The China Challenge

Joe Sestak is a Former Navy Admiral and Congressman, and is a Democratic Presidential Candidate.

In Northwestern China, north of Tibet, there is an autonomous region called Xinjiang. It is the largest region in China, comprising nearly one-fifth of the country’s total land-mass. Though relatively sparsely populated, its 23 million people make it larger than 22 of 28 European Union member states. Nearly half of the residents of Xinjiang are indigenous Uighur people, who speak a Turkic language and practice the religion of Islam. While Xinjiang remains unknown to most Americans, it has lately been making news for the most ignominious reasons: a brutal crackdown on dissent, a growing surveillance state, and a terrifying “re-education” campaign which is attempting to force the Muslim Uighur people to abandon their traditions and affirm their subservience to the Communist Party.

The human rights violations in Xinjiang are bad enough. What is worse is that Xinjiang is only the beginning. Recent developments have made it clear that Xinjiang is merely the testing ground for a vast and pervasive state surveillance apparatus. China is already exporting their technological capability to other countries, and it has been made clear that we in the United States are not out of their reach. I have long believed that dealing with China is the chief strategic imperative of the 21st century, and recent developments—concerning the Huawei corporation, 5G internet, the expansion of China’s military footprint around the world, their “belt and road initiative,” and human rights violations from Xinjiang to Hong Kong—have only strengthened that belief.

I believe our elected officials have failed to take seriously the various challenges (and threats) China poses to our country, and to a rules-based world order. We need a president who understands the complicated and multifaceted risks embodied in the People’s Republic of China, and who has the experience and knowledge to keep our economy thriving and our country safe.

When American policymakers and the news media discuss China these days, they are typically talking about President Trump’s trade war. While this is most certainly a newsworthy subject, it is also a distraction from the larger issues at play in Sino-US relations and China’s inexorable drive to become a world power which eclipses the United States.

For the record, I believe President Trump’s actions in starting and escalating the trade war have been misguided and reckless. President Trump believes that he alone can force China to submit to the global rules on fair trade, intellectual property rights, and currency valuation, but he is wrong. All indications are that China has refused to budge, and that it can find other sources for soybeans and other commodities besides American producers. The costs of tariffs on Chinese manufactured goods and building materials like steel will be largely borne by US companies and consumers, so they have little incentive to make a deal.

The President should instead organize the world around standing up to China and utilizing the mechanisms of the World Trade Organization (WTO), which is full of traditional American allies who will take our side, to hold China accountable and force them to play by the rules. As it stands, China is treated like any other economy, but we need the WTO to realize that the market capitalism of most countries and the state capitalism of China are two very different systems. China’s Communist Party controls its economy with an extremely heavy hand, using state-owned enterprises, along with companies heavily influenced or directed by the state, to dominate a range of industries. We will have to change the WTO’s rules, which were originally written mainly to prevent “dumping,” because they were not set up to deal with an opaque state that subsidizes its companies to compete unfairly on the world stage. The WTO needs to lower its evidentiary standards to make it easier to prove when China cheats so they can be held accountable and penalized. The WTO needs to treat the Chinese government’s role in Chinese businesses for what it is: a raft of subsidies, keeping Chinese enterprises floating above everyone else’s.

Solar panels are a good example. Over the past decade, China has come to dominate the solar energy industry with a combination of tax credits, loans, and direct investments. By one estimate, the Chinese government has poured nearly US$50 billion into the development of its solar industry. In the process, US and European solar manufacturers were forced to shut down; now the majority of solar panels installed in the United States are made in China. The WTO could make up for China’s unfair advantage by strengthening provisions allowing for duties to cancel out China’s subsidization of the solar industry, allowing other companies to compete. The WTO also needs to create a more realistic definition of what kind of state support counts as a subsidy, and to address the US$300 billion theft of US intellectual property.

To fully understand why our policies are failing to meet the Chinese challenge, it is important to realize the complete context of what China is presently doing, both around the world and at home: laying the foundation for their global dominance for the foreseeable future. If the 20th century could reasonably be called “the American Century,” China would like the current one to be “the Chinese Century.”

Throughout the world, China has embarked on an ambitious and comprehensive global development plan known as the “Belt and Road Initiative,” which involves building an array of infrastructure projects—roads, bridges, railroads, airports, seaports, dams, power plants, mines, factories, farms, telecommunications networks, and housing for the workers who make it all run—in nearly every country on the planet. It was originally referred to as a “strategy” when first unveiled in 2013, but the less threatening “initiative” was ultimately chosen for the English language translation. Its innocuous-sounding stated aim is to “enhance regional connectivity and embrace a brighter future.” In reality, it is a form of neo-colonialism aiming to turn the rest of the world into a source of raw materials and products for the burgeoning Chinese middle class.

According to Chinese sources, the government has now signed cooperative “Belt & Road” agreements with at least 126 countries and 29 international organizations, working on projects as diverse as a railroad in Laos (to ultimately connect China with distant Singapore), two hydroelectric dams in Argentina, and cotton farms and related infrastructure in Sudan. At the same time, China is using its economic influence to spread its military reach, including by illegally building artificial islands in the South China Sea to establish naval dominance in the region; according to the US military commander of the Pacific, China now has naval command of the Western Pacific. It is the first loss of command of the seas by the US Navy anywhere in the world since World War II. China is also opening its first overseas naval base in the African nation of Djibouti, with a second on the way in Cambodia. It is estimated that Djibouti has public debts worth about 88 percent of its annual GDP, with China owning most of it. The naval base is part of their payment. Likewise, debt incurred by Sri Lanka forced them to sign a 99-year, 70 percent stake in a newly constructed port over to China. This is debt-trap diplomacy, plain and simple.

Back in Xinjiang, China is learning how to use technology to exercise control over a restive population in a demonstration of 21st-century totalitarianism that is as impressive as it is frightening. And they are doing so with the help of US corporations, universities, and individuals who are effectively selling out their country. Microsoft is working with the Chinese military on artificial intelligence; MIT is working with the Chinese facial-recognition firm SenseTime; and an American non-profit called the OpenPower Foundation, founded by Google and IBM executives, is working with a US microchip manufacturer and a Chinese company to produce chips capable of analyzing vast amounts of data with speed and efficiency, critical for tracking millions of people in real time.

Throughout Xinjiang, especially in the capital Urumqi, hundreds of thousands of cameras maintain a vigilant eye on the population. Facial recognition technology allows the government to track the whereabouts of anyone. Sophisticated telecommunications monitoring allows the government to spy on people using the internet or telephones. And a compulsory “Physicals for All” program is being used as the pretext for the collection of millions of Uighurs’ DNA, allowing the government to create a genetic information database with a myriad of potentially nefarious uses. Police collecting DNA in Xinjiang have used equipment made by Thermo Fisher, a US company, according to a New York Times report, while cross-referencing their data against that belonging to US companies and organizations. In recent years, China has used this Orwellian infrastructure to arbitrarily imprison between one and two million Uighur people in “re-education camps.”

China is also exporting this surveillance technology to other countries. Companies like Huawei and ZTE are building what they call “smart cities” in countries including Pakistan, Kenya, and the Philippines, where Huawei is installing internet-connected 24/7 surveillance cameras and facial recognition systems in what’s known as the “Bonifacio Global City.” The Chinese companies Hikvision, Yitu, and SenseTime are providing cameras to Singapore, which has announced plans to install 110,000 facial-recognition cameras on lamp-posts throughout the country. All of this infrastructure has the potential to be abused both by the client states’ governments, private companies, and by China itself.

The biggest threat China currently presents to the world comes from their prowess in  5G wireless infrastructure. China will make every country that signs up for Belt and Road also agree to add China’s 5G service. Even in countries that don’t have Belt and Road agreements, China will still dominate 5G because Chinese companies make the wireless tower technology. Everything will flow through Chinese technology—from virtual business meetings to personal email accounts, artificial intelligence data to intelligence gathering—so China will be able to watch over everything. It will also be able to remotely damage critical infrastructure at will, from our electrical grid to nuclear power plants to dams that can drown entire cities. We need to launch a public-private effort, much like the Eisenhower administration did with the Interstate Highway System, to produce American-made 5G technology and lay the necessary infrastructure to support it..

China is also the primary country laying new undersea cables, allowing them to control access to all of our non-wireless data (as 98 or 99 percent of international data flows through undersea cables). To make matters worse, our corporations have outsourced our national security by allowing China to create a virtual monopoly in the manufacturing supply chains that make so many corporations’ high-tech products. China makes 90 percent of personal computers sold in the United States, and 75 percent of mobile phones. Chinese-made motherboards are used in data servers worldwide, and according to landmark reporting from Bloomberg News last year, they are already sneaking in tiny microchips that can be used for spying. From Apple and Amazon to the Defense Department and the CIA, our entire business and national security establishment is in danger. This means that the private data of Americans—and of the American government—can be surreptitiously sent to China, a reality that software installed on some Android phones already makes possible. Outsourcing jobs and industries to China has been bad enough, but outsourcing our national security is beyond the pale.

The only way to confront the Chinese threat is to convene world leaders, work closely with our allies, and maintain constant vigilance. The free world must present a united front against Chinese expansionism. We must ban the use of Chinese-made technology in our internet-connected infrastructure, whether they be 5G towers or electrical grids. We must invest in cyber-security far more than we ever have before—even if that means cuts to other defense programs. We must prevent Chinese corporations from buying up farmland and critical infrastructure in the United States. We must not allow US companies and organizations to participate in China’s human rights violations. And we must engage constructively with developing economies, to provide a counter-balance to China’s Belt and Road Initiative.

It bears mentioning that I have great respect for the Chinese people. As a young Naval officer, I backpacked through China the year after independent travel by Americans was permitted, when they opened cities which had previously barred foreigners. I was treated with such genuine hospitality (and curiosity) by the Chinese people who generously opened their lives to me. But the Chinese government’s authoritarian methods are not compatible with the rules-based world order that has allowed our democracy to flourish in peace and prosperity for the better part of the last hundred years.

If America is to continue flourishing for the next century, we cannot take our eyes off of China. We need to confidently and assertively counter their autocratic ways with the help of our great allies and international organizations. And we need to do better ourselves: we can only maintain the moral high ground in the battle of ideas by engaging in fair trade with the rest of the world, improving our own democratic institutions, and respecting human rights at home and abroad.

We are in the early stages of a long-term struggle for the soul of the world. It is a struggle we cannot afford to lose.