To: Interested Parties

From: Marc Ross, Caracal

Date: January 7, 2020

EVAN OSNOS’ NEW YORKER ARTICLE ON US-CHINA RELATIONS

Evan Osnos: The future of America's contest with China: Washington is in an intensifying standoff with Beijing. Which one will fundamentally shape the twenty-first century? 

Published in the print edition of the New Yorker’s January 13, 2020, issue, with the headline “Fight Fight, Talk Talk,” this Osnos' article will be widely read and well-circulated within multinational corporate boardrooms, global think tanks, and the world’s most important newsrooms.

Evan Osnos joined The New Yorker as a staff writer in 2008 and covers politics and foreign affairs. He is the author of “Age of Ambition: Chasing Fortune, Truth, and Faith in the New China” and his insights on the US-China relations are frequently sought by international political power players and global business executives.

You can access the full article - here or check out my curated highlights with accessible insights below:

70th Anniversary of the People’s Republic of China: On October 1st, to celebrate the seventieth birthday of the People’s Republic of China, the government planned the largest military parade and “mass pageant” in Beijing’s history.

Be mindful of how Chinese leaders dress - their outfits are arranged for the target audience: For this occasion, instead of his usual Western attire, Xi wore a black Mao suit.

Mao stopped China from being weak: “On this spot, seventy years ago, Comrade Mao Zedong solemnly declared to the world the establishment of the People’s Republic of China,” he said. “That great event thoroughly transformed China’s tragic fate, ending more than a century of poverty, weakness, and bullying.”

Chinese leaders project their desired image: Whenever Chinese leaders stage a public spectacle, it provides a chance to assess their self-portrait. 

2008 was then - 2019 is now: In 2008, when Beijing hosted the Olympics, the opening ceremony celebrated Confucius and ignored Mao;  the organizers wanted to project confidence but not brashness, a posture that China described as “Hide your strength and bide your time.” 

Football as a means to understanding America: Eleven years later, China no longer hides the swagger. On the balcony, to Xi’s right, was the politburo’s reigning propagandist, Wang Huning, a former professor who once traveled the United States and honed a prickly theory about dealing with its people. “The Americans pay attention to strength,” he wrote, after attending a football game at the Naval Academy. “Football has some strategy, but it’s not elegant; mainly, it relies on strength.” He added, “The Americans apply that spirit to many fields, including the military, politics, and the economy.”

China is to be seen as wealthy and powerful: This was a day of unaffected pride in China’s new wealth and power.

Twenty-five years ago, China’s economy was smaller than Italy’s. It is now twenty-four times the size it was then, ranking second only to America’s.

Why Boeing wants to sell more jets in China + Why Marriott wants to build more hotels: It is estimated that a billion Chinese people have yet to board an airplane.

China wants to be the 21st-century power: To a degree still difficult for outsiders to absorb, China is preparing to shape the twenty-first century, much as the U.S. shaped the twentieth.

The globe with Chinese characteristics: Its government is deciding which features of the global status quo to preserve and which to reject, not only in business, culture, and politics but also in such basic values as human rights, free speech, and privacy.

Asia for Asia: “It is for the people of Asia to run the affairs of Asia, solve the problems of Asia, and uphold the security of Asia,” he has said. To achieve that, China has strengthened its military to the point that Pentagon analysts believe it could defeat U.S. forces in a confrontation along its borders.

America has been seeking Chinese consumers since the early days of the American Republic: Ever since 1784, when the first American merchant ship landed in China to trade ginseng for tea, the two sides have cycled through what John Pomfret, the author of “The Beautiful Country and the Middle Kingdom,” calls “rapturous enchantment followed by despair.” 

Coca-Cola was in China before the Communists (and will probably be there after the Communists) and maintains 40+ bottling plants: The Cold War pulled the countries apart—the Party feared “Coca-Colanization”—but eventually the People’s Republic needed cash and foreign know-how. On December 13, 1978, Deng Xiaoping announced China’s Open Door policy, inviting in foreign businesses and encouraging Party members to “emancipate their minds.” Two weeks later, the first bottles of Coke arrived.

The US government strategy used to be called engagement: Eight American presidents from Richard Nixon to Barack Obama employed a strategy known as “engagement,” based on the conviction that embracing China politically and economically would eventually make it more profitable and liberal. 

Trump is all about American First: Donald Trump wants none of that. He has always despised trade deficits. In 1988, when America was flooded with imports from Japan, he told Oprah Winfrey, “They are beating the hell out of this country.”

The US government strategy now is called uncoupling: Trump’s idea of “uncoupling”—pushing factories to leave China, reducing the flow of students and technology—was a fringe position, found mostly in hawkish books such as “Death by China,” by Peter Navarro, a fiery economics professor who joined Trump’s campaign as an adviser.

Competition is out in the open - polite diplomacy is taking a back seat: “For years, the two were kicking each other under the table,” Minxin Pei, a government professor at Claremont McKenna College, said. “Now all the kicking is out in the open.”

Team Trumps sees China as a foe: The Trump administration’s argument, in its bluntest form, frames China as a hardened foe, too distant from American values to be susceptible to diplomacy.

Pompeo’s director of policy planning on what Team Trump really thinks about China (Skinner departed the State Department in August 2019): Kiron Skinner, Pompeo’s director of policy planning, said in a public talk, “This is a fight with a really different civilization.” She added that China represented “the first time that we will have a great power competitor that is not Caucasian.”

A new cold war? In the void, there was a clamor to set rules for dealing with China in business, geopolitics, and culture, all surrounding a central question: Is the contest a new cold war?

 Committee on the Present Danger is back: In March 2019, the Committee on the Present Danger—a group, first formed in the fifties, that encouraged an arms buildup against the Soviets—was relaunched, with a focus on China. Its events have featured Senator Ted Cruz, the former Trump strategist Steve Bannon, and, notably, the former House Speaker Newt Gingrich, Washington’s best weathervane for political opportunity.

In 2000, the Speaker Gingrich was in favor of establishing permanent trade relations with China and a leading supporter of Permanent Normal Trade Relations (PNTR) for China - that was then: Gingrich called China “the greatest threat to us since the British Empire in the seventeen-seventies, much greater than Nazi Germany or the Soviet Union.”

Both Beijing and Washington are not very well informed about the other side’s goals: Odd Arne Westad, a Yale historian, is clear-eyed about the risks of China’s rise, but he is most alarmed by alarmism itself. The leaders of the two countries are both hasty, intransigent, and not very well informed about the other side’s goals.

The US seeks to maintain influence- Chian wants to expand influence: The U.S. wants to preserve its influence and to balance trade. China seeks, above all, to expand its power in East Asia, as Germany did in Europe more than a century ago.

Beijing sees domestic peril everywhere: Chinese leaders, for all their projections of confidence, see peril everywhere: a precarious economy, an aging population, an Arab Spring-style revolt in Hong Kong, an ethnic insurgency.

Risky times: In a speech last year to the National People’s Congress, Premier Li Keqiang mentioned “risk” twenty-four times, twice as many as on the same occasion three years earlier. 

China does communism better than the Soviet Union: In 2018, China surpassed the Soviet Union as history’s longest-surviving Communist state, a distinction that fuels both pride and paranoia.

Orthodox commitment is the path to success: Xi believes that orthodox commitment to Communism is paramount as his country fends off Western influence. In a speech in 2013, he asked, “Why did the Soviet Communist Party collapse?” His answer: “Their ideals and convictions wavered.”

Not the time to be a moderate on the relationship: In both DC and Beijing, it has become easier to be a hawk than a voice of moderation.

Hong Kong as the new West Bank and Gaza Strip: From Beijing’s perspective, Israel’s sequestering of the West Bank and Gaza has led to an agreeable scenario: a chronic but confined insurgency that does not threaten the country’s overall security.

China sees all competition as necessary and all institutions as targets: The Chinese hacking of American businesses exposed a deep clash of perceptions: America was starting to see China as a near-peer, intent on flouting rules laid down mostly by the West. But China still regarded itself as a scrappy latecomer, using whatever tools it could to protect and improve the lives of a vast population.

China sees itself as a developing country: That clash extends far beyond hacking: China has invoked its status as a “developing country” to erect barriers against foreign competitors, and to coerce American companies into sharing technology.

My way or the Huawei: The US has asked sixty-one countries to ban Huawei equipment, but only three—Australia, New Zealand, and Japan—have agreed. 

More and more nations will be picking sides - or at least be asked to pick sides: A European diplomat told me that, despite credible concern about the use of Huawei’s products in spying, the campaign has been ham-fisted—a demand for us-or-them loyalty at a time “when you’re slapping tariffs on your European allies.”

Decoupling is fanciful and is a good think-tank circuit talking point: When Trump first imagined “uncoupling”—or “decoupling,” as it became known—the term evoked a divorce. But a complete decoupling is implausible.

Check out the 2019 investments Starbucks and Tesla made in China: Most American CEOs want more access to China, not less.

The phase one trade deal as performance art: The (phase one trade deal) truce did not resolve the core disputes, such as technology transfer, and, outside the White House, it was mostly seen as the end of a wasteful stunt.

NBA should be seen as the No Boundaries Association: China is the NBA’s most lucrative domain outside the US; the China operation has been valued at more than four billion dollars, and star players earn a fortune in sneaker deals.

Anta, a shoe brand you never heard of, is going to pay one of the “Splash Brothers” $80 million: Klay Thompson, of the Golden State Warriors, stands to make eighty million dollars in ten years from Anta, a Chinese brand, according to ESPN. 

Demands to respect culture - not exporting its culture: China is not exporting a state ideology in the manner of the Soviet Union. But it wants to make the world more amenable to its ideology, so it has demanded extraterritorial censorship, compelling outsiders to accept limits on free speech beyond its borders.

American tech is on the sidelines and won’t be allowed to play in China: Reed Hastings, the CEO of Netflix, acknowledged the barriers before him, saying, “We will be blocked in China for a long time.”

China provides a new system - a new options for governance and development: Xi Jinping promotes the view that China’s system presents an alternative to free-market democracy—what he has called “a new option for other countries and nations who want to speed up their development while preserving their independence.”

Country over the individual: “Americans think that free speech and freedom of press is basic for people. But in China we think the community, the country, is the first thing we need to think about. Most ordinary Chinese people don’t understand why democracy is so important for America. They’ll say, ‘Yes, America brings democracy to Iraq, to Afghanistan, to lots of countries. But these countries are getting killed now.’ They say, ‘We’re not democratic, but we live in a peaceful country. We have a good living standard.’ ” 

Chinese on the quad: If America closes its doors to Chinese students, it will not only deprive us of their talent and ambition; it will sacrifice the power of our uncensored world.

Competition for talent to power economic development: After the Second World War, Xue noted, the US “collected all the best people in the world.” Now European postdocs are coming to China to work with him. If the US squeezes out Chinese scholars, both sides will suffer, he predicts. “We can work hard by ourselves—no problem at all—but then you’ll lose good people,” he said. “If you cut off, you send a big signal to everyone in the world.”

The United States must make realistic decisions on how to engage, manage, confront, and collaborate with China: Chris Johnson, a former CIA analyst who is now a senior fellow at the Center for Strategic and International Studies, said the United States must make realistic decisions about where it is prepared to deter China’s expansion and where it is not. “If we think we can maintain the same dominance we have had since 1945, well, that train has left the station,” he told me. “We should start by racking and stacking China’s global ambitions and determining what we can’t accommodate and what we can, then communicate that to the Chinese at the highest levels, and operationalize them through red lines we will enforce. We’re not doing that. Instead, what we’re doing are things that masquerade as a strategy but, in fact, amount to just kicking them in the balls.”

The US and China - It’s like ham and pineapple on pizza- an uneasy coexistence: The most viable path ahead is an uneasy coexistence, founded on a mutual desire to “struggle but not smash” the relationship. Coexistence is neither decoupling nor appeasement; it requires, above all, deterrence and candor—a constant reckoning with what kind of change America will, and will not, accept. Success hinges not on abstract historical momentum but on hard, specific day-to-day decisions—what the political scientist Richard Rosecrance, in his study of the First World War, called the “tyranny of small things.”

Will this century be about us-or-them or us-and-them? To avoid catastrophe, both sides will have to accept truths that so far they have not: China must acknowledge the outrage caused by its overreaching bids for control, and America must adjust to China’s presence, without selling honor for profit. The ascendant view in Washington holds that the competition is us-or-them; in fact, the reality of this century will be us-and-them.

Marc A. Ross is a business strategist and communications advisor working at the intersection of globalization, disruption, and politics. Ross specializes in communications for economic diplomacy and global commerce. He is the founder of Caracal.