Confident rhetoric was abundant at last week’s Chinese National People’s Congress.
The Chinese economy grew 2.3 percent in 2020 while the United States contracted. China is expected to grow 8.3 percent this year versus 4.1 percent for the United States. The Chinese economy has grown from 4 percent to almost 20 percent of world gross domestic product in the past 20 years and will be larger than the U.S. economy by the end of this decade.
China last week unveiled a massive increase in research and development spending to close the gap on the United States in multiple technologies from semiconductor chips to hydrogen energy. China also announced a 6.8 percent increase in military expenditures this year, more than expected. President Xi Jinping is promoting not communism but “modern socialism” to the leaders of the world’s emerging economies, promising command and control economic growth as a better political insurance policy than Western democracy. The United States is on its heels against an increasingly assertive China.
Former President Donald Trump was right to call out China but clumsy in his response. He rejected promising trade deals and promoted an ill-advised tariff war that, predictably, delivered few benefits to U.S. workers and boosted prices to U.S. consumers. Trump lost the goodwill of continental Europe by walking away from the Paris Climate Accord, criticizing contributions to NATO and disrespecting European leaders.
But all is far from lost. President Joe Biden should take six initiatives to put the United States back in the global driver’s seat:
Rediscover our allies: The road to Beijing passes through Brussels. With eight years of experience as vice president, Biden knows many of the key players in Europe and he is appointing experienced diplomats to reboot quickly our traditional European alliances. He has swiftly rejoined the Paris Climate Accord and the World Health Organization. In Asia, Trump over-emphasized India and shortchanged Japan and Korea. We must swiftly mend fences and hammer out common positions with our allies in both regions to steadfastly oppose China’s human rights violations, military incursions and economic piracy.
Invest more in research: The United States still boasts 15 of the top 20 research universities in the world. We have a terrific research infrastructure. R&D expenditures need to increase to 3.5 percent, perhaps 4 percent of GDP. Let’s offer private companies enhanced tax incentives to invest in basic research. Let’s also reopen our borders to qualified scientists who seek to immigrate here.
Don’t decouple, diversify: With bilateral trade exceeding $700 billion per year and more than 100,000 cross-border investments between China and the United States, decoupling is not an option. But a reassessment of our supply chains to insure multiple overseas sources and domestic production of strategic goods, even if there is a cost penalty, is essential. Biden’s announced $2 trillion infrastructure program will boost technological innovation in 5G and beyond, create millions of good jobs and modernize the U.S. transportation, energy and telecommunications sectors.
Call out China: Through its $1 trillion belt and road initiative, China offers loans to emerging economies to build ports, roads and other infrastructure. But when the revenues promised in the contracts don’t materialize, Chinese banks take ownership. From Sri Lanka to Argentina, countries have forfeited important assets to this “debt trap diplomacy.” We must demonstrate to world leaders how easily Chinese foreign aid can lead to indentured servitude.
Promote our values: Pointing out China’s flaws is not enough. We and our allies must do a much better job of nurturing and promoting democracy, showing the world by example how freedom of expression and respect for diversity spawns more creativity and innovation, and how a regulated free market can generate greater and more equitably distributed prosperity than a command-and-control economy with one party rule. Only one in 12 Chinese citizens is a member of the Chinese Communist party — tens of millions of Chinese want more.
Communicate to cooperate: As competition between China and the United States intensifies, there is precious little room for loose rhetoric or error. A miscalculation in the South China Sea or in Taiwanese air space could trigger a skirmish or worse. We need to restore regular high-level dialogues with China and seek opportunities for cooperation on all issues from climate change to global public health simply because the fates of both our nations are mutually dependent.
The United States cannot take for granted its continued leadership of the world economy. Through our deeds and by example, we have to earn the respect of other nations every day. China demands a much more subtle and coordinated strategy than merely outspending on military hardware. Secretary of State Antony Blinken has wisely made it clear that our relationship with China must be multifaceted: “competitive when it should be, collaborative when it can be, and adversarial when it must be.”
John A. Quelch is dean of the University of Miami Patti and Allan Herbert Business School and dean emeritus at the China Europe International Business School in Shanghai, China.