IP Theft collapses China deterrence---nuclear war

In contrast to the military competition of the Cold War, which was a truly global struggle, the dangers for Washington and Beijing are likely to be confined to the Indo-Pacific. Even so, the region features at least four potential hot spots: the South China Sea, the East China Sea, the Taiwan Strait, and the Korean Peninsula. Neither side wishes for conflict, but tensions are rising as both invest in offensive capabilities, boost their military presence in the region, and operate in ever-closer proximity. Washington fears that China is trying to push U.S. forces out of the western Pacific, and Beijing fears that the United States is trying to hem it in. Given China’s harassment of U.S. aircraft and naval vessels, minor incidents risk escalating into major military confrontations; Admiral Wu Shengli, the former naval commander of the People’s Liberation Army, has warned that any such incident “could spark war.”

But coexistence in the Indo-Pacific by both militaries should not be dismissed as impossible. The United States must accept that military primacy will be difficult to restore, given the reach of China’s weapons, and instead focus on deterring China from interfering with its freedom of maneuver and from physically coercing U.S. allies and partners. Beijing will have to accept that the United States will remain a resident power in the region, with a major military presence, naval operations in its major waterways, and a network of alliances and partnerships.

Taiwan and the South China Sea are likely to present the most significant challenges to this overall approach. A military provocation or misunderstanding in either case could easily trigger a larger conflagration, with devastating consequences, and this risk must increasingly animate the thinking of senior leaders in both Washington and Beijing.

On Taiwan, a tacit commitment not to unilaterally alter the status quo is perhaps the best that can be hoped for given the historical complexities involved. Yet Taiwan is not only a potential ash point; it is also the greatest unclaimed success in the history of U.S.-Chinese relations. The island has grown, prospered, and democratized in the ambiguous space between the United States and China as a result of the flexible and nuanced approach generally adopted by both sides. In this way, the diplomacy surrounding Taiwan could serve as a model for the increasingly challenging diplomacy between Washington and Beijing on a variety of other issues, which are similarly likely to include intense engagement, mutual vigilance and a degree of distrust, and a measure of patience and necessary restraint. Meanwhile, in the South China Sea, Beijing’s understanding that threats to freedom of navigation could have devastating consequences for China’s own economy might help—when combined with U.S. deterrence—modulate its more nationalist sentiments.

To achieve such coexistence, Washington will need to enhance both U.S.-Chinese crisis management and its own capacity for deterrence. Even as Cold War adversaries, the United States and the Soviet Union worked concertedly to reduce the risk that an accidental collision would escalate to nuclear war; they set up military hot lines, established codes of conduct, and signed arms control agreements. The United States and China lack similar instruments to manage crises at a time when new domains of potential conflict, such as space and cyberspace, have increased the risk of escalation.

In every military domain, the two countries need agreements that are at least as formal and detailed as the U.S.-Soviet Incidents at Sea Agreement, a 1972 deal that established a set of specific rules aimed at avoiding maritime misunderstandings. The United States and China also need more communication channels and mechanisms to avoid conflict—especially in the South China Sea—to allow each side to quickly clarify the other’s intentions during an incident. The bilateral military relationship should no longer be held hostage to political disagreements, and senior military offcials on both sides should engage in more frequent and substantive discussions to build personal ties as well as understandings of each side’s operations. Historically, progress on some of these exports, especially crisis communication, has proved difficult: Chinese leaders fear that crisis communication could embolden the United States to act with impunity and would require devolving too much authority to senior military officers in the field. But these worries may be easing, given China’s growing power.

Effective U.S. strategy in this domain requires not just reducing the risk of unintentional conflict but also deterring intentional conflict. Beijing cannot be allowed to use the threat of force to pursue a fait accompli in territorial disputes. Yet managing this risk does not require U.S. military primacy within the region. As the former Trump administration defense official Elbridge Colby has argued, “deterrence without dominance—even against a very great and fearsome opponent—is possible.”

To ensure deterrence in the Indo-Pacific, Washington should reorient its investments away from expensive and vulnerable platforms, such as aircraft carriers, and toward cheaper asymmetric capabilities designed to discourage Chinese adventurism without spending vast sums. This calls for taking a page from Beijing’s own playbook. Just as China has relied on relatively cheap anti-ship cruise and ballistic missiles, the United States should embrace long-range unmanned carrier-based strike aircraft, unmanned underwater vehicles, guided missile submarines, and high-speed strike weapons. All these weapons could protect U.S. and allied interests, even as they dent China’s confidence that its offensive operations will succeed and reduce the risk of collision and miscalculation. The United States should also diversify some of its military presence toward Southeast Asia and the Indian Ocean, making use of access agreements rather than permanent basing when necessary. This would place some U.S. forces beyond China’s precision-strike complex, preserving their ability to promptly address crises. It would also preposition them to address a wide range of contingencies beyond conflicts involving China, including humanitarian assistance, disaster relief, and antipiracy missions.

ESTABLISHING RECIPROCITY

Unlike the Soviet Union, which focused its resources on military power, China views geoeconomics as the primary arena of competition. With an eye toward the future, it has invested heavily in emerging industries and technologies, including artificial intelligence, robotics, advanced manufacturing, and biotechnology. China seeks dominance in these fields in part by denying Western companies reciprocal treatment. The United States granted China permanent normal trade relations, supported its entry into the World Trade Organization, and has generally maintained one of the world’s most open markets. But through a combination of industrial policy, protectionism, and outright theft, China has put in place a range of formal and informal barriers to its markets and has exploited American openness.

This structural imbalance has eroded support for stable U.S.- Chinese economic ties, and the relationship faces a heightened risk of rupture even if Xi and U.S. President Donald Trump are able to reach a near-term trade truce. Many in the American business community are no longer willing to tolerate China’s unfair practices, which include employing state hackers to steal intellectual property, forcing foreign companies to localize their operations and engage in joint ventures, subsidizing state champions, and otherwise discriminating against foreign companies.

Alleviating these growing frictions while protecting American workers and innovation will require making China’s full access to major markets around the world contingent on its willingness to adopt economic reforms at home. Washington, for its part, will have to invest in the core sources of American economic strength, build a united front of like-minded partners to help establish reciprocity, and safeguard its technological leadership while avoiding self-inflicted wounds. The most decisive factor in the economic competition with China is U.S. domestic policy. The notion of a new “Sputnik moment”—one that galvanizes public research as powerfully as seeing the Soviet Union launch the world’s first satellite did—may be overstating the point, but government does have a role to play in advancing American economic and technological leadership. Yet the United States has turned away from precisely the kinds of ambitious public investments it made during that period— such as the Interstate Highway System championed by President Dwight Eisenhower and the basic research initiatives pushed by the scientist Vannevar Bush—even as it faces a more challenging economic competitor. Washington must dramatically increase funds for basic science research and invest in clean energy, biotechnology, artificial intelligence, and computing power. At the same time, the federal government should scale up its investments in education at all levels and in infrastructure, and it should adopt immigration policies that continue to enhance the United States’ demographic and skills advantage. Calling for a tougher line on China while starving public investments is self-defeating; describing these investments as “socialist,” given the competition, is especially ironic. Indeed, such strange ideological bedfellows as Senator Elizabeth Warren, Democrat of Massachusetts, and Senator Marco Rubio, Republican of Florida, are making a convincing case for a new U.S. industrial policy.

On top of this domestic foundation, Washington should work with like-minded nations to dene a new set of standards on issues that the World Trade Organization does not currently address, from stateowned enterprises to indigenous innovation policies to digital trade. Ideally, these standards would connect Asia and Europe. To this end, the United States should consider starting a rules-setting initiative of market democracies layered over the WTO system, which would ll these gaps. The logic is straightforward. If China hopes to enjoy equal access to this new economic community, its own economic and regulatory frameworks must meet the same standards. The combined gravitational pull of this community would present China with a choice: either curb its free-riding and start complying with trade rules, or accept less favorable terms from more than half of the global economy. If Beijing chooses to hold to the line that the necessary reforms amount to economic regime change, it can certainly do so, but the world would be well within its rights to oer China reciprocal treatment. In some cases, Washington may still need to impose reciprocal measures on China unilaterally, by treating its exports and investments the same way Beijing handles U.S. exports and investments. These eorts will be challenging and costly, which is precisely why the Trump administration’s decision to pick trade ghts with U.S. allies rather than rally them to a common position vis-à-vis China is such a waste of American leverage.

The United States will also have to safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors. Doing so will require some enhanced restrictions on the ow of technology investment and trade in both directions, but these eorts should be pursued selectively rather than wholesale, imposing curbs on technologies that are critical to national security and human rights and allowing regular trade and investment to continue for those that are not. Even these targeted restrictions must be undertaken in consultation with industry and other governments; failing to do so could Balkanize the global technology ecosystem by impeding ows of knowledge and talent. Such a development would neutralize a key U.S. competitive advantage relative to China: an open economy that can source the best global talent and synthesize the biggest breakthroughs from around the world. Meanwhile, overreach on technology restrictions could drive other countries toward China, especially since China is already the largest trading partner for most.