The US and some of its allies are drawing red lines for China’s conduct in the global arena – through internal efforts at industrialization, technological innovation, politico-social reforms as well as externally through foreign policy measures. The pushback from China and its utilitarian partners – Russia, Iran, North Korea, etc is evident. This public clash of two superpowers will further shrink the space for building trust and cooperation on key issues, creating geo-political, security and business risks worldwide.
About three months into his inauguration, President Biden’s (and other politicians in the US) energy to revitalize the US role on the global stage has been evident. His administration officials have been trapezing the globe – APAC and Europe – holding strategy meetings to get allies on board. The issues pivot around China but are being navigated through a broader spectrum, including human rights, trade and commerce, cooperation on Covid-19, maritime disputes, etc. Through the NATO summit (end March), the meetings in APAC, the planned Biden-Suga (Japanese PM) summit in Washington (16 April) and the Alaska meeting with China, the messaging has been clear – the West and some of its allies are drawing red lines for China’s conduct in the global arena. The pushback expected from China and its utilitarian partners will create geopolitical, security and business risks worldwide.
The experts have deliberated the agenda, the takeaways and follow up from these global interactions repeatedly:
- At the APAC level, the central theme is free and fair Indo-Pacific based on cooperation on key issues. These include vaccine production and distribution, trade and aid, the de-militarization of the disputed maritime zones, etc., to strategically take on China in the region.
- For Europe, the message is the trans-Atlantic alliance’s importance via the NATO, an unequivocal emphasis on human rights and subtle warnings (mainly to China and Russia) on North Korea, Myanmar, Iran and Ukraine.
- Economic, technology and supply chain issues
After four years of the Trump administration’s constant pendulum swings in what US allies could expect, this new attitude is at least beginning to show results.
Why is the US engaging in this exercise?
At the heart of this exercise is the acceptance that the US’ global superiority is no longer a matter of ‘divine rights.’ The four years of the Trump administration re-enforced the chinks in the global alliances and the decay of the accepted structures to ensure stability after World War II. It also highlighted new power challengers to the perceived US supremacy. But most importantly, it brought to fore the internal contradictions of a highly polarized US socio-political system that can no longer support the US’s grand global vision.
This push seems to have galvanized at least a section of the US electorate and the political system in the right direction, though the systemic risks can still be overwhelming. An emerging bipartisan consensus to build the US ability to push back China is evident in the bill titled ‘Strategic Competition Act (SCA) of 2021’ introduced in the Senate. It addresses several areas, including economic and technology competition with China, military investments abroad, and universal values promotion. With this bill and other focus areas of the administration, three key areas stand out:
1. Technology and research
There is a hard-line sentiment in the US that the Chinese state-led economic model and its aggressive industrial policy have eroded the US’s lead in critical technologies and industries. The US has bartered tech superiority for access to markets worldwide, which needs to be corrected. The SCA 2021 section on science and technology includes efforts to help US companies diversify their supply chain, total or partial acquisition of critical infra such as 5G mobile networks and undersea cables, and create cybersecurity capabilities in the next five years.
The fast-tracking of the Endless Frontier Act, a bipartisan bill that would authorize $100 billion over five years to fund research in cutting-edge fields in key industries, also reflects these sentiments. The semi-conductor emergency plan and the need to address chip shortages in the US supply chains have been the immediate triggers. This top-down federal involvement in the US innovation and economic activity has not been actively pursued since the 1980s in a country that fetishizes free-market capitalism. There are also efforts to control big technology companies whose platforms have been used by ‘hostile’ powers to influence elections and democratic systems.
2. Foreign policy tools:
- Re-aligning the alliance system – The Strategic Competition Act stresses that the US must encourage and empower allies to do more about Beijing’s ‘aggressive and assertive control.’ An important aspect is strengthening arms-control measures with partners and regular reports on Chinese weapons and space systems. There is also a realization that the allies’ essential requirements concerning China, Russia, etc., will have to be addressed for the alliance to endure. This is probably why despite threats of sanctions to players (most prominently German companies) involved in Russia’s Nord Stream 2 pipeline to Western Europe, the Biden administration has not added to the limited measures taken by President Trump.
- Strategic military investments – The SCA emphasizes the need to align the “military investments with the US political objectives in the Indo-Pacific.” These include the proposal for $655 million in Foreign Military Financing funding for fiscal 2022 -2026 and $450 million for Indo-Pacific Maritime Security Initiative. It re-emphasizes the strategic partnership with Taiwan, directly challenging China’s most vital red line, through military aid and a promise of intervention in case of a direct attack. The Biden administration’s active diplomacy with Japan, Korea, Australia and, to a limited extent, India has re-enforced the SCAs intent.
- Interventions abroad, including military/training engagements and sanctions
There has been a push from the Senate to reclaim their powers, for example, of war-making to ensure that the executive branch cannot personalize the provision of military aid to countries. There is a realization that the US-led military/training engagements have been unable to contain the conflict actors. Instead, they have strengthened the hand of the US’s geopolitical rivals – for instance, Russia in Syria and China in Iran. Today, composed of foreign policy stalwarts, the Senate has shown a willingness to take on the Biden administration on Yemen, Syria and Afghanistan. While it can delay decision-making – it will also make the process of external intervention more goal-oriented and robust.
Biden administration’s internal review of the US sanctions program is based on the same principle. In the changed geopolitical environment where the US is no longer the dominant military and economic power, US sanctions on Russia, Iran, Myanmar and North Korea have failed to achieve the desired results.
3. Internal socio-political reforms
In their first-ever meeting with Biden administration officials in Alaska, the Chinese officials lamented the US efforts to impose ‘democracy and values.’ They pointed to the Black Lives Matter movement, Capitol Hill incident, frequent shootings – underscoring the point that the US system is far from perfect. Internal socio-political reforms are perhaps where the US political class will have to spend most of its efforts and keep falling short. Notwithstanding its economic implications, the infusion of the USD 1.9 trillion Covid funding into the US economy is an admission that the politico-economic system has not worked for many. Biden’s $2 trillion infra and economic recovery package is an effort to address long-held pain points on deteriorating civil infrastructure that has held back both urban, rural and industrial growth. Dubbed as the ‘American Jobs plan,’ the package echoes many SCA themes, including modernization of transportation, EVs, manufacturing, housing, R&D and digital infrastructure. Gun control bill, hype on immigration, voting rights – are areas that will require the beginning of fixes on which the consensus is threadbare.
The US remains the only power with the wherewithal to take on China individually and through a global collaboration of nations. This moment of internal reckoning thus has wider repercussions. However, taking on China and other irritants worldwide is not easy, and their pushback will create risks worldwide. As the Biden administration has taken a tough stand and allies have backed it, China is activating its alliances with Russia, North Korea, Iran – aimed at creating a substantial ‘no solution to critical problems without our help scenario.’
China’s increasing belligerence
It is not a coincidence that four developments have followed each other- China’s 25-year agreement with Iran, Russia’s troop build-up on Ukraine’s eastern border, China and Russia’s backing of the military coup in Myanmar and a statement of cooperation between China and North Korea that threaten the restart of nuclear weapons or ICBM. Individually most of them may not amount to a significant escalation. Still, together it’s a message that China has utilitarian partners propped up by its money power that can complicate life for the US and allies in most regions. China has also demonstrated that it can sanction corporate entities, close market access, create supply chain disruptions and mount crippling cyber attacks.
Significantly it is charging ahead with its ‘Made in China 2025’ strategy and research in cutting-edge technology. Significant advances in these initiatives can undercut US aims to contain China – as China works towards self-sufficiency in technologies required for ten key sectors, including robotics, AI, EVs, semi-conductors, aerospace, etc. Experts have cautioned that cutting China from critical technologies will only spur the nation’s efforts towards self-sufficiency.
In the security and military realm, China is changing the ground situation in several of its disputed maritime territories. In the South and East China sea, China has created artificial islands and militarized its assets. It has also formed ‘maritime militias’ that deny Beijing’s plausibility for attacks on other stakeholder countries’ naval vessels, infiltration of Exclusive economic zones, etc. Incidents such as the recent one in the Whitsun reef where 200 Chinese vessels entered the Philippines (an erstwhile ally) Exclusive Economic Zone (EEZ) – demonstrate that Beijing has significantly raised the stakes for retaliation. The Chinese have also developed ‘feet on the ground’ in some areas of US (and allies) interests – e.g., in Central Asia, where China has a military base in Tajikistan and a supposed base in the strategic Wakhan corridor in Afghanistan. It has emerged as a major actor in the Afghan peace process and the larger restive region. It has also taken advantage of the US foreign policy tools’ weakness – using US and Western sanctions to bring the Myanmar military under its wing.
Both the powers are circling each other, testing the others’ endurance and weakness. While on the one hand, the US’s steps are tepid and many allies are still ambivalent – a clear message, unlike any in the last 20 years, seems to have also gone out to the Chinese leadership. President Xi will find it difficult to meet President Biden before the 1 July deadline – the 100th anniversary of the Communist Party of China’s formation. It is a landmark that President Xi was counting on to create a perception that everything is normal. This throwing and acceptance of the gauntlet will further erode the space for any trust-building or coming together on critical global issues between the world’s two greatest powers. It will instead heighten the public confrontation, forcing a zero-sum approach even in areas of deep interdependencies.
About the Author
Shraddha Bhandari is the Co-founder of Intelligentsia Risk Advisors, a strategy consulting firm that aims to facilitate ‘ease of doing business’ by managing and mitigating geopolitical, social, operational and security risks. In her last corporate avatar, Shraddha was heading the Asia-Pacific Intelligence team for Barclays Bank PLC, analyzing geopolitical risks and their impact on business decisions, operational continuity and crisis response. She graduated from the London School of Economics with distinction in Comparative Politics.
Email: [email protected]