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The first item in Joe Biden’s in tray? Dealing with China

Some American problems are more fundamental than the identity of the commander-in-chief

By Ngaire Woods   December 2020

Beyond the political turmoil at home, the US must refocus its attention abroad—especially if it wants to contend with China’s growing confidence on the international stage. Photo: Charles Dharapak/AP/Shutterstock

The world is full of foreign policy problems, conflicts and traps for a US president starting a term in 2021. In office, Donald Trump has tended to do his own thing, eschewing the expertise of America’s intelligence agencies and foreign policy professionals; too often his personal diplomatic overtures have at least seemed linked to his family’s commercial interests. It would be expected that any other kind of administration would adopt a more sober approach, rooted in a serious analysis of US national interests. Once the dust settles on the domestic turmoil surrounding this year’s election cycle, the world will know whether or not the country has a president with any interest in—or the capacity for—rebuilding the integrity of America’s foreign policy machine, or indeed filling the very long list of vacancies in the State Department.

But beneath all of this is a much larger strategic issue that any American president has to grapple with. After decades of global hegemony, the US finds itself facing strategic competition from China. Many of 21st-century America’s other dilemmas can be traced back to this challenge, and the central question for the presidency today is how to manage it.

A first uncomfortable fact is that China is competing for influence within the very institutions and rules that the US created after the Second World War. In recent years China has enhanced its position in the United Nations, where it is currently the second-largest contributor to both the general budget and the peacekeeping budget. Overall, Chinese officials now head up four of the 13 UN specialised agencies (other than the IMF and World Bank)—that is, three more than the US. In the IMF (and similarly in the World Bank) China is the third most powerful member state, with 6.08 per cent of the voting power (the US still has 16.51 per cent and Japan 6.15 per cent, but Germany just 5.32 per cent); it has a seat on the Executive Board; and a senior Chinese official is deputy managing director. In the World Trade Organisation (WTO) China has become the third most active country in the dispute settlement process.

China is also building institutions of its own, such as the Shanghai Cooperation Organisation, an eight-member group that includes Russia and central Asian countries, as well as India and Pakistan; the Asian Infrastructure Investment Bank, a multilateral organisation with 102 members based in Beijing that helps to finance infrastructure; and the New Development Bank, formed by emerging economies and based in Shanghai. In 2013, President Xi Jinping launched the Belt and Road Initiative, an infrastructure project that plans to link partners from China’s western border (the former Soviet republics) to the south (India, Pakistan and southeast Asia) as well as to the wider world beyond, such as Italy who signed up in 2019 as the initiative’s first European partner.

“An uncomfortable fact for the United States today is that China is competing for influence within the very institutions and rules that it helped to create”

Meanwhile, a vaguer general presumption of US primacy and leadership continues to wane. The 2003 war in Iraq split the US-led western alliance. The 2008 global financial crisis—which originated in the US and then in Europe—accelerated the rise of China and other emerging economies. Most recently, President Trump has further alienated allies by pulling the US out of the climate negotiations and the long-negotiated Iran nuclear deal. His shambolic handling of Covid-19 has further dented support for US leadership abroad. In a poll of 11,000 citizens across nine European countries, reported in June, a staggering 70 per cent of people noted that their perceptions of the US had worsened over the course of the virus. The researchers conducting the poll cite the risk that Europeans will come “to see the US as a broken hegemon that cannot be entrusted with the defence of the western world.”

Withdraw, bully or build?

A key challenge on the American horizon for 2021 will be rebuilding trust with its allies, while at the same time evolving its leadership. The US has long wrestled with three impulses on foreign policy. The isolationists wish to avoid “entangling alliances”: America alone. The unilateralists would impose the terms of the US on the rest of the world: America first. The multilateralists would focus on strengthening institutions that assist in forging cooperation with other countries: America leading. The choice of strategy is not the president’s alone. He will have to work with a China-hawkish Congress and, beyond that, an electorate much less interested in foreign policy than it was four years ago.

But “America alone” has not been working well for a country which, on at least some issues, needs agreement with others. Withdrawing from the world has resulted in the US being excluded from negotiations that have profound consequences for it. When the US pulled out of the Trans-Pacific Partnership negotiations, all the other partners simply continued and concluded a successful deal among themselves without America. Similarly, when the US withdrew from global climate change negotiations, it became the only country not participating. And when the US announced this year that it would cut funding and withdraw from the World Health Organisation (WHO), China responded by pledging $2bn over two years to help fight the pandemic. 

“America first” has also had its weak moments. In the WTO the US sought to press all others into agreeing to changes that Washington imagined would bolster certain American commercial sectors and perhaps strengthen the US balance of trade deficit. Trump has been so fixated on the deficit he has blocked any appointments of new judges to the appellate body, the backstop that underpins the application of WTO rules. The effect has been to render the appellate body inoperative since 11th December 2019. China’s response has been to circulate a reform proposal that underscores the importance of global trade rules, while at the same time criticising those blocking appointments to the appellate body. The debacle has offered yet another example of what any future international order might look like, in which much of the world settles the rules for its business without America being in the room.

“In the end, however reluctantly, the United States need to find a way to rub along with China more fruitfully”

In another “America first” moment, in 2019, the US sought to impose its will on other governments electing the head of the Food and Agriculture Organisation (FAO), an organisation conceived and born in the US (its first headquarters were in Washington DC) and to which the US is one of the largest contributors. The Trump administration refused to support the EU-backed French candidate. The result was that it inadvertently cleared the way for the Chinese vice-minister, Qu Dongyu, to be elected instead.

“America leading” is less flashy. It requires deft diplomacy and meticulous coalition building. It takes time and patience. It has not been, therefore, a road that appealed to Trump. At least some people in a prospective new administration would want to re-engage with allies and begin conversations with partners on trade policy and WTO reform, the Paris Climate Accords, the WHO, UNESCO and the Iran nuclear deal. But especially for a superpower in relative decline—which can no longer rely on the assumption of its own might to set the terms of debate in the way it did in the past—doing any of this will require expertise, careful negotiation, as well as a clear sense of America’s strategic interests, plus an understanding of the allies who can most naturally support these.

Failing technology

Aside from having to settle whether to withdraw, bully or build in response to “China rising,” America’s president will have to grapple with America’s faltering technological supremacy, which has implications for domestic as well as foreign policy. In the aftermath of the Second World War, the US built a system that made it the dominant global player in technological innovation. Government-driven investments in basic research and development paved the way for advances in both private and state industry; military capabilities developed, and cemented, close relationships and partnerships. Outstanding training in science, technology, engineering and mathematics attracted the best and brightest from across the world. Commitments to open trade won new markets abroad, further fuelling domestic innovation.

US leadership in technology is now less clear. Federal support for research and development has stagnated. Insecure supply chains, a deteriorating manufacturing capability and reliance on competitor nations has hampered the military uptake of new technologies. The Trump administration’s trade and immigration policies may have further blunted America’s competitive edge, alienating the allies, students and researchers who help to keep America competitive. China meanwhile has been investing hugely. Its 2015 “Made in China 2025” plan aims to rapidly expand its high-tech and advanced manufacturing base, especially in AI, advanced robotics, next-generation information technology, telecommunications, electric cars and new energy vehicles. The plan explicitly seeks greater global self-sufficiency in high-tech industries (70 per cent by 2025) and a dominant position in global markets.

The US response until now has been fierce words accompanied by a raft of trade and commerce restrictions that have driven a wedge between US and Chinese companies, breaking the global production chains that linked them. In the longer term, this will do nothing for America’s performance in the “technology race.” Washington will need to consider instead how to compete with China’s levels of investment in research and development, infrastructure, education and skills, while also thinking again about how to recombine the drivers that led to innovation in the past: consumer power, commercial need, military security and global exports.

Rather than forcing Europeans and others to choose between itself and China, the US will in the end, however reluctantly, need to find a way to rub along with China more fruitfully, competing vigorously where that is appropriate and cooperating where that is essential. Above all, the man in the Oval Office would do well to appreciate that the strategic rivalry with Beijing is a rivalry between nations that both depend on global markets, global finance, global innovation and the cooperation of other countries and regions of the world to sustain their own successes.

Over a century ago, President Theodore Roosevelt famously advised America to “speak softly and carry a big stick.” In today’s world that means—or should mean—combining quiet, deft diplomacy with renewed primacy in advancing and deploying technology.

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