A New Cold War with China?

Picking up on Vice President Mike Pence’s speech at the Hudson Institute several weeks ago, Hudson’s Seth Cropsey detailed a plan in the Wall Street Journal on “How to Win a Cold War with Beijing.” At the center of Cropsey’s op-ed is a dramatic increase in the U.S. presence in Asia that would require, among other things, accelerating the current naval buildup, increasing naval patrols, and bolstering naval and Marine forces in Australia. In effect, Cropsey wants to apply the strategy that helped end the former Cold War to America’s growing conflict with China. Quoting Ronald Reagan, Cropsey explains “The objective in this strategic competition [is] ‘We win, they lose.’”

Cropsey’s approach, however, is based on several flawed assumptions, including about the inevitability of conflict between the United States and China. He also places undue faith in the United States’ capacity to face down its rising rival by building more warships and deploying them close to China’s shores.

Implicit in Cropsey's call for a large naval arms race with China is the assumption that China will back down in the face of it. Convinced of the futility of such competition, Cropsey appears to believe, the Chinese will simply accede to our demands, including on Taiwan. But I have seen no evidence to support such an assumption. The more likely result of an arms race is...a further arms race, as my colleague John Glaser explained earlier this year. Cropsey also ignores the fact that the world is moving into an era of defense-dominance, which puts America’s exquisite, but enormously costly, naval platforms at increased risk from small, smart, and cheap weapons.

The current Sino-U.S. competition is unlike any we’ve seen – at least in a very long time. The Cold War was, in large part, a zero-sum fight between two diametrically opposed ideologies. However, whereas Soviet Communism and Western Capitalism couldn’t coexist, China’s and America’s current systems can. Or at least might.

If you doubt that, consider that Americans have helped to lift hundreds of millions of Chinese out of desperate poverty over the last quarter century through trade, greatly enriching China in the process. That wasn’t the intention, per se; as Adam Smith famously explained, trade is driven by mutual “self-love.” “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner,” he wrote, “but from their regard to their own interest.” 

And, even now, as President Trump wages a trade war with China, he’s not seeking to end trade between the two countries, but rather to have it on terms more favorable for Americans. Whether he can pull that off is an open question, as Dan Ikenson recently noted, but the end result could be an even greater degree of economic interdependence than already exists.

Contrast that possibility against the reality of U.S.-Soviet trade relations. Actually, you can’t; there was hardly any economic exchange between the two superpowers during much of the Cold War. Most Americans during the darkest days of that standoff wouldn’t have been caught dead buying Soviet-made goods – and not just because they were of dubious quality. At another level, doing so would have been seen as treasonous, literally trading with the enemy.

Cropsey’s plan overlooks another critical difference between the Sino-U.S. conflict and the Cold War: the Soviet Union was a declining power; China is rising. We can't compete in the same way today as we did in the 1950s and 60s, engaging in an arms race that eventually grinds the other side into the dirt – or drowns them in the sea. On the current trajectory, I’m sad to say, we'd drown first.

Cropsey fails to account for this possibility by ignoring the United States' crushing fiscal imbalance. I'm not merely referring to the federal budget deficit, which surpassed $779 billion in the last fiscal year, the highest level since 2012, but also the long-term crisis caused by out-of-control spending on Social Security, and, especially, Medicare. Awkwardly for Cropsey, his call for accelerating an already dramatic expansion of the U.S. Navy appeared on the very day that the Trump administration called for cutbacks in military spending precisely because of the yawning deficit.

By contrast, Cropsey offers no suggestions for what other spending must be cut, and what taxes increased, to cover the cost of his proposed military buildup. Instead, he is essentially assuming that these spending increases will be paid for by additional debt -- while ignoring that the very country we are arming against is the largest foreign holder of such debt.

America should not ignore an increasingly assertive China, and that includes calling attention to bad behavior. I thought it noteworthy, for example, that Vice President Pence called out China’s shameful human rights record, including the ongoing persecution of Muslim Uyghurs. The crackdown on peaceful political dissent in also troubling. More broadly, U.S. policymakers must consider novel approaches to territorial disputes in the South and East China Seas without privileging any one claimant. Indeed, Washington should always take account of the perspective of other countries in the region. Notably, none are calling for the kind of military confrontation that Cropsey favors -- and a number, including most recently Japan, are doing the opposite by actively exploring deeper trade and diplomatic ties with Beijing.

Closer to home, it is in our interest to develop policies and procedures that protect intellectual property and our sprawling cyber infrastructure. This may mean considering what regulations can and should be imposed on Americans that would like to do business in China, or with Chinese firms. I would prefer, however, that Americans rethink how they safeguard their precious assets without politicians in Washington, DC, having to tell them to do so.

A long-term strategy for Sino-US relations should be forward looking, and based on present realities, not on outdated thinking and false assumptions. Most importantly, the United States should work with China to find diplomatic solutions to those issues that could lead to war (including the toughest issue of all - Taiwan). We should seek solutions that advance U.S. interests, but also contribute to long-term peace and stability in the region.

The alternative to a win-win is that we both lose.

p.s. If you want to hear more on U.S.-China relations, and reactions to the Pence speech, check out my conversation with Bryan McGrath (@ConsWahoo) and Melanie Marlowe (@profmarlowe) at "Net Assessment," War on the Rocks’ newest podcast.

Thanks to Travis Evans for his help with this post.