How to manage China… peacefully

Here are three medium-term strategies that will secure America’s interests for the 21st century, solidify its geopolitical influence, accelerate the American economy, and unleash the potential of its allies.

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China is the most formidable challenge for America and many other countries in myriad dimensions – economy, technology, diplomacy, military, and political philosophy. The Washington consensus has been to “contain” China at all costs using counterproductive tools such as tariffs, sanctions, information war, military buildups, and even a quasi-Cold War. However, there are constructive and peaceful solutions to “manage” China, while achieving the broader geopolitical objectives. Here are three medium-term strategies that will secure America’s interests for the 21st century, solidify its geopolitical influence, accelerate the American economy, and unleash the potential of its allies. 

Creating Manufacturing Powerhouses Across the World

China’s not-so subtle message to the developing world is that America is unable to accept the emerging multipolar world and thus is desperately trying to cling to its superpower status. Guess what? This message resonates all over the world. Rather than fighting this, America should embrace it and tell the world, “Yes, multipolarity is the future! This means that the Southeast Asian countries, India, Africa, Middle East, and Latin America should transform into economic and manufacturing powerhouses. And America will help the Global South prosper in this multipolar century.” Analogous to JFK’s Peace Corps, Biden can start a Development Corps.

Trump spent four futile years trying to bring manufacturing back to the U.S. However, he could have reduced dependence on China and gained immense geopolitical clout by offshoring manufacturing – especially the labor-intensive sectors – from China to other developing countries. This would have created more American jobs as well – more on that later.

Consider Africa, whose population is almost the same as China but the average age is only 19 — half the median age in China. Africa has a tremendous but untapped potential for growth. Right now, China-Africa relations are sort of based on the colonial model — Africa ships raw materials to China; and China sells manufactured goods in return. This is the exact trap that China avoided with the West decades ago by insisting that Western corporations must move their factories to China, if they want access to the Chinese market. So, why can’t Africa impose the same requirement on China? Because the 50+ African countries have no power when they try to individually negotiate with China. 

Here’s where the U.S. can play a transformational role in Africa’s future. The U.S. should create and lead an African Trade Union and negotiate the building of Chinese manufacturing plants in Africa. The U.S. should also facilitate technology transfer from China to Africa. This endeavor, which will take a decade to mature, will also create hundreds of thousands of high-paying American jobs in consulting, management, training, finance, accounting, marketing, technology, architecture, urban planning, construction etc. (Yes, Americans must travel to other countries, and that’s a good thing). American corporations can create joint ventures with Chinese and African entities to establish factories for steel, cement, electric cars, solar panels, pharmaceuticals, and countless other sectors. Wall Street can profit by helping these countries secure funding and investments. A secondary benefit of these efforts: African countries who consistently vote with China at the U.N. will be drawn into the U.S. circle.

This model should be replicated in Latin America as well. In Asia, this process will be a lot easier, since countries like Vietnam, Indonesia, and Thailand already have substantial experience in manufacturing. 

The key in this novel paradigm is to avoid exploitative capitalism and truly help these countries develop. 

At the same time, America should strive to become the unrivaled leader in hi-tech manufacturing. In semiconductor manufacturing, the U.S. share of the global market is shockingly just 12% now. 

With global planning, the U.S. and the E.U. can establish vibrant ecosystems of manufacturing spread around the world. This creates resilience in supply chains, avoids the risks of over-dependence on one country, makes the world more prosperous, and cultivates long-term strategic alliances. Needless to say, it will also create a humbler and less jingoistic China.

Leverage the Soft Power Advantage Now

China’s Achilles heel is the lack of its soft power. For various reasons, China’s global appeal is bleak now, despite its remarkable achievements. Among developed nations and large countries like India, unfavorable views of China range from 71% in Germany to almost 90% in Japan (Polls from Pew Research, Lowy Institute, and MOTN).

To maintain competitive advantage, the U.S. must coordinate its actions and pool R&D resources with all the developed nations. Australia, for example, can be turned into a global leader in mining and refining of rare earth minerals; and alliances with E.U., Japan, and South Korea can focus on innovations in semiconductors, space exploration, and emerging technologies such as artificial intelligence and robotics. Working as a team, the West must also demand reciprocity from China, which has taken advantage of the open Western system. For example, Chinese state-owned enterprises have ownership in many European ports – in Greece, Spain, Belgium, Netherlands etc.

China’s soft power deficit extends to its neighbors as well. China talks a lot about win-win and peaceful development, but its nationalism, aggression in South China Sea, and “wolf warrior diplomacy” are making its neighbors extremely nervous. While ASEAN elites prefer to not get caught in the middle of a war, 62% say that they would choose the U.S. over China. More notably, ASEAN countries see China’s growing influence in the region as a threat to their interests and sovereignty (ISEAS poll 2021). 

Thus, it’s obvious that America has to deeply engage with these allies in Asia. Not by selling missiles and fighter jets or giving sermons on democracy, but through foreign direct investments (FDI) and job creation. U.S. corporations should be incentivized to move manufacturing and set up comprehensive supply chains in these countries which have smart and industrious workers. Also, Western venture capitalists should establish incubators in these countries to foster startups, tech innovation, and entrepreneurship. 

End Hostility with Russia

In the 1990s, geopolitical visionary Brzezinski warned that the worst outcome for America will be an alliance of China, Russia, and Iran. Well, thanks to the disastrous U.S. foreign policies over the last two decades, that alliance has come to fruition. What the U.S. needs now is tenacious pragmatism. It’s not difficult to turn Russia into an ally. When the Soviet Union fell, Russians eagerly embraced America. However, in the 1990s, Wall Street plundered Russia, U.S. intelligence supported jihadists in Chechnya, and NATO kept expanding along Russia’s border. This cruel betrayal led to the rise of Putin.

Now, the U.S. and the E.U. should forget the past and forge a roadmap for détente with Russia. To start with, a U.S./E.U.-monitored referendum in Crimea should be held to formalize its reunion with Russia. Then, the E.U. should lift the sanctions and sign a free trade agreement with Russia. With a GDP-per-capita of only $12,000, Russia can be the next-generation manufacturing center for Europe. Eventually, Russia can be admitted to NATO. In return, Russia will rescind its military pacts and arms sales with China. This strategic realignment will pull Russia away from China’s orbit and radically reshape the balance of power in Eurasia. Of course, peace between the United States and Russia – who combined account for 90% all nuclear weapons – will also make the world infinitely safer.

If Biden wants to win the Nobel prize, he should also seek rapprochement with Iran and Cuba. Iran is a strategic prize for a multitude of obvious reasons. And Cuba will be a boost for America’s image around the world – recently, 184 countries in the U.N. voted to end the embargo on Cuba. Finally, as a bonus, let’s drop the irrational belligerence towards other small socialist countries such as Venezuela and Bolivia. 

Caution

While engaging in the geopolitical contest, we must guard against ultra-nationalism, xenophobia, and Sinophobic racism. U.S.-China cultural exchanges and travels must be fostered and more American children should be taught foreign languages such as Chinese and Spanish. 

Conclusion

China’s primacy in this century is not guaranteed. China will face significant economic challenges in this decade, as I describe in my book China, China, Chyyna – Greatest Disruption to American Century. However, wishful thinking cannot be America’s strategy in this historic great power competition. America and its allies need holistic, peaceful, and visionary strategies underpinned by flawless execution. At the same time, America must set an example for prosperity. If people around the world see homeless camps, crumbling infrastructure, mediocre education, predatory healthcare, and a struggling middle class in America, they are not going to follow the U.S.A. for too long. The world is at a critical juncture and is looking for a leader for this century. Can America rise to the challenge?

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