Rethinking China Policy: A New Special Report


2017-01-19 According to the 2016 version of the Annual Report to Congress of the U.S.-China Economic and Security Review Commission, the time is now to deal with the actions and policies of the current dictatorial regime in Beijing.

China’s willingness to reshape the economic, geopolitical, and security order to accommodate its interests are of great concern as China’s global influence grows. This influence has been manifesting most recently with China’s “One Belt, One Road” initiative aimed at connecting China with great portions of the rest of the world via a wide range of investments and infrastructure projects.

Last year, the Commission tracked the initiative’s impact in Central Asia. This year, as part of our examination of China’s rise and South Asia,
we considered its impact on some of the countries in that region. China’s emergence as a major player in South Asia is affecting the geopolitics of the region, and is causing the region’s traditional major power, India, to grow increasingly concerned about the prospect of Chinese encirclement.

Meanwhile, China’s military modernization—fueled by a growing defense budget—continues to emphasize capabilities that are designed to challenge the United States and intimidate China’s neighbors.

For example, China’s ability to conduct conventional strikes against U.S. regional facilities recently reached an inflection point with the fielding of new ballistic missiles capable of reaching Guam.

The Chinese military’s pursuit of force projection and expeditionary capabilities, while enabling it to provide public goods in the form of antipiracy, peacekeeping, and humanitarian assistance and disaster relief operations, will also strengthen China’s traditional warfighting capabilities against its weaker neighbors, many of whom are U.S. allies or partners.

These developments are underpinned by advancements in China’s naval, air force, cyber, and space capabilities. In response to conflicting claims in the East and South China seas.  China has increased its military deployments there.

Moreover, China’s expanding intelligence collection capabilities, including in the cyber realm, have enabled many in infiltrations of U.S. national security entities. The information China has extracted could strengthen its hand in a conflict with the United States.

China’s actions in the economic, foreign policy, and military realms suggest China’s leaders have decided the time has come for China to leave behind its long-held strategy, espoused by Deng Xiaoping, of “hide your strength, bide your time.”

China is showing itself to the world now, and the outcome is not what many had hoped for 15 years ago when the country was welcomed into the WTO and the global economic system.

The new Trump Administration has an opportunity to shift U.S. policies and strategies to deal with the very clear patterns of negative and aggressive behavior with regard to the so-called People’s Republic of China.

A new domestic agenda pursued by Trump could provide the basis for a policy reset.

As Richard McCormack noted in his publication Manufacturing News and published in late 2015:

In a position paper on reforming the U.S.-China trade relationship, Trump notes that President Bill Clinton in 2000 promised that China’s inclusion in the World Trade Organization would be a big win for the American economy.

“None of what President Clinton promised came true,” Trump notes.

Since China joined the WTO, 50,000American factories have closed and millions of jobs have disappeared.

“It was not a good deal for America then and it’s a bad deal now,” writes Trump. “It is a typical example of how politicians in Washington have failed our country.”

Trump would take a much more aggressive approach in government negotiations with China.

“We have been too afraid to protect and advance American interests and to challenge China to live up to its obligations,” he writes.

“We need smart negotiators who will serve the interests of American workers, not Wall Street insiders that want to move U.S. manufacturing and investment offshore.”

Free trade is not the same as fair trade, says Trump, reflecting a phrase that Ronald Reagan used in the 1980s when he confronted Japan and Germany over their predatory trade policies. Reagan’s stance on trade helped create a generation of “Reagan Democrats” throughout the American heartland.

“When Donald J. Trump is president ,China will be on notice that America is back in the global leadership business and that their days of currency manipulation and cheating are over,” states the Trump position paper.

Trump taps into the anti-Washington sentiment when he says, “We need a president who will not succumb to the financial blackmail of a Communist dictatorship.”

He blasts Obama and his Treasury Department for “repeatedly refus[ing] to brand China a currency manipulator.

If elected, “on day one of the Trump administration, the U.S. Treasury Department will designate China as a currency manipulator. This will begin a process that imposes appropriate countervailing duties on artificially cheap Chinese products, defends U.S. manufacturers and workers and revitalizes job growth in America.”

He adds that he will “stand up to China’s blackmail and reject corporate America’s manipulation of our politicians.” He would then “force” China to uphold intellectual property laws“ and stop their unfair and unlawful practice of forcing U.S. companies to share proprietary technology with Chinese competitors as a condition of entry to China’s market.”

He would “reclaim millions of American jobs and [revive] American manufacturing by putting an end to China’s illegal export subsidies and lax labor and environmental standards.”

He notes that Chinese export subsidies take the form of free rent, utilities and raw materials, cheap loans from China’s state-run banks, and tax rebates and cash bonuses to stimulate exports. “From textile and steel mills in the Carolinas to the Gulf Coast’s shrimp and fish industries industries to the Midwest manufacturing belt and California’s agribusiness, China’s disregard for WTO rules hurt every corner of America,” Trump writes.

“The U.S. Trade Representative recently filed yet another complaint with the WTO accusing China of cheating on our trade agreements by subsidizing its exports. The Trump administration will not wait for an international body to tell us what we already know.”

To strengthen the U.S. negotiating position with China, Trump would lower the U.S. corporate tax rate as a means to keep American companies from moving abroad. He would “attack our debt and deficit so China cannot use financial blackmail against us.”

A President Trump Would Play Hardball With China

That is the domestic side of it.

In our Special Report, we focus on the foreign policy side of a major redirection of U.S. policy towards China.

The strategic challenge posed by the increasingly assertive leadership of the People’s Republic of China needs to be met.

The new American Administration has a strategic opportunity to reshape its policies towards the PRC, rather than simply engaging in a “tit-for-tat” exchange, which the PRC is well postured to augment its global positions.

One of the opportunities opened up by a Trump presidency is a serious repositioning of Taiwan within U.S. policy.

It is time to exit the Madame Tussaud museum of policy initiatives and shape a Taiwan policy for the 21st century, which is part of a broader deterrent strategy.

Both the technology available to the United States and the policy shifts of core allies in the Pacific are enabling the forging of a deterrence in depth strategy.

As Japan has focused on its extended defense, Australia upon the integration of its forces with a capability also for the extended defense of Australia and with U.S. forces focus on shaping a force to operate over the extended ranges of the Pacific, now is the time for a serious rebooting of the role of Taiwan in extended Pacific defense and security.

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