One of the hottest topics in the US foreign policy community is: Will China invade Taiwan? The answer is simple: No. China won’t need to invade Taiwan. China is playing a much more sophisticated, long-term game.
Beijing does not need to incur the criticism, boycotts and sanctions that an invasion would doubtlessly trigger. But China’s long-term strategy to dominate the Western Pacific and, eventually, to emerge as the leading global power is very much on track.
As distinguished academic experts explain in China’s Grand Strategy: A Roadmap To Global Power? Beijing’s strategists do not think they need to fight major military battles; they believe their economic, financial and technological prowess will gradually overwhelm opponents.
President Xi Jinping’s aggressive tactics vis-a-vis Hong Kong, the South China Sea, the Philippines and Australia are all part of this projection of power. In short, China has a grand strategy, but the United States has yet to develop its own strategy in response, as the titles of our two books suggest.
What’s particularly urgent to develop is a cohesive technology strategy with key allies.
Ever since the launching of relations in 1979, most American interest groups dealing with China, including companies selling technologies, were content to have the US pursue a policy of “engagement.”
This meant that Washington was counting on trade, investment and student exchanges to liberalize the Chinese authoritarian system. Selling advanced technologies seemed in broad accord with US and Western policy goals.
There were three successive heads of government in China over 30 years who allowed some liberalization and favored cooperation with the West. But Xi’s ascension to power in 2012-13 has brought a dramatically different type of hard-line Communist leader to the fore.
The US has been slow to recognize that Xi would reassert the Communist Party’s control over all aspects of commerce, as evidenced by crackdowns on previously “private sector” technology and tutoring companies. China specialists also have been slow to recognize that Xi would intensify China’s efforts to achieve not just parity but technological dominance.
Because the US and China have essentially integrated their economies, we do not believe a complete decoupling of economic relations is possible or necessary. But taking action on the technology front is imperative.
So far, the US has employed an ad hoc policy of:
- Barring semiconductor exports to China’s 5G wireless giant Huawei;
- Barring certain exports to enterprises or companies on the “entities list”; and
- Blocking the sale of the most advanced semiconductor equipment.
Now it’s time to develop a full-fledged, global technology strategy, starting with semiconductors, which are the building blocks of all computing systems. China is still dependent on the outside world for semiconductors, buying about $300 billion worth a year from the United States and its allies.
Here would be some key elements of such a strategy:
First, while the US by itself cannot be entirely self-sufficient technologically, the latest semiconductor manufacturing equipment needs to be protected like crown jewels.
With the help of allies, the US has been able to prevent China from buying the most sophisticated chip-making equipment from Holland. The machine made by ASML, so large it takes three Boeing jetliners to haul it, contains components and expertise from the US, Germany and Japan.
A pending sale of Britain’s largest chipmaker, Wafer Fab, based in Newport, also should be stopped. The proposed buyer is Nexperia, which is based in Holland but, in fact, is owned by Wingtech Technology, a Chinese firm.
Another possible sale, this one of Britain’s Arm, which sells chip designs to hundreds of companies, should be subjected to a security review. The possible buyer is Nvidia, which is based in California and is run by a Taiwanese. But it sells its graphic chips to the Chinese state and hence it may be vulnerable to pressure from Beijing.
All major technology mergers that were formerly viewed primarily from a competitiveness standpoint will now need a simultaneous security review.
To achieve that, the Committee on Foreign Investment in the United States (CFIUS) should seek to cooperate with similar governmental bodies among allies, including Holland, Germany, Britain, Japan, South Korea and Taiwan.
If these nations can be persuaded not to let their companies sell the most advanced equipment to China or allow Chinese acquisitions of private companies that make the gear, that would preserve a huge strategic advantage.
The Joe Biden administration has started reaching out to European allies in this regard, but it needs to be a global initiative.
Second, the US and allies should adopt a subtle strategy of slowing down the sale of the most advanced three- and five-nanometer chips.
The US government’s ban on certain semiconductor sales to Huawei has clearly curbed the company’s success in the short term. It would be best if the US and its allies agreed on a system of multilateral export controls to China to prevent a Japanese company, for example, from taking advantage of a decision by an American company to slow sales of a particular chip.
Third, the US and its allies must stop the hemorrhaging of technology from research labs that China has been able to achieve, and continues to achieve, through cyber-hacking. This should be treated as a major strategic challenge. All information technology systems should be reinforced.
A corollary is that the presence of hundreds of thousands of Chinese researchers inside key research facilities outside of China must be better managed. The recent decision by the US to deny visas to students attending universities that support the People’s Liberation Army was one such sensible step.
Fourth, the US needs to establish cost-effective criteria for spending the $250 billion contained in legislation moving through Congress to buttress American technology manufacturing. A separate bill proposes $52 billion for semiconductors.
The government should do everything in its power to help American corporations continue to manufacture chips inside the US. In addition, it should follow through on the effort to persuade Taiwan Semiconductor Manufacturing Company (TSMC) to build a fabrication facility in Arizona.
The new spending should also be directed in part toward creating a Western equivalent of Huawei’s 5G technology, which has been installed in dozens of countries. A go-it-alone strategy would be foolish if Sweden’s Ericsson and Finland’s Nokia already possess critical 5G components.
Frictions already are developing between the Chinese government and those two companies, so they could possibly become part of a Western 5G consortium.
Fifth, maintaining a US leadership position in artificial intelligence is another urgent priority, as the National Security Commission on Artificial Intelligence concluded. There may be overlaps of common interest between the US and China in AI, but there are clear military implications. A Western leadership position must be maintained, as the commission argued.
Sixth, it will be necessary to re-establish some manufacturing of computing equipment inside the US and Europe because they have become completely dependent on China for those products, and Beijing has demonstrated that it will use that as a tool of penetration.
And, finally, it may ultimately be necessary to split the internet into Western and Chinese versions. As long as the US and allied networks are interconnected with those of China, Beijing will have broad avenues to monitor or hack sensitive Western information. There are some tentative signs that this “forking” of the internet is beginning to happen.
None of this will be easy and all of it will cost money. But the world of the 1990s, when the US was the sole superpower, is gone. China represents a far larger, more sophisticated power than the Soviet Union during the Cold War and either Japan or Germany during World War II.
The sooner the US recognizes the true scope of Xi’s technology ambitions, the sooner it will be able to create a viable strategy to compete.
Holstein, a business journalist formerly based in Hong Kong and Beijing, is the author most recently of A Grand Strategy: Countering China, Taming Technology, and Restoring the Media.
Denoon, a former deputy assistant secretary at the US Department of Defense, is a professor of politics & economics and director of the Center on US-China Relations at New York University. He is the editor of China’s Grand Strategy: A Roadmap to Global Power?