Unpacking the Escalating U.S.-China Conflict: Q&A with David M. Lampton

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Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) on August 1, 2019 in New York City.
Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE) on August 1, 2019 in New York City. Following large gains earlier in the day, U.S. markets dropped sharply after an afternoon tweet by U.S. President Donald Trump announcing his plans to impose a 10 percent tariff on an additional $300 billion worth of Chinese imports. His announcement said the new tariffs will take effect on September 1.
Photo credit: 
Drew Angerer/ Getty Images

The U.S.-China relationship is in a dangerous downward spiral. The crisis in the relationship has spread virtually to every arena, from the intensifying trade war between the two largest economies to their escalating technology rivalry that is rippling into a U.S. government crackdown on foreign influence on research, and from security concerns over China’s growing military power in the Asia-Pacific region to mounting tensions over the antigovernment protests in Hong Kong and over longstanding frictions with respect to Taiwan.

Renowned Chinese politics expert David M. Lampton has been busy discussing these developing issues with academics and policymakers in China, Hong Kong, and Washington, D.C., and researching his book project about Chinese power and rail connectivity in Southeast Asia. In a conversation with APARC’s Associate Director of Communications and External Relations Noa Ronkin, the Oksenberg-Rohlen Fellow at the Freeman Spogli Institute and Shorenstein APARC analyzes the escalating U.S.-China conflict, one that will affect not only bilateral ties, but the regional and world systems beyond.

Q: What risks in the conflict are you most concerned about?

There are a number of problems on the agenda. Certainly trade is top of mind for people in Beijing and Washington. But I think the situation in Hong Kong has great potential to do tremendous harm to the U.S.-China relationship. The predicate is being laid for the possible use of force in Hong Kong. I don't think a decision has been made to do so, and I believe Beijing would prefer not to do so. However, remembering 1989 in Tiananmen, we shouldn't underestimate the willingness of China’s central government to use force to protect its power. You see the increasing spread of demonstrations within Hong Kong, which are very worrisome to the PRC government, and indicators are accumulating that to me signal a significant possibility that the Special Administrative Region and/or Beijing will use tough means to bring demonstrators under control. Such an outcome will, of course, feed into the policy and security anxieties in Washington, not to mention be a tragedy for Hong Kong itself. So, I think Hong Kong is a top concern.

Q: Can you expand on the politics and the context of the U.S.-China trade war?

We're in a situation in which each side thinks it can and will benefit by outwaiting the other. I think Beijing sees at least a significant possibility that Mr. Trump would not be reelected and fervently hopes that's the case. They're in no hurry, thinking that the U.S.-China trade dispute undermines Trump with his natural constituencies and makes his economic story harder to tell to the American people. Beijing believes that, by virtue of the United States’ being a democracy, China has a higher threshold for pain than we do, and so simply inflicting pain on key American constituencies and industries will turn up the political heat on the administration so that compromise would look increasingly attractive to Washington.

The Trump administration, on the other hand, looks at the high percentage of China's GDP that's involved in exports, particularly exports to the United States, which is over three percent. If you subtract the value added of all the components China imports in order to assemble these exports, then still approximately two percent of China's GDP is directly involved in trade with the United States, and the Trump administration believes that China has a lot to lose. The United States is not nearly as dependent on China's exports—that's one of our complaints, that we don't export enough. Therefore Mr. Trump sees Mr. Xi as facing many domestic problems and thinks he can outwait Mr. Xi.

We have then two leaders who are locked into the view that the other is going to blink first. I believe both sides benefit from an economic relationship, but both have the capacity to do without the other if they're forced to. And so I think the trade war can go on for a protracted period.

Q: The trade war, big as it is, is part of a more encompassing rivalry between China and the United States. How do you see this competition between the world’s two superpowers and its consequences?

What has fundamentally happened here—even more important than the economic and cultural dimensions of the U.S.-China dispute—is a deterioration of the security dimension in the relationship. For the first three decades of engagement since the Nixon era, our security relationship with China was generally positive, based first on an anti-Soviet rationale, then counter-terrorism, and finally jointly tackling global issues such as climate change. Up through the Obama administration we had a security rationale for positive relations. Most countries and people prioritize their security, and hence as long as Americans and Chinese could feel the relationship had value for their security, they downplayed thorny issues such as human rights or economic frictions, even though they were unhappy with each other in those other domains.

But as China's military and economic capabilities have increased, so has its assertiveness abroad and its efforts to resolve longstanding disputes in its favor: in the South China Sea, in cross-Strait relations with Taiwan, against Japan, even against South Korea. From its more capable position today, China is pushing the perimeter of U.S. influence back away from the Chinese coast as far as possible, while the United States resists. And so we have a severe security competition that, in turn, has infected the economic relationship, because what makes a competitive military today is largely technological capability, which China is forging ahead with and using to develop new weapons systems. The United States thinks much of this capability is coming through the illicit acquisition of intellectual property and proprietary technology, and through university collaborations and exchanges. So the security competition is ramifying through the economic relationship and the cultural/educational relationship.

Q: If the competition between the two superpowers is here to stay, what steps, at home and abroad, are essential to achieve stable coexistence with China?

We have assumed that a huge, complex authoritarian society such as China has many disadvantages, which it does, but we're in danger of not realizing what it can achieve nonetheless. I'm worried about the competition with China because I don't think we are taking the right steps to put ourselves in the best possible competitive position, and I don’t mean just militarily.

If you consider the space race against the Soviet Union, there was a galvanizing vision of a serious competitor, yet there nonetheless was an abiding belief that we could prevail if we properly organized ourselves with discipline, commitment, and allocation of resources. We need the same sort of galvanizing spirit, not grounded in seeing China as an enemy, but in the realization that we Americans make up but four percent of the world's people and that if we're going to keep a strong position economically, intellectually, and socially, then we have to perform better than others, because we're just too small a percentage of the world's people. And I don't think anybody believes we're performing at our peak today.

Competition in general is a good thing. We surely recognize this in our own domestic lives, and free trade theories in international economics recognize that competition is an engine for positive forward motion. So I don't think we should be afraid of competing with China. Our society has been designed for competition from the ground up. And China has tremendous problems: demographic problems, educational quality problems, and debt problems. But what we must avoid is a destructive competition in which we're hurting our own ability to innovate by attempting to keep China from advancing. For instance, targeting foreign students in American research institutions and labs is a major problem.

Q: You have been studying China’s Belt and Road Initiative (BRI) and its implications across the Asia-Pacific. What are some of the takeaways from your research so far?

The Chinese learned a lesson from U.S. policy in the post-WWII era, namely, that you build your own greatness by integrating other countries into your economy and by building their strength. The Chinese are now looking at their underdeveloped periphery and think, "How can we build the new connectivity in the 21st century that will make China central to all countries along its enormous periphery and beyond?" BRI is therefore a big umbrella concept, based on the notion that you create economic growth through building infrastructure, and particularly transportation and communications, in an attempt to increase China's comprehensive national power and centrality in the emerging global system. It could be described as an “all roads lead to Rome concept.”

Some argue that BRI is a strategy, a master plan. And here's where I think we get it wrong. It isn't really a plan. China has created this umbrella policy concept, has said it will devote resources to it, but local provinces, state enterprises, private enterprises, foreign governments all are in effect lobbying Beijing to approve their pet projects that are shoved under this umbrella. So, you see a big vision painted by Beijing, but an extremely entrepreneurial system below Beijing is trying to grab as much of this money and opportunity, and build their locality into this vision. It's a combination of spontaneous combustion at the middle and lower levels and a grand general idea at the top.

Right now what we're seeing is the implementation of numerous projects—some are unmitigated fiascos, some are successful to a limited degree, and some are likely to become quite successful. There will be a sorting out process. In fact, Beijing, for its own welfare, is already starting to constrain the system and apply more economic analysis to differentiate between good and bad projects. But because BRI is so entrepreneurial and so many people at the bottom are trying to grab a piece of this policy, it's very difficult for Beijing to get its arms around all that's going on.

I think that one of the policy implications of BRI is that we—the United States, the West, American allies—must realize that BRI isn't necessarily a bad idea. This is how development occurs: big infrastructure projects create urbanization, pathways for production chains, and so forth. And if we were to sit back and say, "This is destined to fail," or "The Chinese are biting off more than they can chew," or essentially decide that we have a "no” policy, then we will essentially abandon what I believe is largely a sound concept. The U.S. government is, I think, beginning to understand that it has to respond with something, not nothing. The United States needs to use its creativity, capital, and capacity to get others to cooperate and be more active in showing our private sector where it can get involved.

We're in a transition stage. I think that one of the big problems right now is that it's hard to induce our allies to cooperate when we’re badgering them about defense expenditures and so forth. We need a remake of our foreign policy process before we'll be able to consistently pursue a vision for development. On some projects we might even choose to cooperate with the Chinese. In fact, we're already cooperating through the World Bank, the Asian Development Bank, and even indirectly through the Asian Infrastructure Investment Bank, which has gotten almost all U.S. allies involved with it. So we shouldn't absolutely oppose China on all fronts, but evaluate the alternatives and tradeoffs in each particular case.

Q: Your current book project focuses on China’s development of high-speed rail between southern China and Singapore. What have you found in researching this project?

My core interest has always been Chinese politics, and particularly what I call the "implementation problem." That is, the realization that what Beijing says isn't necessarily implemented faithfully down the hierarchy in localities, despite the assumption that, because China is authoritarian, there ought to be a high correlation between what the top says and what the bottom actually does. The idea to build connectivity between China and the seven continental Southeast Asian nations south of it makes for a fascinating implementation case study. The underlying question for my book is: “Does China have the capacity to pull off such a gigantic initiative?”

In the case of this particular railway connectivity vision linking China and seven Southeast Asian neighbors, the idea was not Chinese, but rather, a vision of Southeast Asians themselves. In the past, China didn't have the technology, capital, or frankly the inclination to build somebody else's rail system. Around 2012, however, China decided to step out and build infrastructure beyond its borders, and essentially adopted the Southeast Asian idea of rail connectivity. What interests me is the implementation question: if it's difficult to get things done within China itself, how do you create an interconnected system that transits seven more countries, from Thailand, Malaysia, and Singapore, through Myanmar, Laos, Vietnam, and Cambodia? It's a fantastically complicated project, with financing, environmental, and displaced population problems, among many others.

The results so far are mixed, but you would be surprised at the progress that China has made. I believe that within a few years, certainly before 2030, there will be a high-speed and conventional-speed rail system that connects south China to at least Bangkok and another link that connects Singapore to Kuala Lumpur, with the major uncertainty being the stretch from Kuala Lumpur to Bangkok. It’s less clear whether it will also eventually go through Myanmar and Vietnam. But the Chinese are well on the way to finishing the Laos railroad and began construction on some railroad in Thailand, so I think that probably by 2025 you'll see a railroad to Bangkok, which would be a major change in the economic geography of the region. What bothers me is seeing the United States mired in our own preoccupation with ourselves and not reacting in a way that is most productive for our future given what China is doing and how other countries are moving forward.