Right US-China policy prioritizes collaboration despite competition

The Hill has published an article arguing that the evolving dynamics of the US-China relationship demand a nuanced approach that balances competition with strategic collaboration. Caliber.Az reprints the article.

In May 2022, Secretary of State Antony Blinken faced down China hawks and laid out the Biden administration’s policy for the U.S.-China relationship: “invest, align, compete.”

As we celebrate its second anniversary, that is still the administration’s China approach — and it is the right one if it leads to cooperation and détente, and not inexorably to conflict.

However, conflict and hostility currently dominate the China discourse. It has been decades since there has been a comparable level of hostility — focused in that case on the Soviet Union, a nation quite unlike China. 

How far different? In addition to basic raw materials and agricultural commodities, the Soviet Union exported over 40 global conflicts, including direct territorial invasions. 

China, by contrast, has succeeded in lifting its people from poverty, contributed to global economic growth and has over the past few decades provided critical manufactured goods such as inexpensive solar panels, at a time when no one in Western Europe or the U.S. has been able to produce them at the same scale. China is vital to a sustainable global economy — it was the fourth largest U.S. goods-trading partner in 2023, with a total trade volume of $575 billion.

It’s also true that China has clearly acted in ways that challenge the world economic order, despite the fact that it benefits from that economic order along with the rest of the world. Given that contradictory reality, “invest, align, compete” has been an effective, productive approach. 

It calms the rhetoric, balances the complex dynamics of engagement with China pragmatically and captures the full nuance of the relationship in a way that has generated specific policy solutions while also addressing critical national security concerns. 

But “invest, align, compete” is not easy to manage. It places demands not only on China but also on the U.S. and our allies; demands that we have not yet fully met. To understand the positive impact of “invest, align, compete” to date, look at it through the lens of infrastructure investment.

• Invest: The “invest” pillar is about U.S. competitiveness. The Bipartisan Infrastructure Law passed in 2021 has allowed the U.S. to start a major infrastructure rebuild — an initiative supported by both parties based on the simple idea that to ensure we have a sustainable strong economy, we need to invest in our infrastructure. China’s economic strength comes from investing over 8 per cent of its GDP in infrastructure compared to less than 2 per cent for the U.S. during the same period. Thanks to the bill, as of late last year, the U.S. has provided nearly $400 billion in funding for over 40,000 projects in over 4,500 communities — including roads, bridges, ports, airports, water systems, high-speed internet, recycling and clean energy. Online threats are pushing the U.S. finally to upgrade cybersecurity systems — not just addressing physical components but also strengthening the technological systems in ways that link it to the 21st century technology-based economy.

• Align: Alignment is, as Blinken explained, about the U.S. and its allies. The G7’s Partnership for Global Infrastructure and Investment (formerly known as the Global Infrastructure Initiative) provides $600 billion in global infrastructure funding over five years for communications technology, clean energy and healthcare to benefit emerging economies. This is a healthy alternative to China’s decades-long investment in global infrastructure. The Indo-Pacific Economic Framework includes a clean energy and clean economy program as part of a far-reaching economic growth plan for the U.S. and 13 Indo-Pacific allies.

• Compete:  U.S. infrastructure initiatives such as the CHIPS and Science Act enhance U.S. competitiveness globally. For example, the U.S. semiconductor industry is thriving as the administration works to onshore production in ways that enhance national security and reduce dependence on China. The U.S., European Union and other allies have so far provided $81 billion in subsidies to the semiconductor industry – the leading edge of a planned total of $380 billion. It is a smart move to ensure self-reliance on a strategic capability. There is economic benefit as well. Thanks to the CHIPS Act in combination with the Bipartisan Infrastructure Law and the Inflation Reduction Act, U.S. companies spent an average of $16.2 billion a month on new manufacturing facilities. Spending more than doubled from 2022 to 2023.

But more is needed. The U.S. must not only invest in itself and align with its partners, it must also invest in the China relationship. The ultimate goal of “invest, align compete” is to make the relationship truly cooperative and productive while collectively maintaining and enhancing the international rules-based system that has helped everyone including China achieve extraordinary growth over the last decades.

To achieve this, three steps are required:

• Align not just with allies but also with China itself on critical areas not limited to climate policy. Both the U.S. and China have identified climate as a key common objective. In a previous opinion piece, I suggested a collaborative focus on the global water crisis — a pressing issue for China, the U.S. and many emerging economies. It is also a threat to global stability. A joint initiative on water, supported by a global water technology fund, would strengthen the relationship and produce global benefits.

• Coordinate development strategies across multilateral institutions. The Asian Infrastructure Investment Bank is now lending to the World Bank and has been working on joint projects with the International Finance Corporation and other development finance institutions. China should integrate its Belt and Road Initiative projects within the global development agenda rather than maintaining a separate and distinct competitive strategy. We can encourage all parties to integrate more deeply with global development efforts. That would ensure greater cooperation among multilateral institutions and avoid the trap of using them as geopolitical tools.  For example, the U.S. should reverse a bad decision and join the Asian Infrastructure Investment Bank.

• Leverage China’s technological advances in non-strategic areas. Goods that can be produced elsewhere at lower cost and that pose no national security threat should not be subject to trade barriers. Importing Chinese solar panels and EV batteries would relieve us of the high cost of parallel development without compromising national security and would accelerate our own energy transformation. Common-sense free trade has worked, while import substitution policies have always failed.

China will not collapse like the former Soviet Union, an artificial construct that was bound to disappear. It is time to step back from the brink, stop talking about a new Cold War (or a hot one) and establish a true engagement policy.