SPEECH: Winning the New Cold War with China and How America Should Respond

I. Introduction

It is a special privilege for me to take part in the annual B.C. Lee Lecture Series. I want to thank the Lee Family for their support of this proud tradition of addressing what are very important issues for American foreign policy, and I also want to thank the Heritage Foundation for the great work that they do on so many issues. It truly is an honor to be here.

The United States has a very long history in the Indo-Pacific and has recognized for centuries that our own future is intricately tied to a peaceful and prosperous Indo-Pacific. In fact, access to the Indo-Pacific was one of the major arguments used when debating the purchase of Alaska, my state, from the Russians in 1867.

But America’s involvement – whether it’s the purchase of Alaska or other more recent activities in the Indo-Pacific – has really been key, both on the security and economic side, to the unprecedented era of peace and relative security that the region has secured since the end of World War II. None of this happened by accident. This peaceful and prosperous era has been the result of a carefully-woven fabric of decades of bipartisan American diplomacy, military engagement, and leadership by the United States, all of which is being challenged by China and its economic and military rise.

For over two decades, I’ve had the opportunity to view the U.S.-China relationship through a variety of lenses. Those experiences have impacted the way I’m viewing our relationship with China now, and have informed my thinking about the steps we need to take when dealing with China in the future.

Let me just give you a quick overview of some of those experiences. Over 24 years ago, in 1996, I was a Marine infantry officer deployed as part of an amphibious task force to the Taiwan Strait, which included two carrier battle groups, as part of the United States’ response to Chinese provocations on the eve of the presidential elections in Taiwan. It was a long time ago, but it certainly was an example of American commitment and resolve to one of our allies during a period of heightened tension, now referred to as the Third Taiwan Strait Crisis.

I later served with the National Security Council staff of the White House under Condoleezza Rice and traveled to the region often. I focused on international economic issues with cabinet officials like U.S. Trade Representative Robert Zoellick. I was recalled to active duty by the Marines in 2005 for a year and a half to serve as a staff officer to commander of U.S. Central Command, U.S. Army General John Abizaid. After my active duty stint, I came back to the Bush administration and served as the U.S. Assistant Secretary of State in charge of economic, trade, finance and energy issues. At that time Secretary of the Treasury Hank Paulson launched the Strategic Economic Dialogue (SED) with China. I participated in all of those engagements as the lead State Department official under SED with Secretary Paulson and others. 

I then went back home to Alaska. As a senior State of Alaska official in charge of natural resources and energy, I traveled to China to cultivate their interest in Alaska’s world-class energy and natural resources. Alaska is a small state in terms of people, but we are a powerhouse in terms of exports: billions of dollars in natural resources including seafood products. So, we had a lot of engagement with China at the state level. Now, as a U.S. Senator, I’ve been very focused on highlighting the serious challenges posed by the rise of China.

When I first arrived in the U.S. Senate in 2015, I was surprised by how few of my colleagues in the Senate were actually talking about China and the geostrategic challenges and opportunities it posed. I would give a speech about once a quarter on these issues to urge the Senate to focus more on China.

I couldn’t give that speech today. Everybody is talking about China now, and I think that’s good news. We’re seeing an awakening. The United States has awakened to what I believe is actually a new “Cold War” with China.

Now, to be clear, this is not a challenge or a Cold War of our choosing. It is the result of conscious decisions by the Communist Party leadership of the People’s Republic of China to overturn key elements of the U.S.-led, rules-based international order, despite that order enabling China to emerge prosperous and strong from its so-called century of humiliation. This “new Cold War” is not an inevitable consequence of China’s rise or our status as an established power. Rather, I believe it stems from China’s rejection of becoming a “responsible stakeholder” in the international system that the U.S. has led since the end of World War II – a system from which China has benefited probably more than any other country in the world.

But recognizing that a new Cold War exists with China does not mean that the nature of the global challenge is identical to that posed by the Soviet Union. However, it does mean that the U.S. and our allies need to recognize the challenge and counter it in ways that avoid major conflict without compromising our core values and interests.

So, let me talk a little bit about what I call America’s awakening.

II. America’s Awakening

Since President Nixon initiated the opening of relations with China, many hoped that the country’s political and economic system would open up as the country developed and joined the international system. Others believed that even if the Chinese Communist Party (CCP) remained in control, its external behavior and relationship with the United States would not be affected. When the United States supported China’s entry into the World Trade Organization, President Bill Clinton remarked that American workers, consumers and investors would be the greatest beneficiaries. Ultimately, this has proven not to be true.

Equally misguided was the hope that as China grew economically, it would liberalize politically. The expectation was that China would lower its trade barriers and follow WTO practices – including respecting intellectual property (IP) rights, promoting basic safety standards for exports, curbing subsidies of main industries, and not subjecting imports to illegal, non-tariff barriers. China did not meet most of its commitments, and still hasn’t. Rather, it has employed new access to Western markets to pursue large-scale technology theft, exploiting the openness of the American economy without allowing Western companies reciprocal access to its markets.

In a 2003 Oval Office meeting that I participated in with then National Security Advisor Condoleezza Rice, President George W. Bush and Madame Wu Yi, who was the Vice Premier of China at the time, President Bush forcefully raised the issue of theft of American intellectual property. Madame Wu Yi said, “Mr. President, I am in charge of this. We are working on it. We are going to fix it.” That was more than 16 years ago.

IP theft from China is worse now than it was when Madame Wu Yi made this Oval Office commitment. The Office of the U.S. Trade Representative estimates that Chinese theft of American IP costs the U.S. economy as much as $600 billion annually, not to mention the thousands of American jobs lost. President Obama also tried to stem these blatantly unfair, non-reciprocal trade practices, but Beijing did not honor the common understanding reached by President Obama and President Xi Jinping in 2015 on curbing cyber hacking of government and corporate data for economic gain. Such theft continues unabated today.

Broken promises extend well beyond the economic sphere. Standing next to President Obama in the Rose Garden in 2015, President Xi pledged not to militarize the South China Sea. The commitment was broken within months as China undertook a massive military build-up of this key strategic lane, to the consternation of every single country within the region. After enduring this “promise fatigue” with the Chinese for decades, the U.S. government – including members of Congress – are finally getting wise. Trade should be a win-win, but Chinese leaders appear to view it more as a zero-sum game.

Ironically, China’s predatory and non-reciprocal trade practices have brought about the new, much tougher approach by the Trump administration that is now contributing to China’s economic slowdown, and global business leaders seriously considering divesting from China to lessen the country’s influence as an international manufacturing base.

III. Responsible Stakeholder?

This current state of affairs between the United States and China was not preordained. In 2005, then Deputy Secretary of State and future World Bank President Robert Zoellick encouraged China to become a “responsible stakeholder” in the international system which had done so much to enable its rise and prosperity. Zoellick’s well-regarded speech challenged China to change its behavior to support and promote, and certainly not undermine, the U.S.-led liberal economic order that had brought peace and prosperity throughout the globe after World War II, but particularly to the Indo-Pacific.

For a time, it appeared that China’s leadership was contemplating America’s offer to be a responsible stakeholder, even considering reforms that included democratization and liberalization. In my trips as an Assistant Secretary of State to China, I heard China’s leadership use the phrase “responsible stakeholder” in many meetings, including with President Hu Jintao and other senior officials. But over time, it has become increasingly clear that the Chinese Communist Party leadership has rejected this American invitation to be a partner in bolstering the international economic order that has benefited China so much.

In fact, China is now working to systematically build an illiberal sphere of influence that threatens to exclude America and erode the alliances that we have kept in the region for decades. The challenge we face today is rooted in the attempt by the Communist Party of China to popularize its authoritarian model abroad to ensure China’s rise as a great power under party leadership. President Xi made that clear at the 19th Party Congress, championing China’s model as a new option for other countries and nations that want to speed up their development. The Chinese Communist Party’s view of the relationship between the individual and the state differs fundamentally from the concept in the democratic West, and its foreign policy is driven by the desire to ensure China encounters no resistance in exercising its authoritarian prerogative.

We must always remember that the Chinese Communist Party’s primary goal in domestic and foreign policy is to ensure the survival and preeminence of the party. The key driver of competition today is China’s ambition to project its authoritarian model abroad. China’s development under a Leninist political model serves as an inspiration for some illiberal actors and aspiring autocrats around the world. It uses its economic influence as a means of exerting political pressure. Additionally, Chinese companies and state-owned and state-subsidized industries are not bound by anti-corruption laws that American and Western companies must adhere to. China’s indifference to established standards of transparency and project implementation through its Belt and Road Initiative (BRI) results in elite deals that concede corruption abroad, weaken prospects for long-term prosperity, and undermine the sovereignty of weaker nations.

China is seeking to undermine democracy and human rights and the rule of law in international institutions. From pushing its norms for controlling cyberspace, to silencing critics of its human rights record, to pushing for enforcement of the BRI at the United Nations, China is using its growing voice on the global stage to legitimize an approach at home and abroad that undermines U.S. interests. A recent Hoover Institution study argues that China is looking to gain influence in the United States, to shape attitudes and, ultimately, American policy toward China. Although we have not experienced the same level of political interference as our ally, Australia, where politicians and donors linked to the Chinese Communist Party have tried to sway the country’s policy on sensitive issues, China is clearly engaged in what the National Endowment for Democracy calls a “significant sharp powered campaign to influence American policy” here at home. 

IV. America’s Response

Fortunately, the Trump administration and members of Congress on both sides of the aisle have awakened to the long-term challenge to America’s national and economic security that China poses. The Trump administration’s more realistic approach on China, laid out in its well-received National Security Strategy and National Defense Strategy, as well as Vice President Pence’s key Asia speeches, offer a clear-eyed view of Chinese ambitions and our need to counter them. At a time when there’s not enough bipartisan agreement in Washington, there is broad bipartisan focus and support within the United States government on the strategic challenges posed by China. I see this regularly with my colleagues in the U.S. Senate.

So, what should our policy be? What principles should we focus on? I believe we should undertake a coordinated strategy of what I call “firm strategic engagement” with China by continuing to emphasize the opportunities of our shared interests with China becoming a responsible stakeholder in the U.S.-led international order, while at the same time, countering China’s efforts to undermine that system through the establishment of its own illiberal global model, particularly where such actions threaten U.S. strategic interests and those of our allies.

Such a strategy should be based on continued engagement with, not isolation of China, to work to find common interests and solutions that avoid conflict. But such a strategy should also draw from elements of the successful American strategy of containment that enabled the United States to prevail over the Soviet Union during that decades-long Cold War.

In particular, building on the Trump administration’s National Security Strategy, I believe our country should address the geostrategic challenges posed by China by emphasizing five core pillars in this relationship:

  • Demanding reciprocity in all major spheres of the U.S.-China relationship
  • Re-invigorating American competitiveness to out-compete and out-innovate China
  • Continuing to rebuild our military strength and capability
  • Deepening and expanding our global network of alliances
  • Employing our democratic values as a critical comparative advantage in countering China’s global authoritarian influence

So, let me talk briefly about each of these five core principles.

  1. Demanding Reciprocity

The United States must insist that the bilateral relationship with China is defined by reciprocity and fairness. For too long, the United States has ignored “promise fatigue” with China and accepted unfulfilled Chinese promises across so many spheres of the bilateral relationship. I have seen this throughout my career in government.

A demand for reciprocity and fairness should not undermine China’s economic success, but the U.S. should flatly reject China’s tired argument that it even uses today, that because of its “developing country status,” it does not merit a reciprocal relationship with the United States. That is an argument I heard from senior Chinese officials on a congressional delegation trip in 2018 and, more recently, in a meeting with several U.S. senators and the Chinese ambassador. We should reject this ridiculous argument that China continues to rely on at the highest levels of its government.

The Trump administration has made significant progress on pressing for a more reciprocal relationship. However, more needs to be done. The time has come for a policy of general reciprocity with China. In the economic sphere, we know that most American firms cannot buy, for example, a media company, a movie studio, a biotech company, an AI company, in China. But those restrictions don’t exist in the United States. This needs to change.

Further, we need reciprocity in the free exchange of ideas. If American journalists are not allowed to freely travel in China, then why should Chinese journalists have such freedoms in our country? Additionally, there are over one hundred Confucius Institutes established by the Chinese Communist Party at American universities. In contrast, when I was in Beijing, I was told by our ambassador that U.S. diplomats are not even allowed on the campus of Beijing University unless accompanied by a Chinese government official. I raised the issue with China’s senior leaders, suggesting that they could keep the Confucius Institutes in our country if they allowed us to establish what I called, “James Madison Institutes of Liberty and Democracy” at Chinese universities. The Chinese said that such a proposal would be unfair, because Confucius Institutes simply teach culture and language. A James Madison Institute of Liberty and Democracy in China, they said, would be teaching propaganda. My reply was: “If you think James Madison is about propaganda, you don’t understand the United States of America!”

Reciprocity is so important because it is a concept that every American understands and agrees with. It’s about basic fairness. I posed the important question of reciprocity to Dr. Henry Kissinger at a Senate Armed Services Committee hearing a couple of years ago, and he acknowledged that to have a sustainable great power relationship, the citizens of the country, particularly our country, need to feel that the relationship is fair and that a general policy of reciprocity is important in that regard.

But it’s important to note that this focus doesn’t just need to be on what I refer to as negative reciprocity. If we can’t do it in your country, then you can’t do it in ours. I’ve also been pressing the Chinese for over a decade on the concept of “positive reciprocity.” What do I mean by positive reciprocity? For decades, U.S. companies have undertaken greenfield investments in China’s manufacturing sector with American foreign direct investment, employing hundreds of thousands of Chinese workers by building factories up from the ground. I think we should encourage that kind of greenfield investment by China in the United States which would, in turn, employ Americans. This could help reduce economic tensions between our two countries, just as Japan’s significant greenfield investments, particularly in the auto industry in the 1980s and 1990s, helped reduce U.S.-Japan trade tensions.

  1. Re-invigorating American Competitiveness

The United States is no stranger to global military and economic competition. Our comparative advantages globally remain significant, but we can and should do more to bolster these, such as prioritizing STEM education, doubling down on basic research and supporting federal agencies like the National Science Federation and National Institutes of Health that bolster American competition. We also need to be able to out-compete and better understand China, its culture, history and strategies with a new generation of Americans who focus on these issues, just as Russian/Soviet studies were emphasized during the Cold War with the Soviet Union.

Many of our most significant challenges – our national debt; infrastructure projects that take years to just permit, let alone build; a dysfunctional immigration system – are our own self-inflicted wounds. I believe the very real challenges posed by China, as they become more broadly apparent throughout our country, will spur the bipartisan motivation needed to address these significant but solvable American challenges. Indeed, this is already beginning to happen with my colleagues in the U.S. Senate.

  1. Continuing to Rebuild our Military

From 2010 to 2016, the Department of Defense budget was slashed by 25%. Not surprisingly, the combat readiness of our forces plummeted. At the same time, China undertook a massive build-up and modernization of its forces while also making concrete moves to militarize the South China Sea. History shows, particularly with regard to America’s authoritarian rivals, that American military weakness encourages authoritarian provocations globally.

My colleagues in the Senate are beginning to show a bipartisan understanding of this. As the Chairman of the Senate Armed Services Subcommittee on Readiness and Management, rebuilding our military readiness has been a top priority of mine. The last three National Defense Authorization Acts (NDAA), which have solidified the Trump administration’s focus on the Indo-Pacific and great power competition with China, have had strong bipartisan support. This year’s NDAA also has a provision that I authored that is focused on a reorientation of our forces in the Indo-Pacific, to look at how they should be coinciding with the National Defense Strategy and postured for the next 50 years. As we continue to engage China, a strong U.S. military provides a hedge against Beijing contemplating risky and destabilizing military actions as their military strength and capabilities continue to grow.

  1. Expanding and Deepening our Alliances

The recalibration of our relationship with China should be done in partnership with our allies. The cultivation and nurturing of these relationships must be a foundational pillar of any American China strategy. Our greatest strategic advantage in dealing with China is that we are an ally-rich nation with long-standing historical ties reinforced by decades of diplomatic, military and economic cooperation based on shared values with our friends and allies in the region. By contrast, China is an ally-poor country, with North Korea as its closest friend.

The Trump administration’s Indo-Pacific strategy recognizes the value of deepening our alliances with countries like Japan, South Korea, the Philippines and Australia, while expanding partnerships with countries, like India and Vietnam. The recent “Howdy Modi” event in Houston between President Trump and Prime Minister Modi is an important example of deepening the relationship between the United States and India, which could be key.

But U.S. actions need to do more to bolster this element of America’s strategy and the type of alliance management that we have, not just in the Indo-Pacific, but in Europe as well. This is critical for our overall strategy with regard to China. For example, NATO allies have valuable equities to bear in Asia, including British and French freedom of navigation exercises in the South China Sea in defiance of China’s claims to an exclusive sphere in that international waterway, which no other country in the world recognizes.

The unity of the West is essential to maintaining high global standards in transparency, accountability, anti-corruption, peaceful resolution of conflict, and the importance of international law, particularly in the global common areas of sea, space and cyberspace. We must also work with our allies to manage the national security risks inherent in incorporating Chinese equipment into national telecommunications and cyber networks, such as their 5G infrastructure. No country wants to return to the Chinese imperial system of Middle Kingdom vassalage that many in Beijing see as their destiny.

  1. Employing America’s Democratic Values

We should never forget that our democratic values are a critical comparative advantage in the new Cold War with China, just as it was in our successful Cold War victory over the Soviet Union. In President Reagan’s famous Westminster speech before the British Parliament in 1982 – in which he launched the National Endowment for Democracy – he argued that America would win the Cold War, not through hard power alone, but through the power of our ideals. As he reminded his audience and our close allies in Britain, “Any system is inherently unstable that has no peaceful means of legitimizing its leaders.” China’s unelected rulers, like all authoritarians, ultimately fear their own people. Our leaders do not.

It is fear that has driven China to develop an Orwellian social credit score to rank its people while detaining as many as one million Chinese workers in concentration camps. Why else does the Chinese Communist Party invest so heavily in facial and gait recognition technology to monitor their own citizens? Why comprehensively censor the internet to preclude even the most glancing criticism of the Communist Party and its leaders? Why do China’s internal security services employ more people than the People’s Liberation Army, the world’s largest military? The answer lies in fear, and the goal, above all else, to make sure the Communist Party remains in power.

President Reagan saw the power and promise of our democratic ideals as a potent critical instrument to challenge America’s global rival, then the Soviet Union, because the aspiration to freedom is universal and remains the core commonality that underpins the United States’ strongest partnerships with other nations. The belief that liberty, democracy and free markets reflect and strengthen the size of our alliance system is something that is fundamental to the United States and our allies. Helping countries protect their sovereignty so they can be responsive to their citizens and effective partners of our nation is imperative at a time when Chinese influence risks pulling nations into a new “Sinosphere” hostile to American interests and our democratic ideals.

As Vice President Mike Pence said at the Asia-Pacific Economic Cooperation Summit last November, “Nations that empower their citizens, nurture civil society, fight corruption, and guard their sovereignty, are strong homes for their people and better partners for the United States.” That is why America must recommit to helping nations protect their institutions and defend their sovereign independence. One important way to do this is through organizations, such as the National Endowment for Democracy, the National Democratic Institute, and the International Republican Institute, which I am honored to chair, which work with local partners around the world to strengthen democratic institutions, bolster awareness of Chinese Communist Party influence tactics, and foster transparent and accountable governance.

V. Conclusion

Let me conclude by predicting that the New Cold War challenge I describe is going to be with us for decades. We must face it with confidence and strategic resolve. America has extraordinary advantages relative to China: our global network of alliances; our military power and economic leadership; our innovative society; our abundant energy supplies – we are now the number one producer of oil, natural gas and renewables in the world; our world-class universities; the world’s most productive work force; and a democratic value system that makes countries far more comfortable as American partners than as subservient members of a new “Middle Kingdom” led by China.

As a result of the long twilight struggle with the Soviet Union, we also know what works. Maintaining peace through strength, promoting free markets and free people at home, and having the confidence in George Kennan’s insight that the Chinese Communist Party, like the Soviet Communist Party, likely “bears within it the seeds of its own decay.”

While democracies are resilient, adaptive, and self-renewing, there are many vulnerabilities embedded in China’s perceived strengths. One-man rule creates acute political risks. Historical grievance can breed violent nationalism. State-directed economic growth can produce massive overcapacity and mountains of debt. The gradual snuffing out of freedom in places like Hong Kong creates spontaneous protests of tens of thousands of young people that we’re seeing each weekend. China’s budding military power and historical view of itself as a nation and culture superior to many others is beginning to alarm neighboring states, inspiring them to step up security cooperation with the U.S. Nearly half of wealthy Chinese want to emigrate, and these are the winners from China’s four decades of heady economic growth.

As we have in the past, Americans can prevail in this geopolitical and ideological contest, but doing so will require a new level of strategic initiative, organization, and confidence in who we are and what we stand for. This also means that we must redouble our efforts in making this strategic case to others around the world, particularly our allies. 

I want to thank you again for inviting me here, and I look forward to your questions on these important issues.