Relitigating China Policy – by Matt Turpin

Friends,

I apologize this is arriving a day late, but I was recovering from jetlag.

No doubt you were as surprised as I was by the precision attacks this past week against Hezbollah leadership (and their foot soldiers who hide amongst civilians to launch thousands of rockets on Israel).  The use of pagers and walkie-talkies, by exploiting electronic supply chains, was brilliant.  Then on Saturday, just as Hezbollah was reeling from these embarrassing attacks, its senior military met face-to-face in a building in southern Beirut and was eliminated in a precision Israeli airstrike.

If you haven’t had a chance to read Eve Barlow’s latest post on her Substack Blacklisted, you should… she’s my new hero. 

She reminds us, that there is no shame in picking sides.

The supply chain attack also reinforces why this is an appropriate action to take:

US to propose ban on Chinese software, hardware in connected vehicles, sources say – Reuters

The last thing we need to do is allow the PRC to target connected vehicles in ways that we saw unfold this week with pagers and walkie-talkies.  Next step is shifting the broader electronic manufacturing sector away from the PRC as well.

Whether or not that will happen has a lot to do with the next topic.

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The Battle over China policy in the Democratic Party

An article in Foreign Affairs this week highlights the debate going on in the foreign policy community over the direction of U.S. policy on China and in particular the divisions within the Democratic Party over the future of that policy.  Jessica Chen Weiss, who just left Cornell to take a position at John Hopkins’ SAIS (School of Advanced International Studies) and is rumored to be in the running for a senior policy position in a Harris Administration, argues for relitigating U.S. China policy. 

She certainly criticizes Republicans for provoking a “shooting war with China,” but she spends more time criticizes the Biden Administration for encouraging a “zero-sum” competition, thwarting efforts to “work toward common objectives,” and emphasizing “worst-case scenarios.”

In “The Case Against the China Consensus,” Weiss argues that the United States must return to the path of engagement and reassurance with the Chinese Communist Party. 

Her article, along with a host of others and debates I’ve listened to for the past few months, got me thinking. 

It seems clear that there are three groups within the Democratic Party competing over the future of U.S.-China relations, as well as the future of U.S. economic policy and our approach to the world.  Jessica Chen Weiss represents one faction and its worth examining what those factions are, where they stand in the competition of ideas within Democratic Party circles, and who might win out for influence in a potential Harris Administration.

Group 1 – The Internationalist Competitors

This group, which I call the “Internationalist Competitors” holds sway within the Administration and was brought in by President Biden during the transition to implement his vision of “strategic competition.”  The leaders of this group are folks like National Security Advisor Jake Sullivan, Secretary of State Antony Blinken, Deputy Secretary of State Kurt Campbell, former NSC China Senior Director Laura Rosenberger, former NSC China Director Rush Doshi, and Assistant Secretary of Defense Ely Ratner.  In my judgment, much of the career bureaucracy within the State Department and Defense Department share this group’s diagnosis of the threat posed by China, as well as the approach advocated by this group, “managed competition.”

(FULL DISCLOSURE: While I have significant criticisms of this group’s approach… and they have heard me voice them… their position and approach most closely resemble my personal policy preferences compared to the other two groups)

Many of these individuals had been close to Hillary Clinton during her time as Secretary of State and played a critical role in developing the concepts behind the “Rebalance to Asia” (a foreign policy initiative that took shape during Obama’s first term but floundered in Obama’s second term under Secretary of State John Kerry and National Security Advisor Susan Rice).  Had there been a Clinton Administration in 2017, these individuals would likely have held similar positions to the ones they hold today.  While this is a counterfactual, I feel quite confident in asserting that U.S. policy towards China would have shifted to “strategic competition” in 2017 under a Clinton Presidency, just as it did under the Trump Administration.

The “Internationalist Competitors” are not only concerned about the threat posed by the PRC, but are also committed to shifting the U.S. economic model away from outsourcing manufacturing and financial engineering to something that looks like an industrial renaissance in the United States.  Jake Sullivan organized the blueprint for this approach with the Carnegie report published in September 2020 titled, “Making U.S. Foreign Policy Work Better for the Middle Class.” 

Today, the best spokesperson outside of government for this group within the Democratic Party is Rush Doshi, who left his position as the NSC China Director earlier this year to join the Council on Foreign Relations and create a new China Strategy center.  Rush lays out this group’s approach to China in the piece he wrote for Foreign Affairs in May, “What Does America Want From China? Debating Washington’s Strategy—and the Endgame of Competition.”

Group 2 – The Pro-business Engagers

This group, which I call the “Pro-business Engagers,” represents a portion of the Democratic Party’s foreign policy team that once held sway, but was in many ways excluded from the Biden Administration.  They see an opportunity in a potential Harris Administration to triumph in the policy battle over their principal rivals in the first group.  Many in this group worked closely with the U.S. business community as it invested hundreds of billions into China to create a manufacturing powerhouse at the expense of American workers.  The older generation of this group broke with the Democratic Party’s union supporters to push for PNTR (Permanent Normal Trade Relations) with China during the Clinton Administration. 

The group believes deeply in the mutual benefits of a close and integrated Sino-American economic relationship.  They see engagement and reassurance as the best way to cement this economic relationship and ensure peace and stability.  Many have made their careers around furthering this goal and find it difficult to question their prior assumptions even as conditions have changed.

This group includes folks like former Deputy Secretary of State James Steinberg (who literally wrote a book on “strategic reassurance” in U.S.-China relations), former Secretary of State John Kerry, former National Security Advisor Susan Rice, and new faces like Jessica Chen Weiss.  In the current Administration, I suspect that Treasury Secretary Janet Yellen falls within this group, as evidenced by the “alternative China policy” speech she gave at SAIS in April 2023 (“Remarks by Secretary of the Treasury Janet L. Yellen on the U.S. – China Economic Relationship at Johns Hopkins School of Advanced International Studies”).

This group pines for the good old-days of Sino-American economic integration when the prevailing assumption was that the economic relationship with China was overwhelmingly beneficial to the United States.  China’s entry into the WTO and the extension of free trade benefits allowed U.S. companies to shed costly labor in the United States (and ignore environmental, human rights, and national security concerns) to build out a massive manufacturing enterprise in partnership with the Chinese Communist Party.  Many comforted themselves with the narrative that closer economic ties would further the goal of economic liberalization in China, which would inevitably lead to political liberalization.  Up until last year, Henry Kissinger served as the inspirational father figure of this group (despite his Republican pedigree).

In many ways, Weiss has become one of the new spokespersons for this group, as I think her latest piece shows.  She rose to national prominence in the summer and fall of 2022 when she denounced the Biden Administration’s China policy after serving for 10 months as a CFR fellow on loan to the State Department’s Policy Planning Staff (“The China Trap: U.S. Foreign Policy and the Perilous Logic of Zero-Sum Competition,” Foreign Affairs, August 18, 2022 and “America and China Don’t Need to Knock Each Other Out to Win,” New York Times, October 19, 2022).  I’ve heard that Biden Administration officials felt deeply betrayed by her, since she had been welcomed into the policy making process only to denounce them within weeks after finishing her fellowship… I suspect there will be much less willingness to grant that kind of access to outside academics in the future. 

In her latest article, Weiss heaps praise on the benefits of economic and technological integration, complains at length about the harms caused by export controls, restrictions and tariffs, and like a true believer in the benefits of free trade with China, extolls the virtues of lower costs for American consumers (without mentioning the trade-offs).  As if singing to the Wall Street choir, she acknowledges some benefits of diversification but stresses the “need to establish limits on decoupling and “de-risking”,” while continuously emphasizing the “strategic benefits from economic integration.”  In her telling, “China’s entanglement in the global economy and its dependence on international technology, investment, and markets are important deterrents to aggression”… no doubt Norman Angell would have agreed.

Group 3 – The Progressive Isolationists

The last group I call the “Progressive Isolationists.”  Members of this group share some traits with the emerging isolationist group within the Republican Party (though I’m certain they are loath to admit any resemblance).  They share the view with their Republican counterparts that the United States is the cause of much of the world’s woes and advocate a form of retrenchment, so that America can focus on “fixing itself.”  The two isolationist camps diverge when it comes to the problems they want to fix and find themselves as mortal enemies in domestic policy battles and culture wars that do so much to undermine the country.

Senator Bernie Sanders’ Foreign Affairs article from June 2021 serves as an exemplar of the arguments put forward by the “Progressive Isolationists” when it comes to China policy (“Washington’s Dangerous New Consensus on China: Don’t Start Another Cold War”).

Sanders shares Jake Sullivan’s skepticism of the neo-liberal economic policies that granted PNTR to the PRC and brought them into the WTO (more accurately, Sullivan now shares Sanders’ long-held views).  Those who share Sanders’ views reject the bromides of the “Pro-business Engagers” like Weiss who extol the benefits in economic integration with the PRC.

For Sanders the problem with blindly following Wall Street and C-Suites in their embrace of Beijing was that it would result in a disaster for American workers, “(w)hat I knew then, and what many working people knew, was that allowing American companies to move to China and hire workers there at starvation wages would spur a race to the bottom, resulting in the loss of good-paying union jobs in the United States and lower wages for American workers.” (I find it fascinating that folks like Weiss completely ignore this aspect that so motivates the other two groups).

While the “Progressive Isolationists” may share some of the diagnosis with the “Internationalist Competitors,” they part ways over what to do about it. 

First and foremost, Sanders categorically rejects the need for any increase in defense spending and asserts that “