April 6, 2021 | US-China Decoupling Is Still Happening, And It's Not All Bad
"Decoupling" has become a loaded term, but US-China strategic disentanglement will likely lead to the best long-term outcomes for both sides
I spend a lot of time thinking about how US-China relations have reached this point. I've realized there's very little agreement amongst all kinds of experts on what US-China relations even means. The weird part is no one is really wrong.
Where one person sees an existential challenge to US interests, another sees an opportunity to recalibrate and redefine America’s role in the 21st century. Some see US-China economic integration as a liability, where others, particularly in the US business community, see a newfound need to tie geopolitical strategy together with business strategy. All geopolitical actors see the same challenges in their own ways based on their unique sets of interests and values. The challenge for the Biden administration is to recognize and calibrate these interests into a unified strategic vision.
It’s hard to discuss US-China relations without alluding to “decoupling,” which has morphed into the catch-all term some US policymakers apply towards the idea of a comprehensive US-China geopolitical divorce. Although there's still much debate over whether China or the United States initiated this breakup, the Trump administration can take full credit for slamming the door on the strategic engagement era (circa 1980-2017) and ushering in our current configuration, which we’ll tentatively refer to as "strategic competition."
Several months into Biden’s term, the legacy of Trump's vision for US-China decoupling lives on. Before Biden defeated Trump in the November 2020 Presidential election, former Australian Prime Minister managed to accurately predict Biden's current approach to China: "If the next President of the U.S. is a Democrat, my judgment would be that the new Administration will be equally but more systematically hard-line in their reaction to China."
So far, Rudd's thoughts from last year have proven prescient. The Biden administration has taken steps to compartmentalize sources of US-China tensions on a case-by-case basis. We see this "modular approach" reflected in the make-up of the Biden administration's cabinet. Secretary of State Antony Blinken, NSA Jake Sullivan, and Asia Czar Kurt Campbell are the hawks of the team. We saw one half of this "good cop, bad cop" dynamic play out last month during the Biden team's first high-level talks with senior Chinese officials in Anchorage, Alaska.
Many observers declared the contentious and rancorous talks to be a permanent setback for relations. Such sentiment is premature, as the United States and China are set to meet again virtually later this month at the 2021 Climate Leaders summit in Washington DC. Biden and Xi will address the other directly on climate change, an issue that cannot be tackled without unequivocal buy-in from both the United States and China.
Climate Czar John Kerry is the “good cop” charged with ensuring China’s participation in a multilateral climate agreement. Kerry will meet with his Chinese counterpart Xie Zhenhua virtually during the 2021 Climate Leaders summit later this month. Xie is known for his pragmatic, no-nonsense approach and is well respected both in China and globally.
While the Trump administration's China policy was only superficially hardline and lacked a clear strategic vision, Biden is leveraging the expanding challenge posed by China to galvanize support for the $2 trillion American Jobs Plan, which according to the White House, is an "investment in America that will create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China."
Beyond a long-overdue investment in domestic infrastructure is the Biden administration's renewed focus on outcompeting China in critical emerging technologies such as artificial intelligence. The Trump administration seemed to view blind confrontation with China as an end itself. Conversely, the Biden administration is working to narrow the scope of direct competition to where it matters most for US strategic interests, advanced technologies.
An uncoordinated “decoupling” from China is not part of Biden’s vocabulary. Instead, Biden's priorities are oriented inward so that the United States can gradually step away from its co-dependent relationship with China. The United States lacks the formal authority to compel its multinational corporations to align with US geopolitical interests. However, the Biden administration is demonstrating a serious and rational commitment to incentivizing strategically vital US corporations to reduce business exposure to China and the Asia Pacific.
The best example of the US indigenous innovation is Intel’s recent announcement of its creation of a new business unit Intel Foundry Services. This move positions Intel as a direct competitor to Taiwan-based TSMC in the foundry business. This is a rare case of a US multinational focused on long-term strategic thinking, and an excellent example of the role geopolitics will play in driving business strategy in the high-tech sector.
Ultimately, whether Biden is "tougher on China" is not the most useful question. The better benchmark to use is whether Biden can successfully position the United States' core interests by bringing out the best of America in the face of a rising China. Those who argue the United States should focus solely on limiting Chinas' capabilities reveal that they really don't have any faith in America's future.
The United States and China are still integrated economies. Emotionally charged anti-China rhetoric is a useful tool for scoring political points during an election cycle. Still, it doesn't change the fact that US growth is tied to China’s growth on many levels.
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