US has the wrong strategy on China
Beat it on economics, don’t disengage
All Americans should be concerned about the potential for China to replace the United States as the most important economy in the world. We face a potential future where Mandarin and the yuan, not English and the dollar, dominate the global economy, and the U.S. government is pursuing the wrong strategy to prevent this reality.
Over the past two decades as a former CIA officer, partner in an international strategic consulting firm and now member of the House Permanent Select Committee on Intelligence, I’ve seen how the Chinese government has threatened global supply chains, stolen U.S. intellectual property and economically bullied smaller countries. Instead of pursuing a 19th century tit-for-tat tariff war, which is a self-imposed sales tax on American consumers, we should be collaborating with our allies to outinnovate China.
A common mistake in Washington is thinking about U.S.-China competition through a Cold War mentality that views Beijing as an adversary that we can contain and isolate like the Soviet Union. The United States and China are economically intertwined in a way that America and the Soviet Union never were and that America and Russia are not today. Regardless of presidential tweets saying that “we don’t need China” and that U.S. companies should find alternative markets, decoupling from China is simply unrealistic and would be in neither country’s interest.
Economic competition we can win
Meeting the challenge of head-tohead economic competition with an authoritarian regime requires a new approach. We are not fighting a Cold War but a New War. And it is an economic competition we can win.
The first step in this New War is to focus on policies that incentivize structural changes in China’s economy and its treatment of foreign companies and investors. U.S. consumers shouldn’t have to pay for Middle Kingdom misdeeds through tariffs. Instead of a tax on our consumers and businesses, we should have a policy of reciprocity.
If U.S. companies and investors are unable to do something in China, then Chinese companies and investors should be unable to do those things here. If U.S. venture capital firms can’t invest in Chinese artificial intelligence companies, then Chinese capital shouldn’t be allowed in the American AI industry. If U.S. software companies operating in China must turn over their source code to the Chinese government, then Chinese software companies will have to reciprocate in America.
We also must build a coalition to counter the Chinese government’s growing global influence. Strengthening North American supply chains will bolster advanced manufacturing in the Western Hemisphere, providing an alternative to China. Ratifying the United States-Mexico-Canada Agreement would provide a framework for attracting advanced manufacturing and technology production to places like San Antonio, Toronto and Monterrey — not Shanghai, Shenzhen and Beijing.
We should also strengthen economic ties with countries wary of an aggressive China, such as Vietnam.
Old battle lines will still exist, like Hong Kong, Taiwan and human rights abuses, but the new line of conflict is advanced technology — AI, 5G, the Internet of Things and aerospace engineering. China was clear about its intentions when it released its 2015 Made in China plan. By 2049, when China celebrates 100 years of communist rule, it plans to be the world’s leader in advanced technology and manufacturing.
Innovation and immigration
The United States and our allies will not prevent countries from doing business with Chinese companies like Huawei on the basis of security concerns alone, though they exist. We must provide an alternative service or product that is better, cheaper and more secure. We need to out-innovate our opponent. Close cooperation between the government and the private sector will be essential to win this competition.
Instead of stifling innovation through regulations or talking about breaking up American companies, Washington should work on things like a national strategy to coordinate efforts across government, academia and the private sector to advance research, development and adoption of AI.
Washington should also be working to streamline legal immigration so that America remains the beneficiary of the decades-long “brain drain” of the rest of the world. Today, more than 1 million international students are studying in the United States, including more than 360,000 from China. The best and brightest are educated here, and we need an immigration system that lets more of them stay. If the Chinese want to steal our secrets, we should be stealing their engineers and scientists.
While we are attracting global talent, we must prepare our American workforce to meet the challenges of a 21st century economy and long-term competition with China. We simply do not have enough people to fill jobs in technology and advanced manufacturing. We have to retrain and “reskill” our workforce over time and prepare our kids for jobs that don’t even exist today.
To ensure that the free world continues to set the rules in the global economy, America and its allies must work together to preserve their positions as world centers of innovation and technological advancement.
By moving past Cold War-era thinking and adopting 21st century solutions to this New War, the United States can continue as the world’s most important economy, creating opportunity at home and for millions around the world.