In a recent interview on National Public Radio, Jake Sullivan, the national security adviser-designate for the incoming Biden administration, said US foreign policy must serve domestic policy. In other words, “the work that we do abroad fundamentally has to connect to making the lives of working people better, safer, fairer.”
So far, so good. The preceding regime under Donald Trump did next to zero for the bottom 90% of the American people. Indeed, improving the lives of the huge middle class has to be the highest priority for the Biden presidency.
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In fact, Sullivan said, “What Joe Biden is proposing, and what I am reinforcing as the national security adviser, is that every element of what we do in our foreign policy and national security ultimately has to be measured by the impact it has on working families, middle-class people, ordinary Americans here in the United States.”
He pretty much repeated his talking points in his subsequent interview with Fareed Zakaria of CNN.
Unfortunately, he then talked about changing the foreign policy with respect to China, in which he envisaged an approach that differed only slightly from Trump’s zero-sum confrontation. It’s almost as if Sullivan is slowing down the train heading toward the precipice from 100 miles per hour to 50 but is not getting off the track that’s leading to disaster.
Fresh approach needed
Rather than looking backward and relying on past grievances, legitimate or otherwise, as the starting point to rebuilding a relation with China, Sullivan should advise President Joe Biden to face the real world that exists today and find a fresh approach that will look to the future and give boost to his domestic agenda.
Thanks to four years of Trump’s “America first and nobody else matters,” the US he represented has earned the disdain and disrespect of world opinion. This is not to say that China has taken over, but we can say that the world has moved away from a unipolar world dominated by the US and is moving increasingly to a multipolar world.
The China-EU Comprehensive Agreement on Investment (CAI) just concluded before year-end 2020 is a strong confirmation of such a multipolar world. This agreement had been under discussion for seven years, and Biden asking the European Union to delay concluding the pact would seem reasonable and consistent with the pre-Trump relations between the US and Europe.
However, in a world altered by Trump, China and the EU rushed to conclude the deal and presented Biden a fait accompli before he takes office. This is a clear message that the EU is now more interested in protecting its own self-interest than merely following America’s lead.
In November, the ASEAN + 5 (China, Japan, South Korea, Australia and New Zealand) bloc concluded the Regional Comprehensive Economic Partnership Agreement, representing the biggest free-trade pact in the world. The US could have been a member of RCEP, but Trump withdrew from the negotiations before the agreement was concluded. When it comes to understanding the significance of free trade, Trump is a woeful country bumpkin.
The community of nations has moved on while, thanks to Trump, the US has been left at the station. It’s unrealistic to expect that the US under the new Biden administration can simply pick up from where the US was before the Trump debacle.
Sullivan has no middle way
As the new national security adviser, Sullivan faces a choice of which direction to take. He can continue to engage China in an ideological confrontation along the lines of condemning alleged human-rights abuses, intellectual-property theft, unfair trade practices, etc, etc, or he can find ways to collaborate with China that would boost the recovery of the US economy and inject much-needed help for the 90% he talked about. He can’t do both.
To bring the Covid-19 pandemic under control, the US will have to work with China. Using older, conventional technology, China has developed several vaccines that do not require deep refrigeration and are more affordable for developing countries. Worldwide herd immunity will be possible only if most of the world is inoculated. Just protecting the wealthy nations won’t do.
Similarly, China understood the damaging implications of climate change to its economy long before a clueless Donald Trump walked away from the Paris Accord. China has declared its national goal to be carbon-neutral by 2060 – and this is one country that has a habit of meeting its national objectives on or before its stated goal.
The US has some catching up to do, and Biden will have his hands full convincing the American people that continuing emission of greenhouse gases is bad for their personal net worth (due to fire, hurricanes and tornadoes) and not just for their health. As the world’s top two emitters, the US and China have to collaborate to set the example for the rest to follow.
Trying to collaborate as a pair of frenemies just won’t be as effective or convincing than if the US and China can act in a true partnership on a common mission.
Hypocrisy and China’s human rights
A favorite talking point of American politicians and mainstream media alike is to attack China for its alleged human-rights abuses. Amazingly enough, these accusations spew from American mouths without the slightest discomfort or sense of embarrassment. This is despite the fact that the US with just 4.4% of the world’s population has 22% of world’s prison population.
Furthermore, American prison labor has been inhumanly exploited, with inmates paid slave wages for the benefit of government officials in cahoots with contractors that profit from their output. A typical wage paid for 12 hours of hard labor is US$2.25, for the day not per hour, according to NPR. After deducting for sundries and overhead, the net take-home is a pathetic pittance.
Such extreme cruelty speaks for itself and needs no embellishments. It’s not even a case of the pot calling the kettle black. The pot stands alone in a class of its own.
Yet when American critics throw their sucker punch at China, they are unrestrained with their fabrications to drive home their arguments. Most recently, they have argued that millions of Uighurs are kept in labor camps and forced to grow cotton, turned into cotton textiles and made into fashion garments for export to the West. None of this has been corroborated by international visitors who went to Xinjiang to see for themselves.
On the other hand, China by trial and experimentation has devised a methodology that lifted hundreds of millions out of poverty. As the saying goes, rather than give the poor man a fish to eat, teach him to catch fish so that he will never go hungry. In other words, the poor were taught new skills to improve their livelihood, and that’s irrespective of their ethnicity.
To China’s central government, every life matters, and other countries are beginning to take notice. African countries among many are now studying China’s approach to poverty alleviation and seeking China’s advice on how to apply similar measures in their home country.
The total eradication of extreme poverty has been unprecedented and is China’s greatest achievement in protecting the rights of its people. Rather than lambasting China for human-rights violations, Sullivan may want to study China’s poverty alleviation programs for ideas on how to use them in America.
China’s national policy treats its people far more fairly than in an America that’s rife with racial inequality and xenophobic tension, to say nothing of inequality in education, in opportunity, in income and in protection under law.
Bringing manufacturing back
In his NPR interview, Sullivan also said the US needs to bring manufacturing back home. Trump thought he could accomplish that goal by raising tariffs on goods made in China. It didn’t work, because American manufacturers moved offshore to avoid the high cost of domestic labor. Imposing import duty does not change the economics of manufacturing at home.
The other reason American companies moved to China was to participate in what is now the world’s largest and most booming consumer economy. For many companies, the revenue they have made there during the pandemic more than made up for the losses in the US.
However, there is one way for Sullivan to bring manufacturing back to America, just not American manufacturing. He should devise a strategy to attract and welcome more Chinese companies to invest in the US.
As China’s economy grows, Chinese companies need to develop a global presence to serve their worldwide customer base. Haier, China’s leading white-goods and home-appliance company, is one classic example of the positive synergy of a Chinese investment in the US.
In 2000, the company started with a modest manufacturing operation in South Carolina making wine coolers and small refrigerators popular with college dormitories. By 2016, Haier was successful and financially strong enough to acquire the appliance division from General Electric for $5.6 billion.
GE wanted to get out of the consumer-appliance business and Haier saw the purchase as an opportunity to become a world market leader. At the time no one in Washington objected that Haier was a Chinese state-owned enterprise (SOE). Perhaps saving the payroll for 12,000 employees made it easier for the politicians to swallow their pride.
As I have previously reported, other Chinese investments that predated outgoing Secretary of State Mike Pompeo’s China-bashing hysteria have greatly benefited the US economy.
For example, China’s CRRC Corporation has established two plants to assemble subway cars for major US cities. The cars are state-of-the-art, cost 20% less than any competition, have more than 60% local content, and created 150 jobs at each of the two locations. In addition, the US cities saved hundreds of millions while replacing their dilapidated old metro cars.
And about 10 years ago, China Construction of America rebuilt the Alexander Hamilton Bridge in northern Manhattan, doubling the four lanes to eight, and completed the project ahead of schedule and on budget. It was the largest single construction project, at $407 million, ever awarded by the State of New York. It was under joint Chinese and American management but with an American workforce.
More recently, Huawei could have materially helped the installation of nationwide fifth-generation (5G) telecommunications network, much sooner and at significantly lower cost than the current situation. But techno-ignorance and irrational fear of Washington threw Huawei under the bus.
Huawei, unlike Haier, wasn’t even an SOE. Its sin seemed to be that its chief executive was at one time in the People’s Liberation Army.
Torrent of FDI awaits
Foreign direct investments nearly always benefit the recipient country because such investment creates employment. Is there any doubt that Chinese investments would accomplish the same?
The obvious task facing Sullivan is to reverse the knee-jerk, anti-China bias in Washington and greatly reduce the red tape in the Committee on Foreign Investment in the United States (CFIUS) and turn it into a committee that welcomes rather than rejecting Chinese companies.
If Sullivan decides to explore collaboration with China for mutual economic benefit, much of the necessary foundational work has already been done. The China-EU CAI contains provisions of no forced transfer of technology, no hidden subsidies for SOEs, a level playing field for market access to China’s consumer market, and elimination of equity caps or joint-venture obligations.
The provisions seem to cover most the complaints and concerns raised by American companies, and therefore China’s deal with the EU should make it easier for the US to hitch a ride and strike a comparable agreement. Certainly, getting along, building trust and benefiting from bilateral investment and trade would be considerably more tolerable than raising tension and hostility.
George Koo recently retired from a global advisory services firm where he advised clients on their China strategies and business operations. Educated at MIT, Stevens Institute and Santa Clara University, he is the founder and former managing director of International Strategic Alliances. He is currently a board member of Freschfield’s, a novel green building platform.