China versus the world

While America staggers from coronavirus lockdown to riot curfew, China is pushing out at sea, on its borders, in its legal claims, and in the global economy. America and its allies have begun to realize the extent of China’s ambitions and the threat they pose. But will Western governments do more than signal their disapproval? They certainly have the means to do so.

China’s recent actions, taken together, constitute a serious escalation. Even though COVID-19 was spawned there, China never instituted a full, nationwide lockdown, attempting to keep as much of its economy as active as possible, including, ironically, as a source of production for personal protective equipment for the rest of the world. Simultaneously, Beijing took advantage of the political distraction and economic weakness of others to advance its strategic goals.

Over the last few months, while the United States pulled the nuclear-powered aircraft carrier USS Theodore Roosevelt back to port due to COVID-19 infections, a Chinese coast guard ship rammed and sank a Vietnamese fishing boat in contested waters; a Chinese Navy ship locked its fire control on a Philippines navy ship; Chinese coast guard and survey ships harried a Malaysian survey ship in what Malaysians say is the country’s exclusive economic zone; Chinese fishing boats moved into Indonesian waters, and a Chinese fishing ship “collided” with (and possibly rammed) a Japan Maritime Self-Defense Force destroyer in international seas.

China also conducted military exercises aimed at refining the skills and preparation needed to invade Taiwan, and Chinese Premier Li Keqiang dropped the usual phrasing of “peaceful” in public reference to China’s “reunification” with Taiwan.

On its land borders, China has thrust across the India-China Line of Actual Control in several locations, moving in thousands of troops and digging in. Of particular concern is an incursion in Ladakh that, according to one Indian strategist, has placed Chinese troops “within slingshot distance” of a highly strategic Indian forward air base, Daulat Beg Oldi.

India has been building up road infrastructure on its side of the LAC in response to longstanding major Chinese upgrades on its own side. The incursions seem to be aimed at dissuading Delhi from continuing to build while at the same time putting Chinese forces in strike position. Daulat’s location gives Delhi strategic oversight of a section of the Karakoram Highway running from China to Pakistan, a component of the potentially dual-use China–Pakistan Economic Corridor.

One concern in Delhi is that China is positioning itself to be able to strike India in “defense” of close ally Pakistan in case Islamabad starts something that forces India to retaliate. The perception is that China advances its interests in the region directly, but also through proxies, which is why Delhi also views the recent trouble on its border with Nepal as essentially being directed by Beijing.

China is also using its legal system to expand influence. On May 28, China’s legislature passed sweeping new security laws drastically curtailing autonomy in Hong Kong, in breach of treaty obligations with the United Kingdom. Beijing is using its tariffs system to punish Australian beef and barley exports in retaliation for Canberra asking for an independent inquiry into the origins of COVID-19.

On the global economic front, in April, Beijing started to test its own state-run digital currency, a component of its strategy to undermine the U.S. dollar as the global reserve currency. It has also been using the COVID-19 economic crash in other countries to try to buy up distressed assets on the cheap and position itself in strategic sectors such as high-tech startups.

While China’s maritime, territorial, legal, and economic ambitions have been evident for at least 20 years, all of the above has happened in just the past few months. Years ago, Capt. James Fanell, former director of intelligence and information operations for the U.S. Pacific Fleet, predicted that the 2020s would be the “decade of concern” regarding China. The global political paralysis and economic destruction caused by COVID-19 accelerated and condensed the timeline.

However, China’s actions have been so audacious and egregious, and anger over its role in the pandemic so widespread, that the growing global response is more forceful than Beijing may have expected. And a substantial amount of it is hitting China where it’s vulnerable, right in the economy.

President Trump’s May 30 speech on China announced a new set of options for dealing with Beijing. In particular, with Secretary of State Mike Pompeo certifying to Congress that Hong Kong can no longer be considered autonomous due to China’s new security legislation, the U.S. can now strip Hong Kong of its special trading status with the U.S., legally turning it into just another Chinese city. Essentially, the president said to Beijing that it can’t play the system as it wants anymore.

In another important move, in early May, Trump and the Labor Department directed the Federal Retirement Thrift Investment Board to stop plans to invest tens of billions of dollars of U.S. retirement funds in Chinese companies since they were “risky” and “a threat to U.S. national security.”

That it had even been contemplated indicates the level of Chinese influence in the U.S. financial sector. That the plans were stopped is a very good sign, and a big blow to China, as it needs convertible currency.

The U.S. is not alone in starting to push back. Lines are being drawn. Washington was joined by Five Eyes partners Australia, Canada, and the U.K. in a declaration of concern about developments in Hong Kong, leading strategists to wonder about the degree of Chinese influence in the “fifth eye,” New Zealand.

Chinese audaciousness is leading countries that thought they could hedge, at least for a bit longer, to pick a side. Post-Brexit, the U.K. was considering looking to China for investment in the City of London and allowing Huawei increased access in its telecom systems, against loud objections from Washington.

Since COVID-19 and Hong Kong, the U.K. looks like it will expel Huawei from its telecom backbone. On June 3, Prime Minister Boris Johnson said the U.K. would allow 3 million people in Hong Kong who are eligible for a British National (Overseas) passport to live and work in Britain. The calculation could be that rather than get investment from Beijing, London will try to attract wealthy Hong Kongers to relocate to the U.K. while blocking Chinese strategic access into U.K. systems to benefit a stronger relationship with the U.S.

On May 29, London also proposed setting up a group of 10 democratic countries — the G-7 plus Australia, South Korea, and India — to develop a 5G alternative to Huawei.

Around the world, countries are trying to defend themselves from China in new ways. Attempting to fend off predatory investment from Beijing, in April, India announced that foreign direct investment coming from countries on its land borders would no longer get automatic approval. Indians, furious at China’s COVID-related actions and border incursions, are boycotting Chinese products and pushing online for an economic “#Chexit.” Japan has announced a fund to help Japanese companies relocate manufacturing out of China.

As of the end of May, India was chairing the World Health Organization Executive Board. It has promised to bring transparency to the organization and is likely to support a role for Taiwan. Delhi also said it would buy more Australian barley, helping to bail out Australia. And it will hold a “virtual summit” at the prime-ministerial level with Canberra to advance defense cooperation. Indian strategists are even mooting the establishment of an Indo-Pacific Charter to frame the way forward, as the Atlantic Charter did in 1941.

China’s attempts at aggressive expansion are not going to stop, and it still has a range of conventional and nonconventional arrows in its quiver, including in the areas of cyber, electronic warfare, and space. But Beijing has been so obvious in its desire to dominate territorially and economically that it is now impossible to ignore. If the rest of the world can focus for a moment on where the long-term threat to democracy, stability, security, and prosperity is really coming from, there is a unique opening to forge the sort of strategic and economic alliances that can stop a war before it happens.

Cleo Paskal is a nonresident senior fellow for the Indo-Pacific at the Foundation for Defense of Democracies. Follow her on Twitter @CleoPaskal.