America is awakening to China. The COVID-19 pandemic has revealed that, to a great degree, our very health is in Chinese hands; from medicines to masks, we are at Beijing’s mercy. Embarrassed by the revelation of this vulnerability, politicians in Washington will certainly act to remedy our medical dependence — with the usual fanfare and self-congratulation. But China’s stranglehold on pharmaceuticals is only a small sliver of its grand strategy for economic, military and geopolitical domination. The West’s response must extend much further — it will require a unified strategy among free nations to counter China’s trade predation and its corruption of our mutual security.
In recent years, China has succeeded in disproportionately positioning its citizens and proxies with loyalties to the Chinese Communist Party in key international governing bodies, allowing it to expand its geopolitical influence. China relentlessly badgers and bribes nations to avert their leaders’ eyes from its egregious abuses of Tibetans, Uighurs and other minorities — as well as its targeting of pro-democracy leaders in Hong Kong. The same methods result in the geopolitical isolation of Taiwan. All the while, China spreads pacifying propaganda throughout the world; even right under our noses, so-called Confucius Institutes peddle pro-China messages in America’s colleges and high schools.
China’s alarming military build-up is not widely discussed outside classified settings, but Americans should not take comfort in our disproportionately large military budget. The government of President Xi Jinping doesn’t report its actual defense spending. An apples-to-apples analysis demonstrates that China’s annual procurement of military hardware is nearly identical to ours; but because our military has missions around the world, this means that in the Pacific, where China concentrates its firepower, it will have military superiority. No wonder the Philippines and other Pacific nations have cozied up to their powerful neighbor.
Today, however, Beijing’s weapon of choice is economic: The tip of its spear is global industrial predation. China not only steals technology from other nations, it massively subsidizes industries it determines to have strategic importance. Further, it employs competitive practices that have long been forbidden by developed nations, including bribery, monopoly, currency manipulation and predatory pricing.
As China ascended in the global marketplace, the West indulged its aberrant industrial policies, hoping it would move toward freedom and adherence to the international rules of commerce. That indulgence exacted a heavy toll. For example, China achieved a breathtaking capture of the global steel market through means that are illegal or impossible elsewhere: pricing far below cost, artificially depressing currency, massive government subsidies and, to be sure, a measure of bribes. Between 2000 and 2009, China more than tripled its global share of steel production, and now it controls more than half of the world’s output — resulting in steel plants shuttered around the globe and the sacrifice of hundreds of thousands of jobs.
China employs its predatory tools across the economy, from high-tech and national security sectors of nanotechnology, telecommunications and artificial intelligence to basic mining and manufacturing. A Chinese conglomerate recently acquired a dominant Indonesian stainless steel company. Indonesia just happens to be the largest producer of the world’s nickel, an essential ingredient in the production of stainless steel. Suddenly, Indonesia has agreed to shut off nickel exports to any of China’s foreign competitors. Another near-monopoly is born, thanks to anti-competitive tactics.
When a predator, unbound by the rules followed by its competitors, is allowed to operate in a free market, that market is no longer truly free.
As a first step, President Trump was right to blow the whistle on Xi and apply tariffs. But we must go a good deal further. We must align our negotiating strategy and policies with other nations that adhere to the global rules of trade. This means narrowing trade disputes with our friends and uniting against China’s untethered abuse. China must understand that it will not have free, unfettered access to any of our economies unless it ceases to employ anti-competitive and predatory practices. It will face a simple choice: Play by the global rules, or face steep economic penalties.
Further action should be applied in national security sectors such as artificial intelligence, telecommunication and, as we now know, pharmaceuticals. The free nations must collectively agree that we will buy these products only from other free nations. In addition to protecting our security, such an agreement would incentivize our research and industrial institutions to invest in these areas, knowing that they will not be undercut by Chinese predatory practices.
China has done what we have allowed it to do; to save a few dollars, we have looked the other way. COVID-19 has exposed China’s dishonesty for all to see. And it is a clarion call for America to seize the moment. When the immediate health crisis has passed, the United States should convene like-minded nations to develop a common strategy aimed at dissuading China from pursuing its predatory path.