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10 March 2021

Global strategy 2021: An allied strategy for China


This strategy was produced in collaboration with experts from ten leading democracies.
Foreword

Following World War II, the United States and its allies and partners established a rules-based international system. While never perfect, it contributed to decades without great-power war, extraordinary economic growth, and a reduction of world poverty. But this system today faces trials ranging from a global pandemic and climate change to economic disruptions and a revival of great-power competition.

As Henry Kissinger has pointed out, world order depends on the balance of power and principles of legitimacy. The rise of Chinese power is straining both aspects of the existing rules-based system. China benefited from the system and does not seek to kick over the table as Hitler did with the 1930s international order, but China wants to use its power to change the rules and tilt the table to enhance its winnings. Beijing is directing its growing economic, diplomatic, and military heft toward revisionist geopolitical aims. While we once hoped that China would become what we considered a “responsible stakeholder” in a rules-based system, President Xi Jinping has led his country in a more confrontational direction.

Some analysts portray a new Cold War, but this historical metaphor misunderstands the nature of the new challenge. The Soviet Union was a direct military and ideological threat, and there was almost no economic or social interdependence in our relationship. With China today, we have half a trillion dollars in trade and millions of social interchanges. Moreover, with its “market-Leninist” system, China has learned to harness the creativity of markets to authoritarian Communist party control. It announced its intent to use this system to dominate ten key technologies by 2025. We and our allies are not threatened by the export of communism – few people are taking to the streets in favor of Xi Jinping thought – but by a hybrid system of interdependence. China has become the leading trading partner of more countries than the US. Partial decoupling on security issues like Huawei (discussed below) is necessary, but total decoupling from our overall economic interdependence would be extremely costly, and even impossible in the case of ecological interdependence such as climate change or future pandemics. For better and worse, we are locked in a “cooperative rivalry” in which we have to do two contradictory things at the same time.

Addressing the China challenge will require a collective effort on the part of the United States and its allies and partners, in which we leverage effectively our hard and soft power resources to defend ourselves and strengthen a rules-based system. Some pessimists look at China’s population size and economic growth rates and believe that the task is impossible. But on the contrary, if we think in terms our alliances, the combined wealth of the Western democracies – US, Europe, Japan – will far exceed that of China well into the century. A clear strategy with well-defined goals that neither under- nor over-estimates China is necessary for the current moment. Over the past two years, the Atlantic Council has convened high-level meetings of strategists and experts to produce just that.

In this paper, Global Strategy 2021: An Allied Strategy for China, Matthew Kroenig and Jeffrey Cimmino, along with expert collaborators from ten of the world’s leading democracies, propose a logical and actionable strategy for addressing the China challenge. The strategy articulates clear long- and short-term goals and several major strategic elements to help achieve those goals.

First, the paper calls for strengthening likeminded allies and partners and the rules-based system for a new era of great-power competition. This will require, for example, prioritizing innovation, repairing infrastructure, and establishing new institutions to bolster democratic cooperation. A successful strategy begins at home.

Second, likeminded allies and partners should defend against Chinese behavior that threatens to undermine core principles of the rules-based system. Executing this element will mean prohibiting China’s engagement in economic sectors vital to national security, countering Chinese influence operations, and deterring and, if necessary, defending against, Chinese military aggression in the Indo-Pacific.

Third, the authors recognize that China also presents an opportunity, and they recommend that likeminded allies and partners engage China from a position of strength to cooperate on shared interests and, ultimately, incorporate China into a revitalized and adapted rules-based system. Thus, efforts should be made to cooperate with China on issues of shared interests, including public health, the global economy, nonproliferation, and the global environment.

They argue that the desired endpoint of the strategy is not everlasting competition or the overthrow of the Chinese Communist Party, but rather to convince Chinese leaders that their interests are better served by cooperating within, rather than challenging, a rules-based international system. They pay attention to both the rivalry and the cooperative possibilities in the relationship.

The paper presents a sound strategic framework and a comprehensive and practical plan for the US and its democratic allies to follow as they address the China challenge. I encourage experts and officials from the United States and allied nations to study this thoughtful report. Following this strategy could help leading democracies cope with the China challenge and advance a revitalized rules-based system for years to come.

Harvard University

The system

The Gist: After World War II, the United States and its allies and partners established a rules-based international system. The rules of this system shape financial systems, trade, diplomacy, and the resolution of disputes between nations.

Sustained by the leadership of the United States and other leading democracies, this system has led to an unprecedented expansion of peace, prosperity, and freedom across the globe.

Key Elements:

The US-led, rules-based international system constructed by the United States and its democratic allies at the end of World War II reflects a set of norms and principles pertaining to global security, economics, and governance.

The system has contributed to the absence of great-power war for over seven decades.
Worldwide living standards have nearly tripled as measured by GDP per capita, and the percentage of people living in extreme poverty has dropped from 66 percent to less than 10 percent since 1945.

The number of democratic countries worldwide has grown from 17 in 1945 to 96 today.

The rise

The Gist: In 1949, as the rules-based international system was in its infancy, China underwent a pivotal shift. Mao Zedong led a revolution, after which China emerged as a communist state.

But China struggled to grow into a major player on the global stage until Deng Xiaoping rose to power in the 1970s. Deng instituted a series of market-oriented economic reforms that unleashed a torrent of growth. China rapidly became a force to be reckoned with on the world stage.

Key Elements

Deng opened China to foreign investment and loosened restrictions on internal markets.
Technology and capital flooded into the country from abroad; peasants moved to cities for industrial jobs; entrepreneurs founded businesses and produced inexpensive goods for export using cheap labor.

As a result of a Deng’s reforms, China’s economy grew at a rapid pace, achieving double-digit growth rates for decades. In 2010, China surpassed Japan as the world’s second-largest economy and it currently possesses over 15 percent of world GDP.

The Chinese Communist Party (CCP) promised economic growth and improved living standards in return for political obedience. This authoritarian model of capitalism became known within the Party as “socialism with Chinese characteristics.”

In the realm of foreign policy, Deng advised that China should “hide its capabilities and bide its time.” China would keep a low profile as it rose to become a great power.

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