A response to "Underestimating China," an article in Foreign Affairs

A response to “Underestimating China” by Kurt M. Campbell & Rush Doshi, link here:

In their piece “Underestimating China,” Messer’s Kurt Campbell and Rush Doshi lay out a comprehensive argument emphasizing the importance of a strategic reassessment regarding China. While China's economic growth has slowed and faces a series of challenges from youth unemployment to demographics to debt, it will be a strong competitor to the United States because of its technology, manufacturing capabilities, and military modernization. They also recognize the challenges in understanding what China is today and how to deal with the country.

Because the United States cannot match China’s output and capacity alone, the authors argue, it should rally allies and partners to its cause and undertake a “fundamental reorientation” of its diplomacy from one that is “command-and-control” to “capacity-centric.” By aligning with democracies and market economies, and alliances such as NATO and Japan, China can be outscaled and outcompeted. Such a “capacity-centric” approach includes building common regulations on export controls and will form a bulwark against a China-led axis. But the authors fail to lay out a clear value proposition for why those countries will be willing to join those efforts. Add to this the events of the last few months, and Washington is now alone in trade, and the world has changed. Traditional alliances, such as those in trade, a key bulwark of the US-led global order, have ruptured, and allies have been battered by US actions and policies. There are three main reasons why the authors’ approach of a capacity-centric, alignment of democracies and market economies strategy will not work.

The first is that the treatment of US partners and allies by the current administration has broken trust that took decades, if not generations, to build. These actions have taken away leverage, influence, and friendship that will be challenging to reconstruct in the near future, and thwart attempts to create a bulwark against China. The damage has been done, and US capabilities to rally those to this cause are now gone. Many of our partners now view any deal agreed with the US as ineffective or meaningless, because terms can change at a moment’s notice, and the US is now unreliable and lacks credibility. Add to this that the country is on the outside of the global trading and manufacturing systems, which has caused our partners and allies to make their own agreements and policies without the US, but often with China.

The second is that those the United States would build such a coalition with have demographic, financial, and societal challenges that will be difficult to overcome, and allow them to focus on building such a union. Germany, South Korea, the United Kingdom, and Japan would be key cornerstones of any such alliance. All four are past peak manufacturing, have demographic and financial challenges, and are unlikely to put substantial investments into building out capacity against China when they trade heavily with the country and want access to its technologies and supply chains. Australia and New Zealand are unlikely to commit to policies or collaboration that would take away their economic relationships with China. India will blaze its own trail, especially in light of recent US actions, by integrating further into Asia and the Middle East. Canada and Mexico will continue to be part of the North American trading system, but will buy and sell inputs from China, regardless of US pressure. These same partners and allies also want continued access to Chinese investment, technology, and talent, and are unlikely to “burden-share” US attempts to deal with China.

The third is that while countries are being bullied by the United States with threats, tariffs, and demands, including long-time and traditional allies, China is offering a host of benefits. Approximately 70% of the world's economies, or 145 countries, trade more with China than with the United States, and they are unlikely to join in this effort. Major US allies such as Canada, Mexico, Germany, Japan, South Korea, and Australia have significant trade with China, and it is doubtful they will give this up, especially when the United States is offering so little. China is also in the lead of many major technologies, including robotics, artificial intelligence, cheap semiconductors, batteries, electric vehicles, and green energy. The world, including allies of the United States, wants access to them. These factors will stymie initiatives to build any kind of serious coalition and will increasingly frustrate efforts by the United States to deal with China.

The authors assume that countries see China as the United States does, and that building a “coalition of the willing” to take the country on is what they want, and the best solution to pushing back against Chinese actions. But most countries do not see China in this way, and ultimately, the United States has lost long-term influence over the last decade due to its actions. For example, the outcome of Trade War 1.0 in the first Trump Administration is that it delivered Chinese dominance to Southeast Asia. A reasonable outcome of Trade War 2.0 is cementing Chinese dominance in global supply chains, erasing the possibility for the United States to rally like-minded allies and partners to any serious coalition against China.

The United States needs to offer attractive, long-term, and reliable terms for its partners and allies to join such an alliance.