Washington’s Playbook for China Must Change
Asia is the global epicenter of a competition for global leadership.
By Evan G. Greenberg
September 24, 2024
Over the past four decades, I have built and managed businesses throughout Asia, including China. In my dealings, I met frequently with successive leaders, including President Xi Jinping in Beijing. Through that period, I have watched America’s approach to the region change from one presidential administration to the next. Some presidents emphasized regional strategy and others concentrated on China. Many presidents prioritized trade promotion. Washington’s increasingly bipartisan priority over the last decade has become shielding American workers from global competition. In the process, America’s strategic community has become enamored with viewing U.S.-China competition as a new cold war.
This emerging policy orthodoxy is wrongheaded and counterproductive. If the United States wants to create a more favorable balance of power in the face of China’s growing challenge, it will need to adjust its approach. America’s next president should redirect Asia policy to strengthen deterrence while driving regional economic integration. Absent such a shift, the United States risks undermining its own leadership and interests.
The United States and China are both great powers. They hold profoundly different visions for the future of the international system. Unlike in the Cold War, however, Washington and Beijing are locked within a single international system. They each are competing for greater relative leadership and influence of the same system.
During the Cold War, the Soviet Union was an isolated, embattled, resource-rich economy that never came close to matching America’s industrial and economic might. China, by contrast, is deeply woven into the global economy. China accounts for nearly 20 percent of the global economy, dwarfing the Soviet Union at its peak. The country also produces upward of 35 percent of the world’s manufacturing output and is the largest trading partner of more than 120 countries.
The American and Chinese economies are deeply interdependent. Even with government-directed policies in recent years to reduce dependencies on each other, as well as American policies to control the export of dual-use items that could aid China’s military advances, both countries still recently traded nearly $700 billion with each other annually, though that number is declining.
Leading companies in both countries remain entwined through dense global value chains. Supply chains now encompass a global web of companies. Washington and Beijing are both rationally working to limit over-dependence of critical products from each other. These parallel efforts are part of a shared instinct by both sides to shrink the other’s leverage and potential coercive capability. While selective U.S.-China decoupling in high-technology and critical national security sectors is underway, it would be unwise to attempt to completely disentangle the dense value chains between both countries. Not only would such an effort be virtually impossible, but it would also be harmful to the American economy, including businesses that rely on Chinese intermediate goods and capabilities for their products.
This depth of mutual interdependence does not limit Washington’s requirement for defending critical interests. If anything, it elevates it. America’s level of exposure to China’s economy demands that Washington use all available tools to protect intellectual property, defend against efforts to acquire military or economic advantage through espionage, challenge predatory economic practices, and insist on fair treatment for American firms and their workers. The alternative—letting any country, particularly one with size and scale, get away with unfair economic practices that generate an uneven playing field for American firms—would be strategically misguided and politically unviable.
Unlike the early years of the Cold War, there are no fixed geographic demarcations between American or Chinese blocs today. There is, instead, a group of countries animated by shared grievances against a Western-led world order. This group includes China, Russia, Iran, and North Korea. They all seek greater insulation against Western influence and economic pressure from the United States and its allies. The more insulation they obtain, the stronger their attraction becomes for other illiberal actors around the world.
Among these countries, Russia, Iran, and North Korea increasingly are pariahs outside the international system, whereas China remains a leading actor within the existing order. Those outside the system benefit from chaos. China does not. The more China identifies with this coalition, the more it exposes itself to geopolitical risk, including by closing pathways for more productive relations with Europe and the United States. The good news is that Beijing views its relationships with the West as having been instrumental to its historic rise.
When I first started doing business in China in 1992, Shanghai streets had little lighting and few cars. People traveled by bicycle and pushed coal wagons by foot to heat their homes. Today, Shanghai has an impressive modern skyline. Many hundreds of millions of Chinese people have escaped extreme poverty in one generation. Individuals are buying life insurance, and businesses purchase property and casualty coverage to protect their assets. These advances only happened through engagement with the West. This is a fact not lost on people in the street, nor the senior leaders and businesspeople I know.
Countries around the world are exercising agency to maximize their interests, rather than choosing sides. The reasons are simple. First, America’s politics presently are too unpredictable for any country to bet on Washington advancing a patient long-term strategy to compel China’s collapse. Second, there is no international enthusiasm for the world’s second-largest economy to collapse. Third, America’s post-Cold War record of imposing its governance vision on other countries—think Venezuela, Iraq, Afghanistan, and Libya—is remarkable in its failure. Fourth, a strategy of containment represents a dangerous blindness to the limits of American influence and power, a blindness that few outside of Washington share. And fifth, the cost and risk for America’s allies of alienating Beijing are prohibitively high.
America would be wise to listen to its allies as it defines the boundaries of its competition with China. The world does not view the current moment as a battle of competing ideologies. Nor is there enthusiasm among America’s partners for China to become an isolated, wounded, and aggrieved great power.
The epicenter of U.S.-China competition is Asia. There is no path for China to displace America from global leadership without first dislodging the U.S. from leadership in China’s home region. This area will serve as a leading engine of the global economy for the coming decades. I see widespread desire in Asia for prosperity and for the stabilizing forces of rule of law and a balance between powers. Yet the U.S. and China have dueling visions for the future of the region.
America seeks an Asia-Pacific that remains free from Chinese hegemony. It wants to sustain unimpeded lawful access to markets. Washington is determined to maintain its economic, military, and technological leadership. It views its alliance network and its vision of a market-oriented regional economy as instrumental to these goals. American leaders traditionally have sought to create fertile ground for democratic institutions to flourish across Asia.
China, by contrast, wants to return to what it views as its rightful historical role as the central power in the region. It expects regional countries to become more deferential to its core interests, including its vast territorial claims. Beijing seeks greater freedom of movement in the region, including by weakening or breaking America’s alliance network. China also aspires to gain greater respect for its domestic system and has tools and techniques for societal control and surveillance that it is capable of exporting to other countries.
If Washington is going to outperform Beijing and preserve its leadership position, it will need to accept several inconvenient truths. For example, America will need to moderate its emphasis on values as a source of attraction. Washington oversells the appeal of human rights and democratic principles in the Asia-Pacific. In my experiences, I have found that American efforts to evangelize its political values simply are not verbally persuasive in this part of the world. In Asia, notions of individual rights are balanced against support for collective rights. As an American, I place a high degree of importance on our core values. All countries should strive to support and improve human rights. Each will pursue its own path for doing so.
Much of the region is youthful and optimistic about its future, and there is a desire for improving governance and expanding opportunity. Progress will occur in fits and starts, and it will reflect each country’s vision for democratic, or more liberal, governance, which often will not resemble ours. America’s experiences in developing property protections and rule of law are a greater source of interest and attraction in Asia than any sermons on American values.
Countries in the region are not organized around ideology. They are organized around conceptions of national identity. Their national identities create powerful narratives around what countries are for and what they are against. For most countries in the region, a key element of their national story is their distinctiveness and their aversion to being under Beijing’s thumb. And a key measure for leaders in the region is whether they are improving the lives of their citizens, compared to their past and compared to their peers.
In other words, national development and the balance of security are where competition for influence in the Asia-Pacific is playing out. The U.S. economic model should provide a strong starting point for attracting support for our vision of leadership. Our economy is market-oriented with a transparent legal system, sanctity for individual and property rights, and strong institutions administering justice. U.S. companies are global leaders in the world of advancing technological innovation. The job market is booming. Wages are rising. At this moment, the American economy is outperforming China and other developed countries. But the United States is presently not giving due consideration to its partners’ requirements, including the region’s desire for greater market access with the United States.
Advancing our interests means embracing ideas that have fallen out of favor in political circles. Deeper economic integration through trade agreements between the United States and our partners would bind fortunes more tightly. It would promote America’s vision of market-oriented, rules-based fair trade. And it would strengthen our presence and staying power on the world stage. In a word, trade agreements matter. The United States-Mexico-Canada Agreement, which replaced NAFTA, is an example of regional integration through trade that we should consider extending.
In addition to promoting greater economic integration, Washington will need to elevate its defense posture in the region. Our allies want the stability that a sustained U.S. military presence ensures. To achieve this objective, according to security and military experts, it will be essential for Washington and its partners to introduce new concepts and capabilities to frustrate any country’s attempts to redraw boundaries in Asia by force.
America’s alliances and security partnerships are foundational to our deterrence posture in the region. However, we are not equipped presently to produce ships, planes, missiles, munitions, and autonomous weapons at a speed and scale needed to meet our own national security requirements or those of our partners. There is a clear long-term imperative for America to restore the capacity to produce defense equipment at a scale needed to meet strategic challenges. In the interim, we should use this moment as an opportunity to pool resources with allies to accelerate defense production. We should build upon the various cooperation and security agreements in place and developing, including AUKUS, the Quadrilateral Security Dialogue, the American-Japanese-Korean trilateral pact, and a range of bilateral arrangements.
China has advantages, including its proximity to the rest of Asia, its size and scale, its culture, and its know-how. In recent years, however, China has undermined its appeal in many parts of the region through its revanchist efforts to demand acquiescence to its territorial claims and mismanagement of its own economy. Beijing’s dimming domestic performance is reducing its appeal, and its bullying behavior is driving many countries closer to the United States. Countries will exercise agency to ensure America and China both remain active and that neither acquires exclusive dominance. Nevertheless, it is imperative for Washington to capitalize on the opening Beijing is providing.
America’s global alliance network is its asymmetric advantage in its long-term competition with China. Any actions that devalue our alliances undermine our capacity to compete with China. Specifically, if America organizes its foreign policy around ceaseless confrontation with China, it will find few followers. Preserving this network requires constant attention and the quest for shared interests. This is where rhetoric from America’s leaders and aspiring leaders matters. Ideological declarations for a new cold war or the collapse of the Chinese Communist Party or the full decoupling of the world’s two largest economies do not stop at our borders. Such calls create distance between the United States and its partners. Paradoxically, such statements by American leaders also serve to strengthen, rather than weaken, China’s leaders’ hold on power.
Here’s why: Calls for regime collapse reinforce notions in China that America is bent on holding back the progress of the Chinese people. I would expect the Chinese people to rally in support of their leaders if they believe the country is being confronted by a hostile adversary.
To be clear, there are few signs that China’s approach to the United States or the Asia-Pacific will moderate any time soon. American leaders will need to remain firm and resolute in defending our interests and those of our allies and partners. At the same time, the future is not predetermined. If China’s actions are undermining its own interests, Beijing eventually will adjust its approach, not as a favor to America, but out of self-interest.
American leaders will not be able to determine the timing of such a shift. Even so, the more that our leaders show willingness to welcome a more prosperous and less belligerent China in the future, the more pressure China’s leaders will feel at home to justify their aggressive and impatient course.
We are in a contest for relative power, not absolute power, and this is consistent with the notion of coexistence. Direct dialogue with Chinese leaders through diplomacy is the path to exploring terms of this coexistence. Engagement is not weakness or an act of surrender. It is a recognition of reality. America can afford to exercise strategic patience, even as it stands firm in defense of our interests and principles.
The United States maintains a commanding lead in overall national power relative to China, a lead that has widened in recent years as our economy has accelerated while China’s has slowed. American policymakers should act with the confidence that these advantages afford us, rather than stretching for bad historical analogies to justify policies that generate self-harm at home and drive wedges with allies abroad.
Evan G. Greenberg is chairman and CEO of Chubb, the global insurance company. He serves on the board of trustees of the Center for Strategic and International Studies, the board of directors of the Peterson Institute for International Economics, and as executive vice chairman of the National Committee on United States-China Relations.