On February 24, 2021, the China Program at Shorenstein APARC hosted Dr. Thomas Wright, director of the Center on the United States and Europe and a senior fellow in the Project on International Order and Strategy at the Brookings Institution. Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

The program, entitled "U.S.-China Relations in the Biden Era," explored the future of US-China relations based on experience from past administrations. Under former President Trump, U.S. relations with China evolved into outright rivalry. In his talk, Dr. Wright discussed whether this rivalry will continue and evolve during a Biden administration by analyzing the roots of strategic competition between the two countries and various strands of thinking within the Biden team. According to Wright, the most likely outcome is that the competition between the two countries will evolve into a clash of governance systems and the emergence of two interdependent blocs where ideological differences become a significant driver of geopolitics. Cooperation is possible but it will be significantly shaped by conditions of rivalry. Watch now:

There are strong indications that the Biden administration intends to continue strengthening U.S.-Taiwan ties. The Biden team invited Taiwan's representative Bi-khim Hsiao to the presidential inauguration, supporters of Taiwan now hold senior roles in the administration, and officials have pledged "rock-solid" U.S. commitment to Taiwan, warning that PRC military pressure against Taiwan threatens regional peace and stability. But Cross-strait deterrence is arguably weaker today than at any point since the Korean War, according to Chinese military and security expert Oriana Skylar Mastro, FSI Center Fellow at APARC.

On February 18, 2021, Mastro testified to the U.S.-China Economic and Security Review Commission at a hearing on Deterring PRC Aggression Toward Taiwan. Her testimony on the political and strategic dynamics underpinning deterrence across the Taiwan Strait is available to watch below.

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Beijing has turned to increasingly hostile and combative rhetoric and actions since the democratic election of Taiwan’s president, Tsai Ing-wen. PLA air and water operations around Taiwan, particularly in the Taiwan Strait, have increased significantly in the past year, and concern is growing that the Chinese Communist Party is imminently planning to use force to compel Taiwan to accept unification with mainland China.

Drawing on her expertise in both policy and military security, Mastro explains why deterrence in Taiwan must be based on military capabilities rather than signaling through policy.

Catalysts to Conflict

Foremost, Mastro argues that the basic circumstances of aggression towards Taiwan have changed. In years past, it was accepted that China would launch military operations against Taiwan in response to actions or policy positions taken there or in the United States. However, Mastro believes that China is now primed to force a campaign of reunification regardless of either Taiwan’s or the U.S.’s policies moving forward.

By Mastro’s assessment, China is now in a position where it could prevail in cross-strait military contingencies even if the U.S. intervenes in Taiwan’s defense. The reform overhaul and modernization of China’s military have vastly improved the quality it equipment and confidence in its capability. China now possesses offensive weaponry, including ballistic and cruise missiles, which if deployed, could destroy U.S. bases in the Western Pacific. Sophisticated cyber attacks on domestic infrastructure both in Taiwan and the United States are also a credible threat and viable form of retaliation.

As long as President Xi is confident that the PLA can successfully back a forced unification in Taiwan, Mastro argues that action of some kind against Taiwan is not a matter of if, but of when, and what severity.

Types of Escalation

Failure to reunify Taiwan is too high a political and military cost for the PRC to risk, but there is also growing agitation amongst the mainland Chinese population for a resolution on the half-baked status of the island and its governance. Mastro believes that this pressure will ensure that action will be taken on Taiwan in the next 3 to 5 years.

Since Taiwan cannot withstand a sustained, active assault from China on its own, the deciding factor in when and how China moves against Taiwan is largely dependent on the signals the U.S. sends. And since China is increasingly confident in its own military, the signals the U.S. sends must likewise be ground in military capability, not policy, says Mastro.  

If China believes there will be little or no intervention or support from the U.S., it is likely to follow a graduated plan of attack, using economic blockages and targeted military action to bring about capitulation. If, however, it appears the U.S. will intervene, China is much more likely to move quickly and escalate violence and force rapidly to maximize damage before a full U.S. defense response can be coordinated.

Policy Recommendations

To effectively counter China on Taiwan, Mastro recommends crafting policy that creates doubt over China’s ability to successfully absorb Taiwan through military means. To do this, the United States needs to focus forces and develop operational plans that credibly off-set China’s goals while not triggering a panicked response from Beijing that could escalate into rapid conflict.

Mastro also urges the allocation of more resources toward intelligence, surveillance, and reconnaissance (ISR), base development, and firepower in the Asia-Pacific region. Investing in these signals U.S. commitment to determent and the capacity to follow through if need be.

Finally, Mastro urges additional research into U.S. war termination behavior. Any involvement in Taiwan must be as limited and without the possibility for escalating levels of violence and long term unsustainable, unwinnable commitments. In preparing to potentially fight a war, she reminds policymakers that they need to know how to end one as well.

A recording of the full hearing is available courtesy of the U.S.-China Economic and Security Review Commission.

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Oliver Hart and the ‘Proper Scope of Government’

Hart’s seminal economic theory, ‘The Proper Scope of Government,” underpins much of the research into public-private partnerships in healthcare. Hart developed this touchstone framework jointly with Andrei Shleifer and Robert W. Vishny to better evaluate when a government should provide a service itself and when it should contract with a private provider for support and execution of services.

The model outlined in Hart, Shleifer, and Vishny’s original 1996 working paper is designed to help providers and contractors consider the costs and benefits of a proposed contractual service agreement. While this model was originally applied to the case of prison privatization, the framework has served as an invaluable tool for researchers in multiple sectors including health policy and provision.

Reflections and Updates to the Theory

In reflecting on ‘The Proper Scope of Government,’ there are things Hart would like to see more fully incorporated into the theory to enrich its real-world applicability. Chiefly among these is better accounting for contractual incompleteness or the reality that a contract cannot anticipate and outline every possible unforeseen event or area of ambiguity. However, modeling contractual incompleteness is notoriously difficult given the almost-limitless factors of variability.

Some of Hart’s recent work on guiding principles responds to this challenge. Rather than trying to predict every aspect of a contractual relationship within the framing and language of a standard contract model, Hart argues that mutually agreed-upon guiding principles —such as equity, loyalty, and honesty — can serve as a foundation for navigating inevitable areas of ambiguity and potential conflict that a contract does not specifically state or that the original theory does not fully account for.

These guiding principles also help preserve space for renegotiation and innovation, which are necessary in an era of rapid technological advances and explosion of measurable data. In this context, Hart cautions against the mentality of ‘more is more:’

“If you put more and more things into the contract and then something happens that wasn’t in the contract, the fact that you put so much more in may make it more difficult to negotiate about the thing that you didn’t put in.”

 Applying ‘The Proper Scope of Government’

Hart shared a prime example of his theory at work in health systems in a case study of the Vancouver Island Health Authority. Traditionally, family physicians would continue as the primary care provider for their patients even if a patient needed hospitalization. But a change of law in 2006 required all specialized in-hospital care be contracted to hospitalists with little to no crossover with care provided by family practice physicians.

The result was a rise in caseload and stress levels amongst hospital specialists and repeated failed negotiations of the standard contract. The addition of guiding principles to the contract, however, provided avenues where reasonable solutions and additional communications could happen beyond the limits of the formal contract.

This is just one case of innumerable where Hart’s work has helped inform and contextualize how policymakers consider relationships between the public and private spheres of healthcare. Responding to the praise and input from fellow economists presented in a tribute documentary to the impact of his framework, Hart remarked:

“I hadn't realized how many people have been influenced by this paper and how they've been using it in different contexts. I knew some of the applications, but there were others I didn't, and it’s been truly amazing to see that.”

Looking Toward the Future

The tradeoffs between public and private partnerships in healthcare systems across the world will continue to be a dynamic and evolving area of research that will rely on theories such as ‘The Proper Scope of Government’ for framing and application. Looking towards the future, Hart was hopeful but cautious about the vitality of the kind of theoretical tradition which allowed for the development of his original theory. He recognizes that specialties such as contract theory and contractual incompleteness are inherently “messy” and somewhat out of vogue with current trends in economics which tend to favor theories that are “impressive, clever, and non-obvious,” regardless of whether they address important questions.

As he iterated in his Nobel Prize lecture, the incomplete world of contracts nonetheless “underlies numerous significant phenomena, some of which have great policy relevance,” and therefore fully deserving of upcoming economists’ time and efforts.

Further Research into Public-Private Partnerships

The Asia Health Policy Program’s 2020-21 colloquium series focuses on the roles and impacts of public-private partnerships in healthcare and the tradeoffs in equity, accessibility, and cost that come with contracted agreements in health systems. All of the events from the colloquium series are available on our YouTube channel. Click the thumbnails below to start exploring.

Collaborative governance — that is, relationships involving both the private and public sectors in the pursuit of public value — is part of ongoing research by Karen Eggleston. Her forthcoming book, The Dragon, the Eagle, and the Private Sector (Cambridge University Press), co-authored with Harvard’s John D. Donahue and Richard J. Zeckhauser, examines the ways in which collaborative governance works across a wide range of policy arenas in China and the United States, with the goal of empowering public decisionmakers to more wisely engage the private sector. Join us for the book launch event, which will be held jointly with the Harvard Kennedy School on March 5 

 

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On February 10, 2021, the China Program at Shorenstein APARC hosted Professor Oriana Skylar Mastro, Center Fellow at the Freeman Spogli Institute for International Studies​ for the virtual program "Military Competition with China: Harder to Win Than During the Cold War?" Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

As US-China competition intensifies, experts debate the degree to which the current strategic environment resembles that of the Cold War. Those that argue against the analogy often highlight how China is deeply integrated into the US-led world order. They also point out that, while tense, US-China relations have not turned overtly adversarial. But there is another, less optimistic reason the comparison is unhelpful: deterring and defeating Chinese aggression is harder now than it was against the Soviet Union. In her talk, Dr. Mastro analyzed how technology, geography, relative resources and the alliance system complicate U.S. efforts to enhance the credibility of its deterrence posture and, in a crisis, form any sort of coalition. Mastro and Oi's thought-provoking discussion ranged from the topic of why even US allies are hesitant to take a strong stance against China to whether or not Taiwan could be a catalyst for military conflict. Watch now: 

This op-ed by Donald K. Emmerson first appeared in The Jakarta Post.

Above all, Trump wanted to be a winner. History granted his wish. He is the first president in the 245-year life of his country to have been impeached twice. By that standard, he won the title of America’s Worst President (AWP)—worse than any of the 44 presidents who preceded him.

AWP rhymes with 'gawp,' and that’s what he also wanted: to be stared at, talked about, catered to, the center of fawning attention, unforgettably present, dominating the news, astride the world in which the news is made. He wanted applause. His ravenous insecurity—narcissism—inflated his ego to continental size. In effect, in his authoritarian imagination, the “extremely stable genius” that he called himself deserved to be the indispensable “me” in “America,” without which the country’s name and the country itself would crumble.

The roars and chants of Trump’s crowds slaked his thirst for veneration. But they imprisoned him in his “base.” By satisfying his craving to be idolized, they gave him no reason to convince the unimpressed. How much more gratifying it must have been for him to bask in mass flattery at rallies than to engage in the difficult business of persuading the uncommitted. That would have taken assets he lacked: empathy, knowledge, intelligence, and a willingness not to lie.

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So how could Americans have elected such a demagogue? Trump was corrupt but charismatic. He broke the rules. He said whatever was on his mind. He appealed to the streak of individualism in American culture. He ran his campaign and his presidency as a mass entertainment featuring a lone patriot fighting a “deep state” controlled by globalist elites. Especially in rural areas between Silicon Valley and the Boston-to-Washington corridor, millions of white Americans felt threatened by the transfer of jobs from physical toward mental labor in a computerized society whose racial make-up was increasingly non-white. Globalization fed those anxieties. Trump stoked them. He promised to end them and “make America great again.”

Joe Biden defeated Trump in both the popular vote and the Electoral College—respectively by 4.4 and 13.7 percent. Biden’s margins were narrower than one might have wished, given the blatant flaws in Trump’s character, including the 30,573 false or misleading claims that he made during his presidency as tracked and noted by The Washington Post . The egregiousness of his behavior is, however, a double testament to America’s democratic system: to its failure to select a less despicable leader, yes, but also to its success in providing the lawful framework within which his desperate effort to stage what in Latin America would be called an autogolpe or “self-coup” could be and was overcome.

On 1 February 2021, watching television at his 126-room estate in Palm Beach, Florida, ex-president Trump would have learned of the coup in Myanmar and might have envied Senior General Min Aung Hlaing. Both men had been banned by Facebook for inciting violence in their respective countries—Trump in 2021, the general in 2018. Both had suffered defeats in elections held just five days apart in 2020—3 November in the US, 8 November in Myanmar. Both had rejected the voters’ verdict, claiming fraud. But whereas Trump’s frantic and deadly effort to subvert the US election and retain power failed, Min Aung Hlaing’s self-coup has succeeded, at least for now. The general quickly seized full power despite his party’s massive embarrassment at the polls in November, Aung San Suu Kyi’s party having won 83 percent of the available seats. In contrast, Trump could not reverse his exit from power despite a far slimmer margin of electoral defeat. To the extent that the ex-president was even aware of the difference, it could have fanned what angry envy of the general he may have felt.

Trump failed mainly due to the checks and balances that generally call government to account in America. Min Aung Hlaing succeeded in no small part thanks to the checks and balances in the bank accounts of the generals who have compromised Myanmar’s transition to democracy and helped make it the second most corrupted country in Southeast Asia (after Cambodia) as measured by the Corruption Perceptions Index.

Among the many reactions to the Burmese coup, several stand out for their courage and creativity. UN Secretary General António Guterres was unequivocal. "It's absolutely unacceptable,” he said, “to reverse the result of the elections and the will of the people.” Presumably speaking on behalf of the UN, its secretariat, or himself, or all three, he went further: "We'll do everything we can to mobilize all the key actors of the international community to put enough pressure on Myanmar to make sure that this coup fails." 

This notable response came from Indonesia’s former foreign minister Marty Natalegawa: “Deafening silence in the face of assaults against democratic principles [has] increasingly become the norm,” he said. He urged ASEAN to “demonstrate its relevance: It must speak urgently for the respect of constitutional process and rule of law in Myanmar, and call for the immediate release of those unlawfully detained.”

In the days immediately following the coup, ASEAN’s Bruneian secretary general said nothing about it, preferring to remain, in the Indonesian expression, “silent in a thousand tongues.” Speaking for ASEAN as its current chair, however, Brunei’s government did at least encourage a “return to normalcy in accordance with the will and interests of the people of Myanmar,” noting that the group charter’s called for adherence to “democracy, the rule of law” and “human rights and fundamental freedoms.”

As for ASEAN’s next chair, Cambodia, its strongman Hun Sen did speak, but only to say that "Cambodia does not comment on the internal affairs of any country at all.” Hun Sen’s restraint made historical sense. Had Cambodia’s old despot chosen to criticize Myanmar’s new despot, observers could have noted that Min Aung Hlaing had only done what Hun Sen himself had bloodily accomplished in 1997 by seizing full control over Cambodia in a self-coup of his own that had enabled him to become the longest-serving prime minister in the world.

Critical Southeast Asian voices, unconstrained by look-the-other-way diplomacy, have been heard. The chairman of the ASEAN Parliamentarians for Human Rights, Charles Santiago, has urged ASEAN to send a high-level delegation to Myanmar to tell Min Aung Hlaing that his coup “violates ASEAN principles and the ASEAN charter” and is “not acceptable.” “If Myanmar does not turn around,” he added, “there should be proceedings to expel Myanmar out of ASEAN.”

Who is better positioned to deal with this crisis than ASEAN’s largest and debatably least authoritarian member country? It was Indonesia’s Natalegawa who patched up ASEAN’s consensus after Hun Sen damaged it on China’s behalf in 2012. And it is Natalagewa who believes, with the Myanmar coup in mind, that “at this critical juncture for the region, Indonesia must demonstrate its leadership within ASEAN.”

Indonesia’s president Jokowi, rather than trying to rally the region against the coup, will likely continue to focus on domestic economic growth. Not to mention the existential priority that COVID-19 also warrants on his agenda.

So why not task Natalegawa with a damage-control trip around the region comparable the one he took with some success in 2012? He could start with fact-finding in Myanmar. He could then explore an intra-ASEAN understanding that would reassert the core democratic values in the ASEAN Charter while lessening, if possible, the chance that Myanmar will revert to entrenched and fully authoritarian rule. That may be a lost cause. But nothing ventured, nothing gained.

Although Donald Trump is no longer in office, America is still not safe from Trumpism. But America’s system—democracy—is working as it should. Is ASEAN really a dictators’ club? Or does it, too, when threatened from within, have a system that can at least manage and minimize the damage that is, in Myanmar as I write this, being done?

On January 27, 2021, the China Program at Shorenstein APARC hosted Professor Hau L. Lee, The Thoma Professor of Operations, Information & Technology at the Stanford Graduate School of Business for the virtual program “The Pandemic, U.S-China Tensions and Redesigning the Global Supply Chain.” Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

Professor Lee focused on an important question that has only become more pressing due to the COVID-19 pandemic: How, if at all, should businesses redesign their supply chains? Since the beginning of the pandemic, explains Lee, there has been an increase in calls for “redundancy” in supply chains in order to protect them from the problems they faced early in the pandemic, when China was first hit by shut downs and slowed productivity. Advice has been varied, ranging from the “China Plus One” strategy in which businesses simply add a secondary production location, to completely domesticating supply chains.

Lee warns, however, of the perils of overreaction. There are numerous risks that come along with a fully domestic supply chain, not least the danger of “having all of your eggs in one basket.” Instead, says Lee, businesses should move cautiously and, instead of fully divesting from China, should use the country intelligently. 

Professor Lee’s “In and Out Design” encourages businesses to work from the inside out, securing and strengthening their supply chains by starting at home. Companies must first build “internal supply chain excellence,” after which they can move on to making sure their strategic partners are equally strong and can work to their advantage. Eventually, companies can move on to strengthening the extended value chain and, ultimately, their entire ecosystem. Using strategies like dual response, leveraging “lubricants,” and bolstering capacity-building capabilities, businesses can create a more stable future. 

The session concluded with a fruitful Q&A between Professor Lee and the audience, moderated by Professor Oi.

A video recording of this program is available upon request. Please contact Callista Wells, China Program Coordinator at cvwells@stanford.edu with any inquiries.