Asia & the Pacific

The U.S. position in the global value chain puts it at a disadvantage, and Washington's confrontational policies are making things worse.

Power transitions affect a state’s ability to exercise economic statecraft. As a dominating and a rising power approach parity, they face structural incentives to decouple their economies. This decoupling affects business-state relations: high-value businesses within the dominant power tend to oppose their state’s economic statecraft because of its costs to them, whereas low-value businesses within the rising power tend to cooperate because they gain from it. 

China leverages its market in a form of “predatory liberalism” that weaponizes the networks of interdependence created by globalization. ne response to China’s bullying would be for its targets to form an alliance to retaliate against China’s high-dependence trade should Beijing act against any alliance members. 

This paper addresses the question of how the Chinese party-state chooses to exercise its economic, financial, diplomatic, military and soft power in the next 25 years will make a great difference to US national security and foreign policy, and to developments in the rest of the world. The paper makes three key points:

The core argument of this paper is that Beijing will likely aspire to pursue an empire-like position globally, not just seek an Asia-Pacific sphere of influence, and that this aspiration will founder. Achieving an empire-like position is both an imperative and is infeasible. The tensions between goal and reality will likely characterize China’s role in the world in coming decades and will be central to the difficulties of US-China relations. Second, there is heuristic value for US policymakers and analysts to consider a 20-year outlook on the rise of China that encompasses China’s pursuit of a global empire-like position. Third, paying close attention to how Beijing organizes its own government, corporate, and non-governmental organizations to seek an empire-like position will provide important signposts emerging tension and trends.

The incursion in January of a Chinese spy balloon into U.S. airspace seemed to many observers like a bad miscalculation by Beijing. U.S. Secretary of State Antony Blinken had been scheduled to travel to China the following month, but the balloon incident led to the scrapping of the much-anticipated visit. Chinese leader Xi Jinping almost certainly would have preferred to see diplomacy proceed as planned. It is likely that he would not have sanctioned this operation had he known its consequences. If he believed that the United States would simply overlook the incursion, he was clearly mistaken.

Joseph S. Nye argues that history shows that globalization is largely driven by technological changes that reduce the importance of distance, and that will not change.

Economic interdependence has long been considered important to international peace. Questions about harmful effects of the free flow of capital, however, are arising. China and Organization for Economic Co-operation and Development countries are increasingly involving their business firms in security and intelligence work, causing a security dilemma dynamic that increases economic competition.

The authors propose a simple, four-part framework to guide relations among major powers. This framework presupposes only minimal agreement on core principles—at least at first—and acknowledges that there will be enduring disagreements about how many issues should be addressed. Rather than imposing a detailed set of prescriptive rules (as the World Trade Organization and other international regimes do), this framework would function as a "meta-regime": a device for guiding a process through which rival states or even adversaries could seek agreement or accommodation on a host of issues. When they do not agree, as will often be the case, adopting the framework can still enhance communication among them, clarify why they disagree, and offer them incentives to avoid inflicting harm on others, even as they seek to protect their own interests.

Commercial international port terminals owned and operated by Chinese firms provide dual-use capabilities to the People's Liberation Army during peacetime. They enable China to project power into critical regions worldwide by providing military logistics and intelligence networks.