Commentary / Japan

Japan must prepare as the U.S. and China dig in

by Brad Glosserman

Contributing Writer

It is tempting to see the hardening of U.S.-China relations as a temporary phenomenon, a product of unique features of contemporary international politics, the Donald Trump presidency in the United States in particular. Resist that temptation.

The U.S. consensus about the nature of its relationship with China has shifted to the right; it is difficult to find anyone who dissents from the view that the two countries are locked in an intense competition that threatens to spiral into a new Cold War.

This in turn validates the Chinese belief that the U.S. is determined to thwart its rise and encourages a nationalism and readiness to sacrifice on behalf of the nation that harkens back to the Long March. Together, these two perspectives virtually ensure that the U.S.-China relationship will become more confrontational. Japan must prepare for the impact.

The new U.S. approach to China was laid out in the December 2017 National Security Strategy of the United States. The NSS argued that the world had entered an era characterized by great power competition. While this competition is multidimensional, its primary focus is economic and the chief U.S. competitor is China.

This approach differed from its predecessors in two critical ways. First, it shifted the locus of security concern from terrorism and rogue states, which had dominated U.S. security thinking since 2001, to great powers, which had been viewed primarily as partners combatting those threats. Second, it embraced an expansive notion of national security that is potentially indistinguishable from economic security. As a consequence, economic engagement, which had historically provided the ballast for the U.S.-China relationship has been weaponized.

The list of U.S. grievances is long. Vice President Mike Pence looked at the big picture in a speech to the Hudson Institute last year, charging that Beijing is “using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States. … To win the commanding heights of the 21st century economy, Beijing has directed its bureaucrats and businesses to obtain American intellectual property — the foundation of our economic leadership — by any means necessary.”

The U.S. Department of Defense was blunter still in its annual China Power report, released in early May: “China’s leaders are leveraging China’s growing economic, diplomatic, and military clout to establish regional preeminence and expand the country’s international influence.”

The Office of the U.S. Trade Representative detailed China’s economic misbehaviors, asserting in a report that it “has engaged in a range of unfair and harmful conduct, including investment and other regulatory requirements that require or pressure technology transfer, discriminatory licensing restrictions, direction or facilitation of the acquisition of foreign companies and assets by domestic firms to obtain cutting-edge technologies, and conducting and supporting unauthorized intrusions and theft from computer networks of U.S. companies to obtain unauthorized access to intellectual property.”

These accusations are not spun from whole cloth. U.S. policymakers are well acquainted with Chinese President Xi Jinping’s claim that his country is entering a “new horizon for the great renewal of the Chinese nation.” They point to policies such as “Made in China 2025,” which aims to transform China in a global industrial leader in 10 sectors deemed critical to a 21st century economy. Made in China 2025 seeks to control 90 percent of the world’s most advanced industries, including robotics, biotechnology and artificial intelligence.

Significantly, the new U.S. hard line is bipartisan. Kurt Campbell, assistant secretary of state for East Asia and the Pacific in President Barack Obama’s first term, and Ely Ratner, deputy national security advisor to Vice President Joe Biden, called for “a clear-eyed rethinking of the United States’ approach to China. … Cooperative and voluntary mechanisms to pry open China’s economy have by and large failed. … Washington now faces its most dynamic and formidable competitor in modern history.” They acknowledged that “The Trump administration’s first National Security Strategy took a step in the right direction.”

A new report by two national security experts who will have senior positions in a next Democratic administration agreed, arguing that “The central contest of this century will be between the U.S. model of political and economic development and the Chinese model of political and economic development. If China’s vision prevails — if it becomes the dominant power of the 21st century — there is a risk the U.S. and the world will be less free, less prosperous, and less safe.”

Labor, a pillar of the Democratic Party, has always been suspicious of free trade. Chuck Schumer, the Senate minority leader, backed a hard line against China as the U.S. imposed new tariffs, tweeting “Hang tough on China, President Trump.”

The business community, which has long argued China’s case in Washington in hopes of profiting from its vast market, is now more concerned about the loss of intellectual property and global business opportunities. Beijing has squandered a powerful and important constituency in the U.S.

Finally, there is the public. Polls show rising levels of concern about the Chinese economic threat among Americans. In every age group, majorities view China as a competitor and a near majority considers China’s economic power “a critical threat.”

An increasingly competitive relationship will not necessarily lead to conflict, although that is a possibility if China continues to subvert the territorial claims of its neighbors. The U.S. and China must work together to solve big problems — the North Korean nuclear program, climate change and large-scale reform of international institutions. Such cooperation is not unprecedented: During the Cold War, the U.S. and the Soviet Union worked together to avert Armageddon.

Even without open conflict, the U.S.-China relationship will deteriorate absent a major shift in either capital. Both countries feel aggrieved and under siege. The U.S. is convinced it is being exploited while China believes U.S. demands go to the heart of its economy and challenge the legitimacy of its government. The current trade war is likely to be resolved — both sides have an incentive for a face-saving compromise — but the structural competition will continue since both governments understand the stakes.

This has profound consequences for Japan. Tokyo will be increasingly squeezed between demands from its ally and those from its top export market and driver of its economy. This is evident in Washington’s demand that security partners keep Huawei, the Chinese telecommunications equipment giant, out of critical IT networks, with the U.S. threatening to stop sharing information with countries that do not do so.

Equally important are restrictions that the U.S. will impose on “emerging and foundational technologies,” an as-yet undefined set of technologies that are deemed essential to the maintenance of U.S. leadership in the science, technology, engineering, and manufacturing sectors. Among these are critical technologies such as artificial intelligence, biotechnology, cloud computing, microprocessor technology, such as systems-on-chip or stacked memory on chip, position, navigation and timing technology, and robotics. They are central to the future of many industries, many of which have had no ties to defense and security.

This creep of national security concerns into new and unanticipated areas requires a new mindset among Japanese companies. If businesses want to work with U.S. partners in these areas, they must be prepared for new regulatory demands and the restructuring of internal processes and procedures to meet U.S. security concerns. For example, supply chains will have to be changed to account for U.S. complaints about product tampering or IP protection. Worryingly, it is not yet clear which technologies will be affected — and at a time of rapid innovation, the list will change.

Yet it is precisely because these technologies are so critical that leadership in their development will be so bitterly contested. This will be the front line of future U.S.-China competition, and few countries and businesses will be able to sit it out.

Brad Glosserman is deputy director of and visiting professor at the Center for Rule Making Strategies, Tama University, and a senior advisor (nonresident) at Pacific Forum International. His new book, “Peak Japan: The End of Great Ambitions,” was just released by Georgetown University Press.

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