US-China relations: Biden containment plan requires Beijing respond with ‘grand strategy’
- Beijing has a two-year ‘window of opportunity’ to create a master plan to defend itself against President Joe Biden’s new multilateral containment strategy
- Advisers also urge China to take the diplomatic lead to create better relations with Japan and Europe, as well as friendly elements within the US
China has a window of opportunity within the next two years to develop a “grand strategy” to defend itself against new containment policies under the Biden administration, Chinese academics say.
The transition of power in Washington and the disruption caused by the coronavirus pandemic have given Beijing a chance to plan its next move – and even grab the upper hand – in its relationship with the United States, they said.
But with numerous challenges ahead, China must also improve relations with Japan, Europe and friendly elements in the US, in part by leveraging access to its huge domestic market, the experts added.
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On Wednesday, US President Joe Biden released a 24-page interim national security strategic guidance document warning that China was “the only competitor potentially capable of combining its economic, diplomatic, military and technological power to mount a sustained challenge to a stable and open international system”.
Liu Yuanchun, vice-president of Renmin University in Beijing, expected Biden to only revise the unsustainable elements of Trump’s China policy and roll out a strategy of medium-to-long-term containment in certain fields.
Under Biden, “the US tech containment efforts are likely to be more severe than in the Trump era,” he warned at a webinar organised by the China Macroeconomy Forum on Wednesday.
His view was echoed by Zhang Ming, deputy director of the institute of finance at the Chinese Academy of Social Sciences, who said Biden was likely to conduct “targeted decoupling” in hi-tech sectors, while collaborating with like-minded countries.
We need to create a grand strategy for the game with the US; to use a grand strategy to cope with another grand strategy
The US would employ a grand strategy incorporating its political and economic cards to contain China, Zhang said, adding the Chinese government response had so far not been systematic.
“We need to create a grand strategy for the game with the US; to use a grand strategy to cope with another grand strategy,” he said at the event.
The strategy should be highly transparent, market-oriented and understandable to the international community, he said.
China should also develop friendly relations with political forces within the US so that Beijing’s position would be better understood, Zhang said.
Liu Qing, deputy dean of the National Academy of Development and Strategy at Renmin University of China, said Beijing should go on the offensive by building stronger ties with Tokyo and Brussels.
The fundamental principle of the fierce competition between China and the US has not changed
It could do that by showing the advantages of China’s huge domestic market and paying attention to their interests to balance Washington’s efforts to form an anti-China alliance, Liu said.
He argued China would have a “window of opportunity ” within the next two years where it would hold the upper hand in the bilateral economic relationship, thanks to the effects of the pandemic on the US economy, as well as its domestic political divisions.
“The fundamental principle of the fierce competition between China and the US has not changed,” Liu said.
Statements by the Biden administration in the last two weeks have underscored the extent of the competition to come.
Last week, the president ordered a 100-day review of vulnerabilities in American supply chains for critical products, including semiconductors, pharmaceuticals, car batteries and rare earth elements, aiming to reduce reliance on countries such as China.
Biden’s order came after his speech to the Munich Security Conference, in which he said the US and its international allies must push back against Beijing’s “abuses and coercion that undercut the foundations of the international economic system”.
On Monday, the Office of the US Trade Representative (USTR) said in its 2021 agenda that Washington would use “all available tools” to tackle China on trade while making human rights issues in the Xinjiang autonomous region a top priority.
Liu, the vice-president of Renmin University, calculated that China had to buy an additional US$100 billion worth of American goods to meet the commitments, bringing total annual imports from the US above US$200 billion for this year, after falling short of last year’s requirement amid pressure from the pandemic.
“Although [the size] is not large compared with China’s entire imports, we need to assess how much of an impact it will have on specific sectors,” he said.
Zhang said the US$1.9 trillion pandemic aid plan pushed by Biden would boost US demand and ensure the trade deficit with China continued.
In addition, the extra liquidity added to global markets would increase capital inflows into China, putting pressure on Beijing to resist appreciation pressure on the yuan. This could rekindle Washington’s attacks on Beijing over currency manipulation.
He also said bilateral frictions in finance were likely to grow, as US attempts to delist Chinese companies from American exchanges were ongoing and mainland firms would be prevented from buying American tech companies.
We should make contingency plans … don’t be too optimistic
“We should make contingency plans … don’t be too optimistic,” Zhang said.
Li Xunlei, chief economist at Zhongtai Securities, said it was crucial for China to assess the risks of additional American economic stimulus and take steps to reduce the impact on the Chinese financial system.
To improve cooperation with Japan and Europe, China should open its markets wider and embrace international best practises, he said.
Mao Zhenhua, founder of China Chengxin Credit Rating Group, said China should not overestimate the role of its consumer market, given domestic retail sales shrunk last year, a worse performance than in Western economies.
“The key is to do our own business well, expand domestic demand and accelerate efforts to catch up in weak links in tech,” he said.
