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한국어로 읽기Leer en españolIn Deutsch lesen Gap اقرأ بالعربيةLire en françaisЧитать на русском In October 2023, the EU Commission identified four technology fields as critical: advanced semiconductors; artificial intelligence (AI); quantum, and; biotechnologies.[1] All four areas are greatly impacted by the U.S.-China rivalry in technology, making it essential for Europeans to understand the Sino-American competition. This article examines this rivalry from the Chinese and U.S. perspectives. It recounts their prevailing attitudes, which are shaped by recent events, and that, in turn, mold Chinese and American strategic approaches. From the Chinese policymakers’ perspective, its geo-technological competition with the U.S. is novel and passively learned. During Xi Jinping’s first term, the Chinese government still positioned technology under the economic-oriented strategy of innovation-driven development. This stance followed the idea that ‘science and technology constitute a primary productive force’ and the ‘peaceful development’ principles set during Deng Xiaoping’s era. However, around 2018, two sanctions incidents that targeted Chinese telecommunications giants shifted Chinese leaders’ understanding of tech strategy into the geopolitical context. The first sanction incident involved ZTE, China’s second-largest communications equipment manufacturer. In 2016, the Barack Obama administration accused ZTE of selling telecom equipment containing American chip technology to Iran, which violated U.S. sanctions. In 2017, ZTE pleaded guilty and paid a fine of $1.2 billion. However, in 2018, Trump’s government stated that ZTE did not comply with the settlement agreement, coupling previous sanctions with export controls on ZTE in April 2018. The second incident involved Meng Wanzhou, then Vice-Chairwoman and CFO of the Chinese telecommunications giant Huawei, who was arrested in Vancouver, Canada, during a layover in December 2018. Her detention was at the extradition request of the Trump administration, which levied charges related to alleged violations of U.S. sanctions against Iran. These included bank and wire fraud and outright violations of U.S. sanctions via a subsidiary called Skycom Tech, which allegedly concealed Huawei’s activities in Iran. The necessity of a strategic adjustment These two incidents caused an uproar in the Chinese media, followed by a surge in public patriotic sentiment. However, for the Chinese government, the impact and significance of the two cases were quite different. The essence of the ZTE case was commercial sanctions, which meant that ZTE violated business norms and deserved economic punishment. The official Chinese government stance was that ‘this is just an individual case of corporate violation.’ Despite this position, the fact that the government was actively involved nonetheless politicized the incident within China. It was Xi Jinping himself who negotiated with Trump to save ZTE from bankruptcy after which ZTE became a state-owned enterprise with absolute state control—a move that ultimately resulted in ZTE gaining a greater domestic market share than Huawei. At the international level, the top-level nature of negotiations prevented the ZTE incident from overly politicizing then-ongoing trade frictions between the U.S. and China. While the ZTE episode was resolved with little rancor, Chinese senior officials became concerned about the impact that the U.S. might have on China’s strategic technology companies.[2] In November 2018, Tan Tieniu, then Deputy Secretary-General of the Chinese Academy of Sciences, reported to China’s top leaders that they should learn from the ZTE incident. They should avoid overreliance on imports of core electronic components and chips, and they should not repeat mistakes made by ZTE. In the same month, Xi Jinping mentioned in a speech that ‘internationally, advanced technology and key technology is more and more difficult to obtain… forcing us to travel the road of self-reliance.’ Terms like technological security, technology ‘chokepoints’ (卡脖子), and core technologies in key fields (关键核心技术) began to appear frequently in Chinese official discourse. These reflected Chinese leadership’s views about the ZTE incident that were in turn shaping strategic thoughts on the geopolitical technology competition with the United States. It was the Meng Wanzhou incident at the end of 2018 that for Chinese leaders confirmed the necessity of a strategic adjustment. As in the ZTE case, Huawei was involved in a business violation that from the Chinese perspective should have resulted in corporate punishment. Instead, a personal arrest warrant was issued for Meng, thereby escalating a commercial sanction into a political and diplomatic incident. Le Yucheng, then Deputy Minister of Foreign Affairs, urgently summoned the U.S. and Canadian ambassadors to China and issued a stern protest. The Chinese government also arrested two Canadian citizens in China, sentencing one to 11 years in prison. The Chinese Ambassador to Canada wrote that the Meng Wanzhou case was a ‘premeditated political act in which the United States wields its regime power to hunt a Chinese high-tech company out of political consideration.’ Chinese Defensive Deterrence These two episodes shaped and reinforced Chinese leaders’ strategic thinking about its geopolitical technology competition with the U.S. The 14th Five-Year Plan issued by the CCP in 2020 proposed ‘making technological self-reliance’ a strategic goal. Soon all official documents established a new tone for China’s technology strategy based on self-reliance. Previously, China pursued a reassurance strategy, a strategy that showed goodwill towards the U.S. and the system it led. Thus, in theory, China had two strategic options: reassurance and/or deterrence. The former strategy involves showing friendliness towards the U.S. and its allies, thereby releasing tension, and maybe re-joining the U.S.-led system. A reassurance strategy allowed China more time for stable development—the logic of ‘keeping a low profile’ of the Deng Xiaoping era. The Xi Jinping government picked the second option, deterrence, which is to show strength or use countermeasures to reduce the likelihood of further U.S. trade or coercive action. To make a deterrence strategy work, however, Xi further believed China needed to gain strong capacity in key tech fields. Therefore, Xi first mobilized domestic R&D resources and tried to acquire advanced technologies before using diplomatic countermeasures. The core logic underlying this geopolitical technology strategy is one of ‘defensive deterrence.’ A typical example of this strategy in play concerns the semiconductor industry. Facing export controls on semiconductor equipment from the U.S., the Netherlands, and Japan, the Chinese government first increased R&D investment in the sector, trying to overcome ‘chokepoint’ technologies. As a result, China’s investment in semiconductor R&D grew from $10 billion in 2018 to $25 billion in 2022, an increase of 150%. At the same time, the Chinese government increased investment in the production of key raw materials (silicon, gallium nitride, etc.) and semiconductor production bases. It also guided industries upstream while also pushing for downstream integration through policies to improve and strengthen supply-chain security. Chinese policy also moved to increase international supply-chain dependence on China through its comparative advantages in the semiconductor industry (and even other industries) in a hedging move against the U.S. and its allies. For example, in the automotive chip sector, in the supply of vital raw materials, and in the semiconductor equipment markets, China sought to utilize its significant comparative advantages. In August 2023, the Chinese government announced export controls on gallium and germanium, two key materials for manufacturing semiconductors. China Seeking More Regulatory Power But in addition to responding to what was perceived as U.S. containment policies in the area of technology, China’s strategic use of technology followed another approach, one led by the Ministry of Foreign Affairs (MFA) and the Ministry of Industry and Information Technology (MIIT). This third approach sought more regulatory power, for example, in the areas of civilian AI where China has huge potential.[3] Starting in 2018, the Chinese government showed a strong determination to introduce and study AI ethics and technical standards.[4] Based on these domestic framework policies, various diplomatic initiatives, and standards proposals, the MFA and MIIT expanded China’s regulatory influence in the field of AI. For example, the MFA proposed the ‘Global Data Security Initiative’ in 2020 and the ‘Global Artificial Intelligence Governance Initiative’ in 2023. Minister Wang Yi explicitly stated ‘We hope to provide a blueprint for related international discussions and rule-making.’ The China Electronics Standardization Institute, affiliated with the MIIT, also actively participates in the formulation of international new technology standards. Selectively decoupling: U.S. Attitudes and Strategies When it comes to strategic technologies, the Joe Biden administration has generally maintained a stance toward China that aligns closely with the previous administration led by Donald J. Trump. This is especially the case concerning competitive technologies such as 5G/6G, the specialized processors designed to handle the computational demands of AI, quantum computing, and electric vehicles (EVs). Taking a page from U.S. President Ronald Reagan’s Cold War playbook of outspending the Soviet Union, president Biden initiated a $2.25 trillion infrastructure plan. This plan, not unlike China’s policy to increase domestic innovation and strength, allocated funds for sectors such as transportation, manufacturing, renewable energy, clean water, and high-speed broadband for both wired and wireless technologies. The justification for these investments, part of the Build Back Better Act (BBB) policy and later incorporated into the Inflation Reduction Act (IRA) and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, was that they were a response to Xi Jinping’s ambitious goals of doubling China’s economy by 2035, intending to establish China as a global leader in biotechnology, green energy, and AI. In addition to a spending strategy to boost U.S. competitiveness in strategic technologies, the Biden administration continued with some of Trump’s punitive measures. For example, Biden maintained tariffs amounting to approximately $300 billion. He also continued action against Huawei, which has the potential to outcompete in 5G/6G mobile network technology. The Trump administration used the Bureau of Industry and Security to exclude Huawei from global semiconductor supply chains and it placed the company on the Commerce Department’s Entity List, thus requiring U.S. companies to obtain a license before exporting to Huawei. As discussed above, Trump’s executive branch also brought fraud allegations against Huawei’s Chief Financial Officer Meng. While Biden kept in place Trump-era prohibitions on sales of U.S. goods to companies like Huawei, as well as maintaining restrictions on exports of U.S. critical technology, he did quickly resolve the dispute over Meng. Within hours of the deal for her release, the two men caught up in the game of hostage diplomacy left China on a flight back to Canada. Highlighting the political nature of the incident, when Meng returned to China, senior local officials at the airport met her. Encourage Multilateralism to meet Global Challenges Along with strident measures, the Biden administration also sought a more nuanced stance. Indications that suggest a less hawkish approach to China include emphasizing a collaborative approach toward global challenges like climate change and future pandemics. Biden further pushed for engagement in high-level meetings with, for example, Secretary of State, Antony Blinken, and National Security Advisor, Jake Sullivan, who held talks with their Chinese counterparts, Yang Jiechi and Wang Yi, in Anchorage, Alaska, in March 2021. These talks were frostier than U.S. officials would have preferred but they got the two sides to engage in some dialogue. Similarly, Biden sought to engage with China in multilateral forums and organizations where both countries are members, such as the recent Asia-Pacific Economic Cooperation (APEC) forum that Biden hosted in November 2023. Even the choice of San Francisco as the venue was designed to be conciliatory as it has historic ties to Asia as well as a central role in global technology as the home of Silicon Valley. Still, one must keep in mind that in deciding on a strategy towards China, Biden must also contend with a Congress and public opinion that are growing increasingly skeptical of doing business with China, which they believe steals good jobs and sends balloons over American territory to spy on U.S. critical infrastructure. One primary shaper of U.S. attitudes towards China are the leaders of the House Select Committee on the Chinese Communist Party, Republican Representative Mike Gallagher and Democratic Representative Raja Krishnamoorthi, who lead one of the last bastions of functioning bipartisanship in Washington, D.C. With their many investigations, subpoenas, and policy recommendations, the House China Committee has become the ‘beating heart’ of U.S. Congressional policy, which, with regards to technology, argues for selectively decoupling from China for national security reasons.[5] A way forward Faced with the U.S.’ decoupling or blunting strategies and China’s defensive deterrence strategy, what steps might European nations take to navigate through the choppy, contentious waters of strategic technologies? Are there also steps that Europeans can take to mitigate the impact on their own strategic technology vulnerability? First, recognizing the pivotal role of technology in the rapidly digitizing global economy, Europeans need to stress that it is in the collective interest of everyone to establish institutions, norms, and policies for effective global governance. Rather than engaging in reactive geopolitical maneuvers resembling a chess game, these institutions could concentrate on constructing a more cooperative foundation for crucial technology sectors. Second, along with this recognition, efforts could be directed toward the development of future institutions, policies, and norms that set standards for next-generation and sensitive technologies. Such efforts should take into account initiatives already made by the Chinese and the Americans. Such efforts could also coincide with a third approach of encouraging the Biden administration to adopt a comprehensive multilateral approach. The U.S. needs to push for collaboration beyond issues such as climate change and economic inequality to encompass the intensely competitive areas in technology like those discussed in this article. For one, Europeans could point out that U.S. blunting strategies are simply not working and may even be backfiring by accelerating Chinese technological advances. In September 2023, Huawei released the Mate 60 Pro smartphone equipped with a 7nm domestic chip, revealing that China has overcome some hurdles that U.S. bans were designed to stymie.[6] Since no one knows how long China’s defensive deterrence strategy will hold (and shift to what Chinese leaders believe is a more offensive deterrence), nor whether Trump or someone as equally anti-multilateral as Trump will be (re)elected, Europeans have many incentives to encourage a softer engagement between China and the U.S. Changing the narrative is a fourth important recommendation. It is essential to recognize that the essence of the Sino-American technology competition is more about narrative construction than a description of the current situation. One indication of this is that both sides believe that the other side started what has been described as the ‘new Cold War.’[7] It does not help that both sides have engaged in behavior that supports the other side’s narrative with some hawkish actors employing similar bash-the-other tactics to gain political advantage.[8] Typically, the factual basis for technological competition is grounded in industrial competition, corporate rivalry, or intellectual property disputes. However, the high-tech relationship between China and the United States has been one of complementarity as well as rivalry. Both China and the United States, as well as European stakeholders, need to be careful of the narratives they espouse, lest they become a self-fulfilling prophecy. This work has been funded by the REMIT project, funded from the European Union’s Horizon Europe research and innovation programme under grant agreement No. 101094228 Footnotes [1] EU Commission Recommendation of 3.10.2023 on critical technology areas for the EU’s economic security for further risk assessment with Member States. [2] Gregory C. Allen. 2023. ‘China’s New Strategy for Waging the Microchip Tech War.’ csis.org, May 3. [3] Jing Cheng and Jinghan Zeng. 2023. ‘Shaping AI’s Future? China in Global AI Governance.’ Journal of Contemporary China 32(143): 794-810. [4] See White Paper on AI Standardization, a Guide to the Building of a National Standard Framework for New Generation AI, a report on Ethical Norms for New Generation AI, a White Paper on Trustworthy AI as well as other regulatory documents. [5] Robbie Gramer. 2023. ‘The Masterminds: Washington wants to get tough on China, and the leaders of the House China Committee are in the driver’s seat.’ foreignpolicy.com, November 27. [6] Weiwen Wang. (2023). ‘China Breaks Through 7nm Chip Technology, Has the China-U.S. Tech War Entered Phase 2.0?’ (中国突破7纳米芯片技术 中美科技战进入2.0阶段？). Lianhe Zaobao (联合早报), September 17. Retrieved from https://www.zaobao.com.sg/news/china/story20230917-1433739 [7] Patricia M. Kim, Matthew Turpin, Joseph S. Nye Jr., Jessica Chen Weiss, Eun A Jo, Ryan Hass, and Emilie Kimball. 2023. ‘Should the US pursue a new Cold War with China?’ Brookings.edu, September 1. [8] Roberta N. Haar. 2020. ‘Will China replace the U.S. as the world’s predominant power?’ Atlantisch Perspectief 44(3):9-13.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском As Beijing’s investment approach to Latin America focuses on industries of strategic importance, the EU and US will need to contend with growing Chinese competition China is pouring less foreign direct investment (FDI) into Latin America. But while this may seem like a sign of Beijing’s disinterest in the region, data suggests that Chinese companies are simply recalibrating, not retreating. In doing so, they are becoming important players in sectors key to Western interests: critical minerals, fintech, electric vehicles, and green energy. While the European Union and the United States have long been top investors in Latin America, increased competition with Chinese investment now jeopardises their interests in the Latin American industries that will become most crucial to the digital and green transitions. The number of Chinese projects in Latin America grew by 33 per cent from 2018-2023, compared with the previous five-year period of 2013-2017, even as the total value declined. In other words, Chinese companies are making more investments in the region but are pursuing smaller-scale projects on average. These investments are also more focused on what China calls “new infrastructure“ (新基建), a term which encompasses telecommunications, fintech, renewable energy, and other innovation-related industries. In 2022, 60 per cent of China’s investments were in these frontier sectors, a key economic priority for the country. Beijing also views smaller projects in these industries as incurring less operational and reputational risk, especially compared to some of the large-scale infrastructure investment projects often associated with the Belt and Road initiative. Like China, the investment priorities of the G7 grouping – particularly the US and the EU – are centring on critical minerals, fintech, electric vehicles, and green energy as they aim to grow and reinforce existing economic and political partnerships in Latin America. However, both the US and the EU risk falling short of China’s investment strategy in the region. The US has signalled want for greater economic engagement with the region, especially in sectors of strategic interest. However, to date, US efforts to compete with China remain largely focused on building US domestic capacity in these strategic sectors, even as some US companies, such as Intel, are increasingly focused on including regional partners in their supply chains. Some see opportunity for Latin America in Joe Biden’s landmark legislation, the Inflation Reduction Act (IRA), which is aimed at incentivising the energy transition while also de-risking critical supply chains. For example, certain countries in the region may benefit from preferential market access for their lithium or other key inputs to new energy and technology supply chains. However, the reach of the IRA – which remains a largely domestic policy – does not stretch as far as China’s current investment reshuffle. The Americas Act, announced by members of Congress in March could generate promising new investment opportunities for the region, as it encourages US companies and others to move their operations out of China, to which Latin America stands as a promising replacement. But Americas Act reshoring would primarily incentivise textiles and potentially medical equipment manufacturing, with less overall focus on the range of “new infrastructure” industries that China is prioritising. Chinese interests in information and communication technologies reveal a similar story. While the US has focused its policy on 5G equipment sales, China is undertaking a process of vertical integration in Latin American tech sectors that will dramatically boost its competitiveness. For instance, Chinese company Huawei is rapidly expanding its focus to include data centres, cloud computing, cybersecurity, and other services, especially in Argentina, Brazil, Chile, Colombia, Mexico, and Peru. (Computing accounted for a sizable 41 per cent of total Chinese information technology investment in the region between 2018 and the first half of 2023.) At the same time, Global Gateway, the EU’s proposal for a global investment initiative is yet to reach its potential in the region. Brussels is looking to be Latin America’s partner of choice by building local capacity for making batteries and final products like electric vehicles, as European Commission president Ursula von der Leyen noted last year. Yet even as the EU signals renewed commitment, China is becoming increasingly dominant in the electric vehicle market in Latin America and other regions. China surpassed the US in electric vehicle sales in 2023, with Chinese companies accounting for 45 per cent of total global sales and three times that of Germany’s. What is more, China has invested $11 billion in lithium extraction in the region since 2018, as part of a bid to control a third of global lithium-mine production capacity. Meanwhile the EU has secured some access to lithium as part of trade deals with Chile, alongside other nations, but this pales in comparison to what will be required to fuel the future of EU battery production. Latin America as a whole accounts for an estimated 60 per cent of the world’s lithium reserves. Based on its current levels of engagement in the region, the EU risks falling short of lithium, stalling its battery production and subsequently, its electric vehicle sales, just as China advances in this field. The window is closing for the EU, the US, and other partners looking to both maintain market share and compete with China in these Latin American industries, despite still-high rates of US and EU investment in and trade with the region. Indeed, US automakers increasingly see Chinese competition across the globe as an “extinction-level event.” Ensuring competitiveness in “new infrastructure” and related sectors will require a continuous commitment by partners to building and supporting project pipelines, and to delivering products and services at price points that can compete with China’s subsidised offerings. Both the EU and the US remain critical economic partners for Latin America and are contributing in ways that China is not. Still, complacency risks allowing China to take the lead in emerging industries in the region, some of which weigh heavily in the EU’s green and digital transformation. To protect their own future industries, the EU and the US need to first take a longer look at Latin America’s – especially as China vies for a dominant position.

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском Moscow and Beijing likely worked together to sow disinformation globally that was propagated locally by political parties in the lead-up to Solomon Islands’ national and provincial elections on 17 April 2024. Both countries’ propaganda systems accused the United States, without evidence, of using its foreign aid and networks across the country to interfere in voting and of preparing to foment riots and orchestrate regime change in response to an unsatisfactory election result. This campaign adds to a growing body of evidence showing that China’s and Russia’s ‘no limits’ partnership extends to coordinating their disinformation campaigns in the Indo-Pacific. The narratives haven’t gained widespread attention or media coverage in Solomon Islands. Australia, the United States and other Pacific partners should nonetheless be concerned, as Russia and China can be expected to learn from this campaign and will likely use the lessons to further improve their influence operations in the region. Individually, China and Russia are adept and expert at pushing disinformation to disrupt other nations but, by coordinating their efforts, they have a force-multiplier effect. The campaign consisted of an alleged ‘leaked’ letter, articles published on authoritarian state-controlled media outlets and a fringe journal publication, which were then shared and amplified on social media platforms. A fortnight before election day, an unknown author by the name of Richard Anderson published an explosive article in CovertAction Magazine alleging that the US was seeking regime change in Solomon Islands. The US-based magazine was co-founded in 1978 by the late Philip Agee, a former CIA officer who after his retirement became a vocal critic of the agency and of US policy and had reported links with Soviet and Cuban intelligence. The magazine was set up ‘on the initiative of the KGB’, the Soviet Union’s main intelligence agency, according to a book by KGB defector Vasili Mitrokhin and British intelligence historian Christopher Andrew. Anderson had no previous history of writing for CovertAction Magazine. A week after that article was published, Russian state-controlled media agency Sputnik further fuelled the allegations, writing that the US was ‘plotting [an] electoral coup’. This article cited an anonymous source who had ‘intimate familiarity’ with the activities of USAID, the main United States foreign aid and international development agency. This mirrored how Anderson is described in his CovertAction Magazine bio, though Sputnik’s article did not explicitly mention him or his article. Sputnik’s claims were amplified four days later by the Chinese state-controlled tabloid newspaper the Global Times, which did directly reference Anderson’s article and has the potential to legitimise these narratives to an audience the Chinese Communist Party (CCP) is actively targeting. During the same period, a poorly fabricated letter from an unconfirmed (and potentially non-existent) IFES project consultant was circulated among Solomon Islanders by an unknown source claiming that the US was seeking a ‘democratic transition by violent means in necessary circumstances.’ The text in this letter mirrored language used by Sputnik’s alleged anonymous source. Figure 1: Paragraph from Sputnik article (top) and a screenshot of the alleged IFES letter (bottom).     To be clear, there is no evidence that the US, or any other country, is supporting violent riots or interfering in Solomon Islands. Ann Marie Yastishock, US Ambassador to Papua New Guinea, Solomon Islands, and Vanuatu, has strongly refuted these allegations. This is not the first time the CCP-controlled media has spread disinformation in Solomon Islands or accused the US of seeking to instigate riots in the country. Following the 2021 Honiara riots, the CCP falsely accused Australia, the US and Taiwan of organising the riots, fomenting unrest and discrediting the relationship between Solomon Islands and China. In contrast, Russian media outlets also covered the 2021 Honiara riots but didn’t promote any explicit accusations of US or foreign interference. This time, China and Russia have been in lockstep. In the lead-up to the April elections, Russian state media was more direct and damning in its reporting with the release of Sputnik’s original article and in the subsequent coordination and dissemination of false narratives alongside Chinese state media. While Sputnik published only one follow-up article to the initial investigation, China’s Global Times was more prolific and varied, with six articles alleging US meddling in Solomon Islands. Of these six articles, four explicitly referenced Sputnik’s claims and two referenced US influence operations in more general terms. The indications of Russia-China propaganda coordination in this campaign were further supported by China’s Ministry of Foreign Affairs (MFA) post on 19 April 2024 titled ‘The Hypocrisy and Facts of the United States Foreign Aid’. The post on their website claims the US is giving aid to Solomon Islands, among other countries, only because it sees it as a political threat. This was the first article ever published by the MFA to smear USAID. Moscow, however, has consistently campaigned against USAID since it ejected the US agency from Russia in 2012 for ‘meddling in politics’. Russian media has pushed a consistent narrative that the organisation is a US imperialist tool of regime change, accusing it of fomenting civil unrest and coup attempts as far afield as Belarus, Cuba, Georgia and Mexico. However, this latest attack against USAID appears to be the first where Russia’s narratives are working to the benefit of CCP interests. It’s been clear since at least 2018 that Russian and Chinese state media are converging on media narratives that serve their governments’ strategic and political interests. According to leaked documents from Russian state broadcaster VGTRK, Russian and Chinese propaganda entities also signed an agreement to ‘further cooperate in the field of information exchange, promoting objective, comprehensive and accurate coverage of the most important world events’. While previous ASPI research has demonstrated Russian and Chinese state-coordinated narratives on the Russia-Ukraine conflict, the repeated re-airing of Sputnik’s conspiratorial claims of interference in Solomon Islands’ elections in Global Times articles indicates this propaganda cooperation is now a global initiative. There was also some evidence of amplification by inauthentic accounts on social media of these narratives, but they were limited and it is unclear whether they were state linked. For example, one X account with the handle @jv79628 shared the original Sputnik investigation. The account posts links almost exclusively from Sputnik, Global Times, Australian website Pearls and Irritations and videos with artificial intelligence-generated voices from the pro-CCP YouTube channel Chinese Revival, which may be linked to the Shadow Play network previously uncovered by ASPI. Other accounts sharing the original Sputnik report, such as @de22580171, pose as pro-Russian US citizens. They share articles mostly from Sputnik or Russia Today. At the time of publication of this report, Russia’s and China’s state media articles, and the accusations contained in them, have had minimal reach into online Pacific communities. In the public Solomon Islands Facebook groups ASPI viewed, online discourse remains more focussed on the emergence of new coalitions and the election of a new Prime Minister than on discussion of foreign influence or interference. According to Meta’s social monitoring tool, CrowdTangle, none of the articles from the Global Times have been shared in open and public Solomon Islands Facebook groups. However, Sputnik’s first article may have been more successful in reinforcing anti-Western sentiments in outgoing Prime Minister Manasseh Sogavare’s O.U.R. Party, who are strong contenders to be part of the coalition that forms the next government. That article was posted on the O.U.R. Party Solomon Islands Facebook page, which is run by the party, on 10 April. It was reshared to several public Facebook groups in Solomon Islands, including news aggregation sites and local island forum pages. This is significant because it is the first time a news article has been posted on the O.U.R. Party Solomon Islands Facebook page, which typically shares positive images of the party’s activities and political campaigns. As of 1 May 2024, the post (below) has had over 180 interactions, which is higher than the average number of interactions a typical post has on this page. Figure 2: Screenshot of Sputnik article posted in O.U.R Party Solomon Islands Facebook page.     Sogavare, a founding member of the O.U.R. Party, has made similar remarks about ‘foreign forces’ previously. According to an article published in the Solomon Star, when US Ambassador Yastishock visited Solomon Islands in late March to present her letter of credentials to Governor-General John Oti, Sogavare claimed foreign forces were ‘intervening in the national general election’ and ‘may fund some political parties and plan to stage another riot during the election to disrupt the electoral process and undermine social stability’. Despite the low online interaction so far, the barrage of US regime change allegations lays the foundation for future narratives that may resurface if Solomon Islands experiences future unrest. Beijing and Moscow can be expected to learn from these disinformation efforts, leaving the US, Australia and their Pacific partners no room for complacency about the threat the regimes pose, nor the need for effective strategic communication. The Russian and Chinese governments are seeking to destabilise the Pacific’s information environment by using disinformation campaigns and influence operations to undermine traditional partnerships. In this digital age, leaders of governments and civil society across the region need to consistently confront and counter baseless lies pushed by authoritarian state media, such as accusations that the governments of Australia and the US are instigating riots. If they fail to do so, partnerships with, and trust in, democratic countries are at risk of deteriorating, which can reduce the development benefits provided to Pacific Island Countries by Western partners. Australia, the US, and other close Pacific partners, such as Japan, New Zealand and the European Union, must take a stronger stance against false and misleading information that is starting to circulate in the region as a result of authoritarian state-backed disinformation campaigns. These nations must also better support and encourage local media and governments to take further steps to identify and combat false information online. This includes providing more training packages and opportunities for dialogue on media-government communication procedures to tackle disinformation and misinformation. Countering the effects of disinformation requires ongoing efforts to call out false statements, educate the public, and build country-wide resilience in the information environment. Greater transparency and public awareness campaigns from the region’s partners can also help to ‘prebunk’—or anticipate and delegitimise—disinformation and alleviate concerns about malign activity.

한국어로 읽기 Читать на русском Leer en español Gap In Deutsch lesen اقرأ بالعربية Lire en français When U.S. President Biden and Chinese President Xi met in November 2023, Biden remarked that the countries must “ensure that competition does not veer into conflict.” A recent ODI report Hedging belts, de-risking roads: Sinosure’s role in China’s overseas finance illustrates the scale of the competition and reveals how one of China’s less-known institutions – Sinosure – has been giving China the edge. This blog offers some thoughts about how the U.S., through its U.S. International Development Finance Corporation (DFC) can better compete. Competing requires resources, but really not as much as you think Competing credibly requires money, dedicated staff, and creativity. It requires studying the competition. Infrastructure development requires low-cost financing, capacity-building, and getting everyone aligned. As Sinosure has demonstrated again and again, deploying guarantees and insurance – particularly from official financing – can de-risk overseas investment, reducing costs of finance and mobilising commercial investment from the private sector. When it comes to infrastructure, China has a far more robust, albeit imperfect, track record when compared to others. The U.S. and its G7 partners have not been much of a match for China in financing infrastructure worldwide. The G7 could successfully compete with China, and doing so does not have to cost hundreds of billions of dollars. The U.S. Congress, despite its strong desire to counter BRI, has yet to appropriate the resources necessary to compete credibly in a battle of influence against China in developing countries. There’s been plenty of rhetoric, repurposing of existing programs and resources into initiatives like the Partnership for Global Infrastructure and Investment (PGII) and the Global Gateway. Each time the U.S. launches a new overseas economic development initiative, however, it rarely dedicates sufficient resources to help it scale – examples include the Partnership for Growth, Power Africa, Prosper Africa, and PGII. When it was fully funded, Power Africa, which coordinated the efforts of 12 U.S. government agencies, helped 120 power projects in Africa get across the finish line in just a few years, building a strong brand for the U.S. in Africa for economic development for the first time in decades. Then the U.S. cut Power Africa’s budget by 75% because of political shifts. The initiative stalled in its progress on new infrastructure, while still helping 200 million Africans get access to more reliable electricity. PGII, which has no dedicated budget, involves a handful of smart people working hard to deliver on a G7 promise of $600 billion in global infrastructure by 2025. Other than the Lobito Corridor project, it has not been clear to date what PGII is able to deliver at scale in Africa without additional resources. That could be about to change, though. The State Department just requested another $4 billion from Congress to up its game against China, which should help tremendously if that funding is secured to support PGII. Why Sinosure has been such an effective tool for China, despite its low margins BRI has not been particularly innovative, but it’s been steady. Sinosure, along with other Chinese export credit agencies, offers highly favorable terms and longer-term finance – this approach has well suited Global South governments in advancing their development and political objectives. While some projects have been problematic, Chinese creditors have provided the low-cost, patient capital at scale that many countries need for long-term productive infrastructure investment. But as the report shows, this approach has challenged established regimes governing the use of public money (link to blog 2). Sinosure insurance covers non-payment up to 95% of the insured equity or debt for up to 20 years, but most OECD Export Credit Agencies (ECAs) only provide 85% coverage for up to 10 years – though this policy soon will soon change [link to blog 2] Sinosure can work anywhere, except where there’s a live conflict or in cases of repayment arrears. By contrast, the U.S. International Development Finance Corporation (DFC) has a list of over 100 countries where it cannot do business. Sinosure’s premiums max out at 7% of the total debt servicing cost of a project, making it relatively cost-effective. In this aspect, it is surprisingly transparent. DFC’s fees and costs are numerous and opaque, with DFC passing some of its own costs on to its clients. By the end of 2022, Sinosure had provided over $1.3 trillion-worth of insurance on export and investment, with a quarter of this going only to BRI countries. In 2022 alone, it supported a total portfolio of $900 billion through its insurance for over 170,000 clients, of which $80bn went to overseas investment and long-term finance, which mostly supports projects in infrastructure such as power, transportation, construction, telecoms and shipping. It received a total net insurance premium of $1.9 billion and paid out $1.5 billion in insurance claims. Despite its significant payouts, however, Sinosure continues to earn a modest profit of $102 million – not much of a margin, but enough to propel China’s global leadership on trade and infrastructure development.     By contrast, DFC’s current total portfolio-wide exposure is $41 billion, with just over $9.3 billion committed in fiscal year 2023 for 132 transactions – of which only around $3.5bn of this was for guarantees and risk insurance. DFC has many of the same tools available to it as the Chinese government, and DFC is not even legally required to earn a return on its investments. Yet DFC has not made full use of its capital resources and has not deployed its capacity for risk-mitigation finance in the same way. An unleashed DFC could make the U.S. more competitive It’s not too late for the U.S. and others to compete. The U.S. has an opportunity to further change how it conducts business to compete with China, while promoting sustainable development. DFC is starting to flex its competitive muscles with its own insurance product, recently using political risk insurance to support a $1.6 billion debt-for-nature swap in Ecuador and another $500 million debt-for-nature swap in Gabon, which support broader debt relief efforts, as well as channelling money towards climate and conservation goals. Moreover, those deals come at a very low cost to the U.S. government given DFC’s pricing models. DFC is up for reauthorisation in 2025. It has both foreign policy and development mandates. In a previous blog, we laid out 10 recommendations about how DFC could be more effective in achieving its development mandate. Here are 9 recommendations to help DFC be more effective in competing with China and achieving its foreign policy mandate: 1. Spend some money and spend it right All it took for Sinosure’s expansion in the early 2010s was a capital injection of $3 billion. To make its financial institutions just as competitive, the U.S. only needs to commit a few extra billion dollars of appropriated resources per year, just as State Department has proposed, not hundreds of billions. Sinosure, with its somewhat loose investment criteria, still managed to earn over $100 million profit on a $900 billion portfolio in 2022. Even if DFC were to spend $1 billion/year of additional budgetary resources – for the purpose of leveling the playing field with China and providing developing countries with the type of inexpensive financing they need – that could be money well spent for the U.S. taxpayer. That money could cover legal fees that DFC currently passes on to clients. It could be deployed through innovative instruments: to take on some of the currency risk on strategic transactions, to cover first loss on strategic investments, or to provide technical assistance that does not need to get repaid–comparative advantages that Chinese financial institutions still sorely lack. That funding also could be used, simply, to reduce interest rates and fees, at a time when borrowing costs for lower-income countries have risen astronomically. 2. Structure deals to outcompete China Encourage DFC to structure transactions to use its funding to maximize competition with China in a way that promotes a more level playing field. DFC should not crowd out competitively tendered and transparent private sector investment, but where inexpensive or even concessional DFC co-financing might help the private sector out-compete opaque Chinese investment, DFC should be equipped to support those projects. 3. Don’t obsess over returns Even though DFC is not legally required to earn a return on a portfolio-wide basis, most members of Congress expect DFC to be revenue neutral to the U.S. Treasury. If members of Congress would adjust their return expectations even slightly, DFC could significantly advance its development and foreign policy goals. Effective development and foreign policy are not free – especially when competing with China. Even earning back $.95 on the dollar on a portfolio-wide basis would be a significant leverage of 1:20 of appropriated resources to private investment – giving DFC broad flexibility to structure deals that prioritise development impact and foreign policy. 4. Remove DFC’s limits Eliminate ceilings on DFC financing – including the $1 billion transaction limit, the $10 billion annual portfolio limit, and the $60 billion total portfolio exposure. It really doesn’t cost anything to do this. It’s like raising its credit card limit. 5. Let DFC work anywhere when necessary Give DFC the authority to determine the countries where it can do business on a case-by-case basis, depending on what the foreign policy and development priorities are. DFC should be required to continue to prioritize investments in low and lower-middle income countries, but it should have flexibility to respond quickly and selectively anywhere that doing so will credibly advance a compelling U.S. national security interest, such as financing a strategic port or lithium processing. To prevent DFC from sliding into becoming just a national security tool, abandoning its development mandate, DFC should be required to clearly articulate the compelling national security interests of projects and should provide a detailed report to Congress each year on its investments in upper-middle income and high-income countries to explain these interests (even classified, if necessary). 6. Empower DFC to support “nearshoring” DFC can help the U.S. diversify its supply chains and reduce dependencies on China. To encourage companies to move operations out of China and into the Americas (if operating in the U.S. is not commercially viable), give DFC broader authority to support strategic transactions in the region. 7. Make it easier for DFC to support equity investments in strategic infrastructure When DFC takes an equity position in a company or an investment fund, it gets a seat at the ownership table. That allows DFC to drive decisions regarding sourcing of goods and services (i.e., making sure contracts do not always go to Chinese companies). Investing in equity funds that develop and finance a portfolio of infrastructure projects is an effective way for DFC to increase and spread its strategic influence -- except that DFC often struggles to make these types of investments because U.S. legal requirements make DFC a slow and clunky, and hence, an unattractive investment partner. DFC needs flexibility to bypass some of these requirements. 8. Help DFC scale its risk insurance instrument For years, DFC has been hugely innovative in deploying its insurance products to leverage capital from others. DFC used its political risk insurance tool to crowd in private investment in Ukraine, and to catalyze pioneering debt-for-nature swaps worth hundreds of millions of dollars in Ecuador and Belize. But according to recent reports, the U.S. Office of Management and Budget has been threatening to start treating insurance investments like guarantee instruments from a budgeting standpoint. This will make it more expensive for DFC to deploy this tool. If it ain’t broke, why fix it? As we’ve shown, one of the main factors behind China’s competitiveness abroad is through Sinosure’s expansive use of its insurance tool: OMB’s changes will make it more expensive and difficult for the U.S. to scale its own. OMB needs to read the room. We’re not going to suddenly balance the U.S. budget by tinkering with a formula that has worked for decades. Let DFC do more of what it does well. 9. Help speed DFC up Before committing any transaction over $10 million, DFC is required to notify Congress in advance. This “Congressional notification” requirement provides a valuable extra level of oversight to ensure that DFC does not doing anything out-of-whack with Congressional priorities. But the process slows DFC down, when Chinese financiers are known for their speed. Even though DFC only is required to “notify” Congress of its deals, and not seek “approval,” practically and politically speaking nobody wants to run afoul of any one of the 535 members of Congress. Consequently, DFC rarely moves forward on a project until it can resolve the concerns of members of Congress. DFC needs to work with Congress to come up with a reasonable alternative to the Congressional notification process that balances speed with continued close collaboration with Congress. In addition, DFC’s Board can help speed things up by focusing its efforts on high level policy guidance instead of individual transactions. The Board should delegate more decision making on individual deals to DFC’s CEO. It makes no sense for the Secretary of State, who chairs DFC’s Board, to dig into a $20 million investment into a healthcare fund, not to mention the hundreds of State Department staff with little development finance experience who review the documentation before it goes to the Secretary with a recommendation for a vote. U.S. taxpayers probably would prefer to have the State Department focus on resolving the Middle East conflict. From the perspective of many Global South countries, this competition between the G7 countries and China is not inherently bad if it brings them more desperately needed resources and improves the quality of their infrastructure. The U.S. could be more competitive if it empowered its development finance professionals to use DFC’s tools the way they were designed to be used. DFC must be properly resourced with enough people and enough money to allow it to grow its portfolio. While development impact remains the key priority for DFC, delivering for the needs of partner countries is what also will deliver long-term influence. That is how the U.S. can compete – and all at relatively low cost to the U.S. taxpayer.

How are the fluctuating tensions between Washington and Beijing over Taiwan expected to affect Israel? On January 13, William Lai, the leader of the Democratic Progressive Party (DPP), was elected president of Taiwan. A few days earlier, for the first time in four years, the United States-China Defense Policy Coordination Talks took place in Washington, marking the end of a prolonged round of tension between the two powers, which had peaked in August 2022 when the speaker of the US House of Representatives visited Taiwan. Taiwan is a major point of friction in the already tense relations between the two powers. Managing the disagreements between them has broad implications, including for Israel. The ongoing strategic rivalry between the two superpowers—the United States and China—is the most important geostrategic factor of our time. The two countries are vying for technological dominance and control over resources, that will shape our future, and infrastructure that is critical for civilian, economic, and military purposes. The United States and China are also competing for global influence by forming partnerships and trying to influence world order, including its values, institutions, and mechanisms that regulate it. Can they shape the rules of the competition between them without spiraling into a military conflict that would have devastating global consequences? Taiwan may be the most volatile flashpoint in the complicated relationship between the two powers. For China, the “reunification” with Taiwan is one of its “core interests”—a top objective and a flagship issue in its foreign policy. Although the United States has repeatedly declared that it is committed to the “one China” policy, it is also an ally of Taiwan. The United States has warned China to refrain from making unilateral, aggressive moves vis-à-vis Taiwan, while supplying Taiwan with military resources to deter China and prevent a forceful takeover. Since assuming power in 2013, President Xi Jinping of China has repeatedly emphasized Taiwan’s unification with China as a key objective. During a meeting with President Joe Biden in November 2023, President Xi said that China “prefers” a peaceful unification, but he did not dismiss the use of force. On the eve of Taiwan’s 2024 elections, President Xi further stated that unification is “inevitable.” The tensions between the powers over Taiwan had escalated following the previous elections on the island in 2020. During this period, senior American officials visited Taiwan, and the United States and Taiwan signed weapons deals in August and September of that year, followed by a marked increase in Chinese military aircraft penetrating the island’s air defense identification zone and crossing the “midline” between the island and mainland China. China’s perception of encirclement was further heightened by the United States’ strengthening of its alliances and initiatives in the Indo-Pacific region (such as QUAD, AUKUS, and IPEF) and by the increased diplomatic pressure exerted on China, through boycotting the 2022 Winter Olympics and protesting its human rights record. But even during this period, despite rising tensions, the two nations maintained ongoing communications, including the Alaska talks in March 2021—although they were notably tense—and the meeting between the presidents in November of that year. The tension peaked in April 2022, when then Speaker of the US House of Representatives Nancy Pelosi announced her intention to visit Taiwan. China strongly protested, and the White House even recommended Pelosi to reconsider her visit due to concerns about potential military escalation. Pelosi refused and proceeded with her visit in August, delivering a speech at the Taiwanese legislature and advocating for increased American–Taiwanese cooperation. In an article published in the United States before her visit, Pelosi wrote that “at a time when the world faces a choice between autocracy and democracy . . . it is essential that America and our allies make clear that we never give in to autocrats.”   In response to Pelosi’s visit, China held a large-scale military exercise that disrupted air and maritime traffic in the region and released a white paper emphasizing “The Taiwan Question and China’s Reunification in the New Era.” Furthermore, as a countermeasure to Pelosi’s visit, the Chinese Ministry of Foreign Affairs announced that it was suspending all dialogue and cooperation with the United States, including dialogues between the military commands, the ministries of defense (DPCT), and the maritime military coordination (MMCA), and cooperation in the fields of illegal immigration, criminal legal assistance, transnational crimes, counternarcotics, and climate change. In November 2022, presidents Biden and Xi met in Bali, Indonesia, in an attempt to put the relations between the two powers back on track. After the meeting, the White House issued a statement announcing that the United States will continue to compete actively with China, but the two countries must manage their competition responsibly, without letting it escalate, while maintaining open channels of communication and continuing to cooperate on global issues such as climate change, counternarcotics, debt relief, health, and food security. Regarding Taiwan, the United States reiterated its commitment to the one China policy but strongly opposed China’s aggressive actions, which violate peace and stability in the Strait and in the entire region. The Chinese also released a statement, noting that President Xi highlighted that Taiwan is a core Chinese interest and constitutes a red line that is nonnegotiable in the relations between the two countries. It was anticipated that the year 2023 would begin on a more positive tone, with US Secretary of State Antony Blinken’s scheduled visit to China in February. The visit was canceled when a Chinese balloon was discovered floating over US territory for a week until the US Air Force intercepted it. Although the White House at first tried to downplay the incident, with President Biden initially referring to it as a “minor breach” and said that the Chinese government was unaware of the issue. China claimed that a weather monitoring and research balloon had strayed off course. Public pressure, however, led the administration to cancel Blinken’s visit. Subsequently, the US Department of Commerce imposed restrictions on six Chinese companies linked to balloon and aviation technologies that are used by the Chinese military, requiring that they receive special approval to access American technology. In April and May, China retaliated at a relatively low bar by imposing sanctions on a US member of Congress who visited Taiwan and sentenced an American citizen living in Hong Kong to life imprisonment, for alleged espionage for the United States. These actions reflect the efforts of both China and the United States to take focused, restrained measures, to avoid escalating tensions. The absence of a strong reaction from China to the establishment of a select committee within the US House of Representatives, focused on examining the US–China strategic competition, suggests that China sought to prevent further escalation of the conflict.   Efforts to end the crisis and restore talks were renewed in May 2023 when the head of the CIA met with his Chinese “counterparts.” In June, US Secretary of Defense Lloyd Austin and Chinese Minister of Defense Wei Fenghe met on the sidelines of the Shangri-La conference in Singapore. Secretary of State Blinken’s anticipated visit to China took place later that month. In July, US Special Envoy for Climate John Kerry and Secretary of the Treasury Janet Yellen traveled to China, followed by a visit of US Secretary of Commerce Gina Raimondo in August. These high-level meetings concluded on a note of cautious optimism, with both sides acknowledging “progress” but not a “solution,” as the purpose of the meetings was to stabilize relations rather than to resolve the issues in dispute. In September 2023, Secretary of the Treasury Yellen and Chinese Finance Minister He Lifeng launched two new working groups on economic and financial issues. Moreover, Pentagon officials and their Chinese counterparts met and discussed the US Department of Defense’s cyber strategy, followed by a meeting of the American and Chinese presidents in San Francisco in November. The American efforts to renew the military dialogue between the two countries was initially met with refusal by China until December, when General Brown, the chairman of the Joint Chiefs of Staff, spoke with his Chinese counterpart General Liu Zhenli. In early January 2024, a few days before the elections in Taiwan, the annual Defense Policy Coordination Talks between the two countries were held at the Pentagon for the first time in four years. These developments reflect China’s acute sensitivity toward the Taiwan issue and its willingness to take significant measures against perceived violations of its One China Policy, especially by the United States. Despite numerous disputes, the growing rivalry between them, the defiant measures, and the reciprocal sanctions, these events highlight that the two powers recognize the importance of keeping channels of communication open. This dialogue is crucial for pursuing shared interests, resolving disputes, and minimizing the risk of military escalation that could have far-reaching consequences for both nations as well as the global community. The ongoing tension between the United States and China over Taiwan also has implications for Israel. First, the increasing friction between the powers has accelerated the formation of two opposing camps and has limited Israel’s ability to maneuver between them. As demonstrated (again) since the outbreak of the war between Israel and Hamas, the United States is Israel’s greatest friend and its most important strategic ally. While China is an important economic partner of Israel, its policy is not that of a friend, and its oppositional stance toward Israel has the potential to cause significant damage. The United States expects its allies to stand by its side and to align more closely with its policies vis-à-vis China, especially concerning advanced technologies and critical infrastructure. Failing to meet US expectations could strain US–Israel relations. Second, a military escalation between the United States and China would also have global economic consequences, seriously disrupting supply chains of raw materials and essential goods crucial to Israel. Finally, the US administration recently linked the military aid granted to Israel to that of both Taiwan and Ukraine, framing them as three democracies under threat. While this linkage underscores the US commitment to its allies, it also creates constraints and interdependencies. The attention and resources that the United States currently allocates to Israel and to the broader challenges in the Middle East could be compromised if the United States faces serious military crises elsewhere in the world, and this could have far-reaching impacts on Israel.

There were smiles for the camera, handshakes, warm words and the unveiling of a couple of agreements. But beyond the optics of the first meeting in over a year between the leaders of the world’s two biggest economies, not an awful lot had changed: There was nothing to suggest a “reset” in U.S. and China relations that in recent years have been rooted in suspicion and competition. President Joe Biden hinted as much just hours after the face-to-face talks, confirming that he still considered his Chinese counterpart, Xi Jinping, a “dictator.” Beijing hit back, with foreign ministry spokesperson Mao Ning telling reporters Biden’s remark was “extremely wrong and irresponsible political manipulation.” As a scholar of U.S.-China relations, I believe the relationship between the two countries can be best described as an “enduring rivalry” – a term used by political scientists to denote two powers that have singled each other out for intense security competition. Examples from history include India and Pakistan, France and England, and the West and the Soviet Union. Over the past two centuries, such rivals have accounted for only 1% of the world’s international relationships but 80% of its wars. History suggest these rivalries last around 40 years and end only when one side loses the ability to compete – or when the two sides ally against a common enemy. Neither scenario looks likely any time soon in regards to China and the U.S. How enduring rivalries end China “is a communist country … based on a form of government totally different than ours,” Biden said after his meeting with Xi. That comment gets to the heart of why diplomacy alone cannot reset the U.S.-China relationship. Washington and Beijing are not rivals due to any misunderstanding that can be sorted out through talks alone. Rather, they are rivals because of the opposite reason: They understand each other only too well and have come to the conclusion that their respective world outlooks cannot be reconciled. The same is true for many of the issues that divide the two countries – they are framed as binary win-lose scenarios. Taiwan can be governed from Taipei or Beijing, but not both. Similarly, the East China and South China seas can be international waters or Chinese territory; Russia can be crippled or supported. For the United States, its Asian alliances are a force for stability; for China, they’re hostile encirclement. And both countries are right in their respective assessments. Diplomacy alone is insufficient to resolve a rivalry. At best, it can help manage it. When the US calls, who picks up? Part of this management of the U.S-China rivalry involves finding areas of agreement that can be committed to. And on Nov. 15, Biden and Xi announced deals over curbing China’s production of the deadly drug fentanyl and the restoring of high-level, military-to-military dialogue between the two countries. But the fentanyl announcement is very similar to the one Xi gave to then-President Donald Trump in 2019. The U.S. administration later accused China of reneging on the agreement. Similarly, committing to restarting high-level dialogue is one thing; following up on it is another. History is dotted with occasions when having an open line between Beijing and Washington hasn’t meant a whole lot in times of crisis. In 2001, when a U.S. surveillance aircraft collided with a Chinese jet over Hainan Island, Beijing didn’t pick up the phone. Likewise, during the Tiananmen Square massacre, then-President George H.W. Bush urgently tried to call his counterpart Deng Xiaoping but was unable to get through. Moreover, focusing on what was agreed to in talks also highlights what wasn’t – and is unlikely to ever be – agreed to without a substantial shift in power that forces one side to concede to the other. For example, China wants the U.S. to stop selling arms to Taiwan. But Washington has no intention of doing this, as it knows that this will make the disputed island more vulnerable to Beijing. Washington would like China to end its military displays of strength over the Taiwan Strait; Beijing knows doing so risks seeing Taiwan drift toward independence. American policymakers have long said what they want is China to “change” – by which it means to liberalize its system of governance. But the Chinese Communist Party knows that doing so means self-liquidation – every communist regime that has allowed space for alternative political parties has unraveled. Which is why American attempts to engage China are often met with suspicion in China. As former Chinese leader Jiang Zemin commented, engagement and containment policies have the same aim: to end China’s socialist system. For similar reasons, Xi has shunned attempts by the U.S. to bring China further into the rules-based international order. The Chinese leader saw what happened when Soviet leader Mikhail Gorbachev tried to integrate the Soviet Union into the Western order in the late 1980s – it only hastened the demise of the socialist entity. Instead, Xi calls for a massive military buildup, the reassertion of Chinese Communist Party control and an economic policy based on self-reliance. Actions speak louder … The encouraging words and limited agreements hammered out in the latest meeting between Xi and Biden should also not distract from the actions that continue to push the U.S. and China further apart. China’s show of force in the Taiwan Strait has been sustained for three years now and shows no sign of abating. Meanwhile, Beijing’s navy continues to harass other nations in the South China Sea. Similarly, Biden has continued the U.S. path toward military alliances aimed at countering China’s threat. It recently entered a trilateral agreement between the U.S., Japan and South Korea. And that came two years after the establishment of AUKUS, a security partnership between the the U.S., Australia and the U.K. that has similar aims. Meanwhile, the U.S. administration will continue to tighten the screws on China’s economy through investment restrictions. Biden is well aware that easy flowing money from Wall Street is helping China weather choppier economic waters of late and is keen to turn off the tap. The point of diplomacy This isn’t to say that diplomacy and face-to-face talks are pointless. They do, in fact, serve a number of interests. For both men involved, there is a domestic upside. For Biden, playing nice with China projects the image of a statesman – especially at a time when, due to U.S. positions on Ukraine and the Middle East, he is facing accusations from the political left of being a “warmonger.” And encouraging Beijing to tread softly during the U.S. election year may blunt a potential line of attack from Republicans that the administration’s China policy is not working. Meanwhile, Xi is able to showcase his own diplomatic skills and present China as an alternative superpower to the U.S. and to potentially cleave the Western business community – and perhaps even major European nations – from what he would see as the U.S. anti-China coalition. Moreover, summits like the one in San Francisco signal that both the U.S. and China are jointly committed to at least keep talking, helping ensure that a rocky relationship doesn’t descend into anything more belligerent – even it that doesn’t make them any friendlier.

The meeting at San Francisco between Presidents Joe Biden and Xi Jinping offers a short respite in the broader strategic conflict that both states have been waging since at least 2017. The friends and trade partners of both nations now have an opportunity to employ middle power diplomacy to advocate for their interests and also the moderation of competition. In his book Destined for War: Can America and China Escape Thucydides’s Trap?, Graham Allison provided historical examples of when a status quo power met a rising power and whether and why it resulted in war. Unlike his peer John Mearsheimer, author of the Tragedy of Great Power Politics, who concludes that competition and conflict between the US and China are inevitable due to the structure of the international system, Allison’s book provides a warning to both the US and China that the decisions they make could be positively or negatively consequential, leaving room for agency to be the final arbiter of the fate of bilateral relations. The pre-APEC meeting between President Joe Biden and President Xi Jinping was an invitro international relations experiment testing the premises of Allison and Mearsheimer as to whether US-China strategic competition will be shaped by the agency of leaders or the structure of the system. Superficially, the 15 November 2023 meeting allowed for an agreement limiting the precursors of fentanyl coming into the United States and, importantly, reviving regular talks under what is known as the military maritime consultation agreement. These modest but important agreements followed a throng of high-level cabinet visits to Beijing and reciprocal visits by Wang Yi, China’s foreign minister, that were meant to stabilise US-China relations. These agreements suggest that leaders in both countries can find diplomatic crosswalks to stabilise the relationship in functional areas. It also intimates that other window of cooperation such as climate change, anti-terrorism, transnational disease prevention, and poverty alleviation may be fertile ground for collaboration if leaders choose to move forward. While the modest takeaways from the meeting in San Francisco underscores that agency does have a role in bilateral relations, we should be realistic that they also reflect the deep structural challenges that exist between the United States and China. Moreover, they also represent the intractable nature of the structural challenges in the relationship, placing friends and allies of the United States and major trading partners of China, such as Australia, Japan, Canada, and Southeast Asian nations, with a difficult quandary: How to balance their economic prosperity and stability through a vibrant and beneficial trade relationship with China while maintaining a strong, comprehensive relationship with the United States as it deepens its strategic competition with China? In the US, there is bipartisan consensus that China represents a challenge to US leadership that needs to be dealt with comprehensively. Under the Biden administration, we have seen a systemic, sequential, and allied-first approach to competing with China. It has brought accolades from friends and allies and, predictably, criticism from China that Biden has not only adopted a continuation of policies towards China from the Trump administration, but that his policies are even more severe. The Biden administration has reinforced and reified its alliance partnerships with South Korea and Japan. It then enhanced its commitment to the Quadrilateral Security Dialogue (Quad) and demonstrated substantial leadership in terms of pushing back against Russia’s invasion of the Ukraine. More recently, the Biden administration forged a new trilateral partnership between South Korea, Japan, and the United States, under the so-called Camp David Principles. It also strengthened the quadrilateral security dialogue and its efforts to provide public goods to the Indo Pacific region. And we’ve gradually seen a more coherent AUKUS strategy that aims to create synergy between the UK, Australia, and the United States in the areas of AI research, quantum computing, hypersonic missiles, cyber, and importantly nuclear power submarines. Last, but not least, the adoption of the Chips Act, limiting the sale of sophisticated semiconductor chips to China and the associated technologies, suggests that the United States is not stepping down from its competition with China, but stepping up in the same way that the United States transformed every aspect of its governance following the 911 attacks. Similarly, there seems to be consensus in the Chinese political elite that the US and its allies are intent on containing China and attenuating its development. Xi Jinping’s 20th Workers Party Report at the 20th Party Congress highlighted the concerns China has about its external environment and advocated for strengthening the PLA to deal with separatist forces and external threats, while consolidating it political, social, economic, and ideological systems. Through the Belt and Road Initiative (BRI), the expansion of the BRICS and Shanghai Cooperation Organization, and the advocacy of the Global Development/ Security and Civilization Initiatives, China under the leadership of Xi Jinping is aiming to transform itself, its periphery, and the international system such that all are more conducive to China’s core interests, including preserving its political system. These realities suggest that rather than fostering a reset in bilateral relations, what we are seeing is both China and the United States taking a tactical pause in their strategic competition to amass the resources they need to compete successfully in the Mearsheimer world of great power politics and the maximisation of power. In closed-door discussions on China with Japanese, South Koreans, Australians, Canadians, Southeast and South Asians, as well as Europeans, we hear similar refrains: while China represents a “systemic challenge” in the case of the Europeans and NATO, or is a “disruptive power” in the case of Canada, or as Japan writes in its 2022 National Security Strategy, “the greatest strategic challenge in ensuring the peace and security of Japan and the peace and stability of the international community,” China is also an important and largely irreplaceable economic partner and essential player in dealing with global challenges such as climate change. The question for friends and allies of the United States is how to balance the increasingly difficult and competitive relationship between China and the United States in a way that ensures that they can continue to have strong economic relationships with China while building resilience into their economies and into their economic relationship, such that the economic weaponization of supply chains and the monopolisation of resources cannot negatively affect trading partners of China. Part of these states’ responses to protect their national interests from the structural realities of Sino-U.S. strategic competition will be a middle power diplomacy that aims to shape the competitive nature of the relationship between the US and China. This will be implemented through coordinating their diplomacy and proactively lobbying, insulating, and investing in rulemaking in the realms of security, trade, and international law alongside their like-minded ally the US, but at times also in opposition to the US. This will require investing in diplomatic resources in both the US and China, in the broader Indo-Pacific region, and at the subnational level to forge strong state to state relations to effectively lobby US policy makers to inculcate the interests of allies and friends of the US in their strategic rivalry with China. Similarly, through forging stronger relations with Chinese provincial leaders though trade and investment, middle powers and stakeholders in the US-China strategic competition may be able to have their interests reflected in a moderation of China’s approach to competition with the US.

Understanding the Chinese Perspective The relationship between the United States and China is one of the most important and mutually beneficial bilateral relationships in the world. Nonetheless, it is also complex and contentious, with both countries vying for geopolitical influence and economic dominance. This brief examines drivers of U.S.-China strategic competition from the perspective of Beijing incorporating the prism of MarxistLeninist ideology, domestic politics in the U.S., China's needed alignment with Russia, nationalism, technological advancements such as AI, the role of regional players such as ASEAN, Japan, and the E.U., and Comprehensive National Power (CNP). Understanding this analytical lens contributes to deeper comprehension of China's security anxieties and world view that may provide insight to enhance engagement, resilience, and deterrence in bilateral relations with China. Introduction The relationship between the United States and China is one of the most important and mutually beneficial bilateral relationships in the world today. To illustrate, according to data published by the U.S. Bureau of Economic Analysis (BEA), total imports and exports grew 2.5 percent year-on-year to reach US$690.6 billion in 2022, breaking the previous record of US$658.8 billion set in 2018. This increase is despite the divisions associated with the COVID-19 pandemic and mutual unfavorable ratings. Nonetheless, the U.S.-China relationship is also complex and contentious, with both countries vying for geopolitical influence and economic dominance. Whether it is the rules-based Free and Open IndoPacific or the realization of Xi Jinping’s China dream, the competition for primacy between the U.S. and China will impact friends, partners, and foes of both states. Viewed from Beijing, Chinese scholars and analysts base their assessment of the trajectory of the U.S.-China strategic competition through several lens including the prism of Marxist-Leninist ideology, domestic politics in the U.S., China’s needed alignment with Russia, nationalism, technological advancements such as AI, the role of regional players such as ASEAN, Japan, and the EU, and Comprehensive National Power (CNP). Shaped by Marxist-Leninist Ideology Marxist-Leninist ideology has played a leading if not central role in shaping the Chinese Communist Party's (CCP) approach to governance and foreign relations. The CCP came to power in 1949 following a successful revolution led by Mao Zedong. Mao was heavily influenced by Marxist-Leninist thought. Since then, the CCP has maintained a commitment to Marxist-Leninist ideology, although its interpretation and application have evolved over time. Today, as former Australian Prime Minister Kevin Rudd and author of The Avoidable War: The Dangers of a Catastrophic Conflict between the US and Xi Jinping's China writes, Xi’s China leans left in terms of Marxist-Leninist socio-economic organization and right in terms of nationalism. Rudd’s analysis echoes President Xi’s speech on “Hold High the Great Banner of Socialism with Chinese Characteristics and Strive in Unity to Build a Modern Socialist Country in All Respects” in his report to the 20th National Congress of the CPC. In that speech, Xi stressed that “Marxism is the fundamental guiding ideology upon which our Party and our country are founded and thrive. Our experience has taught us that, at the fundamental level, we owe the success of our Party and socialism with Chinese characteristics to the fact that Marxism works, particularly when it is adapted to the Chinese context and the needs of our times.” At its core, Marxist-Leninist ideology emphasizes the importance of class struggle and the need for the working class to overthrow the ruling class to achieve a classless society. In the Chinese context, this has translated into a focus on creating a socialist society and promoting the welfare of the Chinese people under the umbrella term ‘Socialism with Chinese Characteristics’. In terms of China’s relationship with the U.S., Marxist-Leninist ideology has contributed to a view of the U.S. as a capitalist and imperialist power that seeks to undermine China’s socialist system. This view is rooted in the Marxist-Leninist belief that capitalist powers are inherently expansionist and seek to dominate other countries to secure their own economic and political interests. They see the U.S. as an imperialist power seeking to maintain its hegemony over the world, while China represents a rising power challenging the established order, as written by Graham Allison in his book Thucydides’ Trap. Chinese analysts believe that the U.S. is threatened by China’s rise and is seeking to contain it through various means, including economic sanctions, military posturing, and diplomatic pressure as evidenced by the Trump administration’s trade war, its network of alliances throughout the region, the advent of minilateral cooperation such as the Quad and AUKUS, and the perceived fomenting of independent movements in Hong Kong, Xinjiang, and Taiwan.  They argue that the U.S. is using its military alliances and partnerships with countries such as Japan, South Korea, and Australia to encircle China and limit its influence in the region. These perspectives ignore that the U.S. alongside with Japan and others openly supported China’s entry into the WTO, the 2008 Summer Olympics, and gave China a leadership position at the Paris Climate Accord. These initiatives demonstrated that the U.S. and other countries were willing to work with China on global issues and support its development. Destabilizing Influence of U.S. Domestic Politics While Marxist-Leninist perspectives of U.S.-China relations offer a macro-level understanding of how China views the inevitability of great power rivalry between Washington and Beijing, Chinese analysts also pay close attention to domestic politics in the U.S. and its impact on U.S.-China relations. Chinese analysts believe that the current political climate in the U.S. is highly polarized, and that these domestic political dynamics are affecting U.S. foreign policy, including its stance towards China. They see the Trump administration’s trade war with China as a reflection of this polarization, and argue that it has damaged the relationship between the two countries. They also note that the Biden administration has continued many of the same policies as the Trump administration, including maintaining tariffs on Chinese goods and pursuing a tough stance on technology transfer and intellectual property theft. The build-up to the 2024 presidential election for most will be one of intensifying securitization of relations with China. President Biden will not be in a position to show any weakness in his China policy. Equally so, the Republicans, whether it is former President Trump or an alternative GOP candidate will take an “All because of China” approach, when it comes to foreign policy, like advocating for a hard decoupling of the economies or even more provocatively, possibly migrating away or redefining the “One China” policy. Developing China-Russian Alignment Chinese analysts also view the relationship between China and Russia as an important factor in the trajectory of U.S.-China relations. They see the two countries as natural partners, sharing a common interest in challenging U.S. dominance of the world. They believe that the China-Russia all-weather partnership is growing stronger and that it poses a significant challenge to U.S. interests. For Russia, Pax Sinica would offer it a much more hospitable environment than the one provided by the Pax Americana, according to the authors of The Beijing-Moscow Axis: The Foundations of an Asymmetric Alliance published by the Centre for Eastern Studies (OSW). For China, a tightening of the alignment with Russia will be critical to ensuring that U.S. does not drive a wedge between China and Russia by pursuing a policy of containment against both countries, a policy that Chinese analysts view as unlikely to succeed. The invasion of Ukraine is a case in point. Despite Russia’s invasion violating the U.N. Charter and China’s Five Principles of Peaceful Co-existence, Beijing has taken a pro-Russian neutrality position refusing to condemn Russia. This is not an endorsement of the invasion or of Putin. It is a clear indication of the importance China places on the deepening Sino-Russian alignment and the reality that neither country can afford a geopolitical divorce. In fact, the recent paper ‘China’s Position on the Political Settlement of the Ukraine Crisis’ continues to echo President Xi’s Workers Report at the 20th Party Congress in October 2022, which explicitly used the expression that “no country’s security should come at the expense of another country’s security,” an explicit rejection of the U.S. and Western countries’ views that Russia has engaged in an unprovoked attack against the sovereign state of Ukraine.  Intensifying Nationalism Chinese nationalism is another important factor by which Chinese analysts understand the trajectory of U.S.-China relations. They view Chinese nationalism as a natural response to the country’s history of humiliation at the hands of foreign powers, including the U.S. Carefully curated since the Tiananmen Square incident in 1989, Zheng Wang writes in his book Never Forget National Humiliation: Historical Memory in Chinese Politics and Foreign Relations that Beijing has placed the century of humiliation at the center of China’s national building process and a nationalist movement in which victimhood, national rejuvenation, and a perineal sense of insecurity concerning the West and particularly the U.S. is the major pillar. These narratives have been meticulously manipulated and deployed to build a national identity in which China must resist anti-China forces and those states that wish to prevent “China’s rightful rise.” Events such as the 70th Anniversary of Victory of Chinese People’s War of Resistance Against Japanese Aggression and World Anti-Fascist War, 100th anniversary of the founding of the Chinese Communist Party, or national aspirations such as the China Dream are all constructed with the purpose of infusing into Chinese citizens a nationalism linked to the CCP’s selective understanding of history. Based on these selective views of history, scholars such as Qin Pang in their co-authored article on “China’s Growing Power Makes Its Youth Hawkish?” Evidence from the Chinese Youth’s Attitudes toward the U.S. and Japan’ find that Chinese citizens view the United States as seeking to contain China’s rise and limit its influence in the region, and that this is seen by many Chinese as an affront to their national pride. Chinese analysts believe that Chinese nationalism is a powerful force that will shape the country's foreign policy for years to come, and that it will continue to be a source of tension in U.S.-China relations. For the U.S. and other like-minded states, Chinese nationalism that is based on victimhood, national rejuvenation, and a perennial sense of insecurity concerning the West will not be a platform for stabilizing and creating constructive relations, especially if this nationalism drives territorial expansion in the South and East China Seas, the Himalayan plateau or across the Taiwan straits.  Dominating AI and Other Technologies  The rapid advancement of technology, particularly in the areas of AI and 5G, is another factor that Chinese analysts believe will shape the trajectory of U.S.-China relations. They see China as a leader in these areas, with the potential to surpass the United States in terms of technological innovation and economic growth. Chinese analysts argue that the U.S. is threatened by China’s technological progress and is seeking to limit its access to advanced technology, particularly in the areas of AI and 5G. They also believe that the United States is using national security concerns as a pretext for restricting Chinese access to these technologies. The U.S. Chips Act and the growing first tier semiconductor and technology firewall that is being erected around China by the U.S. in cooperation with Japan, South Korea, the Netherlands and Taiwan demonstrate the centrality the U.S places on dominating these spheres of technology. The consequence for China according to analysts in and out of China is that it will no longer have access to the most sophisticated semi-conductors, semiconductor producing machines and the associated expertise to keep up in the race to be the first mover when it comes to AI and other technologies that rely on first tier semi-conductor chips. In concrete terms, this means that as the U.S. and its allies will form a chips coalition among like-minded countries resulting in their collective abilities to generate scientific breakthroughs that can be translated into military and economic advantages that will preserve U.S. dominance and the existing rules-based order. Beijing is aware of this challenge and has attempted to reduce its reliance on the U.S. and Western states through its Made in China 2025 strategy and Dual Circulation Strategy. Whether these initiatives will be sufficient to outmaneuver U.S. initiatives to dominate semi-conductors and ultimately AI and other sensitive technologies is yet to be determined. Role of ASEAN, Japan, and the EU Chinese analysts also pay close attention to the role of regional players such as ASEAN, Japan, and the EU in the trajectory of U.S.-China relations. They believe that these countries have a significant influence on the balance of power in the region and that their relationships with the United States and China are critical. Japan’s release in December 2022 of three strategy documents—the National Security Strategy (NSS), National Defense Strategy (NDS), and Defense Buildup Program aims to uphold the current rules-based order and prevent the emergence of Chinese hegemony in the IndoPacific region. Meanwhile, the new Washington Declaration between the United States and the Republic of Korea (RoK) commits to engage in deeper, cooperative decision-making on nuclear deterrence, including through enhanced dialogue and information sharing regarding growing nuclear threats to the ROK and the region. The recent meeting between U.S. President Biden and Philippine President Marcos reaffirms the United States’ ironclad alliance commitments to the Philippines, underscoring that an armed attack on Philippine armed forces, public vessels, or aircraft in the Pacific, including in the South China Sea, would invoke U.S. mutual defense commitments under Article IV of the 1951 U.S.- Philippines Mutual Defense Treaty.”. These are explicit examples of how U.S. allies, through their cooperation and partnerships with the U.S., are aiming to preserve U.S. hegemony. In short, Chinese analysts argue that the United States is seeking to use its relationships with these countries to contain China’s rise, while China is seeking to build closer relationships with its neighbors and BRI partners to expand its influence and build win-win relationships based on its Five Principles of Peaceful Co-existence. Lastly, U.S. and ASEAN watchers in China believe that the United States is losing influence in the region, particularly with ASEAN countries, and that China is poised to fill the power vacuum owing to its extensive economic ties in the region, ties that many in Southeast Asia are dependent on for sustainable development despite reservations over the possible negative ramifications of increased Chinese economic and diplomatic influence in the region. Heft of Comprehensive National Power (CNP) Sensitive to the changing power balances and what this means for China’s ability to achieve its core national interests, China places enormous weight on Comprehensive National Power (CNP) as a key measure of a country’s overall strength and capability in all aspects of national development, including economic, military, technological, cultural, and diplomatic power as Hu Angang and Men Honghua write in their article title “The rising of modern China: Comprehensive national power and grand strategy”. The concept of CNP has been used by Chinese leaders since the 1980s to assess China’s relative strength compared to other countries, particularly the United States. In recent years, China has focused on increasing its CNP as part of its strategic competition with the U.S. Beijing aims to surpass the U.S. in terms of overall power and influence, believing that a higher CNP will enable the country to better protect its national interests, enhance its global influence, and achieve its long-term strategic goals. To increase its CNP, China has pursued a range of policies and initiatives. One of the key areas of focus has been economic development, with China becoming the world’s second-largest economy and a major player in global trade and investment. Through the Made in China 2025, the Belt Road Initiative (BRI), and the Dual Circulation Model, China has also invested heavily in science and technology, with a particular emphasis on emerging technologies such as artificial intelligence, quantum computing, and 5G networks.  In addition, China has modernized its military and expanded its global military presence based on the civil-military fusion (MCF), with the goal of becoming a world-class military power by the middle of the century. China has also pursued a more assertive foreign policy, seeking to expand its influence in key regions such as Southeast Asia, Africa, and the Middle East. Concurrently, China has also sought to promote its soft power, through initiatives such as the Belt and Road Initiative (BRI), which aims to enhance connectivity and economic cooperation between China and other countries. China has also sought to promote its culture and values through the Confucius Institutes and its latest Global Civilization Initiative calling for “called for respecting the diversity of civilizations, advocating the common values of humanity, valuing the inheritance and innovation of civilizations, and strengthening international people-to-people exchanges and cooperation.”  China’s focus on increasing its CNP is driven by its desire to become a major global power and to challenge the U.S.’ dominant position in the international system. While China’s rise has brought many benefits to the country and the world, it has also raised concerns among some countries, particularly the U.S., about the potential implications of China’s growing power and influence. This is especially true as we have seen a growing track record of economic coercion, grey zone tactics, and rejecting international law such as the Permanent Court of Arbitration’s July 2016 decision against its claims in the South China Sea.Conclusion Chinese analysts clearly view the relationship between the United States and China through a complex lens. They see the relationship with the United States as one of the most important in the world and believe that it will continue to shape the trajectory of global politics and economics for years to come. While there are significant challenges and tensions in the relationship between the two countries, Chinese analysts also see opportunities for cooperation and collaboration, particularly in areas such as climate change and global health.

In order to ‘walk, chew gum, and play chess’ at the same time, the US will have to both invest at home and sign more trade deals. A speech late last month by Jake Sullivan, President Biden’s national security adviser, on “Renewing American Economic Leadership” clarified that the administration wants to build resilience to “de-risk” from China. But dealing with Beijing will require more than investing at home. Washington also needs to re-engage in negotiations with China to manage difficulties in the bilateral relationship. And to better compete, the United States should get back into the business of signing trade deals. As Trade Representative Katherine Tai quipped during her 2021 confirmation hearing, the United States can “walk, chew gum, and play chess” at the same time. The Biden administration should not only invest in domestic resilience, but also participate in new trade agreements and negotiate directly with Beijing. Over the past two years, China joined the Regional Comprehensive Economic Partnership (RCEP), began acceding to the Digital Economy Partnership Agreement (DEPA), and applied to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). China’s integration into these new frameworks will create efficiencies in its own economy, while binding Beijing closer to the rest of Asia. Meanwhile, the United States does not expect to see the first “real outcomes” from the Indo-Pacific Economic Framework (IPEF) until the end of 2023, more than one year after its announcement. IPEF, moreover, lacks the market-access agreements characteristic of other, more substantive economic agreements. It is not surprising, then, that the 2023 Lowy Institute Asia Power Index ranks China 100 out of 100 on its “economic diplomacy” index, while the United States receives a ranking of only 34.6. The 2023 State of Southeast Asia survey similarly shows that only 21.9 percent of respondents view the United States as a leader in championing free trade, down from 30.1 percent in 2022. To be fair, Beijing has significant ground to cover before its markets become as free and as open as those in the United States. What many trade partners care about, however, is not where China and the United States have been, but where they are going. To many, it appears as if Washington is turning inward while Beijing continues to open its markets. This leads to the second error in Jake Sullivan’s “new consensus” on international economic policy. He expresses fatalism about China’s economic trajectory without giving credence to the possibility that China may change, or that the United States can play a role in influencing Beijing’s behavior. Sullivan explains, when “President Biden came into office, we had to contend with the reality that a large non-market economy had been integrated into the international economic order in a way that posed considerable challenges.” In response, Sullivan focuses on building domestic “resilience” and “capacity” to reduce America’s dependence on China. Washington appears to have given up on addressing the non-market practices contributing to U.S. dependence on China in the first place, including state subsidies and dumping. The administration also seems to have forgotten that access to low-priced imports is an important factor in the competitiveness of U.S. firms and the standard of living of American consumers. Fatalism about China’s trajectory tracks with the Biden administration’s overall Indo-Pacific Strategy, which does not seek to “change the PRC but to shape the strategic environment in which it operates.” Fortunately, Treasury Secretary Janet Yellen has bucked the trend by stating that she hopes to “engage” with Beijing “in an important and substantive dialogue on economic issues.” Not trying to influence Beijing, on the other hand, would give up an essential element of any effective China policy. Of course, prior negotiations were by no means unqualified successes. The Trump administration’s “phase one” trade deal largely failed to change Beijing’s behavior, in part, because the bilateral purchase agreements effectively, as Yukon Huang and Jeremy Smith of the Carnegie  Endowment for International Peace put it, “prescribed state-managed trade over market forces.” Other negotiations, however, have seen more success. Former Treasury Secretary Hank Paulson was able to persuade Beijing to revalue its currency by more than 20 percent in the late 2000s, helping to level the trade relationship. China’s WTO accession negotiations also moved the needle on the country’s economic policy. While Beijing failed to carry out many of its WTO commitments, China did reform key aspects of its economy and, notably, slashed its average tariff level from 15.3 percent in 2001 to 9.8 percent over the next decade. U.S. policymakers should learn the lessons of past negotiations rather than standing by as U.S.-China economic relations deteriorate further. One way to pressure Beijing to continue along the path of reform and opening up would be to carry out negotiations in concert with U.S. friends and allies. The Trump administration gave up significant leverage by dealing with Beijing bilaterally, outside the parameters of the international trade system. Plurilateral negotiations with U.S. partners — many of whom share U.S. grievances — may be more effective at convincing China to change course. The consequences of not having an effective economic dialogue with Beijing will become more apparent over time. Despite Washington’s wishes, China is simply not going away. Beijing will continue to join new trade agreements and integrate itself deeper into the global economy, even as the United States focuses on building resilience at home.

The further strengthening of ties between the US and the Philippines is indicative of the breadth and scope of maritime security arrangements in the region.Only four months into the year and 2023 has already been very busy in terms of United States (US) engagement in the Indo-Pacific, particularly in East Asia and the South China Sea. During Philippine President Ferdinand Marcos Jr’s recent visit to the US, alongside reaffirming the continuation of the broader ambit of bilateral partnership, the two countries established ‘ground rules’ on US-Philippine defence cooperation on 3 May. The US and the Philippines have a long-standing treaty partnership that dates back to the post-World War II era. The treaty partnership began with the signing of the Mutual Defense Treaty (MDT) in 1951, which established a framework for military cooperation and mutual defence between the two countries, making Manila the oldest ally of Washington in the region. Beijing, quite expectedly, has expressed its disapproval of this new development characterising it as Washington’s attempt at drawing Southeast Asian nations into a small clique to contain China. Beijing’s usual reaction whenever the US conducts outreach in the region comprises various versions of the narrative that Washington is forcing countries to sacrifice their sovereign identities by becoming pawns in the latter’s efforts to destabilise the region and turn countries against China. Mao Ning, a spokesperson for the Chinese Foreign Ministry stressed that the South China Sea is not a hunting ground for countries outside of it. Meanwhile, the state-run foreign-language news channel, CGTN, warned against President Marcos’s ‘dangerous courtship.’The reinforced scope of the US-Philippines defence partnershipInterestingly, in addition to reiterating US commitments as Manila’s treaty partner and referencing the strong need for maintaining peace and stability in the South China Sea, the joint statement noted that the two sides “affirm the importance of maintaining peace and stability across the Taiwan Strait” as an indispensable element of global peace and security. Defence ties between the US and the Philippines have indeed expanded to include, first the South China Sea and now, the Taiwan Strait. What this indicates is a steady consolidation of security frameworks in the region that would form bulwarks against Beijing’s repeated and expanding overtures into the South China Sea and pressures on Taiwan. Given that the Taiwan Strait lies at a distance of only 800 miles from Manila, it is not surprising that the security of the Strait has been included under the expanded purview of Washington and Manila’s treaty partnership. Under the basic framework of the MDT, the US and the Philippines agreed to come to each other’s aid in the event of an attack by an external aggressor. The MDT has been an important part of the US-Philippines relationship, providing a basis for close military cooperation and joint training exercises. The US has provided military aid and assistance to the Philippines, helping to modernise its armed forces and improve its capabilities in areas such as maritime security and counterterrorism. Despite episodic friction over issues such as human rights and the rule of law, the US-Philippines treaty partnership remains an important part of both countries’ foreign policy agendas. As the geopolitical landscape in Asia continues to evolve, the US-Philippines treaty partnership will likely remain an important pillar of stability and cooperation in the region. Now, the partnership includes a broadening of “information sharing on the principal threats and challenges” to the peace and security of the US and the Philippines. The upgraded ‘ironclad’ alliance commitments also make room for the inclusion of new sites which could contribute to the enhancement of Manila’s maritime security and modernisation efforts under the U.S.-Philippines Enhanced Defense Cooperation Agreement. It also creates a greater space for US involvement in the improvement of local and shared capacities in the delivery of humanitarian assistance and disaster relief.What this means for the Indo-PacificPresident Marcos’s visit comes close on the heels of South Korean President Yoon’s visit to Washington which resulted in the latter agreeing to send an Ohio-class nuclear ballistic missile submarine to Seoul to strengthen deterrence against Pyongyang’s recent nuclear flexing. Earlier in April, Manila allowed Washington access to four additional military bases for joint training, pre-positioning of equipment and building of facilities such as runways, fuel storage, and military housing. Access to these new locations is significant as two of them—Isabela and Cagayan—are positioned facing Taiwan while the Palawan base is in proximity to the Spratly Islands—a source of a long-standing dispute between China and the Philippines. The two countries have agreed to resume joint maritime patrols in the South China Sea and Manila is also assessing a trilateral security pact involving Japan. In mid-April, before President Marcos’s visit, the two countries participated in their largest-ever joint military drills, Exercise Balikatan, in the South China Sea. China is decidedly furious at the pace and scope of these new developments. Undoubtedly, steps like these are strategic and oriented towards boosting the defence postures of ‘like-minded’ countries in the region. But despite Beijing’s strong censure, these measures are indicative of the breadth and scope of maritime security arrangements in the region being on the course to be further strengthened.