Richard Fontaine
Subject: Pivoting to Asia to Confront China
Bio: CEO of the foreign policy think tank, The Center for New American Security
Reading: Lost Decade: The US Pivot to Asia and the Rise of Chinese Power is here
Transcript:
Larry Bernstein:
Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics, politics, and war.
The topic today is Pivoting to Asia to Confront China.
Our speaker is Richard Fontaine who is the CEO of the foreign policy think tank The Center for New American Security. Richard is also the co-author with Ambassador Blackwill of a new book entitled Lost Decade: The US Pivot to Asia and the Rise of Chinese Power.
I want to find out from Richard about how to contain Chinese economic and military power. I also want to hear about the trouble China is causing with international organizations and what we can do about it.
Buckle up.
Richard Fontaine:
Despite the current wars in Ukraine and Gaza pivoting U.S. foreign policy to Asia is more important today than it ever has been. You see in China a determination to upend the global order. China's challenge is profound. The United States remains a global power and has vital national interests across multiple regions, including in Europe and the Middle East. Balancing those competing interests is complicated. In 2011, the U.S. announced that it would pivot to Asia. For the first time in American history, the United States would put Asia first.
There were some significant increases in basing arrangements in the Indo-Pacific and new defense relationships. But the highest-end systems tended to deploy routinely to the Middle East, not to Asia. And Chinese military power grew at an astonishing clip. You saw a military balance in the Indo-Pacific that shifted toward China and away from the United States and its allies. In the meantime, China also stepped up its diplomatic activism.
The United States tried to join the Trans-Pacific Partnership which is the TPP Trade Agreement that crashed on the rocks of domestic political opposition as President Trump withdrew from the TPP after Congress declined to approve it at the end of the Obama administration.
China emerged as a top trading partner of almost every nation across the Pacific. If the pivot had been executed as it had been intended to, the U.S. would face a momentous China challenge today, but we'd be far better to take it on. Asia continues to rise in global significance. 60% of the world's population, three of the five largest national economies, over 40% of global GDP, and represents the majority of economic growth in the world, as well as half the world's active military personnel.
We need to increase the defense budget. The United States is currently spending roughly 3% of GDP on defense that matches the amount in 1999, after the post-Cold War peace dividend, one of the lowest levels of defense spending since 1953. But the world is not as peaceful as it was in 1999.
We need more diplomatic bandwidth on Asian issues; we need to revive our Asian digital trade agreements and to allocate more foreign aid to Asia. We must deal more effectively with China's trade violations, economic coercion, intellectual property theft, covert interference in other countries domestic politics, human rights abuses and stand up for a stable world order based on liberal values.
Asia is the most important region to the United States. We can't let the urgent change our focus from what is more important and we need to get on with pivoting our military, economics and political resources to Asia.
Larry Bernstein:
What are our goals and objectives with our strategy to contain Chinese power?
Richard Fontaine:
This should be the starting point for our China policy. We often skip over the objectives because we're listing all the things that we don't want to happen. We don't want China to invade Taiwan. We don't want the Chinese to repress the Uyghurs. We don't want China to steal intellectual property.
What do we want? Do we want regime change? Are we trying to topple the Chinese Communist Party? Do we want to accommodate Chinese aggression even if that means capitulation?
The answer to those questions is no. We want to ensure that China cannot upend the regional and global orders.
China could become too weak to dominate the region. The U.S. and its allies could deter those activities. We want to preserve the basic order that exists in the Indo-Pacific and the world. And right now, the balance of power has been shifting in the wrong direction toward China and away from the United States and allies. You won't be able to preserve the order adequately without increased U.S and allied power working together across the military, diplomatic and economic sphere.
Larry Bernstein:
In your book you quote Obama where he said that a successful China is one that will embrace our world order and that he wants China to succeed economically. That goal orientation has been abandoned. Why is that?
Richard Fontaine:
There was an engagement strategy at the beginning. The idea going back to the Clinton administration was through trade and integration into the global system China would liberalize, maybe even democratize over time, become a responsible stakeholder in the international system. It would see the benefits of the way things are rather than a Chinese dominated system.
China has become more integrated in the world, but we didn't see it become a responsible stakeholder. It's become less liberal, less democratic. Around the time of the Trump administration, policymakers abandoned engagement. US policies should respond to the way China is rather than trying to create the China we'd like. The Biden administration is much closer to the Trump administration than it is to Obama.
Larry Bernstein:
In 1996, I co-headed Salomon Brothers Emerging Markets Proprietary Trading Department. To learn about local markets, I would often go to Washington to meet with different IMF officials who would be responsible for analyzing various emerging market countries. These IMF representatives are from all over the world and nearly all of them have PhDs from the top American universities. In 1996, I didn't see anyone from China. Today, the Chinese are all over the IMF. They're in every meeting discussing the economic policies of South Korea, Indonesia or the Central African Republic. The Chinese are omnipresent.
Our hope was that if the Chinese participated in these international organizations that they would be coopted into working with and supporting organizations like the IMF.
The Chinese did the Belt and Road Initiative where they leant hundreds of billions of dollars to emerging market countries. The Chinese built infrastructure in the third world, but they also want to be paid back. If one of these countries gets into financial difficulty, the IMF may be very helpful in assisting debtor countries in a restructuring or providing money in a crisis. That said, the Chinese have not worked well with the IMF or other international organizations. What is going on here?
Richard Fontaine:
The Chinese have been quite savvy over the past decade and a half. Not just IMF-World Bank, but international organizations that frankly most policymakers barely know exists. Ones that govern technical standards and the rules of arcane fields. They've made a real concerted effort to influence those organizations and, if possible, to have Chinese nationals running those organizations. They have embedded basic principles on technology. Is it right to say that the individual has preeminence over the state, or the state has preeminence over the individual?
Well, that's a profound question, but the answers are embedded in little choices that can have consequences. The Chinese realized this early on. The U.S. and our allies only woke up to this a couple of years ago and have started contesting who's going to run these organizations, what standards and rules and are going to be adopted. The real action is not in the UN Security Council; it's paralyzed with a few exceptions. It's in all these other international organizations where the Chinese have played a smart game, and we're way behind on that.
Larry Bernstein:
Aaron Friedberg who is a Professor of International Relations at Princeton spoke on my podcast that the Russians and the Chinese are using the international organizations that we created to cause mischief. For example, the Russians used Interpol to arrest Russian dissidents in Spain. Friedberg recommended that the US and its allies start new international organizations and then do not include countries who are not our friends.
Richard Fontaine:
I hate to say it but I think it depends. Some of these are universal organizations for a reason. You could try to reforge the UN Security Council without Russia and China, but then you're only going to have three countries meeting. It would obviate its purpose, however handicap that purpose has become. The whole goal is to have the key economies in the world agree on what those standards are.
That said, I do think what you're seeing is the empowerment of an alternative set of structures both on U.S. and allied side, but also on the other side. You see the quad, the G-7 being arguably more relevant, and it was the G-8 before they kicked the Russians out.
On the other side, you see China, Russia, North Korea, and Iran working together more than ever. You don't have integrated political, military, economic blocks, which you had during the Cold War, but you're seeing the outlines of blocks.
Larry Bernstein:
Next topic is Chinese economic power. The Chinese economy is growing fast. They say around 8% a year. China is an economic powerhouse. Trade with the major economic players is surging as well as with Latin America, Africa, and China’s neighboring countries.
Is it in America’s national interest to encourage Chinese economic growth? What are our objectives for Chinese trade and economic development and what can we do about it?
Richard Fontaine:
If we said, thou shall not trade anymore with China, you'll not find a single country in the world that would sign up to that, including the United States, because the costs would be so high. And it's also not clear that anything like that is necessary.
Do we care if China uses the highest end semiconductors from the United States and we're dependent on some technology from China? Yes.
Do we care whether Starbucks sells coffee in China and we buy T-shirts from China? Probably not. What matters in between T-shirts and coffee on the one side and semiconductors and some other technology on the other side? That's where the debate is now.
What we should be doing is the national security risk associated with either dependence on China in particular areas or providing China with some technology or capability it would not otherwise have. Then if we're going to intervene in the market to stop that, there will be a cost.
You have to have some notion of what the national security benefit is going to be and what the economic cost to your own economy of doing that, and then you can make a decision. We're still a world away from tallying up those modeled costs and benefits.
Larry Bernstein:
Richard, you spoke on this podcast What Happens Next previously discussing a war game that you did for your think tank on a Chinese war over Taiwan. Tell us about that.
Richard Fontaine:
CNAS Center for New American Security did a war game for NBC's Meet the Press. It's still online if you want to take a look. We also ran the same war game for the House Select Committee simulating a crisis over Taiwan where war broke out.
And what does this look like? There are a number of striking things that come out of this, but one of them is how destructive such a war would be. You're talking not about fighting the Taliban or Saddam Hussein, but two extremely heavily armed countries fighting.
How long does something like this last? How does it end? Those things are very difficult to judge. That puts a primacy on deterring the Chinese from attacking Taiwan because they think either the price is too steep or that they would be unsuccessful in their mission.
That means we have to have more military resources and the United States and our allies working together more closely in the region. We started taking some steps in terms of military base access, new partnerships, Japan is doubling its defense budget over five years.
But ultimately, you still have this deteriorating military balance in the region, and that's going to require more U.S. military resources, particularly in the air and naval domains, but it's also going to require new concepts of operation, not just F35s and aircraft carriers, but long-range missiles and increasing investments in submarine capability.
Larry Bernstein:
You said that the United States needs to work with its allies in the region to contain Chinese aggression in Taiwan and elsewhere. Yet, our allies depend on China for trade, economic investment and development, and tourism. Our allies have little interest in going to total war with a military superpower. The Philippines, Indonesia and Thailand are not interested in getting involved unless they are the victims.
Richard Fontaine:
Things have changed recently. Our Australian friends a few years ago would say. if God forbid, a war between the United States and China broke out over Taiwan, they just couldn't tell you what Australia would do. And now they say, well, it's inconceivable that Australia wouldn't play a role.
Japan’s famously pacifist and dedicated to defense of the home islands, but the way they've started talking about a potential Taiwan contingency has changed dramatically over the past couple of years.
India is not an ally, and we can't expect India to play a role in a U.S. China fight any more than they can expect us to go to war with them in the Himalayas when they've been tangling with the Chinese. The Philippines doesn't have a lot of capability to bring to the fight anyway, but they do have bases. South Korea is a special case because they've got to worry about Kim Jong-Un, so they're constrained.
The way that the United States and our allies in the region are thinking is moving to a position of greater military coherence and integration, with the idea of deterring a war with China. But to deter a war with China, you have to be ready for a war with China. That's what you're seeing right now.
Larry Bernstein:
A few weeks ago, I did an interview on this podcast What Happens Next with James Holmes at the Naval War College, and he suggested that the US would be at an advantage fighting in the Indian Ocean relative to the South China Sea because we could take advantage of stronger interior lines, if we can use India’s air bases. Where we should fight our battles with China if there is a war?
Richard Fontaine:
We don't have a mutual defense agreement with Taiwan. We have this strategic ambiguity. President Biden four times publicly has said that he would defend Taiwan in the event of attack.
President Trump never said that.
If we found ourselves in a war with China, the U.S. Navy could hold at risk the flow of energy, for example, through the Indian Ocean from the Middle East to China or enforce its own blockade against China. But someone must do something about the Chinese vessels around Taiwan. And there's only one force in the world that can break a PLA Navy blockade of Taiwan and it's the United States.
Larry Bernstein:
China agreed to a treaty obligation that required self-rule in Hong Kong, but the Chinese did not live up to their deal. President Trump condemned the Chinese takeover of Hong Kong, but Trump didn't get international support and went quiet. What do you make of that Hong Kong situation as a precursor of a Taiwan blockade.
Richard Fontaine:
Some things were done. The U.S. revoked the Hong Kong special economic status and put it on par with the rest of China. The Brits given that Hong Kong as an ex-colony were particularly exercised and took some steps on the sanction front. Sanctions that the EU wanted to take with response to oppression of the Uyghurs became more politically palatable after that. But none of those things made China say, “we're going to reverse what we did.”
But this gets into the overall dilemma that you were getting at before, which is so many countries, including our own, have deep economic ties with China.
The cost associated with severing those ties or putting those at risk is quite high. The probability that taking those steps would achieve an outcome like getting the Chinese to reverse themselves in Hong Kong are low. And so, what do you do? This is the world we live in. And Hong Kong's not your only interest.
Let's say God forbid China did attack Taiwan. What happens then? Does Europe react the way Europe did to the Russian innovation of Ukraine? We support Ukraine, we sever our economic ties with Russia. Or do they say, our economic ties to China were so much greater than they were to Russia, we got so much more to lose. Or do they say, well, this cannot stand. First Crimea, then the Donbass, and then Ukraine as a whole, and now Taiwan, somebody's got to a draw a line in the sand. That's one of the big question marks hanging over this entire enterprise.
Larry Bernstein:
Let’s get the next question from one of our What Happens Next interns Ryan Claffey who also serves as our China Czar. His new full-time job is working for the US House Committee on China. Ryan, ask your question.
Ryan Claffey:
You just brought up Europe. UK Defense Minister Healy has indicated that the Labor Party's not going to follow Boris Johnson's pivot to Asia, either militarily or economically. They're focused on European issues.
Victor Orban has recently visited Beijing. He just agreed to have Chinese police forces monitor the streets of Budapest.
Will Europe take action to help Taiwan and its allies, and what form would that take?
Richard Fontaine:
It's never going to be as absolute as it is in the United States, but Europe has moved significantly in sentiment toward China and in action over the past few years. In no small part because at a time of Europe's peril, China is actively aiding the aggressor in Russia and that that's not been lost on Europeans.
NATO in its strategic concept started talking about China and Asia. That will be a topic of discussion during the summit. Europe is going to be most important on the economic and technology areas where we need to work together, because the worst of all would be technology decoupling between the United States and China only to see Europe run in and fill in the gap.
Larry Bernstein:
I end each episode with a note of optimism. Richard, what are you optimistic about as it relates to the Asian pivot?
Richard Fontaine:
I'm very optimistic because if you look at the challenge that China poses, the importance of Asia as a region, everything favors what the United States. We've got the geography, the allies, the economy, the military, and the values to be successful in a long-term competition with China. To put Asia first as a priority region in that competition. That frankly is up to us and that leaves me optimistic about what's possible.
Larry Bernstein:
Thanks Richard, for joining us today.
If you missed our previous podcast, check it out. The topic was The Courts Strike Back Against the Bureaucracy. Our speaker was Stanford Law Professor Michael McConnell.
The Supreme Court repealed the Chevron Doctrine in one of the Supreme Court’s most important rulings of the year. This decision ends judicial deference for interpretations made by bureaucrats in the Federal agencies. For the past 40 years, the Supreme Court gave bureaucratic experts deference for their interpretations of ambiguous statutes if their analysis was reasonable. No more. Now decision making goes back to the judiciary on how to interpret the law.
We learned why the Supreme Court repealed the most cited administrative law case of the past 40 years, and what this means for the public’s interactions with Federal agencies. This was a very important case for the future of the separation of powers between the executive and judicial branches.
You can find our previous episodes and transcripts on our website whathappensnextin6minutes.com. Please subscribe to our weekly emails and follow us on Apple Podcasts or Spotify. Thank you for joining us today, good-bye.
Check out our previous episode, The Courts Strike Back Against the Bureaucracy, here.
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