A U.S. think tank has presented a comprehensive economic governance strategy to the newly elected President Trump (Donald Trump) to address the deeply intertwined economic relationship between the United States and China, including seven presidential action initiatives to combat the new cold war with the CCP.
The China Economic and Strategy Initiative (CESI) of the U.S. think tank released a report titled “Defeating the CCP: A Running Start” in November. This report puts forward a comprehensive strategy that enables the United States to win in economic competition and defend its freedom.
“The U.S. is entering a new Cold War with the Chinese Communist Party (CCP) — not the Chinese people,” the report stated.
As noted in the report, similar to the Soviet Union in the Cold War of the 20th century, in the new Cold War of the 21st century, the CCP seeks to dominate world affairs by making free nations submit to its authoritarian norms and behavior.
While the Soviet Union primarily maintained its empire through military power and faced a crumbling economy, the CCP heavily relies on its economic cooperation and coercion schemes — based on its vast population, production capacity, and commercial activities — to bring countries worldwide under its rule.
The report pointed out that as a one-party authoritarian regime, the CCP “has been adept at leveraging China’s global economic position to gain economic advantage, drive military modernization, fund its global illicit activities, and wage comprehensive economic warfare against the U.S.”
Given the deep economic integration between the U.S. and China, and the global economic footprint of both countries, the challenges posed by the CCP to the U.S. are enormous in scope and scale, making it not easy to address these issues.
The CESI report proposed that the U.S. must deploy a new global economic strategy led by the president to protect the U.S. economy and workforce, weaken the CCP, establish a new global economic power center free from CCP’s authoritarian influence, and maintain U.S. economic leadership.
The report acknowledged that even the most carefully planned economic governance strategy would entail certain risks for the U.S., but the sacrifices and costs of avoiding the threat posed by the CCP would far exceed direct confrontational measures.
“The sacrifices and costs of not addressing the threat posed by the CCP will far exceed the costs of addressing the threat. The U.S. is already beginning to feel the costs, and those costs are increasing day by day,” the report concluded.
Authors of this report include prominent figures in the hawkish U.S.-China relations circle during Trump’s first term, including former State Department officials, national security officials, and congress members.
The report outlined the core of this strategy with “Seven Presidential Actions” proposed.
Firstly, it suggested the establishment of a new position of “Strategic Competition Coordinator” within the National Security Council, tasked with leading a team focused on implementing presidential policies concerning strategic economic competition with Beijing.
Secondly, the president should issue a National Security Decision Directive to guide economic governance strategy. This directive should outline paths aimed at protecting the U.S. economy from exploitative business practices of the CCP and preventing Beijing from bypassing, defying, and undermining international law.
Thirdly, the president must build a team to manage complex cross-departmental relationships, consisting of personnel from the State Department, the Department of Defense, the Treasury Department, the Commerce Department, the Department of Justice, and the Office of the U.S. Trade Representative.
Fourthly, the president should promptly take targeted measures to combat CCP’s control of supply chains, dominance in crucial industries, intellectual property theft, defiance of international law, and breach of fair and reciprocal norms in commercial relationships between free and independent nations. The president should set tariffs to protect sectors crucial for U.S. national security and develop a robust plan to counter potential retaliations by the CCP on U.S. economic policies.
Fifthly, the president needs to “forge new global alliances” to counter Beijing’s actions over the past decades to expand its international influence; reduce other countries’ inducive reliance on the CCP, particularly developing countries; reform the international system to prevent it from favoring the CCP and its authoritarian governance. With the help of these alliances, the White House needs to coordinate and enhance export controls, foreign investments, and trade agreements domestically.
Sixthly, the president must collaborate with Congress. The report highlighted that the success of economic policies largely depends on Congress, as it plays a role in “appropriating funds, approving trade, and providing the policy tools necessary for the president to compete effectively with China (CCP).”
Lastly, the president must clearly communicate to the American people the urgency and severity of the economic challenges posed by the CCP. He must outline openly his plans to defend the U.S. economy and reverse the damage caused by the CCP to international trade, being frank about the sacrifices his plan will inevitably entail.
“This economic governance strategy is not an alternative to the diplomatic and military strategies the U.S. must adopt to counter Chinese (CCP) challenges but is a crucial supplement to them,” the report concluded.
Peter Berkowitz, who served as the Director of Policy Planning at the State Department during the Trump era, specifically recommended the CESI report.
He cautioned that the U.S. should not underestimate the complexity of the CCP challenge, and in the context of the intertwined U.S.-China economic relationship, should utilize this fusion to sanction the CCP for its human rights violations against the Chinese people.
The State Department’s Policy Planning team published a document titled “The Elements of the China Challenge” in December 2020, pointing out that the CCP’s ambitions far exceed the Indo-Pacific region’s hegemony.
CCP leader Xi Jinping has emphasized in several speeches and articles that the CCP aims to use various countries’ trade reliance on China to compel them to realign the world order around Beijing’s authoritarian goals. In this sense, Xi’s ambitions are consistent with those of previous CCP leaders.
This includes the U.S. China is the third-largest destination for U.S. exports (behind only Canada and Mexico), the largest source of U.S. imports, and the third-largest trading partner of the U.S. (behind Canada and Mexico).
Berkowitz is currently a Senior Research Fellow at the Hoover Institution at Stanford University. He raises the question of how the U.S., considering the deep entanglement of the U.S. economy with China’s, and the economies of U.S. partners, friends, and allies, can effectively sanction the CCP for its egregious human rights abuses against the Chinese people?
Berkowitz suggests that the best approach is to leverage the deep entanglement of the Chinese and U.S. economies, wisely wield U.S. economic strength and deftly use diplomatic influence to make the CCP pay a significant price for its human rights violations, while making Beijing pay an even higher price for its predatory business practices, in order to prevent the CCP from pushing the world order toward authoritarianism.