Q&A: Elizabeth Economy On The Biden Administration’s China Challenge

Wednesday, January 20, 2021
Hoover Institution, Stanford University
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Elizabeth Economy

by Jonathan Movroydis

In this wide-ranging conversation, Senior Fellow Elizabeth Economy discusses the challenges posed by the People’s Republic of China to the incoming presidential administration. Economy provides analysis on the current state of US-China relations including the status of Taiwan, Beijing’s political repression of Hong Kong, and the Belt and Road Initiative. Economy also talks about joining the Hoover Institution as a senior fellow after a long, distinguished career at the Council on Foreign Relations, research initiatives she plans to take up in her first year at Hoover, and the publication of her forthcoming book, The World According to China.

How did you first become involved with the Hoover Institution after a long, distinguished career at the Council on Foreign Relations?

I had just published a book, The Third Revolution, in 2018, which explored the transformation of Chinese politics under Xi Jinping. An opportunity arose to be a visiting fellow at Hoover, and I was excited to have access to the library and archives to start thinking about my next project. I spent the winter quarter of 2019 in residence and really enjoyed the Hoover community and the strong emphasis on intellectual collaboration among fellows. In addition, Hoover celebrates translating pathbreaking research into education for a broader audience and policy-relevant recommendations, something I have always aspired to do with my own work. I was thrilled when I was able to join the Hoover fellowship as a full-time senior fellow.

What do you hope to accomplish in 2021?

I have a few items that are at the top of my agenda in 2021. One is working with Senior Fellow Larry Diamond and Research Fellow Glenn Tiffert to build up the project on China’s Global Sharp Power. It is an important initiative that looks at how the United States can most effectively respond to Chinese efforts to bolster authoritarianism and undermine democratic values globally. The three of us, along with Stanford Graduate School of Business professor Darrell Duffie, are launching a new yearlong project on digital currency. Darrell and I will cochair a working group that will assess the options for the United States and look at the financial and national security implications of China’s digital currency initiative, DCEP [Digital Currency Electronic Payment ].

I am also planning to launch a podcast, tentatively called The Untold Story. It will feature scholars and experts from the United States and around the world who are conducting cutting-edge research on issues related to China and Asia. My objective is to help these scholars bring their research to light in ways that will inform the thinking of US policy makers. For example, in considering whether China is likely to escape the middle-income trap, Stanford economist Scott Rozelle’s work on the urban-rural divide would open an entirely new world of understanding for most US policy makers.

I also feel strongly that US policy should be informed by perspectives from outside the United States. The United States has a uniquely challenging relationship with China, born in part of the US position as the world’s superpower and China’s aspiration to be on par with, or even surpass, the United States. Other countries often relate to China differently. Many, for example, do not share Washington’s concerns over Huawei 5G technology and the potential for Chinese cyber-economic espionage. We need to understand why that is if we are going to build an effective coalition around a clean network. And if the United States wants to bring real international pressure to bear on China over its repressive policies in Xinjiang and Hong Kong, it needs to find ways to engage the forty-odd countries from the Middle East and Africa that typically support China’s policies. So part of my podcast will be dedicated to increasing our access to the voices from these regions.

Will you tell us about the book you have been writing?

The World According to China paints a picture of China’s vision for the future international order and outlines the strategies Beijing is adopting to realize that vision. It directly addresses the debates that currently occupy the China policy community, such as: Is China trying to supplant the United States as the world’s superpower? Does China want to export its model to the rest of the world? How does China envision its role on the global stage? Is China trying to support, reform, or subvert the current rules-based order?

The book traces Chinese leaders’ foreign policy statements and experts’ debates to understand the country’s broad strategic intentions. For me, however, the most fun is delving into actual Chinese foreign policy behavior across different issue areas to identify patterns in that behavior and ultimately to reveal a type of Chinese foreign policy playbook. I hope that demystifying Chinese foreign policy in this way will help US officials develop more effective policy responses.

In your view, what is the current state of US-China relations?

The relationship is at its lowest point since I started working on US-China relations about twenty-five years ago. There have been conflicts, spats, and even brief ruptures between the two countries in the past, but the nature of the competition—not just in trade but now also in security and values—is new. And the type of sustained effort to constrain and contain each other is also unprecedented. Finally, this period is unusual because the diplomatic framework for negotiation between the two countries—with the exception of trade—has almost entirely disappeared. Nothing in the bilateral relationship is moving in a positive direction.

What is your view of the Trump administration’s China policy?

I think the Trump administration's Asia team has done a terrific job of identifying and attempting to respond to the full range of challenges that China presents to US interests. The administration really did reset the relationship.

Where the Trump administration has fallen short—and here I would say this is primarily about President Trump’s leadership rather than that of his administration—is in articulating a proactive and positive message of US leadership on the global stage. It's not enough simply to say, “We're not going to let China lead in the United Nations, so we are going to defeat Beijing’s candidate for the World Intellectual Property Organization and prevent it from including Belt and Road language in UN agencies and programs.” The United States also needs to step up itself to bolster and, when necessary, reform the current rules-based order. If the United States simply picks up all its marbles and goes home, it can’t compete effectively, and it certainly can’t win the competition.

The Trump administration also uses a sledgehammer and not a scalpel in pursuing its China policy. Sometimes this is appropriate. But the trade war certainly did not accomplish its objectives and, in fact, ultimately harmed US economic interests. In addition, the administration’s rhetoric and tactics in pushing back against Chinese influence activities and its insistence on calling COVID-19 the “China virus” contributed to a significant and unacceptable uptick in racial attacks against Chinese and other Asian Americans.

I think that the Biden administration will improve the tenor of domestic-related China policy and reassert US leadership on the global stage. It will, for example, recommit to membership and leadership in the Paris Climate Agreement, the World Health Organization, and the UN Human Rights Council, among other international agreements and organizations. At the same time, I hope that the new administration will not lose the comprehensive approach that the Trump administration adopted in its consideration of China policy.

The incoming national security advisor, Jake Sullivan, was quoted in the Wall Street Journal earlier this month saying, “China always saw an escape hatch through their economic relations with others,” as a result of what Sullivan views as the Trump administration's unilateral approach to Beijing. Biden has reportedly indicated that he would like to create a grand alliance to counter Beijing’s aggressive actions. Do you think he can convince other countries to cooperate, especially those that have lucrative commercial arrangements with Beijing?

Certainly I hope that the United States and Europe, as well as the US partners in Asia and elsewhere, can find common ground and purpose in developing a coordinated China policy. However, it will not be easy. The Europeans just agreed to a new investment treaty with China, despite the fact that the incoming Biden administration was quietly suggesting that the European Union first consult with the United States. It is easy to talk about cooperation but much more difficult to effect it.

The good news is that our Asian partners such as Japan, Australia, and India don’t need much persuasion to get on board. Oftentimes they are ahead of the United States in identifying new challenges posed by Chinese policies. Increasingly, too, significant groups of European policy makers and societies are pressing their leaders to adopt tougher measures around Chinese human rights and governance issues, as well as influence activities. I think there is significant scope for cooperation on these issues, as well as on issues such as standard setting for the next generation of information technologies. 

Does the United States have an answer to China’s Belt and Road Initiative (BRI)?

The United States shouldn’t think in terms of creating its own version of the Belt and Road. Instead the United States and its allies should focus on what they do best. For example, as the economies of Africa, Latin America, and Southeast Asia move forward with their development and urbanization processes, why not support a global initiative around smart cities that includes support for technological innovation, environmental sustainability, and good governance.

US policy should not be about competing with China on China’s terms. Frankly, there is already a lot of pushback against the Belt and Road from within the host countries. China has overreached and, to a significant extent, the BRI carries within it the seeds of its own destruction. The United States should focus on thinking creatively about what it does best and bring that to the world.

Earlier this month, fifty pro-democracy dissidents were arrested in Hong Kong. Do you expect any action on the part of the United States, and what tools do we have at our disposal to counter Beijing's crackdown on democracy?

I am fairly pessimistic about the United States’ ability to influence Chinese policy in Hong Kong. The United States has already taken a number of punitive actions against Hong Kong officials, including chief executive Carrie Lam. No level of economic sanctions, however, is going to result in China changing its behavior in Hong Kong. The Chinese Communist Party will sacrifice Hong Kong’s economy on the altar of political control and sovereignty. It is perfectly comfortable making Hong Kong just another Chinese city.

In terms of what more the United States and the rest of the international community might do, the United States should open the door to Hong Kong immigrants, whether by granting asylum or through a special visa process. Washington could also place some pressure around the 2022 Winter Olympics [in Beijing]. Several countries are holding debates within their legislatures and parliaments over whether to boycott the Olympics because of Chinese policies in Xinjiang and Hong Kong. There is the potential to broadcast just the games, themselves, with no additional positive programming around the opening ceremony or life in China. Even so, I doubt that Beijing will change its behavior.

On that point, do you expect any bold moves by Beijing in 2021?

I think that China will continue to press its sovereignty claims in the South and East China Seas in ways that will challenge US efforts to protect freedom of navigation. I am increasingly concerned that Beijing might pursue a serious cyberattack or some military action against Taiwan. Although the Trump administration dramatically ratcheted up diplomatic ties between the United States and Taiwan and worked hard to enhance the island’s international space, it didn’t simultaneously strengthen the island’s security. The United States needs to bear in mind how central the sovereignty issue is to Beijing. Many analysts seem to assume that Beijing would be deterred by the likely international backlash that would ensue from a mainland invasion of Taiwan. However, I think China is willing to bear much higher reputational costs than people assume, especially because Beijing will assume that countries will eventually return to working with China given the lure of its market.

How do you think the COVID-19 pandemic will continue to impact relations between the United States and China?

COVID-19 adds to the long list of challenges that the US-China relationship confronts. The Trump administration has entrenched in the minds of many Americans that China is to blame for the pandemic. Beijing is indeed responsible for the initial coverup and spread of the virus globally. However, the United States has to own its own chaotic response. No other country is to blame for the fact that so many more Americans have died than citizens in other countries. The priority in both countries now is bringing the virus under control through the deployment of effective vaccines. I would hope that, once that happens, both countries will work together with others to think through how best to manage the next such potential pandemic.