Based on my experiences in China over the years, I saw a growing shift toward practicality, but today we see another reversal — to the reestablishment of 体 as primary. Along with that reversal, foreigners’ role in China’s development is also changing. 

Living in Nanjing in the Early 1980s

In 1982, I was one of the early international students to go to China to do research. Graduate students from several countries had already been allowed to study there, and the U.S. followed a few years after normalizing relations in 1979. I was the second or third cohort from the U.S. to be sponsored by the Committee on Scholarly Communications with the PRC.² My project was to analyze Jiangsu Province as a case study of the effect of central policies on local development. Since reforms were so new, I first researched the Mao decades and later extended my analysis to the reform period. 

Data was essential to my project, but it was also problematic. The government classified economic data as a state secret. Some scholars had been detained for having data. A conundrum, indeed. At least I had the U.S. government behind me in this endeavor. My strategy was to create tables with the headings of the information I wanted to collect and have the respective offices fill in the blanks. In hindsight, it was perhaps wishful thinking that this approach would succeed. As it turns out, there was a major effort across China, at all levels of administration, to put together data yearbooks. Because of this, officials did, in fact, fill in (at least some) of my data tables.

Since my focus was Jiangsu Province, I applied to do my research at Nanjing University (Nanda) in Nanjing, the provincial capital. I lived in the university’s foreign compound with about 150 other students and faculty from around the world, some of whom had Chinese roommates. We had heat and hot water several hours a day, and food that was substantially better than the regular university canteens, but life was quite harsh relative to what we were used to.

The Economics Department was technically my host, but they did not invite me to meet with them or any students studying economics at any time throughout the two years I was there. However, I could audit courses, which I did. In the last semester of my stay, I finally met one of the professors. Professor Zhu was responsible for helping me make contact with the officials I wanted to interview in Nanjing and several other cities in the province. Professor Zhu spoke English, as he had worked in international trade, while most other professors did not. I was learning Chinese but needed help with translation during the interview process.

In 1982, western foreigners studying or doing business in China was a new development, allowed to support the leadership’s economic reform efforts. We were treated hospitably and with respect. But there was an underlying tension, perhaps suspicion, that foreigners could contribute to China’s reforms and development, but may also be dangerous. The university administrators were responsible for our well-being and so were careful to keep a close eye on us. Anyone who wanted to visit us had to register and show ID. Our mail was read. Our boxes were opened. If we wanted to travel outside the city limits, we needed to apply to the university and the local police station for permission. Just riding our bikes within Nanjing, we would find signs at the boundaries of the city that said foreigners could not go further.

Daily life was challenging, and our environment was restricted and monitored, but we felt there was a good chance that society would move toward more openness. Unfortunately, the opposite is true today. While daily life in China is quite comfortable for most by now, the signs are that the society is closing again. For example, the universities are under pressure to use textbooks by Chinese scholars, and not those written by foreigners. Authorities monitor classrooms with video cameras, and professors can quickly get into trouble for saying something that questions or counters the Party’s line.

Change and Backlash³

Two incidents occurred while I was in Nanjing that reflected the tensions and disagreements about the changes afoot in those early days: first, the “Spiritual Pollution” campaign and second, a demonstration at Nanda. People desired change, but not surprisingly, they also wanted to choose the reforms that benefited them the most. And China’s age-old dance between importing foreign ideas (用) and finding a Chinese solution (体) was also at work.

The Spiritual Pollution Campaign

The Spiritual Pollution campaign in the early 1980s was a backlash against the dangers of China opening too fast and of adopting ideas that went against the strategy of maintaining stability by the political elites. Today, the pressures on professors, students, and citizens to conform to the leadership’s view of China’s path is reminiscent of these early years. The difference is a new looking back rather than looking forward.

The Spiritual Pollution campaign’s main message was that socialism could not be criticized. Intellectuals were discussing the existence of alienation under a socialist system. Markets may be possible under socialism, but alienation is not. Thus “dangerous” ideas, such as those of Sartre, were to be criticized if discussed at all. People who had written pieces favorable to Sartre, or discussed alienation, were asked to write their ideas anew. Specifically, at Nanda, one professor was criticized for an article he had written on Hu Shih, a well-known Chinese academic who had studied and promoted pragmatism.⁴

While targeted primarily at harmful ideas in intellectual circles, the campaign also touched on areas of laxity and unethical behavior. For example, Party spokespeople and written editorials criticized books and magazines for printing stories about love affairs and other situations deemed “indecent.” Also suspect was long hair, facial hair, and revealing attire. One rumor was that all city workers in Beijing were subject to hair and dress regulations.

It was understood, of course, that a main source of these bad influences was foreigners and their decadent societies. Reforms had meant China had much more contact with the international community, and some of this contact was deemed harmful. Being a foreigner in China, then, raised interesting contradictions. Our dress and culture were indecent (even if desired), but our technology and markets were necessary to modernize China. Ironically, this situation is back in spades in China today.

The most immediate problem for us at that moment was judging whether this campaign was severe enough to cause trouble for the Chinese with whom we associated. Our experience was that the Chinese were not worried—aside from the few targeted intellectuals—and that the campaign did not involve us in their minds. People said that indecency was not desirable in books, magazines, and films, but nonetheless, everyone was informed of the details of the latest “indecent” story. But Chinese friends did not stop seeing us, and on the surface, at least, only the amount of gossip changed.

At the university, however, there were required meetings for students, faculty, and administrators to discuss the message of the campaign. These meetings were reminiscent of the numerous campaigns before. In October 1983, the Foreign Affairs Office asked us if we would like to discuss “spiritual pollution.” We agreed, thinking we could ask what this meant for us and if the restrictions on our contact with Chinese people would increase. Instead, the meeting consisted of a two-hour speech on the question of alienation delivered by a university official in perfect line with recent People’s Daily editorials. By December, after going through the motions, we all — Chinese and foreigners – had forgotten that “pollution” had been a problem.

The Nanda Incident

Another reaction to China’s reforms occurred during three days in May 1984. This event began on campus but eventually involved the provincial government, a central investigation, and the international news media. The catalyst for this incident was the status of Nanjing University, but the key issues were the students’ right to demonstrate and factionalism on campus. Earlier in May, the Ministry of Education chose 10 institutions to receive more autonomy and an extra 100 million yuan each to help them quickly implement their educational reform and improve programs. To the dismay of the university community, Nanda was not among this privileged group.⁵

On May 28, posters appeared on campus criticizing the university leadership for lack of concern for intellectuals and the overall quality of the university. The former university president, Guang Yaming, had been transferred and not replaced, leaving Zhang De, the Party Secretary, in charge. The Party Committee was powerful within Nanda’s administration, and removing Guang gave the dominant party group free rein. One of the confrontations between Guang and the Party Committee had been over the status of intellectuals. To improve the situation of professors in line with current reform policy and compensate them for poor treatment during the Cultural Revolution, Guang wanted to add their years spent in school to their work time to increase the years counted in seniority. Since seniority determined access to housing and other perks, this change would mean professors would benefit at the expense of other university employees. This change was not in the interests of the Party Committee, and they succeeded in getting Guang transferred.

After Guang left, three separate elections failed to fill the position. The students accused Zhang of being instrumental in preventing the election of a permanent, reform-oriented president, and they demanded the return of Guang. According to one account in the Hong Kong paper, Pai Hsing, the Party Committee tried to appease the students by agreeing to meet with them to discuss their proposals, but the students rejected this.⁶ The paper also implied that the students decided overtly to demonstrate their displeasure when the Party Committee asked the Nanjing Armed Police to patrol the campus.

From the beginning, in addition to the university’s status, a key issue was the rights of students to disagree with, and try to influence, the university administration. This aspect of the conflict was reminiscent of the Cultural Revolution, i.e., when the bureaucracy blocks established methods of change, then challenged the bureaucracy. The students drew on China’s Constitution to support their right to demonstrate. The university also drew on the Constitution to argue that the demands for reform were correct but that the students’ method of dissent was disruptive and illegal. The students were to meet formally with university officials and not write posters or demonstrate. This position was repeatedly read over the loudspeaker in the evenings when people would gather. Besides this action, however, the university did nothing directly to stop the activities. The students ignored the instructions and put up many large and small-character posters. The lights on the outdoor bulletin board were left on all night so people could read and discuss them.

By the second day, the criticisms in the posters had moved from generalizations about poor leadership to criticizing Zhang by name, pointing to the influences of “leftism.” The activity and excitement on campus then built quickly. Students wrote more posters and discussed the issues late into the night, and people crowded the streets in the evenings. During these events, international students mingled freely among the crowds.

On the third day, a rumor spread that there was to be a demonstration involving a march from campus to the provincial government buildings about two miles away. The students felt they had met a dead end in dealing with the university and decided to take their complaints to provincial leaders. That evening the number of people on the campus streets swelled to make quite an event. Peddlers were selling spiced eggs and ice cream; people brought their children; and the loudspeaker was repeating its message, apparently to non-listening ears.

Eventually, we heard that people had gathered just outside the gate and began to walk, picking up people as they went. I and a few others rode our bicycles to catch them, but not knowing their route, we went straight to the provincial government buildings and waited. The atmosphere was tense, but no one said anything to us. Minutes later, the marchers arrived. The group was orderly and quiet but was large by then, with well over a thousand people. For a few moments, it seemed there would be a confrontation. Public security was blocking the major intersection, but the group did not slow its pace. Then, just before the group reached the blockade, the police moved aside.

For the next hour, little happened. I was standing in the back on a cement wall overlooking the square. The gates to the government complex opened and closed several times. I heard later that the provincial officials asked the students to send representatives inside, but people were reluctant to volunteer. Eventually, several people volunteered to negotiate, and a meeting between the students and the government was set for the next day. After some time, the crowd thinned out and the demonstration ended.

We never knew whether that meeting took place or not. However, the next day the university abruptly ended all activities relating to dissent on campus. The bulletin boards were now kept unlighted, posters were forbidden, security checked IDs at the university gate, and university officials questioned the student leaders. The incident was over.

Two other things of importance related to the Nanda incident happened. First, during the first two days of activity on campus, the situation was reported by Voice of America; and second, Beijing sent an investigation committee shortly after the demonstration, which further curtailed discussion and increased rule enforcement on campus. Perhaps if the international press had not reported news of the event, Beijing would not have become so directly involved in provincial and university affairs.

On the one hand, foreigners’ knowledge of what is going on may increase the impact of a protest by adding pressure to resolve the issues. On the other hand, officials may fear how foreigners will interpret and report the incident and, therefore, may react by quickly ending the dissent and punishing the Chinese people involved. Another aspect of the position of foreigners in China is that we are all under suspicion of being spies. During this incident, a rumor that Voice of America had reported it during the first two days did not allay these suspicions. Even the foreign community was surprised at how quickly this incident became known beyond the university. As this experience suggests, our presence alone may cause problems of which we are unaware.

We had no way of knowing at the time that student protests would put such monumental pressure on the Communist Party and Chinese government. Early protests like this were precursors to events that led to the violent Tiananmen Square crackdown in 1989. Such protests are difficult to imagine in Xi Jinping’s China today.

A New Day

Over the period I lived in Nanjing, the restrictions eased slowly, and people were more relaxed about talking with us. More cities were opened to foreign investors and travel, although only certain hotels could host foreign visitors. Over time, China continued to relax restrictions across society. In contrast to the lack of contact with peers at Nanda in the early 1980s, I developed deep friendships over the years and fruitful academic exchanges and collaboration. I traveled alone, with my husband, with friends, and with student groups, visiting every province and region in China. We were free to explore and learn by talking with whom we wanted.

Now, under the leadership of President Xi Jinping, China’s trend toward opening is reversing – abandoning 用 for a new type of 体. Covid-19 is the most apparent reason for restricting society, but it also provides a convenient excuse. Behind the currently closed borders is a growing narrative that China no longer needs foreign ideas, skills, or capital. Western values are critiqued and rejected, replaced by a mix of Confucian and modern Chinese thought. The term “spiritual pollution” has returned to conversation. The leadership harshly critiques any expression of alienation, such as the “lying flat” trend of young people who talk about doing as little as possible to get by since success, as customarily defined, is so elusive.⁷ Even English is being downplayed after a spectacularly successful push to teach it across the Chinese education system. Moreover, authorities expect Chinese academics to conduct research in support of China’s policies and do it with decreasing collaboration with western scholars.

While economic development continues apace, the range of allowed debate is narrowing, along with individual freedoms as the CCP returns to its Marxist, socialist roots. President Xi talks of pushing China into the next stage of socialism with “common prosperity.” In the past, we heard Chinese people sometimes say the CCP stood for the Chinese Community Party – a reference to a gentler party leading social progress. Today, the Party is returning to sticks over carrots and is increasingly feared. One can only guess that President Xi sees taking the socialist mantel as his way of maintaining his and the CCP’s power for years to come.

The post Deja Vu: China’s Relations with the West appeared first on China Research Center.

Given this likelihood, I ask whether rich democracies, in particular the United States, adequately prepared for a Chinese superpower – especially as its likelihood increased along with China’s economic and technological development. I take a neutral stance as to whether China’s rise should be seen as an opportunity for a more peaceful and prosperous global future or a threat to the global status quo, the Washington consensus, liberal democracy, or the United States in particular, or somewhere in between. I take this neutral stance because a lack of preparation for China’s rise should be concerning for Panda Huggers and Dragon Slayers alike. Dragon Slayers, hawks who want to work to contain, challenge, or even fight China, could find that the U.S. has not done enough to prepare for a – hopefully – preventable conflict with China, or to check its growing influence. Panda Huggers, doves who would prefer to engage China, might conclude that we have failed to develop expertise and put far too little emphasis on peaceful efforts to cooperate as well as compete economically with China.

There is no checklist to prepare for a rising superpower. Yet, this article will provide a survey of some of the efforts, made and unmade, to prepare for a China-dominant world. Specifically, it will consider military, economic, and educational readiness for a China Century.

Military

China’s rise and the modernization and professionalization of its military have proceeded apace since national defense was included as one of Deng Xiaoping’s Four Modernizations in 1977. While the U.S. military was considering its role as a world policeman in the 1990s and a counterinsurgency force in the 2000s, China was focused on projecting power where it mattered to the PRC, near its borders and surrounding seas, particularly toward Taiwan. In 1996 when the United States and China almost clashed over Taiwan, General John Shalikashvili, then chairman of the U.S. Joint Chiefs of Staff, dismissed the PRC’s ability to invade Taiwan, concluding that “China simply lacked the sealift resources, especially amphibious ships.”¹ China’s threat was dismissed as the “million man swim,” a term that is now frequently cited in articles explaining how much the realities of a Chinese invasion of Taiwan have changed since the 1990s.

The U.S. military’s focus, tactics, and doctrine in the decade after the 9/11 attacks were fundamentally mismatched to containing, dissuading, or confronting China. As China forged ahead with its aircraft carrier program, the U.S. Navy contemplated reducing its aircraft carrier groups. Military experts concerned with China argue for the need for weapons and strategies that can block China’s anti-access/area-denial capabilities (A2/AD). Since 2009, the Pentagon has been pushing just such priorities in the form of the Joint Concept for Access and Maneuver in the Global Commons. Yet, according to Michael Beckley, “[T]he U.S. defense establishment has been slow to adopt this [China] strategy and instead wastes resources on obsolete forces and nonvital missions.”²  While the U.S. has not created a unified strategic vision for how to prepare for China’s rise, it’s not for lack of trying. There have been several proposed Joint Concepts, Strategic Concepts, Expeditionary Warfighting Concepts, and other schemes. Implementation of such grand strategies is expensive, difficult, and time-consuming, and shifts in politics have complicated it further, as have wars in Iraq and Afghanistan.

Whether its preparation for dealing specifically with China has been as effective or efficient as it could be, the U.S. military enjoys such substantial advantages that it is hard to conclude that this is an area where rich democracies have failed to prepare. Three factors stand out. First, the United States spends almost four times as much on its military as China. Second, aside from Russia, every other major military spender is a close U.S. ally. Third, the Chinese military’s lack of war-fighting experience contrasts sharply with that of the United States, which has, for better or worse, been involved in numerous conventional and unconventional conflicts in recent decades. While we hope the question of whether the U.S. and its allies can handle China militarily will never need to be answered, it seems clear that it is the field in which preparations for China’s rise have been least insufficient.

Economics

For those, like this author, who believe it best not to consider China primarily as a military threat and that prophecies about coming conflicts are self-fulfilling, a lack of preparation and investment in non-military areas is more distressing. Headline figures on balance of trade have their place, but do not reflect complex realities such as the U.S. earning a much greater share of the profits than China for every iPhone assembled in the PRC. Direct efforts to “get tough on China” on trade have proved dismal failures; from Obama’s early attempts to Trump’s more recent ones, they have generally hurt the U.S. more than China. Far more problematic than today’s headlines about trade imbalances, therefore, is a reluctance to invest in the research, infrastructure, and education that would help make rich democracies economically competitive with a rising China in the coming decades.

Much of China’s economic success was the result of scrappy small and medium enterprises organized in industrial clusters. Foreign companies and consumers were some of the biggest beneficiaries of that economic success. Yet, the Chinese state has also invested heavily in making China internationally competitive. From 2000 to 2017, Chinese R&D spending increased 17 percent a year compared to 4.3 percent in the U.S. China eclipsed U.S. science spending in 2019.³ The Chinese state also invests in, supports, and protects Chinese companies. As the Wall Street Journal’s Chuin-Wei Yap wrote, “Huawei had access to as much as $75 billion in state support as it grew from a little-known vendor of phone switches to the world’s largest telecom-equipment company.”⁴ Rich democracies could have maintained an economically productive relationship with China while still preparing for its rise by spending on R&D. Yet until recently, they did not even attempt to keep up. As late as 2020, the U.S. Senate introduced a bill that offered a mere $1 billion for the development of 5G alternatives to Huawei.⁵

The United States also failed to invest in other areas that could help keep it competitive with China, especially in infrastructure and education. China opened approximately 24,000 miles of high-speed rail between 2008 and 2021 and now accounts for around two-thirds of the world’s total high-speed rail. Europe has less than 6,000 miles and the United States only 34. While U.S. bridges have begun collapsing, China has built around a quarter-of-a-million new bridges since 2010.⁶ China went from graduating half as many STEM (Science, Technology Engineering, and Math) Ph.Ds. as the United States in 2000 to 50 percent more in 2019.⁷ Taken together, it seems that China has surpassed the rich democratic world in almost every aspect of investment, that this trend was clear for decades, and that little was done to address it.

There are signs that the momentum is beginning to shift in the space of only a year or two. In December of 2021, the European Union announced its €300 billion Global Gateway scheme (designed to compete with the Belt and Road Initiative). In February of 2022, a dozen former U.S. national security officials from both parties called for the U.S. to pass the $250 billion dollar China competitiveness bill.⁸ It might appear that rich democracies may have finally woken up to the scale of resources necessary to keep up with China economically both at home and abroad, but there is still reason to be skeptical. The Global Gateway scheme was in part a repackaging of existing investment and aid, and neither the China competitiveness bill nor Biden’s $1 trillion infrastructure bill have yet to pass. Time will tell if these efforts succeed, but for now it appears that the momentum has at last begun to shift and that rich democracies are starting to assess the potential influence of China realistically, if a decade or two late.

Education

Nowhere is the gap between China and rich democracies as evident as in the sphere of education. In 2012, one of the founders of Blackstone private equity group set up the Schwarzman Scholars program to send top U.S. students to study at Beijing’s Tsinghua University, explaining that “China is no longer an elective course, it’s core curriculum.” Yet in most rich democracies, China is not even in the course catalogue. From kindergarten to graduate school, Europe and North America are failing to prepare their students to work and prosper in a century that will be Asia- and China-centric.

Graph 1: K-16 Language Learning in the U.S. 2014-5

Source:  The National K-16 Foreign Language Enrollment Survey Report

Language education is where preparation for a China-dominant world should begin and where it is most lacking. In 2015, Obama announced the launch of “1 Million Strong,” an initiative aimed at increasing U.S. learners of Chinese to one million by the year 2020. “If our countries are going to do more together around the world,” said Obama, “then speaking each other’s languages, truly understanding each other, is a good place to start.”⁹ Yet, Chinese language education has not seen the investment and interest that would allow for anything like this goal to be reached. The most recent comprehensive data from a 2017 National K-12 Foreign Language Enrollment Survey Report (Graph 1), shows that less than seven percent of high schools in the U.S. offered Chinese and that it came in as the fourth most-studied language, barely beating out Latin. In higher education the numbers are worse, with Chinese the seventh most-studied language (Graph 2).

Graph 2: Higher Education Enrollment in Modern Languages

Source:  The National K-16 Foreign Language Enrollment Survey Report

Nor are failures in Chinese language education limited to the United States. Two years after the first Mandarin immersion school attempted to open in Germany, difficulty with state regulation forced them to settle for Chinese three times a week, despite immersion schools already existing in French, English, Spanish, Italian, Turkish, and Russian. By contrast, China is learning English at a prodigious rate and hundreds of thousands of Chinese students flock to the U.S., UK, Canada, Australia, and other rich democracies for everything from high school diplomas to doctorates. While the number of U.S. students studying in China rose steeply in the early 2000s, in line with the Obama administration’s goals, the numbers then plateaued and began to decline in the mid 2010s. By 2019, more U.S. students studied in Ireland than in China (Graph 3).

Graph 3: U.S. Students Study Abroad Destinations 1999-2019

Source: Open Doors – Institute of International Education

Across a variety of departments, most universities do not have the expertise and faculty necessary to provide sufficient offerings related to China or Asia more generally. Beyond language, a trend away from area studies exacerbated a lack of expertise in China. One might expect political science, economics, business, history, and other departments to stock up on China experts as they did on Soviet specialists during the Cold War. But most seem satisfied with a single expert on East Asia (many of whom are actually Korea and/or Japan specialists). There appear to be fewer China-focused jobs in U.S. political science departments every year. In 2021, only a handful of U.S.-based China-focused jobs were advertised in political science, and these were primarily focused on security.

What makes this failure to invest in Chinese language education look even worse is the rejection of one of the few low-cost resources for education in Chinese, Confucius Institutes. CIs have been forced out of U.S. universities even though a bipartisan congressional commission determined that there is “no evidence that these [Confucius] institutes are a center for Chinese espionage efforts or any other illegal activity.”¹⁰ China spent more than $158 million on U.S. Confucius Institutes from 2006 to 2019, but after peaking at 103 in 2017, universities began to reject them and by the end of 2021, and only 31 remained. If China was really such a concern that the CIs had to go, then surely the lost investment in language training should be replaced, many times over, by funding from other sources.

Failing to build a robust Asia curriculum is inexcusable, even in tough budgetary times, because developing substantial infrastructure and profound expertise takes decades. From intelligence gathering to business, children well-versed in the languages and cultures of China and its neighbors are the best hope for rich democracies to compete with and relate to a rising China, but these are investments that will take decades to reap rewards. If rich democracies invest heavily in education programs related to Asia starting today, they will begin to see the results in a decade or two.

Yet, unlike the categories considered above, education seems to be an area in which rich democracies are not even slowing the pace at which they are falling behind. In part this is due to increasingly negative attitudes about China. While this may be understandable given increasingly negative rhetoric about China in the media as well as PRC policies such as the repression of Muslims, it seems to be self-defeating. If China is important enough to attract widespread suspicion, then it ought to be worth learning about. Students who hear ominous things about China could choose to study in Taiwan or Singapore or even Korea or Japan.

Conclusion

Considering the three areas – military, economics, and education – the U.S. and its rich democratic allies have largely, though not completely, failed to prepare for a world in which China is a, if not the, superpower. But preparations have been uneven and some of the areas demonstrate more foresight and investment than others. It is difficult to know whether the United States and its allies are prepared to deal with the rise of China militarily, but in line with generally substantial U.S. military spending and investment it seems clear that this is where preparations have been the most thorough, or perhaps the least neglected. Economically, both at home in the form of R&D support and abroad in terms of offering alternatives to China’s investment, there are clear signs of inadequate preparation and a shift in momentum. In the field of education, there are not even signs of concern as rich democracies fall further and further behind. In the next piece I will consider why, despite the relative predictability of China’s rise, rich democracies seem to have been caught so flat-footed.

The post Is the World Ready for China Risen? appeared first on China Research Center.

A similar episode occurred in China in 2021.  A writer named Li Guangman, formerly editor of a trade publication for an electric power company and columnist for a website that no longer exists, posted a long commentary called “Everyone Can Sense that a Profound Transformation is Underway!” to his WeChat account in late August.  Several media outlets immediately republished his essay, among them People’s Daily and Xinhua — two of the leading central-level news platforms in the country.

The tone and content of Li’s post echoed the militant rhetoric of the Cultural Revolution.  After a lengthy diatribe against a few pop culture celebrities who had been canceled over tax evasion and offenses against traditional cultural values, Li noted other recent regime moves including the suspension of the IPO by Alibaba’s digital finance spin-off Ant Group, the new emphasis on the theme of “common prosperity,” and the grand celebrations of the Party’s centenary.  All these actions, he claimed, signaled the coming of a “profound revolution” that would sweep away “capitalist cliques” and bring the “people” back to the forefront of society.  In dramatic Maoist fashion, he celebrated “the return of red, the return to heroes, the return of blood” (hongse huigui, yingxiong huigui, xiexing huigui).”   Like Mao and the Gang of Four, Li demanded thorough going cultural change. “We need to control all the cultural chaos and build a lively, healthy, masculine, strong, and people-oriented culture” (“women xuyao zhili yiqie wenhua luan xiang, jianshe xian huo, jiankang, yanggang, quianghan, yi renmin wei de wenhua”), Li said.^[3]

Four days later, the editor of the aggressively pro-regime, anti-Western publication, Global Times, Hu Xijin, published a rebuttal of Li’s post.^[4] Calling Li’s article misleading and inaccurate, Hu declared that China’s leaders had been following an orderly course of measures aimed at preserving the “reform and opening up” mixed economy model — which did not at all amount to a revolution.  Hu particularly objected to the rhetorical tone, which he said “would evoke some historic memories and trigger chaos in minds and panic among people.”^[5]  Rather than publishing it in Global Times, however, he posted it to his personal blog.  Then the censors ordered that the post was not to be shared on Weibo or WeChat.  Several hours later, the ban was lifted, and the post could be shared again. Reports from media sources indicate that the regulators issued oral instructions to media editors acknowledging that Li’s post had a wider impact than they had anticipated.  Rather than demanding that they rescind or refute it, however, they asked editors to balance it with less inflammatory content.^[6]  After that, the controversy subsided.  Li Guangman continued to post content, but less heated. The leadership made it clear that they would continue to intensify restrictions against Western influences and press the common prosperity theme, but not shutter all large private businesses or enact draconian redistributive policies.

Like the Nina Andreeva affair, the Li Guangman episode revealed two things about the current state of Chinese policymaking.  Most obvious is the ambiguity in policy about how much the state intends to balance market activity and private capital ownership with state control.  Second, at a deeper level, that ambiguity indicates divergence in the positions of key players in the policymaking process over basic economic policy choices.  There is a basic tension between Xi Jinping’s need for supreme leadership and the fact that the regime rests on a series of tacit understandings among powerful bureaucratic and business interests.  A good indication of this is the incoherence intrinsic to the “common prosperity” slogan.  There is a widespread expert consensus around concern over high inequality and the need to build a middle-class society, one where the middle-income strata are the dominant force in society. One recent commentary notes that China’s society is about 30 percent middle class and argues that China can improve economic and social stability by raising that proportion to two-thirds.^[7]  However, the leadership has consistently avoided acknowledging the extreme concentration of income at the upper end.  Instead, it has consistently asserted the need to raise low-end incomes through measures such as a higher minimum wage and more effective social assistance programs.  Despite the conspicuous assaults on a few visible tycoons and celebrities, even in the most recent phase, the leaders have been cautious about arguing for an effective progressive income tax system, an estate tax, or surtaxes on high incomes.  The regime is moving extremely cautiously in introducing a property tax, for instance, authorizing only small-scale local experiments.

An example of current mainstream thinking on the issue of inequality is an essay co-authored by the prominent economist and expert on inequality, Li Shi, dean of the Institute on Sharing and Development (gong xiang yu fazhan), at Zhejiang University and an associate at the institute, Yang Yixin.^[8]   The essay discusses Zhejiang Province’s pilot program to build “common prosperity.” While using the standard image of an “olive-shaped society” — the model of a social structure that is thickest in the middle and thinner at the two ends — the essay is anything but radical.  It does propose taxes on wealth, such as estates and real estate, but only in the course of time.  The authors do not argue for a progressive income tax.  They call for “high-quality development” that expands incomes in the middle, but their only concrete prescriptions promise more “digitalization” and the “sharing economy.”  They want to build middle class wealth by making sophisticated new financial products more widely available, assuming that more financial sophistication would spur economic growth.  They want to reduce the incomes at the top by encouraging more charitable donations (i.e. “tertiary distribution”) but do not propose using the tax code to create incentives for that purpose.  They call for extending social rights to migrant workers, but only gradually, and without hukoureform.  They call for the use of “collective consultation” (xie shang) rather than collective bargaining between organized labor and employers over wages.^[9]  Most of the calls for improved workers’ wages, in fact, have to do with incentive pay rather than base pay.  Are these as far as the writers can go?  Or are these progressive-minded economists so fearful of the Maoists that they think they must guard against any serious shifts in social or fiscal policy?  Substantively, the essay reveals policy experts’ reluctance to discuss the many forms of rent extraction that a state-dominated, cronyistic economy permits, the ways in which income rents support the Party’s political monopoly, and the forms of privilege that prevent real mobility of capital or labor across sectors and regions.  They bind the regime’s political elites with businesspeople, state and private, who generate the rents the Party uses to maintain its power.  Little wonder that serious reform-minded economists stop well short of analyzing the political economy of the regime.

At present, policymakers are working to deflect the “common prosperity” initiative into politically policy concepts.^[10]  A visible example is the idea of “tertiary distribution.”^[11]  In Chinese parlance, primary distribution is the result of the marketplace, where contributions to production determine the returns to labor and capital.  Secondary distribution occurs through redistributive mechanisms, specifically taxes, social insurance contributions and benefits, and social transfers.  Tertiary distribution — the channel that the current policy emphasizes as the way to achieve “common prosperity” — is voluntary donations of money and time to the nonprofit sector.  Experts are calling for a reform of the tax code to provide material incentives through tax deductions for such contributions.  However, given the current political climate, many wealthy individuals have found it expedient to make sizable and well-publicized donations to worthy causes.  Lacking in the current debate is a reconsideration of more basic economic and political institutions that have fostered cronyistic and corrupt exchanges of benefits between wealthy entrepreneurs and political officials.

Therefore, when we interpret Xi’s gestures against Westernized entertainment industry stars, the private tutoring industry, and —selectively — against big digital platform companies as a broad “crackdown on everything,”^[12] we overlook the fact that this is a highly selective and politically motivated campaign.  Because regionalism, cronyism, and corruption are so deeply interconnected, enabling tycoons to amass wealth and power by cultivating mutually beneficial ties with local officials, it makes political sense for Xi to single out Jack Ma’s Zhijiang-based business empire and the regional officials who were closely tied to him: the campaign strikes at all three problems at the same time.^[13]

The calls for “common prosperity” therefore reveal the limits on policy choices available to Xi.  These are grounded in the multiple compromises his regime must make to retain power, between the monopoly of an ideologically driven communist party and its dependence on an economy dominated by politically favored state and private companies that feed the regime with taxes, kickbacks and privileged ownership shares.  The leaders seek to respond to rising awareness of the extreme economic inequality in the country by taking measures to curb the excesses associated with particular firms and sectors, and by reaffirming Communist values.  At the same time, they dare not move too far toward policies that would seriously harm the interests of the richest strata of entrepreneurs and managers who have locked in their advantageous positions by cultivating the favor of politicians at the local and national levels.  Little wonder that new leftists are seizing on the opportunity to press for a radical turn away from the partial reform economy back toward Maoism, or that establishment party leaders and experts find it necessary to warn against any substantial steps toward a more far-reaching redistribution of wealth.  In a polity where ideology and power are intertwined, the deepening of contradictions between the avowed doctrines of the regime and the actual institutions and practices its power rests on results in a gulf no amount of central control can bridge.

^[1] Nina Andreeva, “Ne mogu postupit’sia princtsipami,” [I cannot violate my principles] [https://diletant.media/articles/34848945/]

^[2] Thomas F. Remington, “A Socialist Pluralism of Opinions: Glasnost and Policy-Making under Gorbachev”, The Russian Review 48: 3 (1989), pp. 271-304.

^[3] [http://www.xinhuanet.com/politics/2021-08/29/c_1127807097.htm]  The reference to masculine cultural imagery alludes to the frequent complaint that the prominence of androgynous styles of self-presentation (sometimes called “sissy-boy” styles [jingzhunan or simply jingnan, ie refined pig boys or refined boys] on the part of some male entertainment industry figures.  This fad became the target of heated cultural criticism in recent years for its violation of traditional gender role stereotypes.  Under the current crackdown, commercial ads and television programs may not use such images.

^[4] https://www.scmp.com/news/china/politics/article/3147548/viral-blogger-hailed-chinas-profound-revolution-state-may; https://www.wsj.com/articles/chinese-essayist-revives-worries-about-a-new-cultural-revolution-11630670154;

^[5] https://www.scmp.com/news/china/politics/article/3147548/viral-blogger-hailed-chinas-profound-revolution-state-may; https://www.wsj.com/articles/chinese-essayist-revives-worries-about-a-new-cultural-revolution-11630670154.

^[6] https://www.scmp.com/news/china/politics/article/3147548/viral-blogger-hailed-chinas-profound-revolution-state-may.

^[7] Zhang Jun, “Gong fu hui xiaochu shouru chabie, dan ke baozhang diceng timian shenghuo,”  [https://fddi.fudan.edu.cn/15/20/c18965a398624/page.htm#:~:text=8%E6%9C%8817%E6%97%A5%E5%8F%AC%E5%BC%80,%E7%9A%84%E6%A9%84%E6%A6%84%E5%9E%8B%E5%88%86%E9%85%8D%E7%BB%93%E6%9E%84%E3%80%82&text=%E5%85%B1%E5%90%8C%E5%AF%8C%E8%A3%95%E6%98%AF%E5%90%A6%E5%B0%B1%E6%98%AF%E6%B6%88%E9%99%A4%E6%94%B6%E5%85%A5%E5%B7%AE%E5%88%AB%EF%BC%9F]

^[8] Li Shi and Yang Yixin, “Jianshe shouru fenpei zhidu gaige shiyan qu zhu tui gongtong fuyu” [“Establish reform of the income distribution system by a pilot zone for common prosperity”][http://www.ce.cn/xwzx/gnsz/gdxw/202108/19/t20210819_36821588.shtml] August 19, 2021

^[9] On this distinction, see Thomas F. Remington and Cui Xiaowen, “The Impact of the 2008 Labor Contract Law on Labor Disputes in China,” Journal of East Asian Studies 15:2 (2015), p. 280.

^[10] For example, see the spate of articles in Caixin Global explaining that “common prosperity” does not mean “robbing the rich to give to the poor” and that it is an encouragement to more “tertiary distribution.”  For example, Cai Xuejiao, “’Robbing the Rich’ Is Not Part of China’s Plan for ‘Common Prosperity,’ Official Says,” Caixin Global, August 26, 2021; Wang Tao, “What Does ‘Common Prosperity’ Mean for China’s Policies and Economy?” Caixin Global, August 27, 2021.

^[11] Eg. Kevin Guo, “CX Daily: What’s Standing in the Way of ‘Common Prosperity’?” Caixin Global, September 10, 2021 [https://www.caixinglobal.com/2021-09-10/cx-daily-whats-standing-in-the-way-of-common-prosperity-101771292.html]; Caixin Global, “Editorial: Releasing the Potential of Tertiary Distribution,” Caixin Global, August 23, 2021 [https://advance-lexis-com.ezp-prod1.hul.harvard.edu/document/?pdmfid=1516831&crid=3b2d80b9-253e-4bf0-a656-90ef416dd531&pddocfullpath=%2Fshared%2Fdocument%2Fnews%2Furn%3AcontentItem%3A63F7-M2R1-DY28-G00P-00000-00&pdcontentcomponentid=468180&pdteaserkey=sr9&pditab=allpods&ecomp=nzvnk&earg=sr9&prid=3c59210a-fdc4-4d3a-95cb-a8fd4011aafc]

^[12] Lily Kuo, “Xi Jinping’s Crackdown on Everything Is Remaking Chinese Society,” Washington Post, September 10, 2021.

^[13] Lizzi C. Lee, “Xi Jinping’s Graft Busters Are Probing Jack Ma’s Home City, and a Rising Star of Xi’s Zhejiang Clan,” SupChina, August 31, 2021 [https://supchina.com/2021/08/31/xi-jinpings-graft-busters-are-probing-jack-mas-home-city-and-a-rising-star-of-xis-zhejiang-clan/]

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Taiwan is on the defensive economically and politically in its effort to maintain security from China despite their robust economic ties. China has been Taiwan’s biggest export market since 2004 and is Taiwan’s largest source of its trade surplus. However, Taiwan has grown politically more distant from the mainland in recent years. Since Taiwan’s democratization in the late 1980s, more and more of its citizens have formed their political identity independent from the historical connection with China. The trend has alarmed China. To prevent the island from drifting away, China has intensified its diplomatic and military pressure on Taiwan.

The cross-Strait dynamic is remarkably similar to the volatile relationship between Russia and Ukraine. In light of the Russian invasion of Ukraine, how far will China go in dealing with Taiwan? To thoroughly understand this issue, a historical review is in order.

Security Challenges

China has launched military operations in the Taiwan Strait on three separate occasions during last 70 years. During the first Taiwan Strait crisis (1954-55), the People’s Liberation Army unleashed heavy artillery attacks on the offshore islands of Jinmen (Kinmen/Quemoy) and Mazu (Matsu) to “liberate” Taiwan. In December 1954, the United States and Taiwan signed the mutual defense treaty, and in January 1955, President Eisenhower signed the Formosa Resolution, a joint measure passed by the U.S. House and Senate granting the president pre-authorization to use armed forces to protect Taiwan. In May 1955, the PLA backed down and the shelling ceased, ending the crisis.

In 1958, China resumed its bombardment of Jinmen and Mazu to block Taiwan from resupplying garrisons on the islands, triggering the second crisis. The United States responded by sending a large naval contingent to the Taiwan Strait. Tensions eased when China suspended its bombing campaign after high-level talks with the U.S. in Warsaw.

In 1995, in protest over the U.S. decision to grant visa for Taiwan president Lee Teng-hui to visit Cornell University (his alma mater in the United States), China deployed some 150,000 troops in areas bordering the Strait. There they conducted three consecutive military exercises, including missile tests, live-fire war games, and air exercises to issue warnings to both Taiwan and the United States. The United States responded with its own show of force by sending two aircraft carrier battle groups to international waters near Taiwan — the biggest display of American military force in Asia since the Vietnam War.

In each of these cases, China demonstrated its intention to use military force to reclaim Taiwan. Despite the role of the United States in defusing these tensions in the past, the Taiwan Strait remains a major source of regional instability.

Recently there has been much attention on Chinese “gray zone” activities in the Taiwan Strait that involve various forms of assertive and coercive actions to achieve strategic goals without provoking war or military conflicts. Besides increasing diplomatic and economic pressure on Taiwan, China has deployed naval forces to conduct “combat drills” off the coast and dispatched aircraft into Taiwan’s air defense identification zone, a marked area in which air traffic controllers request incoming flights to identify themselves. Consequently, the 2021 and 2022 Preventive Priorities Surveys conducted by the Council of Foreign Relations classified the Taiwan Strait as a Tier 1 (High Priority) risk area.

PLA aircraft began to enter Taiwan’s identification zone in June 2020, and operations became more frequent in September 2020. Twice that month, PLA fighters crossed the sensitive median line in the Taiwan Strait. Since then, no major median-line violations have been reported, and most PLA incursions were staged away from Taiwanese territory over the ocean in the southwest corner of Taiwan’s identification zone.

Initially, Taiwan’s air force scrambled to intercept the intruding PLA military aircraft. Chinese air operations began to exact a toll on the island’s military readiness as they intensified and increased in frequency and scale.  The impact on fuel costs, pilot fatigue, and wear and tear on Taiwanese aircraft had to be considered. In March 2021, Taiwan’s defense authority decided to stop intercepting every Chinese aircraft but continue to monitor and gather intelligence on PRC air activities. The recording and publishing of detailed tracking data of PLA operations by the Taiwan military indicates their technical ability to identify aircraft type using long-range electronic sensors.

According to data released by Taiwan’s Defense, 958 PLA aircraft entered Taiwan’s identification zone on 238 days in 2021. The largest single-day record — 56 incursions — happened on October 4, which included 40 fighters, 12 bombers, and four supporting aircraft. Two days previously, on October 2, China launched 39 sorties, with 36 fighters and three supporting planes.

In the beginning, operations happened during the day, particularly in early mornings. Later, they expanded to include nighttime incursions, suggesting an expansion in the effort. Formations also evolved.  Initially, Y-8 ASW (anti-submarine warfare) aircraft were dispatched with occasional fighter jets such as J-16s and J-10s and bombers such as H-6 and JH-7 series. More recently J-16s were most prominent, with Y-8 ASWs ranked second, followed by J-10s.  Other types of planes involved in the operations include Y-8 EW (electronic warfare), Y-8 reconnaissance, and KJ-500 airborne early warning and control aircraft.

Why has China been conducting these operations?  Some analysts suggest that spikes in PLA incursions are reflections of Beijing’s reactions to specific events or actions, such as a comment made by U.S. Secretary of State Antony Blinken to support Taiwan in the face of Chinese aggression in April 2021, and Taiwan’s application to join the TPP in September 2021.  Others (Layton 2021), however, point out that formations combining fighters, bombers, support aircraft, and electronic warfare aircraft require up to six months of extensive planning and training. It is plausible that some of these exercises were pre-planned but held until the right moment for signaling purposes.

It is reasonable to assume that the PLA has been carrying out these operations for multiple reasons (Ang U-Jin & Suorsa, October 2021).  First, as mentioned earlier, these operations intend to show Beijing’s displeasure at Washington’s diplomatic engagement with Taipei, and demonstrate to internal and external audiences the PLA’s resolve to protect Chinese security and sovereignty.  In responding to the U.S. statement urging China to stop its provocative military activities near Taiwan in early October 2021, China’s Foreign Ministry put the blame on the United States for undermining regional peace and stability by supporting Taiwan’s separatist forces with arms sales to Taiwan and warships regularly sailing through the Taiwan Strait. Thus, these aerial operations are indeed designed to respond to the alleged “Western provocations” or “Taiwanese independence” forces.

Second, China’s air operations may be designed to monitor sea and air traffic in the strategically important Bashi channel, to track foreign submarines, and to monitor foreign warship movements in and out of the South China Sea. The presence of maritime patrol aircraft, airborne early-warning and control aircraft, and intelligence-gathering and electronic warfare platforms in the formations reveal the complexity of the operations. The surveillance function becomes especially relevant because the United States and its allies have conducted large-scale naval exercises in the surrounding areas. In those situations, the operations are less about Taiwan and more about monitoring and challenging the U.S. military presence.

Finally, these operations represent a PLA effort to expand training and exercises farther from China’s coast and into the open sea. These flights could serve the purpose of long-range training and provide PLA pilots an opportunity to interact with foreign air forces. The paths of some sorties and the integration of diverse aircraft types into a single unit with strike capabilities demonstrate sophistication in coordination.

One may argue that these operations are multipurpose and may not be an imminent threat to Taiwan’s national security yet. But these near-daily air incursions surely are having their effects. There is no doubt that training and monitoring exercises are helping the PLA to become more capable and confident in maintaining patrol sorties near critical choke points. For Taiwan, however, there is a serious concern that routine incursions could shape the public perception of a “new normal” and affect the island’s overall vigilance.

Economic Challenges

Ironically, escalating cross-Strait tensions have done little to discourage the economic interactions between China and Taiwan. In 2021, the total volume of cross-Strait trade set a record, growing to $328 billion, double the amount in 2011, according to Chinese trade statistics.

Since the 1990s, Taiwan has attempted to minimize its economic dependence on China. President Lee Teng-hui’s Southbound Policy was aimed at expanding economic exchanges with countries “south” of Taiwan.  Some factories were relocated to Southeast Asia to expand economic ties with the region. President Chen Shui-bian, Lee’s successor, sought to negotiate bilateral free trade agreements with some of the countries in the Association of the Southeast Asian Nations.  Under President Ma Ying-jeou, Taiwan achieved some breakthroughs by successfully negotiating economic partnerships with New Zealand and Singapore.

In 2016, President Tsai Ing-wen proposed a “New Southbound Policy” to expand the diversification to South Asia, particularly to India. The goal was to form a “common consciousness of economic community” through cooperation in functional areas of Taiwan’s soft power, such as public health, education, science, and agriculture.

With these efforts, ASEAN states together have taken a bigger share in Taiwan’s imports and exports and Taiwan’s economic importance in ASEAN appears to have slightly increased. Nevertheless, Taiwan’s economy remains heavily dependent on China’s market.

Taiwan has attempted to expand its economic connections with others in the region through the mega-agreements such as the TPP and the Regional Comprehensive Economic Partnership.  The opportunity in the latter was limited because of China’s dominant role in the negotiations. Nevertheless, the TPP initially looked promising, partly because of the pivotal role of the United States in the negotiations, and partly because of its connection to the Asia Pacific Economic Cooperation forum, or APEC, of which Taiwan was already a member.

In 2016, Taiwan began preparing for the TPP accession process, examining and reviewing laws and regulations to identify potential gaps and discrepancies based on the proposed TPP standards. After the United States withdrew from the TPP in 2017, the remaining 11 countries decided to move forward with the creation of the CPTPP in 2018.  In February 2021, the United Kingdom formally applied to join the CPTPP, and Taiwan applied to join as a “Separate Customs Territory,” after China did in September 2021.

For the past several years, Taiwan has revised regulations in key areas such as environment, intellectual property, administrative transparency, service trade, and movement of professionals to comply with CPTPP regulations. Eight of 12 laws identified for revision have been modified and the remaining four are going through the amendment process.

Taiwan’s application, however, faces decisive opposition from China. After Taiwan announced its membership bid, Beijing was quick to strongly urge other CPTPP members to reject the island’s application. China’s economic influence will undoubtedly affect some members’ decision-making. The fact that final decision requires consensus by the CPTPP members further complicates the situation for Taiwan, as any member could exercise a veto.

While these challenges are unique to Taiwan, the complexity of cross-Strait relations is, in fact, a microcosm of the Indo-Pacific, where political leaders must constantly evaluate and balance the cross currents of competition and cooperation.  Stakes are high, and solutions are elusive.  One thing is clear though: any miscalculation in decisions could have significant implications for stability and prosperity in the region and the rest of the world.

References:

Ang U-Jin, A., & Suorsa, O. P. (2021, October 14). “Explaining the PLA’s Record-Setting Air Incursions Into Taiwan’s ADIZ: Multiple Reasons Likely Contributed to the Spike Inincursions and Sorties in Early October,” The Diplomat. https://thediplomat.com/2021/10/explaining-the-plas-record-setting-air-incursions-into-taiwans-adiz/

Layton, P. (2021, October 6). “Chinese Warplanes Overhead Taiwan (Or Maybe Not),” The Interpreter.
https://www.lowyinstitute.org/the-interpreter/chinese-warplanes-overhead-taiwan-or-maybe-not

Ministry of Foreign Affairs of the People’s Republic of China. (2021, October 4). Foreign “Ministry Spokesperson Hua Chunying’s Remarks on Taiwan-related Statement Issued by US State Department Spokesperson,” Spokesperson’s Remarkshttps://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2535_665405/202110/t20211004_9580325.html

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Putting aside the political noise (as much as possible), both China and the U.S. face similar threats and share similar needs for innovation.   Neither is seriously threatened from outside their borders.  The serious threats are found within each country, although aggravated by external forces.  In my view, the most serious threat to both is the failure to share equitably — each country — the very visible prosperity they now enjoy and their failure to create equitable opportunities for those left behind to improve.

While I believe the “war” analogy is not entirely accurate, I will use it to frame my observations on the various “fronts” on which this “war” is being fought and where battle is currently joined.  These fronts are talent, capital, government industrial policy, and intellectual property.

What started this “war?”  China and the United States got to where they are today largely by energizing their economies and organizing their workforces around manufacturing.  America got a head start in the Industrial Revolution when China remained closed.  When China opened under Deng Xiaoping, it became the largest market on the planet.  It has grown three times the rate of the U.S., doubling every seven years.  China has become key to the world’s supply chain and the source of most everything, as well as the world’s largest global trader.  China is now the largest trading partner for more than twice the number of countries than the United States.

In today’s world, however, neither China nor the U.S. can continue to depend on manufacturing as the engine for economic growth.  They must both rely on the growth of innovation-driven economies.   What is central now to economic growth and quality of life in both places is discovering new ways to create value in what we make, how we make it, what we can do with it, and how we consume or use it.  This “Creation of New Value” is my working definition of what innovation is.  It also is not limited to creating new things.  Old things and existing processes used in new ways or to provide new services can also be innovative.

THE CHALLENGE TODAY

Today both China and America are challenged to grow their innovation economies in ways that more broadly share the benefits to assure continued economic advancement, national security, global influence, and domestic political stability.

Both China and America enjoy on average a high quality of life. America still has the larger economy measured by GDP, but in 2014 China surpassed America when measured in Purchasing Power Parity (PPP).  This is a rough comparison of the “felt” prosperity or standard of living.  This is hardly surprising because in the past 35 years the Communist Party in China has raised 500 million people out of abject poverty. Today more than 300 million Chinese enjoy a real middle-class life.  That, however, leaves an economic gap for 900 million Chinese.

Today, in both America and China, the current divisions between the “haves” and the “have nots,” between the economic elites and the “left behinds” or “left outs” or those who “never had a chance,” threaten more than just national economic growth.  These increasing divisions create a loss of confidence in the existing political order and institutions for those who feel ignored.

It is this imperative for continued economic growth sparked by innovation that has led to a global competition for talent, ideas, resources, and rules of the marketplace. This competition has been amplified to “war status” by rising nationalism fed by both the American and Chinese governments.

TALENT

There is no innovation without innovators.

Measuring human capital just in numbers gives China the edge with a population of 1.4 billion. If you are super talented in China (one in a million) there are 1,400 others just like you.  China also has a rigorous, if very regimented, system of education.  The focus through high school is preparing for the gaokao, the national college entrance exam, the lone criterion for admission to Chinese universities.

Education in China is largely based on memorization and hard work with not much critical thinking or problem analysis. The Chinese system, however, produces some people with remarkable talents, commitment to hard work, and self-discipline.  Young Chinese with the talent (and middle-class resources) can also study abroad.  More than 700,000 Chinese are studying outside of China. Roughly half are studying in American universities and high schools under various exchange programs.

America’s advantage has been its appeal to moveable talent across the globe.  America has made up for its sheer lack of numbers by welcoming those seeking refuge and opportunity.  Risk-taking immigrants and those people seeking education in American universities have formed a base of talent and energy that has propelled American innovation for more than a century.  Foreign-born talent that came to America — and their children — have helped create many innovative products and services, and create and lead many innovation-based companies.

America’s great advantage in innovation is this diversity of talent from across the globe.  Where you have different cultures working on the same problem, there is an openness to look for and apply different solutions. This is not easily found in a homogenous population with the same education, perspectives, and culture.  This American innovation advantage from diversity requires cultivation and continued support of diversity of both students and faculty in American universities.

About one-third of all current graduate students at Georgia Tech are foreign born.  Chinese students represent one-third of that number. They are not displacing American-born students who might otherwise be here.  The fact is we don’t have enough American-born students capable of participating in the level of research we conduct at Georgia Tech.  Foreign-born faculty are also an important part of the innovation talent pool.  Maintaining this global talent pool and the exchange of published research is not only critical for the academic tradition and process, but it also feeds innovation.

There are also important cultural barriers to innovation in both countries.  In China, status counts for a lot of behaviors.  Obtaining and preserving status is important to the individual and to their family. This tends to make the Chinese culture generationally more risk-averse.  Since starting a new enterprise or project carries some risk of failure, there is often a fear that failure of a new project might also stain the person as a failure.  In contrast, in Silicon Valley if you haven’t failed a couple of times, you are probably not trying hard enough.  Therefore, the entrepreneurial bug is harder to cultivate in China, but they are working on it.

The American cultural barrier to innovation is the increasing populist hostility to immigration that threatens the diverse pool of talent needed for innovation.   America’s ability to compete successfully for global talent has always depended on America’s promise of both safety and opportunity.  The U.S. government’s current paralysis to address immigration reforms and its suspicion of foreign-born talent working in fields of technical innovation threaten the high-level basic research that is essential for American innovation.  It is from this high-level basic research that a broad variety of applied innovations in products and services are derived.

America used to have a lock on foreign talent trained here who would wish to stay here.  But we are losing some of our best. The U.S. has erred in failing to staple a green card to every Ph.D. we graduate.  Those who graduate now can often find opportunities in their home countries with lower costs of living, less hostility to the way they look, and increasing support for their research.

China is funding and creating, with financial and regulatory support, special urban innovation districts that focus on areas for innovation emphasized by the Chinese government.  These places look a lot like the American garage culture, staged startup growth spaces and featuring the essential start-up coffee or tea shop.

China is also seeking to repatriate talent it lost to America by offering both financial support and research facilities.  This program is neither surprising nor a crime.  Faculty, however, failing to be truthful in their disclosures of foreign support or in discussions with the FBI can be criminal.  There have been several highly publicized arrests of distinguished Chinese academic scholars.  Most have failed to result in convictions or even prosecution.  But the overall anti-Chinese publicity is having a chilling effect in important areas of innovation and impacts the needed pool of talent.

This is particularly a problem for public universities that are more susceptible to the political winds.  American research universities have for many years provided the required export controls and protections for restricted or classified research.  But the rise of American hostility to immigration is eroding America’s innovation advantage by ignoring that our diversity is our strength — not a weakness or a threat.

America’s other cultural barrier to innovation is the historical discrimination that wastes half our domestic potential by underfunding education, employment training, access to technology, and opportunities in general for children of color and children of all colors in distressed communities.  Both countries also suffer from gender discrimination that fails to provide women the full range of opportunities and support needed for success in technology.  With a population that is less than 25 percent of China’s, America should avoid wasting any potential pool of talent.

Another key issue in both countries is developing an innovation workforce. Both countries confront new generations of young talent that favor a better “work-life balance.”  There is dissatisfaction in China with the current “996” work philosophy (9 a.m. to 9 p.m. six days a week).  China social media has seen a new “lying flat” (tang ping) movement (that advocates lying down instead of working hard). This was quickly taken down by the Chinese government, but not before being joined by millions of young Chinese who share that view.

In both countries, those born since 1980 do not believe that hard work is its own reward.  While they are capable, motivated to succeed, and are fine with less space, money, and status, they do seek more “self-time,” ”life balance,” and mobility.  They can get good jobs, but most do not expect to live better than their parents.  In both countries, many of these talented and educated young people cannot afford to buy a condo/home and thus will become a generation of “renters without roots,” free to pursue their next opportunity, wherever it may be.

Mobility is a big deal.  Those with the skills needed for innovation will be able to move freely and globally from job to job and place to place.  The pandemic has accelerated fundamental changes in how (and where) business operates.  An MBA or a graduate degree in computer science or any advanced technology has become a “global passport.”  Those with these skills can move to work anywhere, for anyone, and from anywhere.  They can and will move from job to job — or the jobs may come to them wherever they are.  Their longer productive years will also involve several different and changing jobs as technologies evolve.  Thus, the young in both countries need to develop the skills to be adaptive, lifelong learners in a changing global society or risk becoming obsolete.

CAPITAL

For 20 years China has invested heavily in both the hard and soft infrastructure needed for innovation education and research.  During this same time, the United States has been losing ground in global Gross Domestic Expenditure on Research & Development (GERD) for Innovation.  In the 20 years from 1999 to 2019, the U.S. share of the global R&D investments dropped from 40 percent to 30 percent.  In contrast, China’s global share has grown from 15 percent to over 24 percent in just the last 10 years.

In 2014, I was invited to speak on the future of Innovation at the Chinese Economic Conference in Shenzhen, China.  This was the part of China first to “open up” under Deng Xiaoping’s initiative.  In 2000 Shenzhen was a fishing village across from Hong Kong.  By 2014, Shenzhen had grown to become a thriving metropolis of 15 million people and the biggest hub of innovation in China.

Shenzhen lacked a major Level 1 research university to spawn ideas, talent, and companies.  To meet this need they began to build campus “outposts” for other major research universities in China and globally.  Some American universities had operated a campus in China for years, mostly in Shanghai or Beijing.  NYU, Duke, Michigan, Berkeley, and Georgia Tech were among them.

Georgia Tech was the first American university to create a joint venture in China (China Tech) after Deng Xiaoping’s Atlanta visit in 1979.  Georgia Tech began in Shanghai and decided to move to Shenzhen in 2010 after the provincial government agreed to build Georgia Tech a new campus in Shenzhen in a joint venture with Tianjin University.¹

While China’s R&D is supported by large state investments, most R&D in the United States comes through private investment seeking a profit. According to the National Center for Science and Engineering Statistics:²

• In 2019, the United States is estimated to have spent over half-a-trillion dollars ($656 billion) on R&D. The majority of those investments — $486 billion (74 percent) — came from the private sector.
• Manufacturers account for roughly two-thirds of private-sector R&D spending in 2018. More than 20 percent of private R&D investments come from IT companies.³
• About 15 percent was done by small businesses (fewer than 500 employees).

The American government tends to make major industrial investments only when it feels a threat to the nation.  In the 20^th century, the Depression sparked the New Deal (CCC, TVA) and World War II, aviation, atomic energy, radar, and the GI Bill.  The Cold War and Sputnik led to major investments in technology universities, moonshot, and interstate highways.

The American government does fund high level basic research.  America, however, relies on private enterprise and entrepreneurship to create innovations and advances in applied technology and lets the market determine the winners and losers.  Thus, the search for innovation in America is driven as much (or more) for profit as for advancement of technology.

GOVERNMENT INDUSTRIAL POLICIES

China has a national innovation policy that spends serious money to quickly build labs and provide funding in exchange for them creating new patent applications.  As a result, the annual number of Chinese filed patent applications is now greater than all the rest of the world combined.  These are just applications — and many are just design patents — but it reflects the high level of Chinese activity and support.  Significantly, in 2019 China for the first time filed more international patent applications than the U.S. under the Patent Cooperation Treaty (PCT) that reserves the option to file for patents in other member countries.

The American quest to preserve profits has also led to disruptive innovation.  Kodak and Polaroid invented digital photography but did not want to give up profits from films.  Xerox’s Palo Alto Research Center invented the mouse and graphic user interface, but the company decided to stay with copying.  IBM thought it was selling computer hardware not programmable functionality.  Other innovative firms emerged to take advantage of these gaps to create important innovations, notably Microsoft, Apple, and Google.

China’s strength and its biggest problem is the government’s ownership of the major industries.  Because state-owned industries have easy access to government funding they have expanded to unprecedented scale.  They employ millions (as part of the migration from rural to urban).  They have also exported their capacity to build industrial plants and infrastructure across the globe. The problem is they tend to stifle growth of private and start-up firms which are often sources of disruptive innovation.

On the other hand, when China decides to build something, they can do so promptly and very efficiently.  Their expansion of expressways, high-speed rail, housing, and other infrastructure in 2011-2013 resulted in China pouring more concrete in those three years than the U.S. did in the entire 20^th century.

There are other similarities.  Both governments have discovered because of the global marketplace they must rely on foreign sources for critical parts of their supply chain for essentials such as energy, food, rare earths, and computer chips.  Both are now trying to create domestic sources of supply.  Both China and America are busy blaming the other for domestic political reasons.  The result is rising public antipathy on both sides that is pointless since neither China nor America are going away. But it is useful for domestic political purposes.

INTELLECTUAL PROPERTY

The different focus in America and China on profits and national priorities impacts governmental policies regarding intellectual property. The U.S. Constitution authorizes Congress to grant “exclusive licenses to authors and inventors, for limited periods of time, to promote the progress of science and the useful arts.”  It says nothing about profits or preserving competitive advantage, but that is how our system has evolved.

The American entertainment and pharma industries have been aggressive in seeking to protect their profits globally based on American intellectual property rights.   As a result of the combined economic muscle of the Western economies, a special set of rules (TRIPS) was adopted by the World Trade Organization to set minimum standards for the protection and enforcement of intellectual property rights, according to western views.  These minimum IP standards are enforced by threats to impose trade sanctions.  This was essentially the West using its market muscle to protect Western IP rights.

With all its new patents, China has created new Intellectual Property Courts to enforce rights.  Yet it continues to insist foreign joint ventures share any imported technologies with the Chinese partner having control.  Thus, China is using its market power to enforce its rules for those wishing to take advantage of its enormous market.  Example:  Alibaba Group Holding Ltd.’s Singles’ Day shopping festival in 2021 posted one-day record sales of 540.3 billion yuan ($84.5 billion), compared to U.S. single-day sales in 2021 of $10.7 billion for Cyber Monday and $8.9 billion on Black Friday.  Thus, we have a global competition for the real governance of innovation, with many American companies voluntarily choosing to accept the risks and rules in China in exchange for access to the vast Chinese market.

Most important to China is the protection of the Communist Party from any potential threat to its power to govern.  This includes limiting access to or any use of innovative technologies that might undermine the Party’s ability to control flows of information to and/or about its population.  Dramatic improvements in China’s infrastructure have been made in parallel with advances in its surveillance technologies.  The Chinese government has a zero-tolerance policy toward COVID-19.  Automated monitoring of all innovations in social media, banking, and travel are set to promptly remove or prevent any perceived threat. China is also moving to invest in and effectively control Chinese joint ventures and startups, and to rein in the digital tycoons.

THE FUTURE OF INNOVATION

I see the future of innovation in America and China as a mix of competition and collaboration.  There are problems now and in the future that will unavoidably be shared and working together will be essential.  There will remain distinct cultures but shared appetites for styles, services, and status shown by the consumption of goods and services created in both places.  China faces challenges in making the transition from low-cost manufacturing to an innovation and service economy while maintaining control.  America faces challenges in restoring trust in its government to function and creating new employment opportunities to sustain both continued growth and a shared belief in the future.

Both China and America will be dramatically impacted by the forces of future change and their global impacts.  Key among these: urbanization, changes in technology, global economics, demographics, rising populism, and importantly, climate. These will all impact the need for clean air, fresh water, new temperate zones in which to live and grow food, and the likely global migration of large populations from endangered zones.

Another shared challenge will be the needs of aging populations with longer lifespans.  This will be particularly acute in China where the “one-child” policy has created a smaller workforce to replace pairs of working parents.  It also creates the “1-2-4 problem” (one child to care for two aging parents and four grandparents).  Both China and America are below replacement of their native population.  So, both will require (and welcome) significant immigrant support workers. Both will also need to properly educate and “future-proof” their children to be able to thrive in a rapidly changing global environment.

There will be continued competition between America and China for global influence based on the strength and attractiveness of their domestic economies and how well they share the opportunities and benefits.  In this regard, “soft power” will have as much influence and importance globally as “hard power” from a strong military and economic sanctions, but both are essential.

The real competition between China and America will have less to do with their capacity to innovate and more to do with their capacity to govern ourselves.  Herein lies a key difference between China and America. China defines itself by its dominant Han ethnic culture.   China views those of Chinese descent as citizens of China wherever they are.  America is such a mix of cultures that no single ethnic group is a majority.  America’s current extreme political polarization, however, has created gridlock and a struggle to find a coherent national identity.

Autocracies and emperors have existed for thousands of years, and they exist in many places today.  Autocracies have the benefit of clear rule, and they work until they don’t.  America’s most important innovation is its popular democracy.  America’s real competition is within its borders.  The challenge is whether America can continue to seek “a more perfect union” that can more equitably share the promised opportunities for “life, liberty and the pursuit of happiness.”

The post The Innovation Wars: The Competition between America and China appeared first on China Research Center.

This essay examines how Taiwan has navigated the international system from three distinct vantage points: its activities and relationships with intergovernmental organizations; its domestic adoption of international agreements that it cannot legally join; and its use of humanitarian assistance to aid other states and promote the island’s political and diplomatic interests.

Intergovernmental Organizations

Forging relationships with intergovernmental organizations is perhaps the most wide-ranging and complex component of Taiwan’s international strategy. Despite lacking state sovereignty, Taiwan maintains membership in many international organizations (Hickson, 2003). In the 1990s, Taiwan’s government began “seeking to expand its presence on the international stage by emphasizing that the territory… and the people within that territory deserved to participate in international forums” (Hickson, 2003, p. 1). Though not an exhaustive list, the following examples reveal how Taiwan has leveraged its intergovernmental organization memberships to improve its international standing.

World Trade Organization

Under the name “Chinese Taipei,” Taiwan became the 144th member of the World Trade Organization (WTO) on January 1, 2002 (“Chinese Taipei,” 2020). It took almost 12 years of negotiations to gain membership (“WTO,” 2001). This was a momentous achievement for Taiwan on the global stage because the WTO is a “large, robust, and highly important international organization” (deLisle, 2011). Unlike other such groups, the WTO does not require its members to be states, and WTO membership is arguably Taiwan’s “most important achievement in revitalizing its status on the international plane” (Charnovitz, 2006, p. 402). At the time of its accession to the WTO, former Taiwan President Chen Shui-bian called it a “significant milestone” and promised the Republic of China was “willing to engage in constructive cooperation and play a more active role in the international community” (McMillan, 2002).

WTO membership offered immediate benefits for Taiwan’s global standing by providing recognition of the island’s ability to function as a state. Charnovitz (2006) noted that while WTO membership did not grant state status to Taiwan, it did afford “greater economic and political respect” internationally (p. 424). Membership provided Taiwan with more room to conduct international trade relations (Meltzer, 2013). It essentially granted Taiwan most favored nation treatment in accessing other WTO members’ markets, and it relieved pressure on Taiwan to negotiate free trade agreements (Meltzer, 2013). Furthermore, WTO membership gave Taiwan a voice in creating and administering global trade rules; Taiwan also gained the ability to invoke the WTO dispute settlement process against other organization members (Charnovitz, 2006, pp. 424-425). It is the “only international tribunal in which Taiwan has standing to insist upon the rule of law” (Charnovitz, 2006, p. 425).

Asia-Pacific Economic Cooperation

When Taiwan entered the Asia-Pacific Economic Cooperation (APEC) in 1991, APEC was the first intergovernmental organization Taiwan joined since becoming a contested state in 1971 (Chu, 2016). It participates as an APEC “member economy” under the name “Chinese Taipei” (“U.S.-APEC,” 2019), and it joined the organization at the same time as the People’s Republic of China and Hong Kong (Chu, 2016). The mission of APEC member economies is to create prosperity for people throughout its region by “accelerating regional economic integration” (“About APEC,” 2020). Economic integration through APEC membership has been a boon to Taiwan’s regional standing. Chu (2016) suggested APEC participation has enhanced Taiwan’s external recognition as a de facto state, and has enabled better cooperation with APEC member economies on numerous global issues (p. 186). Its association with APEC also has improved Taiwan’s image domestically as a government capable of international engagement, and it provides a platform to promote Taiwan’s interests through bilateral diplomacy with individual APEC members (Chu, 2016, p. 186).

Association of Southeast Asian Nations

The Association of Southeast Asian Nations (ASEAN) is another regional intergovernmental organization that has provided Taiwan with an opportunity to pursue global engagement. Taiwan does not have diplomatic ties with ASEAN because the organization adheres to the “One China” policy recognizing the People’s Republic of China as the country’s sole legitimate government (Hsieh, 2020a). However, Taiwan has strong economic ties with the organization (Hoang, Truong, & Dong, 2020). Trade between Taiwan and ASEAN members increased significantly during recent decades, and by 2015, ASEAN had taken the top spot as Taiwan’s biggest trading partner (Hoang, Truong, & Dong, 2020). That year, ASEAN accounted for almost 31% of Taiwan’s total trade, which was significantly higher than trade with mainland China (23%), the United States (12%), Hong Kong (12%), and Japan (11%) (Hoang, Truong, & Dong, 2020, p. 2).

Its relationship with ASEAN has also created a system in which Taiwan enjoys several of the diplomatic privileges that traditionally come with recognized sovereignty. Taiwan’s representative offices in ASEAN countries are not embassies, and their leaders are not ambassadors (Hsieh, 2020a). However, they are treated as “functional equivalents” that have received a wide range of diplomatic privileges and immunities (Hsieh, 2020a, p. 213, 221). By providing better treatment to Taiwan, ASEAN member countries ensure similar treatment for their diplomats and representative offices (Hsieh, 2020a). Hsieh (2020a) concluded that successful bilateral trade and investment agreements between Taiwan and ASEAN have enhanced Taiwan’s treaty-making capacity and increased its legitimacy in official cooperative endeavors (p. 221).

European Union

Taiwan has established a strong economic relationship with the European Union, as well. European Union member states, and the EU organization, adhere to the “One China” policy and therefore maintain non-diplomatic relations with Taiwan (Hsieh, 2020b). That has not damaged Taiwan’s standing as a partner in global trade and investment. Taiwan is the EU’s sixth largest trading partner in Asia, and the EU is the largest investor in Taiwan, accounting for about 30% of its foreign investment stock (Hsieh, 2020b, p. 689). The EU-Taiwan Bilateral Investment Agreement (BIA) permits the EU to cooperate with Taiwan and confer varying degrees of legal recognition upon it without formally recognizing it as a state (Hsieh, 2020b, p. 694). For example, the European Union has stated that the EU and Taiwan “share the same values of democracy and respect for human rights and the rule of law, and are seeking closer cooperation where their interests and values converge” (Hsieh, 2020b, p. 694). Hsieh (2020b) determined that the EU-Taiwan BIA provides recognition of Taiwan’s “legal competence to effectively exercise jurisdiction and represent nationals” while also bolstering “Taiwan’s status claim associated with sovereign equality in international affairs” (p. 704). Taiwan’s participation in the EU and other intergovernmental organizations gives it access to information, provides an opportunity to follow international standards, increases its visibility as an actor in the international system, and strengthens relationships with other countries through organizational networks (Winkler, 2011). This strategy has helped Taiwan achieve both diplomatic and political gains (Li, 2006).

“As-If” Participation

Hickson (2003) suggested Taiwan revealed its modern internationalization strategy in November 1999 when the Democratic Progressive Party (DPP) issued its “White Paper on Foreign Policy for the 21st Century.” Historically the political opposition in Taiwan but the majority party in 2020, the DPP recognized that:

Taiwan is unfairly excluded from many international organizations. But as an important member in the international community, Taiwan should commit itself, as a sovereign nation, to abide by the U.N. Charter and various international conventions, and to exercise its proper rights and obligations by contributing to world peace and development. (“White,” 1999)

Describing this principle as “new-internationalism,” the white paper stated Taiwan should not “passively subject itself to the rules of the game played by the great powers” but instead should participate in international activities and establish “sustainable, long-term friendships” (“White,” 1999). deLisle (2011) called this strategy “as-if participation” (p. 5). In practice, Taiwan commits to act as if it is a member of an international organization and pledges to uphold the organization’s standards (deLisle, 2011). Fulfilling the obligations of international membership strengthens Taiwan’s case for access to global institutions, but:

(M)uch of the point of “as if” participation is about the question of Taiwan’s international status…. The more Taiwan can walk and talk and act like a member of a regime that is open primarily or exclusively to states, the more hope it has of securing the benefits of state (or nearly state-like) status in the international system. (deLisle, 2011)

Taiwan has employed a strategy of following international covenants by approving them domestically. Yu-chiao (2019) noted that Taiwan’s exclusion from United Nations membership also excludes it from U.N. human rights bodies, meaning “Taiwan must go its own way to meet international human rights standards.” Taiwan addresses this by “endowing U.N. human rights treaties with domestic legal status” (Yu-Chiao, 2019). In 2009, Taiwan’s legislature passed the Two International Covenants Enforcement Act, which included the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights (Yu-Chiao, 2019). The United Nations General Assembly adopted both multilateral treaties in December 1966. Taiwan also has granted domestic legal status to other U.N. human rights treaties, and all of them include provisions requiring scheduled reviews by international experts (Yu-Chiao, 2019). Bringing non-governmental organizations, international specialists, and Taiwan officials together to monitor domestic human rights practices gives Taiwan a global platform to promote its commitment to the international system (Yu-Chiao, 2019).

Global nuclear proliferation and weapons controls agreements provide additional examples in which Taiwan does not hold official memberships but adheres to international standards. It is not a member of the International Atomic Energy Agency (IAEA) because Taiwan is not a recognized sovereign state (Stricker, 2020). However, it still observes the Nuclear Non-Proliferation Treaty, it applies the IAEA’s highest standards for safety to its civilian nuclear program, and it follows the IAEA’s Additional Protocol verification agreement (Stricker, 2020). Because it lacks recognized state sovereignty, Taiwan is not a party to the Biological and Toxin Weapons Convention, the Chemical Weapons Convention, or the Missile Technology Control Regime, but the Taiwan government has repeatedly stated it will follow these conventions (Bullard, 2005). Because statehood is required for membership in multilateral export control regimes such as the Missile Technology Control Regime, the Nuclear Suppliers Group, the Australia Group, and the Wassenaar Arrangement, Taiwan cannot officially join but has chosen to follow global non-proliferation standards as if it were a member (Kassenova, 2012). Kassenova (2012) stated Taiwan’s non-proliferation policy has been driven by its desire to be part of the international community. Through its “as-if” strategy, Taiwan demonstrates its capability and commitment to adhere to global norms and expectations.

Humanitarian Efforts

Taiwan’s unresolved status made it necessary to pursue unconventional means to establish its place in the international system (Brown, 2010), and its approach to humanitarianism has been described as “unique” (Guilloux, 2016). Guilloux (2016) argued that while many governments provide humanitarian assistance, Taiwan’s history and practices make it different because of its status as a non-state. Though this area is “a limited resource for Taiwan’s effort to break its isolation in the global arena,” Guilloux (2019, p. 209) stated that Taiwan has expanded both its ambitions and capabilities. There is a strong belief domestically that humanitarian aid from the United States helped Taiwan survive and prosper, and it is Taiwan’s duty to repay its debt to the international community (Guilloux, 2016). The International Cooperation and Development Fund (ICDF) is Taiwan’s main international development assistance agency (Alexander, 2015). Its mission includes “boosting socio-economic development, enhancing human resources and promoting economic relations in a range of developing partner countries” (“About us,” 2020). The ICDF has undertaken humanitarian or technical assistance projects in Africa, Central and South America, the Caribbean, Europe, the Middle East, Central Asia, and Asia Pacific (“Projects,” 2020).

Taiwan’s global humanitarian work has been criticized as a tool to advance its political and diplomatic interests (Guilloux, 2016). The ICDF has adjusted its conduct to match domestic political movements, bringing Taiwan into the international mainstream “regarding universal values and engagement with the underdeveloped world” (Alexander, 2015, p. 136). Alexander (2015) observed that the ICDF is dedicated to “communicating with foreign elites who look favorably on Taipei,” and it continues to “engage with international fora as de facto representatives of the Taiwan government” (Alexander, 2015, p. 136). Alexander (2015) identified four primary audiences for Taiwan’s development assistance: publics of countries with ICDF missions, elites of formal diplomatic allies, wider international audiences, and Taiwan’s domestic audience (p. 127). Regarding the elites of diplomatic allies, Taiwan’s motivation for engagement includes maintaining formal diplomatic recognition and ideological patronage (Alexander, 2015, p. 127). Its motivation for engaging wider global audiences includes creating opportunities for positive international discussions of Taiwan and demonstrating compatibility with international projects and norms (Alexander, 2015, p. 127).

Taiwan-based non-governmental organizations also play a significant role in Taiwan’s global humanitarian efforts. NGO engagement in international activities has emerged as an “alternative approach to the expansion of Taiwan’s international space” and represents “an important forum in which Taiwan can share its experiences, learn from the experiences of others, and develop networks of connections” (Lee, 2012). Taiwan NGOs have extended cooperation to more than 90 countries despite only having official recognition from 14 of them (Lin & Lin, 2017). This suggests Taiwan NGO expertise in international development and cooperation is “highly sought despite the country’s diplomatic situation” (Lin & Lin, 2017, p. 487). Taiwan NGOs’ specific efforts to expand their geographical boundaries across several continents make them “an indispensable component for Taiwan’s international development and cooperation” strategy (Lin & Lin, 2017, p. 487). Their efforts contribute positively to Taiwan’s global reputation, as well (Lin & Lin, 2017, p. 488).

The work of Taiwan NGOs is also lauded for implementing the island’s “warm power” initiative regionally and globally (“Taiwan,” 2020). “Warm power” is Taiwan’s practice of sharing resources, experiences, and support, and Yang and Chen (2019) identified three of its primary features. First, Taiwan wants its Asian neighbors to “feel the good will and warmth of [the] Taiwanese government and people” (Yang & Chen, 2019). Second, Taiwan promotes inter-governmental cooperation and civic collaboration regionally (Yang & Chen, 2019). Third, Taiwan’s “warm power” focuses on establishing stable, long-term collaborative frameworks with its international partners (Yang & Chen, 2019). NGOs have played such an indispensable role in Taiwan’s efforts to create space in the global arena that the Ministry of Foreign Affairs established an NGO International Affairs Committee in 2000, which became the Department of NGO International Affairs in 2012 (“Non-governmental,” 2020). The department has “cultivated partnerships… to support international development and cooperation” and has empowered NGOs to expand their global activities (“Non-governmental,” 2020). Taiwan’s Ministry of Foreign Affairs planned to celebrate the department’s 20th anniversary in October 2020 with an awards ceremony that included “foreign representatives of the nations that have collaborated with the NGOs” (Chia-nan, 2020). Through its global humanitarian efforts, Taiwan portrays itself as a dedicated, responsible, and cooperative member of the international community.

Conclusion

Taiwan’s strategy for navigating the international system without recognized state sovereignty has been remarkably effective. Its successful participation in intergovernmental organizations has granted Taiwan political and economic standing that has been traditionally reserved for sovereign states. Though not officially recognized by its global partners as a state within the international system, Taiwan is often treated with a similar level of privilege and consideration. Taiwan’s domestic adoption and implementation of international agreements have earned plaudits from human rights groups and security experts, and in some cases Taiwan’s adherence to established requirements and expectations outperforms efforts by legally-recognized convention signatories. Taiwan also has significantly expanded its humanitarian assistance efforts across a wider geographic area, placing it in a stronger position to cultivate diverse relationships and shape its own narrative.

Taiwan’s narrative includes successes and failures. The United States remains Taiwan’s most powerful political ally in the international system, and lawmakers recently expressed support for expanding Taiwan’s global memberships (Stricker, 2020). In March 2020, Congress approved the Taiwan Allies International Protection and Enhancement Initiative (TAIPEI) Act of 2019. It directs the United States government to advocate, as appropriate:

for Taiwan’s membership in all international organizations in which statehood is not a requirement and in which the United States is also a participant; and … for Taiwan to be granted observer status in other appropriate international organizations…. (“S.1678,” 2020)

Taiwan also has recently undertaken a new effort to enhance its position in international society through President Tsai Ing-wen’s New Southbound Policy (NSP) (Marston & Bush, 2018). Calling it a regional strategy for Asia, President Tsai said Taiwan will work with countries regionally and globally “to deepen and broaden our presence in South and Southeast Asia” (Marston & Bush, 2018). The NSP aims to create a new model of cooperation by promoting economic collaboration, conducting talent exchanges, sharing resources, and forging regional links (Marston & Bush, 2018).

However, Taiwan is frustrated by its persistent failure to gain United Nations recognition and join the World Health Organization (WHO). China has used its “One China” policy and its status as a permanent UN Security Council member to block Taiwan’s membership in both organizations (Chen & Cohen, 2020). Taiwan achieved a promising victory in 2009 when the World Health Assembly granted it observer status under the name “Chinese Taipei,” and supporters had hoped the change would provide Taiwan with an eventual pathway into WHO networks (van der Wees, 2016). That has not happened, and in May 2020, in the midst of a global pandemic, Taiwan was not invited as an observer to the World Health Assembly meeting (Ching, 2020). The Taiwan Ministry of Foreign Affairs expressed “deep regret and strong dissatisfaction” with the decision and promised that Taiwan “will never give up our quest for international participation” (Wu, 2020). The United States issued a statement that it was “deeply disappointed” by the decision and strongly urged WHO to resume its practice of inviting Taiwan to participate as a WHA observer (“U.S. statement,” 2020). As of early November 2020, however, Taiwan had not received an invitation to join that month’s World Health Assembly meeting to discuss the COVID-19 pandemic (“Taiwan not,” 2020).

Taiwan is able to use these snubs to push for increased access within the global community. Its continuing campaign for greater recognition by the United Nations and World Health Organization is intended to “rally domestic support and challenge deficiency and injustice in the current [international] system” (Li, 2006, p. 612). Jaushieh Joseph Wu, Taiwan’s Minister of Foreign Affairs, expressed assurance that “as the voices around the world supporting Taiwan continue to grow louder, we are getting ever closer to achieving our goal” (Wu, 2020). Even with such high-profile disappointments, Taiwan has achieved enviable international success through its persistent efforts to engage with the world community. By pursuing relationships with intergovernmental organizations, adhering to global norms and expectations, and providing intercontinental humanitarian assistance, Taiwan has honed a strategy that could prove useful for other non-recognized states seeking a path through the international system.<

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The Carter Center recently released a report, entitled Finding Firmer Ground: The Role of Civil Society and NGOs in U.S.-China Relations, that highlights the issues of domestic and international concern requiring American and Chinese cooperation, and asks how can the U.S. and China reverse the current trend toward decoupling. Authors from both the U.S. and China examine how Chinese and American civil society, including nongovernmental organizations, might improve cooperation, dialogue, and management of security risks between the U.S. and China. They contend that issues such as climate change and global health should be established as pillars of critical cooperation where both countries could create high-level frameworks to identify shared goals and lay out long-term visions for climate change and global health. They point out that for civil society to be effective in these two areas, key obstacles to engagement must be addressed, including revising China’s Foreign NGO Law, mitigating fears of arbitrary detention, preventing the weaponization of visa policies, educating NGOs on the risks of cooperation, and countering xenophobia in both countries.

After spending two decades researching how civil society improves Chinese governance, I appreciate the goals expressed in the report, specifically how greater civil society engagement might improve cooperation and dialogue between the U.S. and China. However, the current time is more similar to the early 1990s than the early 2000s, with high and persistent levels of distrust prevalent in the relationship. As noted in the report, “Chinese and American government actions have made cooperation more challenging than in the past, and security pressures have increased risk aversion for participants on both sides.”

In the U.S., even though the Biden administration has signaled they want more proactive engagement with China, they also have not changed the Trump administration’s wariness and competitive strategy toward China. This is expressed by many government officials who argue that we can engage China, including Chinese scholars and civil society, as an important way of learning, but that we must be careful in assuming that they are independent (meaning, of course, that they should be understood as agents of the state). Although this stance casts doubt on the ability of non-state actors to meaningfully change the bilateral relationship, there might be a more limited role in helping state actors identify non-obvious areas of potential cooperation.

In China, this distrust can easily be seen in the new five-year plan highlighting the danger of “hegemonism” from the United States. For civil society, distrust manifests in the form of challenges for foreign NGOs to work in China, especially in partnering with or funding Chinese NGOs. Restrictions and the general distrust of Western civil society again casts doubt on any strategy to encourage U.S. NGOs and government agencies to directly fund or influence project choices in that it might unintentionally endanger domestic NGOs.

Relying on civil society groups in China to help achieve policy goals might create unrealistic expectations, and even more worryingly, place these groups in harm’s way for state monitoring or action. As in the 1990s, civil society engagement offers ways to improve the Sino-U.S. relationship, and more importantly governance outcomes for Chinese citizens; however, this must be done carefully, with realistic expectations about what civil society can do, and always with a “do no harm” principle.

I contend that we must leverage the lessons from civil society engagement from that time to inform current decisions. Although distrust on both sides makes engagement complicated, the lessons of the 1990s offer some pragmatic ways forward. In the 1990s, we learned that it is important to do two things: create policy access for civil society and develop civil society capacity. Below I first outline the ways these two goals were accomplished, and then apply these lessons to the current situation.

I. Create Policy Access

1. Elevate concerns raised domestically by civil society to a bilateral level during talks and meetings without directly identifying the groups.
2. Mandate the participation of civil society in all bilateral or multilateral platforms.

As the 1995 U.N. conference for women’s rights hosted by China, and as the Global Fund did with its health projects, we have observed that mandating the participation of civil society creates space for the growth of civil society groups and enhances their voice in certain policy areas. The Global Fund projects on HIV/AIDS, for example, created a number of civil society groups that then participated in creating anonymous testing sites as well as education for many hard-to-reach groups in China such as sex workers, drug users, and its gay population (e.g., the “men sleeping with men” groups). These policy interventions were then further supported through the GF platforms and inserted into Chinese law. Without policy access, it is challenging for civil society to have this sort of impact in China.

II. Develop Civil Society Capacity

3. Invest in creating strong civil society technical capacity.
4. Share resources with domestic groups, such as policy research, lessons from demonstration sites in other countries, access to experts, tax policies to allow for donations and philanthropy, etc.

Investing in improving the governance capacity of NGOs is even more important now because directly funding group projects is challenging under the new FNGO law. However, improving technical capabilities so that groups can better contract (服务购买) from the government is still encouraged. These government contracts are becoming a larger part of domestic NGO budgets, along with domestic fundraising allowed under the 2016 Charities Law; however, it is challenging for groups to cover salaries and professional development costs with these funds given strict fraud regulations. Often these funds may only cover direct project costs. This is a gap into which foreign funders may step, and improving the technical capacity of these groups means that they are more likely to contract and consult with local governments, creating access points in a closed policymaking structure that often lacks societal information about policy preferences and impact.

Many local officials cite a lack of group capacity for not working with local civil society, followed by a fear that the groups are puppets or trojan horses for Western interests. Increasing civil society access to policymaking by elevating issues, mandating participation in international platforms, investing in capacity, and sharing policy resources will help domestic groups play a more active role in China, and avoid the negative repercussions of close association with foreigners.

Applying These Lessons to the Current Situation

Given the likely persistence of distrust between China and the U.S., both the ability of Chinese civil society to achieve policy goals and the desirability of overtly partnering with these groups is in question. However, I do see a role for civil society collaboration, but perhaps in a looser sense, and where U.S. NGOs and foundations follow the lead of Chinese NGOs in determining what would help them versus what might unintentionally hurt them.

As outlined above, this role would focus on allowing for the process of interest aggregation and advocacy, where at the least NGOs might serve as a voice for their communities and help the U.S. identify areas of potential collaboration. The report identified some obvious areas of collaboration such as climate change and health; however, civil society groups often work in areas where collaboration might be possible but not obvious, such as municipal waste policies, poverty alleviation, and income inequality. As one potential example, China and the U.S. share large domestic coal sectors located in poor areas, and policies devoted to transitioning coal miners and their communities to other sectors is an important challenge.

The potential of closer collaboration will likely depend on issue area and group type. For example, certain types of civil society groups, such as arts organizations, might be good bridges in that they are not issue-driven, which allows complex and otherwise sensitive conversations. This impact has been seen in the past with “ping-pong diplomacy” and during the Olympics and other sporting events.

In short, I believe engagement with Chinese civil society is a good strategy, but it must be carefully balanced to avoid or mitigate the distrust in both countries. The policy suggestions in the report focus on ways to decrease distrust, but unfortunately this is being driven by powerful geopolitical concerns so it is unclear how actionable these recommendations are. Additionally, recommendations such as persuading China to revise the Foreign NGO Law is also unlikely given the persistence of the domestic politics concerns that caused the creation of this law in the first place. None of these larger challenges is likely to change in the foreseeable future, so although I support all of these long-term suggestions made by the report authors, I would also propose focusing on increasing policy access and capacity of Chinese NGOs as a dual-track strategy.

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The Challenge

Thank you, Yawei [Liu, China Program director at the Carter Center and China Research Center board member], for your comments about engagement and the role of The Carter Center, because that is a great foundation on which to start the conversation tonight. Unfortunately, it is not the foundation that most people are on right now.  It is no secret there is a lot of controversy and tension in U.S.-China relations. Right now in Washington, I do not know if it is confusion but certainly a searching for answers and a sense that past practices, past policies are no longer a guide for us going forward. But I do believe that engagement and focus on common purpose and common benefit is the path that will take us forward.

I will come back to this point in terms of what specifically I mean, but I want to lay out that I think it is important to be grounded in hope for the future as we just heard from Yawei, but also be cognizant of reality and not be naïve about where we are in terms of the challenges currently facing us.

When I say “us” I mean all of you who are involved in U.S.-China relations, including commercial relations, or in my case, educational relations or whatever other relationship you have with China. All of us feel this tension between the growing importance of China globally and the need to engage but also challenges that are being brought about by virtue of China’s changing role in the world. China is becoming much more assertive in a lot of different dimensions, which is challenging global norms, and that has unsettled people.

This situation is different than when I first became involved in China in 1989 when I joined the State Department. Today, we find ourselves with the United States and China as the two most powerful, most consequential nations in the world. In 1989 we all saw that future, but now it is here. We need to have the wisdom and the patience and skill to be able to deal with what is a very new reality. What people are feeling on an individual level again is a degree of uncertainty and frustration and concern. For example, there’s a lot of frustration on the part of U.S business about market access, about an unequal playing field within China, and China’s been very forthright about an assertive industrial policy. These things have unsettled the commercial relationship between our two nations and pose significant challenges for the path forward. Another example is workers concerned about lost jobs here in the United States due to China’s success in exporting and particularly in the wake of the WTO accession about 20 years ago. We’ve seen that rumble through our political landscape.

A third example is considerable concern among national security experts about how to engage with China on issues such as how to deal with China in the South China Sea or with cybersecurity. Finally, human rights groups are concerned about recent events in Hong Kong or what’s going on in Xinjiang.  At this point, people have more questions than answers.

The Biden Administration

The old measures of dealing with these issues when viewed from policymakers or interested parties’ points of view, particularly in Washington, no longer seem to be applicable. There is a growing consensus that the United States needs new thinking regarding its relationship with China. We’ve seen some of that already coming from the Biden administration.

For example, we’ve seen some tough signals that the administration will try to distinguish itself from the policies of the Obama administration. That was necessary to acknowledge because there’s a pretty firm bipartisan consensus in support of a more firm China policy.  This may not include all the things that we’ve seen in recent years with the trade war and some of the other things that the Trump administration did, but definitely there is a general consensus that the United States needs to be more active in defending what people consider to be U.S. interests.

There are also important signals in terms of what we have not seen, such as discussion over decoupling. In fact, President Biden has talked about intense competition, which is a nod to the reality of the political climate currently in Washington. But he is trying to frame it in a way that provides for a more productive agenda as opposed to confrontation or decoupling or some of these other words that have gotten tossed around in recent years.

Lessons

I’d like to offer a few thoughts on how to go forward in this environment. I’d like to frame my comments by being cognizant of my assumptions and things that I’ve learned in the 30 years of being involved in U.S.-China relations. I’ll go back to my first day on the job, which was June 4, 1989. Things changed on that day in the U.S.-China relationship. We were thrown into a period of turmoil, which meant that my first years dealing with China were dominated by the fallout of that day. During the time I was in the embassy working in China throughout the ‘90s, in addition to rebuilding bridges on the ground, our job was to go back to Washington to explain to members of Congress who were mainly opposed (from the executive branch’s point of view) to engagement with China at that point. Our job was to explain how China was changing in terms of openness or human rights or commerce, among other trends. We were met by strong skepticism on the Hill. It was a tough road because there was a desire to punish China. There was also the sense that China had a different political model that we didn’t agree with and so we should not engage. We talked past one another, and in retrospect, we were both wrong. Today we’re having that same discussion, but again we are talking past one another and even within Washington, we’re taking positions that are extreme. That is not going to bring us to a consensus.

Let me give you a couple of specific lessons that I’ve learned from those early experiences. A key takeaway was the idea that China could be isolated or that its rise could be thwarted by strong U.S. pressure.  In hindsight, this was clearly naïve. What was happening in China was related to dynamics within Chinese society. Of course, the accession to the WTO was obviously a choice on the part of the U.S. administration, but it was not a real choice in that China was heading in that direction anyway, becoming more and more connected to the global economy. So, bringing it into the WTO, yes, was a choice, but it was an eventuality that the United States could not really stop.

So, to re-emphasize, the idea that the United States could somehow stop, or block or thwart China was naïve then, and that idea is still naïve now.  The idea that Chinese development would automatically lead to a political model that looked like the United States, what we would call a Liberal Democratic model, was also naïve. I was one of the ones who probably believed more in that eventuality than being able to block China’s rise, but in retrospect, again, what we misunderstood then, and in some cases we misunderstand now, is that China’s development has its own internal dynamic. External forces can maybe shape or adjust that but cannot significantly bend that trajectory.

Given these lessons, then, in thinking about what we can do with China, or what should we do vis-à-vis China, is we need to drop this false dichotomy of either trying to stop China or leaving China alone because it will become a western liberal democracy if we just give it enough space. The past 30 years have proven that both of those views are wrong. So, we’re not going to isolate China, as it’s not North Korea or Cuba, and decoupling would certainly hurt the U.S. economically and strategically. We’ve already seen some decoupling to the detriment of the United States both commercially and strategically. China has started to build its own — I won’t call it a world order — but at least regional structures and alliances and supply chains. The less the United States is a part of changes in the world order, the more our interests are damaged, but at the same time, we can’t force China to adopt American values and should not see shared values as a precondition for engagement.

To repeat, China is not going to become the United States, and U.S. policymakers and Americans more generally need to understand that. The ultimate goal for the United States should be to find an acceptable, reasonable, and realistic role for China in a rules-based global order. When I say acceptable, I mean acceptable to the United States from the United States perspective.  Not ideal, but acceptable.

An Eight-Point Strategy

Let me lay out my eight-point strategy. This could have been a six-point or 10-point strategy, and I am sure once I share these things, you could add or subtract your own, but since eight is a lucky number, I am going with eight.

Number one is we need to put the U.S. house in order. We have heard some talk about that in Washington and just as China’s source of global strength and global emergence was the result of changes happening domestically within China so should the United States’ global strength be grounded and emanate from domestic strength, such as the strength of our economy, our educational system, our technology, etc.

Number two is the United States needs to champion a rules-based international order. As I mentioned, we cannot stop China’s emergence, we cannot block China, we cannot isolate China, but we can steer it by championing a rules-based order. That will be a change from previous years where there was a lot of concern about the international order not serving U.S. interests.  But the international order was largely built by the United States principally to serve American and western European interests. In my view, it still does that quite well, and we are better served strengthening and updating the order rather than stepping outside it.

Third, we need to rebuild alliances with like-minded nations. We have seen traditional American allies head in different directions on China policy, but there is strength in numbers. This will help us shape the rules-based order if we have allies who are working in concert, maybe not on everything, but with a general shared interest in strengthening international institutions and by building international cooperation that steers China toward outcomes that we believe are more aligned with a stable, long-term relationship.

The fourth issue is we need to live up to our values and for those of you who remember June 4, 1989, you’ll remember that there was a makeshift Statue of Liberty built in Tiananmen Square. Fast-forward 30 years and the Chinese people do not see the U.S. as a model to emulate and that is largely our fault. The values upon which this country was built have served us well in times of crisis and the values that made the United States a model for others are ones that we need to embrace to strengthen our leadership. Doing so will not corrode our power.

Fifth, we need to be realistic about what China will and will not do in response to outside influence. China’s dynamics are domestic dynamics. There are things that are core to Chinese interests that will not bend to outside pressure just like there are things in the United States that are core interests which will not bend to pressure.

Sixth, we need to compete hard where our interests are really at stake. I’m encouraged by President Biden’s choice of characterizing the relationship as “intense competition.” I hope that gains traction and helps to frame both the reality but also to center the thinking of American policymakers and others here in the United States in terms of what we need to do to deal with all these U.S.-China issues that have caused so many concerns. We need to win in technology, but this requires a different approach in terms of the public-private division of labor. In the U.S. model of individual responsibility and somewhat limited government, there are public goods that government needs to invest in. We have lagged in investing in things like basic research, education, infrastructure, and I would add primary health care and public health, as we’ve seen in the past year. Also, having a society where some people are providing fewer and fewer contributions to economic activity so there’s an increasing inequality of wealth distribution does not serve our interests well. If you are a sports team and 30 percent of your players can’t play, you’re not going to be a very competitive sports team. Similarly, with a nation, if you have large segments of your population who, just by virtue of their birth, are destined to unproductive economic lives, even leaving out all the other sufferings, you are holding yourself back as a nation.

Seven is to separate issues where we can and link them where we must. In my 30 years of watching China relations, trying to link issues has led us to dead ends where we couldn’t reach agreements. We tended to assume that negotiations were a zero-sum game, and if any of you who has studied or taught negotiation knows that in zero-sum games you better be considerably stronger than your opponent to win consistently. If we take a zero-sum approach against China, which is an immensely powerful nation in so many dimensions, the likelihood that we are going to end up with significant net benefits is highly naïve in my view. We need to be smarter about how we connect issues and be more thoughtful in how we negotiate.

Finally, the more we can tone down the political rhetoric and focus on tangible outcomes that really matter, I think all of us will be better off.

In conclusion, I hope that outlines at least a framework and a starting point for discussion that provides a realistic, yet hopeful, view of a path forward.

Thank you very much.

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In May 2019, Emory University in Atlanta summarily terminated Li Xiaojiang and his wife Li Shihua, U.S. citizens of Chinese origin who had been employed by Emory for 23 years.  They were internationally recognized for their work on using genetically engineered mice and pigs to study Huntington’s disease.  The Emory administration closed down the laboratory and gave four Chinese postdocs working there 30 days to leave the country.  The charges? The couple “who were named as key personnel on NIH grant awards to Emory University, had failed to fully disclose foreign sources of research funding and the extent of their work for research institutions and universities in China.” They are just two of a dozen or more biomedical researchers of Chinese origin who have recently been charged with failing to report conflicts of financial interest or conflicts of professional commitment on NIH grant applications.  In May 2020, Li Xiaojiang was convicted for filing tax returns that omitted the income he received from his work abroad. He had to repay more than $35,000 to the IRS.

The Trump administration does not disparage international scientific collaboration. It is well aware that innovation and creativity flourish in an open, free-wheeling intellectual environment.  Time and again, Bill Priestap, the Assistant Director of the FBI’s Counterintelligence Division until 2018, has emphasized the enormous intellectual, financial, and cultural contribution that 1.4 million international students bring to the U.S. each year.  He notes that in 2017 they contributed $36.9 billion to the U.S. economy and supported 450,000 jobs. By paying full tuition, they also help an underfunded higher education system balance its books. In fact, Priestap insists that the “vast majority” of foreign nationals poses no threat to their home institutions, fellow classmates, or to their research fields.

Why, then, has the current administration taken a particularly aggressive approach to potential abuses of international academic collaboration with China? Is this just another aspect of the general deterioration of relations between Donald Trump and Xi Jinping, fueled by technological and economic rivalry between the two countries?  Or are there also deeper, structural changes at work that are reconfiguring relationships between two countries? I will argue that the access that thousands of Chinese students and researchers have to advanced academic research in science and engineering, which is tightly coupled to American economic and military power, lies at the heart of the emerging confrontation between them.    Whether or not one agrees with President Trump’s responses to the challenge from Beijing (and a majority of people, be they Republicans or Democrats, do see China as a major threat), the fact of the matter is that any U.S. administration — and the U.S. research system — will have to deal with a China that has every intention of becoming a leading scientific, technological, and economic power by the mid-21^st century, in competition with the United States. The traditional values enshrined in the U.S. research system are engaged in that competition and will not emerge unscathed.

The paper has three main sections. First, I briefly place international academic collaboration between the U.S. and China in historical perspective.  By comparing the responses to a similar challenge to the U.S. research system in the Reagan era, I can highlight the specific features of the current conflict that set it apart from the situation that faced the government 30 years ago.   That conflict, I argue, arises because America’s economic security, which is fostered by an increasingly commercialized academia, is being threatened by scholars who do cutting-edge research in the U.S., and who are being attracted (back) to China by Beijing’s talent recruitment programs, where they help strengthen the Chinese innovation system. After briefly analyzing the historical roots of this situation, I will conclude by drawing attention to the policies that have been adopted, or that are being considered, to regulate U.S.–China academic exchanges, and their implications. 

A Quick Look Back to The Soviet Challenge in the 1980s

There is an uncanny resemblance between the wave of anxiety that swept through the Reagan administration in the 1980s and the fears aroused by China’s legal and illegal efforts to acquire advanced scientific and technological knowledge today.  The scale of Moscow’s effort at the time emerged in the so-called Farewell Dossier, a collection of 4,000 KGB documents handed over by a defector to French authorities in 1981.   They revealed that the Soviets had built a vast technology acquisition system that was “well-organized, centrally directed, and growing….”  Secretary of Commerce Lawrence Brady remarked in March 1982 that, “Operating out of embassies, consulates, and so-called ‘business delegations,’ KGB operatives have blanketed the developed capitalist countries with a network that operates like a gigantic vacuum cleaner sucking up formulas, patents, blueprints, and know-how with frightening precision.”  He complained bitterly that the Soviets were able “to exploit the ‘soft underbelly’” of American openness, including “the desire of academia to jealously preserve its prerogatives as a community of scholars unencumbered by government regulation.”

These charges against academia were laid to rest by a Panel on Scientific Communication and National Security established by the National Academies complex in consultation with the Department of Defense. Its report, published in October 1982, made two major contributions. First, it exonerated universities from any significant responsibility for sensitive knowledge leaking to the Soviet Union.  Second, it stipulated that “to the maximum extent possible, the products of fundamental research should remain unrestricted.” Fundamental research was defined as “basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly in the research community….”             Nationality was not a criterion for active participation in fundamental research as long as it was not classified or of proprietary interest. It remains the formal definition of academic freedom in the practice of research on American campuses, even though it has been challenged repeatedly over the last decade or more. As a matter of fact, it is being challenged today. The rest of this paper will explain why.

The Trump Administration’s Assault on Sino-American Scientific Collaboration

As of 2018, there has been a sharp uptick in Congressional hearings, reports by Congressional committees and by Washington think tanks, as well as news articles, discussing the challenges posed by U.S. scientific and technological collaboration with China.  The tenor of the debate was set in a joint hearing of two subcommittees of the Congressional Committee on Science, Space, and Technology in April 2018. Its title, Scholars or Spies? Foreign Plots Targeting America’s Research and Development, implied that scholars were indeed agents of foreign governments acquiring America’s R&D.   This charge had been made by Christopher Wray, the Director of the FBI at a hearing of the Senate Intelligence Committee in February 2018. Asked by Senator Marco Rubio to comment on “the counterintelligence risk posed to U.S. national security from Chinese students, particularly those in advanced programs in the sciences and mathematics,” Wray replied that in his view, “The China threat is not just a whole-of-government threat but a whole-of-society threat on their end, and I think it’s going to take a whole-of-society response by us.” Speaking to the Council on Foreign Relations in April 2019, he asserted that everyone was in on it, including the thousands of Chinese students and researchers who work and study in the U.S. every year. “Put plainly, China seems determined to steal its way up the economic ladder at our expense.” Wray also deplored “the level of naïveté on the part of the academic sector about this…. They’re exploiting the very open research and development environment that we have, which we all revere, but they’re taking advantage of it,” targeting “our information and ideas, our innovation, our research and development, our technology.”  To make matters worse, when fundamental research was funded by federal agencies liked the NSF or the NIH, American taxpayers were unwittingly funding technological advancements and innovative breakthroughs that helped foreign nations to gain a competitive advantage over the U.S.

Wray’s charges resonate strongly with the Reagan administration’s narrative in the 1980s as regards academia. In fact, many commentators speak of a new “Cold War” in the making. The similarities should not be exaggerated. The Soviet leadership did not prioritize economic modernization in the 1980s. It enhanced its military footprint with the deployment of SS-20 missiles targeting Europe and the invasion of Afghanistan in December 1979. By contrast, the Chinese leadership explicitly seeks to acquire a dominant place in global markets by 2049. Trade relationships between the U.S. and the Soviet Union were tightly controlled in the 1980s (while America had a trade deficit of $345 billion with China in 2019).  And there was relatively little intellectual exchange between the superpowers either (while there were some 365,000 Chinese students in American institutions of higher education in 2019). This is not (yet) a clash between two military systems.  It is a competition for economic power that is underpinned by ceaseless innovation in which university training and research in science and engineering play a crucial role. In what follows, I will highlight a few important developments in both the U.S. and in China that have brought matters to a head today.

The U.S.: Economic Security and the National Security Innovation Base

Economic security is national security, and it lies at the heart of American prosperity.   This is the view of President Trump himself in the Executive’s National Security Strategy statement released in December 2017. The importance of “economic security” can be traced back to the growing conviction in the late cold war that military power based on ceaseless technological innovation would not ensure America’s capacity to maintain a global Pax Americana. It needed to be combined with economic strength to protect key strategic industries from ruthless competitors — including allies — in global markets. As two leading members of the Washington establishment put it in 1990, “International competition has eroded the once commanding U.S. advantage in technology…when it comes to advanced technology national security can no longer be viewed in exclusively military terms: economic security and industrial competitiveness are also vital considerations.”

Leading in research, technology, invention, and innovation is key to achieving economic security. The National Security Strategy document of 2017 sees university research as a central player in securing that leadership. The FRE specifically distinguished between basic and applied research in universities and colleges, and classified research in national laboratories like Los Alamos, as well as proprietary research in industry.  These distinctions are now dissolved. Universities are included in a so-called National Security Innovation Base, “the American network of knowledge, capabilities, and people — including academia, National Laboratories and the private sector — that turns ideas into innovations, transform discoveries into successful commercial products and companies, and promotes and enhances the American way of life.”

And here we come to the second key feature of the current conflict: this blurring of the boundary between universities and the private sector that results from the commercialization of academic research.   The Bayh-Dole Act of 1980, and subsequent revisions, gave universities patent and intellectual property rights over the results of research funded by the federal government. In doing so, it liberated the entrepreneurial energies of the academic community. As a result, according to an official report in 2012, “Today, American research universities are closer to the marketplace than they have ever been, with a focus on translating and transferring research discoveries to industry.” (Lieber’s CV states that he has no less than 65 awarded and pending patents.) In short, as universities have become key sources of innovation for industry, so the boundary between basic and applied research, protected by the Fundamental Research Exclusion, and the development or commercialization of research results, protected by patents, has become increasingly blurred. For someone like Lawrence Tabak, the principal Deputy Director of the NIH, it has virtually disappeared. “Even something in the fundamental research space, that’s absolutely not classified, has intrinsic value,” he says.  This “pre-patented” material “is the antecedent to creating intellectual property. In essence, what you’re doing is stealing other people’s ideas,” he claims. The implication is that all research covered by the FRE is so pregnant with commercial possibilities that it has to be treated as if it were patentable and protected, or else it will be “stolen.”

The Bayh-Dole Act was signed into law when most foreign nationals on U.S. campuses were from allied countries.  Today the situation is very different.  American universities award about 5,000 PhDs in science and engineering to Chinese students every year. The shift in the focus of university research toward the development-end of the R&D spectrum, and a culture that encourages its commercialization, introduces them to know-how and knowledge that are close to the market. While the greater majority stay in the U.S., an increasing number return to their homeland, where they are joined by experts temporarily recruited by China’s Thousand Talents and similar state-sponsored programs.  Let’s look more closely at these developments that are of immense concern to the FBI and the federal funders of fundamental research.

China’s Talent Recruitment Program and Its Innovation Development Strategy

What is the scale and scope of China’s innovation system today?  The National Science Board’s 2020 report on science and technology indicators provides one with a time-sensitive picture of the stunning rise to prominence of the Chinese innovation system. It notes that while gross domestic expenditures on R&D in the U.S. almost doubled between 2000 and 2017, China has experienced a tenfold increase over the same period to reach about 90 percent of the U.S.’s figure. In 2015 China awarded 32,000 PhDs in natural science and engineering, bypassing the U.S.’s 30,000. China’s S&E publication output has risen tenfold since the year 2000 so that China’s output in terms of absolute quantity now exceeds that of the U.S. This has been accompanied by a growth in quality, as measured by the citation rates of papers published by authors in China. China has also become a desirable partner for the American research community: in 2018, 39 percent of scientific papers published by an author based in the U.S. were co-authored with someone in another country.  More than a quarter of these (about 56,000) were with partners in China, more than with any other nation. This collaboration is facilitated by overseas Chinese living and working in the U.S. who are imbued with what historian of science Zuoyue Wang calls a spirit of “cultural nationalism,” expressed through their “identification with the developmental aspirations of their country of origin.”  The administration often presents U.S.-Chinese scientific cooperation as a one-way transfer of knowledge and technology from this country to China, as happened with the Soviet Union in the late 1970s and early ‘80s.  The picture that emerges here is of a dumbbell, not a vacuum cleaner, with two equally weighted communities at each end joined by a bridge of mutual respect.

China’s official talent recruitment programs were devised to compensate for the “brain drain” of gifted scholars to foreign countries. As of 2013, no less than 84% of Chinese students who received Ph.D. degrees in science or engineering stayed in the United States for at least five years.¹ Talent programs sought to take advantage of the intellectual assets of overseas Chinese, and of foreign scholars, to inject new ideas and expertise into the indigenous innovation system. It is the participation by Charles Lieber at Harvard, by Li Xiaojiang and his wife Li Shihua at Emory, and many other U.S.-based researchers who are funded by the Thousand Talents Program (TTP) that is being targeted by the U.S. administration today.

The TTP was established in 2008. A recent authoritative study estimated that by 2018 the program had recruited about 7,000 well-educated and highly skilled researchers.² Participants in the program have several options to choose from, including short-term, long-term and entrepreneurial fellowships. The program recruits established scholars, young professionals, and “top-notch talents and teams.” A short-term contract requires a three-year commitment to spend at least two months a year in China. The long-term contract will usually be for people under 55 years of age willing to work in China on a full-time basis. They must have full-time professorships in prestigious foreign universities or R&D institutes or have senior titles from well-known international companies or financial institutions. Salaries and benefits are generous and go along with substantial start-up funds — RMB1million (about US$150,000) for established scholars.

A close reading of the official Thousand Talents Program website shows that it involves far more than what one usually finds in an international exchange program.³ China is not simply interested in people with outstanding intellectual track records. As the program’s “History and Background” statement puts it, when gifted recruits “go (back) to China, they are playing a positive role in the scientific innovation, technological breakthrough, discipline construction, talent training and hi-tech industry development, as an important force in the construction of the innovative country.”

These government-funded talent projects are embedded in an overall agenda that seeks to transform China into a global economic power by the mid-21^st century.  The Made in China 2025 plan, launched in 2015, has singled out ten key sectors in which the PRC seeks to secure a dominant share of the global market. Theyare central to the so-called fourth industrial revolution, integrating big data, cloud computing, the Internet of Things, and other emerging technologies into global manufacturing supply chains. Some of their foci — artificial intelligence, robotics, autonomous vehicles, augmented and virtual reality, financial technology, gene editing— will be generic so that many applications or end-use technologies can be built upon them. They are part of a technology-driven innovation strategy that sees investment in innovation as contributing to nation-building.

China regards its talent recruitment programs as a legitimate instrument for economic and military modernization. The FBI insists they are platforms to advance “China’s […] economic dominance over us,” using “economic espionage and theft of intellectual property.” For the U.S., protecting economic security involves defining policies to control transnational flows of knowledge to China from a university research system that is increasingly integrated into the commercialization of new products and processes that enhance American prosperity.

Dealing with the Threat Posed by Fundamental Research to Economic Security

The pressure to protect intellectual property will gradually transform the culture of international collaboration on American campuses, aligning it more closely with what we find in corporate laboratories.  Many international collaborations in fundamental research continue to treat the knowledge produced as a common good, shared by all in the interests of advancing scientific understanding. As the FBI’s Priestap put it to a Senate Judiciary Committee, “Unlike in the corporate world, university researchers are rarely required to sign nondisclosure agreements or terms of collaboration, which many professors view as volatile of the spirit of academic openness.”  This “contractual paucity” that pervades academia, Priestap went on, “makes proving foreign intellectual property theft challenging.” This is because “U.S. economic espionage law requires the victim of the theft to demonstrate that he took reasonable precautions to protect the secret stolen” — precisely what does not happen in the informal, free-wheeling climate of most university research laboratories.  

It is not illegal to participate in Chinese talent recruitment programs if both parties respect each other’s intellectual property rights. It is the violation of those rights to the U.S.’s disadvantage that is the issue here.  Granted the difficulty of convicting researchers of economic espionage, those rights are being strictly enforced in federal contracts awarding grants.  The NIH has taken the lead in using this instrument to mitigate and prevent the possibility of IP acquisition before it happens, rather than seeking to criminalize it afterward. InNovember 2019, Jodi Black, Director of External Affairs, reported that the NIH had identified “at least 120 scientists at 70 institutions,” not all of them ethnic Chinese, who had committed unacceptable breaches of trust and confidentiality — this out of 300,000 grantees who receive $31 billion annually in medical research through 50,000 competitive grants.  The numbers are small.  But the integrity of the whole research process that depends on openness, trust, and transparency is being jeopardized. And all the more so when researchers use U.S. taxpayer dollars to finance innovation in a competitor whose political system is orthogonal to their own.

Non-state actors have also begun to impose pre-emptive controls on knowledge circulation in grant applications.  In April 2019, MIT announced a new process to assess research proposals involving collaboration with China, Russia, and Saudi Arabia. They had to be vetted internally before they were even submitted for external support to see if they posed an “elevated risk” related to “intellectual property, export controls, data security and access, economic competitiveness, national security, and political, civil and human rights […]”

New regulations are also in the pipeline to limit foreign access to the academic research system. The Trump administration has reduced the duration of visas for graduate students from China from five years to just one year, renewable, in robotics, aviation, and high-tech manufacturing.  All three are priorities in the Made in China 2025 program. The State Department’s new visa application form requires applicants to disclose all the names that they have used on any of 20 social media platforms for the last five years, including Twitter, Facebook, LinkedIn, and Instagram.  U.S. researchers who have participated in foreign talent programs may soon be denied any further federal government support for their research, so striking a particularly serious blow to Chinese-American researchers who have fostered co-ethnic links with colleagues on the mainland. There is talk of “updating” the FRE by specifying areas of sensitive fundamental knowledge to which it does not currently apply.

Looking Forward

Today, more than ever, economic security is national security.   The wave of new restrictions on U.S. academic collaboration with China is a reaction — some insist an overreaction — to the threat posed to U.S. economic security by Beijing’s talent recruitment programs, combined with its stated ambition to be a major economic player in strategic markets by 2049. Trade wars are not only about steel and soya beans.  They are also about controlling the global circulation of emerging technologies, knowledge, and know-how that will define the international distribution of economic and political power by the mid-21^st century.

Academic labs are central hubs in that system.  We still do not know how profoundly the administration’s confrontational approach to China will transform academic life.   Many prospective Chinese students are reconsidering their plans to study in the U.S. for fear of being discriminated against ethnically, of being denied access to certain fields of study, and of being obliged to leave the country immediately after they graduate.  The crisis surrounding Covid-19 has increased their anguish.   They resent the President’s labeling of SARS-Cov-2 as the “Chinese virus.” They will be discouraged by new steps being taken to preserve jobs for American nationals to deal with an unprecedented number of local unemployed.  Universities whose business models are based on having large numbers of fee-paying foreign students face serious financial difficulties.  High-tech firms like Google and Apple, which recruit large numbers of talented Chinese graduates in science and engineering, face a shortage of skilled “manpower.”  As for life in the laboratory, it is likely that the free-wheeling, spontaneous sharing of know-how, preliminary research findings, and research materials that fosters the production of cutting-edge knowledge will be circumscribed to protect intellectual property. Academic freedom will be jeopardized by government intervention in university labs that are increasingly administered like corporate R&D facilities. As one official from Washington put it recently at a meeting of university administrators and researchers, “If you behave like a business, we will treat you like a business.”  He was referring to the possible invocation of export controls on knowledge-sharing in academia that would require a license from the government to teach foreign nationals from China in certain topics, or for them to use certain kinds of experimental equipment. There is a high price to pay for the commercialization of academic research in a global world in which the U.S. is not the only major player, and in which highly trained scientists and engineers are sought after by competing universities, corporations, and governments.  But then the stakes are high, too.  As the Central Committee of the Communist Party of China and the State Council put it, “The important reason for the backwardness and beatings of China in modern times is that it has lost contact with previous scientific and technological revolutions.”  This will not happen again.  “Innovation drive is the destiny of the country,” and through it we will “realize the Chinese dream of the great rejuvenation of the Chinese nation.”  The Chinese authorities are determined to overcome a historical legacy of foreign oppression from the 19^th century onward, dislodging the U.S. from its dominant position in the world order.  The Trump administration is determined to stop that from happening.

The post Scholars or Spies? U.S.-China Tension in Academic Collaboration appeared first on China Research Center.

Although the relationship between China and Myanmar goes far back in history, the energy relationship between two countries is quite new. Myanmar became the first non-Communist country to recognize the People’s Republic shortly after its founding in 1949, but ties remained rocky until the early 1990s. Western embargoes imposed on Myanmar after its crackdown on democracy in 1988 and on China after the Tiananmen Square massacre in 1989 pushed the two nations closer together. But Myanmar’s role in China’s energy security has been driver of improved ties.

2. Importance of Myanmar in China’s Energy Security

Myanmar, a neighboring energy-rich nation, provides an overland route for energy supplies that offers China economic and strategic advantages. China currently receives 95 percent of its energy imports by sea, with approximately 80 percent passing through the Malacca Strait. Most of those supplies comes from the Middle East. Myanmar’s location on the Indian Ocean presents a money-saving alternative route and strategic geopolitical advantage by avoiding the Malacca Strait, a major international shipping lane dominated by the U.S. Navy. Energy resources can be shipped through the Andaman Sea and Bay of Bengal and transported to China from Myanmar through pipelines, cutting off 3,000 kilometers, reducing transport time by five to six days, and avoiding a potential confrontation with the U.S.¹

Myanmar also is a potential energy source for China, thereby reducing dependence on energy from the Middle East. Two of China’s top three countries for energy supplies are Saudi Arabia and Iraq. Myanmar boasts the most diverse energy resources among ASEAN members, with  a total of 104 oil and natural gas blocks, 51 of them on land with the rest in the sea.² According to 2017 data, Myanmar controls 0.3 percent (139 million barrels) of known world oil reserves, in the Salin Basin and in the seaside Yetagun Field.³ In addition, according to 2019 data, Myanmar has 0.6 percent (1.2 trillion cubic meters) of the proven natural gas reserves in the world. These reserves are located primarily in the Yadana, Yetagun and Zawtika areas in Moattama on the west coast of the country and the Shwe area in Rakhine.

In addition, Myanmar has the potential to help China decrease its dependence on liquefied natural gas imported from the Middle East. According to 2019 data, China is second in the world in LNG imports. LNG is more costly than natural gas. Shipping also presents potential dangers from bad weather, pirates, and accidents. Currently, China imports natural gas through a pipeline connecting Turkmenistan, Uzbekistan, Kazakhstan, and Russia.⁴

3. China’s Energy Security Policies to Myanmar

Myanmar plays an important role in China’s Belt and Road Initiative, the sweeping plan for infrastructure investment to link China to markets in Asia, Europe, and Africa. Energy supplies already are flowing from Myanmar to China through the Myanmar-China Natural Gas Pipeline and the Myanmar-China Oil Pipeline.

Map 1⁵

As seen in Map 1, the natural gas pipeline starts in Kyaukpyu city in Myanmar’s Rakhine State and ends in China’s Yunnan region. China and Myanmar agreed on the project in 2009,  and the pipeline went online in 2013.⁶ CNPC, China’s largest energy company, built the 793-kilometer long pipeline at a cost of $2 billion.⁷ By 2018, 3.2 billion cubic meters of natural gas had been transported from Myanmar to China, far short of the pipeline’s 12 billion cubic meter capacity.⁸

The pipeline contributes to China’s energy security by increasing energy supplies and diversifying delivery routes. It also reduces dependence on LNG. In 2018, natural gas piped in from Myanmar constituted only 2.6 percent of China’s 121.3 billion cubic meters of natural gas imports.⁹ However, operating the pipeline at full capacity would increase the percentage to 9.8 percent. The pipeline also reduces China’s dependence on sea routes through the Malacca Strait.

China, which imported 73.5 billion cubic meters of natural gas as LNG in 2018,¹⁰ has the opportunity to reduce LNG dependence by 4.3 percent with natural gas imported from Myanmar. If China uses the pipeline at full capacity and imports 12 billion cubic meters of natural gas from Myanmar, the figure may reach 16.3 percent. Importing natural gas from Myanmar also could reduce China’s dependence on natural gas from Australia, the source of 26 percent of China’s imported gas, and Qatar, which supplies 11 percent of the country’s gas. China’s diversification efforts, however, will not end China’s dependence on LNG supplied by sea. LNG imports likely will continue for the long term.

The Myanmar-China oil pipeline also has strategic value. As shown in Map 1, the oil pipeline between the two countries connects to the deepwater port of Sittwe and Kunming. In 2017,  3.87 million tons of oil was sent from Myanmar to China through the pipeline,¹¹ which has an annual capacity of 22 million tons.¹² China and Myanmar agreed on the 771-kilometer-long pipeline in 2007, and it was completed in 2015 at a cost of $2.5 billion.¹³ The pipeline provides the same benefits as the natural gas pipeline – supply and route diversification. Myanmar’s contribution to China’s oil imports currently is small – 0.76 percent in 2017. But bringing the pipeline to full capacity could increase oil imports from Myanmar to 4.3 percent of China’s total.

The pipeline provides China the opportunity to transport oil through the Andaman Sea and the Bay of Bengal to Myanmar. While China has not yet implemented this planned route, it is building the Kyaukpyu deepwater port in Rakhine State as part of its Belt and Road Initiative to accommodate oil tankers, which promises to reduce dependence on shipping oil through the Malacca Strait.

Map2¹⁴

The location of Myanmar on the land route within the scope of BRI is shown on Map 2. In May 2017, Aung San Suu Kyi signed the “Cooperation within the Framework of the Silk Road Economic Corridor and the 21^st Century Maritime Initiative” in Beijing. Suu Kyi and Chinese President Xi Jinping met in Beijing in December 2017 and agreed to extend the economic corridor to Kyaukpyu city in Myanmar.¹⁵ In November of 2018, Suu Kyi and China’s National Development and Reform Commission Vice President Ning Jizhe held further talks on the development of the corridor, a high-speed railway linking Kyaukpyu and Kunming, special economic zones, and more oil and gas pipelines.¹⁶

Map 3 ¹⁷

Map 3 shows the location of Myanmar on the sea route of the BRI.

No information has been made available on when the construction of the Kyaukpyu deepwater port and the special economic zone will be completed. According to the original plan, the port will have a container capacity that can compete with ports such as Valencia in Spain or Manila in the Philippines. Based on this information, the Kyaukpyu port would have a capacity of 5-7 million TEU,¹⁸ which would place it within the top 30 world ports in terms of capacity.

The Kyaukpyu port could significantly reduce China’s dependence on the Malacca Strait. China imported 546.1 million tons of oil in 2018,¹⁹ 78 percent of which (426.1 million tons) went through the Malacca Strait.²⁰ Assuming the Kyaukpyu port will have a capacity of 60 million tons, China could reduce its dependence on the strait by 14 percent. Kyaukpyu also offers a shorter route to China. Iranian oil transported to China through the Strait of Malacca covers about 9,900 kilometers. The Myanmar route would reduce that to 5,300 kilometers or 4,600 kilometers.²¹

4. Conclusion

Myanmar provides strategic and practical benefits for China’s energy security needs. It offers an opportunity to diversify supplies, reduce dependence on imported LNG, cut shipping times, and reduce dependence on supplies from the Middle East. The deepwater port being developed in Myanmar offers China the potential to avoid the Malacca Strait. Energy infrastructure linking Myanmar to China is relatively new, but plans for expansion are ambitious and the relationship between the two countries should be watched closely.

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