leader Delegation, as my peers provided lively discussions on China, technology, and how commentary from the speakers could be interpreted from an American’s perspective.

The theft of IP that has brought Huawei to where they are now, as the US contends, and the US’s position that they pose a threat to security, are more wide-reaching then I initially gave credit. The current Administration’s efforts to limit US company engagement with Huawei and restrict the sales of components have had cascading impacts on the market. When I visited China this past month, and had the opportunity to assess some of Huawei’s hardware, was impressed by their capabilities and advancements in comparison to competitors like Samsung and Apple. The conflicts and legal actions that Huawei faces, also leaves the US companies that once supplied them with components for their devices at a great disadvantage. Huawei is building their own self-reliance. A message that resonated with me after hearing from Professor Gao at APR. The Chinese philosophy is one where they have nothing and no one to rely on. When faced with adversity, the Chinese will look internally for solutions. As Huawei works on developing their own operating systems for their mobile devices, I think the US needs to seriously consider the ramifications and Google executives should be concerned about the loss of market share should such ambitions to fruition.

In a recent interview with Huawei CEO Ren Zhengfei., he spoke extensively about the expansion of 5G and I cannot help but agree with his sentiments that by shutting out Huawei, US will be left behind. It reminded me of my recent visit with another Chinese tech giant, Tencent, at their Shenzhen headquarters. At their facility, one cannot help but feel the true power and influence that these companies hold in the country. The expansive reach to nearly every Chinese citizen and the increasing capabilities that go beyond traditional messaging apps or gaming platforms. What is truly ironic to me is that such companies were able to get to where they are because they mimicked the actions of American tech companies like Apple, Microsoft, and Amazon. The Chinese admiration for Silicon Valley, technology advancement and innovations, seems to have left a bitter taste in everyone’s mouth. As an American, I left China concerned that our technology industry could one day be too slow to keep pace globally, and our society too sluggish in their adoption of new systems and already lacks the technological literacy to stay toe-to-toe with the Chinese. 

Disclaimer: All opinions in this article are solely those of the author and do not represent any organization.