3.1U.S.-Strategic-Approach-to-The-Peoples-Republic-of-China-Report-5.24v1.pdf

Introduction

Since the United States and the People’s Republic of China (PRC) established diplomatic
relations in 1979, United States policy toward the PRC was largely premised on a hope that
deepening engagement would spur fundamental economic and political opening in the PRC
and lead to its emergence as a constructive and responsible global stakeholder, with a more
open society. More than 40 years later, it has become evident that this approach
underestimated the will of the Chinese Communist Party (CCP) to constrain the scope of
economic and political reform in China. Over the past two decades, reforms have slowed,
stalled, or reversed. The PRC’s rapid economic development and increased engagement with
the world did not lead to convergence with the citizen-centric, free and open as the
United States had hoped. The CCP has chosen instead to exploit the free and open rules-
based and attempt to reshape the international system in its favor. Beijing openly
acknowledges that it seeks to transform the international to align with CCP interests
and ideology. The CCP’s expanding use of economic, political, and military power to compel
acquiescence from nation states harms vital American interests and undermines the
sovereignty and dignity of countries and individuals around the world.

To respond to Beijing’s challenge, the Administration has adopted a competitive approach to
the PRC, based on a clear-eyed assessment of the CCP’s intentions and actions, a reappraisal
of the United States’ many strategic advantages and shortfalls, and a tolerance of greater
bilateral friction. Our approach is not premised on determining a particular end state for
China. Rather, our goal is to protect United States vital national interests, as articulated in
the four pillars of the 2017 National Security Strategy of the United States of America (NSS).
We aim to: (1) protect the American people, homeland, and way of life; (2) promote
American prosperity; (3) preserve peace through strength; and (4) advance American
influence.

Our competitive approach to the PRC has two objectives: first, to improve the resiliency of
our institutions, alliances, and partnerships to prevail against the challenges the PRC
presents; and second, to compel Beijing to cease or reduce actions harmful to the
United States’ vital, national interests and those of our allies and partners. Even as we
compete with the PRC, we welcome cooperation where our interests align. Competition need
not lead to confrontation or conflict. The United States has a deep and abiding respect for
the Chinese people and enjoys longstanding ties to the country. We do not seek to contain
China’s development, nor do we wish to disengage from the Chinese people. The United
States expects to engage in fair competition with the PRC, whereby both of our nations,
businesses, and individuals can enjoy security and prosperity.

Prevailing in strategic competition with the PRC requires cooperative engagement with
multiple stakeholders, and the Administration is committed to building partnerships to

United States Strategic Approach to
the People’s Republic of China

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protect our shared interests and values. Vital partners of this Administration include the
Congress, state and local governments, the private sector, civil society, and academia. The
Congress has been speaking out through hearings, statements, and reports that shed light on
the CCP’s malign behavior. The Congress also provides legal authorities and resources for
the United States Government to take the actions to achieve our strategic objectives. The
Administration also recognizes the steps allies and partners have taken to develop more
clear-eyed and robust approaches toward the PRC, including the European Union’s
publication in March 2019 of EU-China: A Strategic Outlook, among others.

The United States is also building cooperative partnerships and developing positive
alternatives with foreign allies, partners, and international organizations to support the
shared principles of a free and open . Specific to the Indo-Pacific region, many of these
initiatives are described in documents such as the Department of Defense June 2019 Indo-
Pacific Strategy Report and the Department of State November 2019 report on A Free and
Open Indo-Pacific: Advancing a Shared Vision. The United States is working in concert with
mutually aligned visions and approaches such as the Association of Southeast Asian Nation’s
Outlook on the Indo-Pacific, Japan’s free and open Indo-Pacific vision, India’s Security and
Growth for All in the Region policy, Australia’s Indo-Pacific concept, the Republic of Korea’s
New Southern Policy, and Taiwan’s New Southbound Policy.

This report does not attempt to detail the comprehensive range of actions and policy
initiatives the Administration is carrying out across the globe as part of our strategic
competition. Rather, this report focuses on the implementation of the NSS as it applies most
directly to the PRC.

Challenges

The PRC today poses numerous challenges to United States national interests.

1. Economic Challenges

Beijing’s poor record of following through on economic reform commitments and its
extensive use of state-driven protectionist policies and practices harm United States
companies and workers, distort global markets, violate international norms, and pollute the
environment. When the PRC acceded to the World Trade Organization (WTO) in 2001,
Beijing agreed to embrace the WTO’s open market-oriented approach and embed these
principles in its trading system and institutions. WTO members expected China to continue
on its path of economic reform and transform itself into a market-oriented economy and
trade regime.

These hopes were not realized. Beijing did not internalize the norms and practices of
competition-based trade and investment, and instead exploited the benefits of WTO
membership to become the world’s largest exporter, while systematically protecting its
domestic markets. Beijing’s economic policies have led to massive industrial overcapacity
that distorts global prices and allows China to expand global market share at the expense of

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competitors operating without the unfair advantages that Beijing provides to its firms. The
PRC retains its non-market economic structure and state-led, mercantilist approach to trade
and investment. Political reforms have likewise atrophied and gone into reverse, and
distinctions between the government and the party are eroding. General Secretary Xi’s
decision to remove presidential term limits, effectively extending his tenure indefinitely,
epitomized these trends.

In his 2018 Findings of the Investigation into China’s Acts, Policies, and Practices Related to
Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act
of 1974, the United States Trade Representative (USTR) determined that numerous acts,
policies, and practices of the PRC government were unreasonable or discriminatory, and
burden or restrict United States commerce. Based on a rigorous investigation, USTR found
that the PRC: (1) requires or pressures United States companies to transfer their technology
to Chinese entities; (2) places substantial restrictions on United States companies’ ability to
license their technology on market terms; (3) directs and unfairly facilitates acquisition of
United States companies and assets by domestic firms to obtain cutting edge technologies;
and (4) conducts and supports unauthorized cyber intrusions into United States companies’
networks to access sensitive information and trade secrets.

The list of Beijing’s commitments to cease its predatory economic practices is littered with
broken and empty promises. In 2015, Beijing promised that it would stop government-
directed cyber-enabled theft of trade secrets for commercial gain, reiterating that same
promise in 2017 and 2018. Later in 2018, the United States and a dozen other countries
attributed global computer intrusion campaigns, targeting intellectual property and
confidential business information, to operators affiliated with the PRC’s Ministry of State
Security – a contravention of Beijing’s 2015 commitment. Since the 1980s, Beijing has signed
multiple international agreements to protect intellectual property. Despite this, more than
63 percent of the world’s counterfeits originate in China, inflicting hundreds of billions of
dollars of damage on legitimate businesses around the world.

While Beijing acknowledges that China is now a “mature economy,” the PRC continues to
argue in its dealings with international bodies, including the WTO, that it is still a “developing
country.” Despite being the top importer of high technology products and ranking second
only to the United States in terms of gross domestic product, defense spending, and outward
investment, China self-designates as a developing country to justify policies and practices
that systematically distort multiple sectors globally, harming the United States and other
countries.

One Belt One Road (OBOR) is Beijing’s umbrella term to describe a variety of initiatives,
many of which appear designed to reshape international norms, standards, and networks to
advance Beijing’s global interests and vision, while also serving China’s domestic economic
requirements. Through OBOR and other initiatives, the PRC is expanding the use of Chinese
industrial standards in key technology sectors, part of an effort to strengthen its own
companies’ position in the global marketplace at the expense of non-Chinese firms. Projects
that Beijing has labeled OBOR include: transportation, information and communications
technology and energy infrastructure; industrial parks; media collaboration; science and

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technology exchanges; programs on culture and religion; and even military and security
cooperation. Beijing is also seeking to arbitrate OBOR-related commercial disputes through
its own specialized courts, which answer to the CCP. The United States welcomes
contributions by China to sustainable, high-quality development that accords with
international best practices, but OBOR projects frequently operate well outside of these
standards and are characterized by poor quality, corruption, environmental degradation, a
lack of public oversight or community involvement, opaque loans, and contracts generating
or exacerbating governance and fiscal problems in host nations.

Given Beijing’s increasing use of economic leverage to extract political concessions from or
exact retribution against other countries, the United States judges that Beijing will attempt
to convert OBOR projects into undue political influence and military access. Beijing uses a
combination of threat and inducement to pressure governments, elites, corporations, think
tanks, and others – often in an opaque manner – to toe the CCP line and censor free
expression. Beijing has restricted trade and tourism with Australia, Canada, South Korea,
Japan, Norway, the Philippines, and others, and has detained Canadian citizens, in an effort
to interfere in these countries’ internal political and judicial processes. After the Dalai Lama
visited Mongolia in 2016, the PRC government imposed new tariffs on land-locked
Mongolia’s mineral exports passing through China, temporarily paralyzing Mongolia’s
economy.

Beijing seeks global recognition for its environmental efforts and claims to promote “green
development.” China, however, has been the world’s largest greenhouse gas emitter by a
wide margin for more than a decade. Beijing has put forward vague and unenforceable
emissions reduction commitments that allow China’s emissions to keep growing until
“around 2030.” China’s planned growing emissions will outweigh the reductions from the
rest of the world combined. Chinese firms also export polluting coal-fired power plants to
developing countries by the hundreds. The PRC is also the world’s largest source of marine
plastic pollution, discharging over 3.5 million metric tons into the ocean each year. The PRC
ranks first in the world for illegal, unreported, and unregulated fishing in coastal nations’
waters around the world, threatening local economies and harming the marine environment.
Chinese leaders’ unwillingness to rein in these globally harmful practices does not match
their rhetorical promises of environmental stewardship.

2. Challenges to Our Values

The CCP promotes globally a value proposition that challenges the bedrock American belief
in the unalienable right of every person to life, liberty, and the pursuit of happiness. Under
the current generation of leadership, the CCP has accelerated its efforts to portray its
governance system as functioning better than those of what it refers to as “developed,
western countries.” Beijing is clear that it sees itself as engaged in an ideological competition
with the West. In 2013, General Secretary Xi called on the CCP to prepare for a “long-term
period of cooperation and conflict” between two competing systems and declared that
“capitalism is bound to die out and socialism is bound to win.”

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The CCP aims to make China a “global leader in terms of comprehensive national power and
international influence,” as General Secretary Xi expressed in 2017, by strengthening what
it refers to as “the system of socialism with Chinese characteristics.” This system is rooted
in Beijing’s interpretation of Marxist-Leninist ideology and combines a nationalistic, single-
party dictatorship; a state-directed economy; deployment of science and technology in the
service of the state; and the subordination of individual rights to serve CCP ends. This runs
counter to principles shared by the United States and many likeminded countries of
representative government, free enterprise, and the inherent dignity and worth of every
individual.

Internationally, the CCP promotes General Secretary Xi’s vision for global governance under
the banner of “building a community of common destiny for mankind.” Beijing’s efforts to
compel ideological conformity at home, however, present an unsettling picture of what a
CCP-led “community” looks like in practice: (1) an anticorruption campaign that has purged
political opposition; (2) unjust prosecutions of bloggers, activists, and lawyers;
(3) algorithmically determined arrests of ethnic and religious minorities; (4) stringent
controls over and censorship of information, media, universities, businesses, and
non-governmental organizations; (5) surveillance and social credit scoring of citizens,
corporations, and organizations; and (6) and arbitrary detention, torture, and abuse of
people perceived to be dissidents. In a stark example of domestic conformity, local officials
publicized a book burning event at a community library to demonstrate their ideological
alignment to “Xi Jinping Thought.”

One disastrous outgrowth of such an approach to governance is Beijing’s policies in Xinjiang,
where since 2017, authorities have detained more than a million Uighurs and members of
other ethnic and religious minority groups in indoctrination camps, where many endure
forced labor, ideological indoctrination, and physical and psychological abuse. Outside these
camps, the regime has instituted a police state employing emerging technologies such as
artificial intelligence and biogenetics to monitor ethnic minorities’ activities to ensure
allegiance to the CCP. Widespread religious persecution – of Christians, Tibetan Buddhists,
Muslims, and members of Falun Gong – includes the demolition and desecration of places of
worship, arrests of peaceful believers, forced renunciations of faith, and prohibitions on
raising children in traditions of faith.

The CCP’s campaign to compel ideological conformity does not stop at China’s b s. In
recent years, Beijing has intervened in sovereign nations’ internal affairs to engineer consent
for its policies. PRC authorities have attempted to extend CCP influence over discourse and
behavior around the world, with recent examples including companies and sports teams in
the United States and the United Kingdom and politicians in Australia and Europe. PRC
actors are exporting the tools of the CCP’s techno-authoritarian model to countries around
the world, enabling authoritarian states to exert control over their citizens and surveil
opposition, training foreign partners in propaganda and censorship techniques, and using
bulk data collection to shape public sentiment.

China’s party-state controls the world’s most heavily resourced set of propaganda tools.
Beijing communicates its narrative through state-run television, print, radio, and online

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organizations whose presence is proliferating in the United States and around the world.
The CCP often conceals its investments in foreign media entities. In 2015, China Radio
International was revealed to control 33 radio stations in 14 countries via shell entities, and
to subsidize multiple intermediaries through providing free, pro-Beijing content.

Beyond the media, the CCP uses a range of actors to advance its interests in the United States
and other open democracies. CCP United Front organizations and agents target businesses,
universities, think tanks, scholars, journalists, and local, state, and Federal officials in the
United States and around the world, attempting to influence discourse and restrict external
influence inside the PRC.

Beijing regularly attempts to compel or persuade Chinese nationals and others to undertake
a range of malign behaviors that threaten United States national and economic security, and
undermine academic freedom and the integrity of the United States research and
development enterprise. These behaviors include misappropriation of technology and
intellectual property, failure to appropriately disclose relationships with foreign
government sponsored entities, breaches of contract and confidentiality, and manipulation
of processes for fair and merit-based allocation of Federal research and development
funding. Beijing also attempts to compel Chinese nationals to report on and threaten fellow
Chinese students, protest against events that run counter to Beijing’s political narrative, and
otherwise restrict the academic freedom that is the hallmark and strength of the American
education system.

PRC media entities, journalists, academics, and diplomats are free to operate in the
United States, but Beijing denies reciprocal access to American counterpart institutions and
officials. The PRC government routinely denies United States officials, including the
United States Ambassador to the PRC, access to Department of State-funded American
Cultural Centers, which are hosted in Chinese universities to share American culture with
the Chinese people. Foreign reporters working in the PRC often face harassment and
intimidation.

3. Security Challenges

As China has grown in strength, so has the willingness and capacity of the CCP to employ
intimidation and coercion in its attempts to eliminate perceived threats to its interests and
advance its strategic objectives globally. Beijing’s actions belie Chinese leaders’
proclamations that they oppose the threat or use of force, do not intervene in other countries’
internal affairs, or are committed to resolving disputes through peaceful dialogue. Beijing
contradicts its rhetoric and flouts its commitments to its neighbors by engaging in
provocative and coercive military and paramilitary activities in the Yellow Sea, the East and
South China Seas, the Taiwan Strait, and Sino-Indian b areas.

In May 2019, the Department of Defense issued its annual report to the Congress, Military
and Security Developments Involving the PRC, assessing current and future trajectories of
China’s military-technological development, security and military strategies, and People’s
Liberation Army (PLA) organizational and operational concepts. In July 2019, the PRC

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Minister of Defense publicly acknowledged that OBOR is linked to the PRC’s aspirational
expansion of PLA presence overseas, including locations such as the Pacific Islands and the
Caribbean.

Beijing’s military buildup threatens United States and allied national security interests and
poses complex challenges for global commerce and supply chains. Beijing’s Military-Civil
Fusion (MCF) strategy gives the PLA unfettered access into civil entities developing and
acquiring advanced technologies, including state-owned and private firms, universities, and
research programs. Through non-transparent MCF linkages, United States and other foreign
companies are unwittingly feeding dual-use technologies into PRC military research and
development programs, strengthening the CCP’s coercive ability to suppress domestic
opposition and threaten foreign countries, including United States allies and partners.

The PRC’s attempts to dominate the global information and communications technology
industry through unfair practices is reflected in discriminatory regulations like the PRC
National Cyber Security Law, which requires companies to comply with Chinese data
localization measures that enable CCP access to foreign data. Other PRC laws compel
companies like Huawei and ZTE to cooperate with Chinese security services, even when they
do business abroad, creating security vulnerabilities for foreign countries and enterprises
utilizing Chinese vendors’ equipment and services.

Beijing refuses to honor its commitment to provide travel documents for Chinese citizens
with s of removal from the United States in a timely and consistent manner, effectively
blocking their removals from our country and creating security risks for American
communities. In addition, the PRC’s violations of our bilateral consular treaty puts
United States citizens at risk in China, with many Americans detrimentally affected by the
PRC government’s coercive exit bans and wrongful detentions.

Approach

The NSS demands that the United States “rethink the policies of the past two decades –
policies based on the assumption that engagement with rivals and their inclusion in
international institutions and global commerce would turn them into benign actors and
trustworthy partners. For the most part, this premise turned out to be false. Rival actors use
propaganda and other means to try to discredit democracy. They advance anti-Western
views and spread false information to create divisions among ourselves, our allies, and our
partners.”

Guided by a return to principled realism, the United States is responding to the CCP’s direct
challenge by acknowledging that we are in a strategic competition and protecting our
interests appropriately. The principles of the United States’ approach to China are
articulated both in the NSS and our vision for the Indo-Pacific region – sovereignty, freedom,
openness, rule of law, fairness, and reciprocity. United States-China relations do not
determine our Indo-Pacific strategy, but rather fall within that strategy and the overarching

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NSS. By the same token, our vision of a free and open Indo-Pacific region does not exclude
China.

The United States holds the PRC government to the same standards and principles that apply
to all nations. We believe this is the treatment that the people of China want and deserve
from their own government and from the international community. Given the strategic
choices China’s leadership is making, the United States now acknowledges and accepts the
relationship with the PRC as the CCP has always framed it internally: one of great power
competition.

United States policies are not premised on an attempt to change the PRC’s domestic
governance model, nor do they make concessions to the CCP’s narratives of exceptionalism
and victimhood. Rather, United States policies are designed to protect our interests and
empower our institutions to withstand the CCP’s malign behavior and collateral damage
from the PRC’s internal governance problems. Whether the PRC eventually converges with
the principles of the free and open can only be determined by the Chinese people
themselves. We recognize that Beijing, not Washington, has agency over and responsibility
for the PRC government’s actions.

The United States rejects CCP attempts at false equivalency between rule of law and rule by
law; between counterterrorism and oppression; between representative governance and
autocracy; and between market-based competition and state-directed mercantilism. The
United States will continue to challenge Beijing’s propaganda and false narratives that
distort the truth and attempt to demean American values and ideals.

Similarly, the United States does not and will not accommodate Beijing’s actions that weaken
a free, open, and rules-based international . We will continue to refute the CCP’s
narrative that the United States is in strategic retreat or will shirk our international security
commitments. The United States will work with our robust network of allies and like-
minded partners to resist attacks on our shared norms and values, within our own
governance institutions, around the world, and in international organizations.

The American people’s generous contributions to China’s development are a matter of
historical record – just as the Chinese people’s remarkable accomplishments in the era of
Reform and Opening are undeniable. However, the negative trend lines of Beijing’s policies
and practices threaten the legacy of the Chinese people and their future position in the world.

Beijing has repeatedly demonstrated that it does not offer compromises in response to
American displays of goodwill, and that its actions are not constrained by its prior
commitments to respect our interests. As such, the United States responds to the PRC’s
actions rather than its stated commitments. Moreover, we do not cater to Beijing’s demands
to create a proper “atmosphere” or “conditions” for dialogue.

Likewise, the United States sees no value in engaging with Beijing for symbolism and
pageantry; we instead demand tangible results and constructive outcomes. We acknowledge
and respond in kind to Beijing’s transactional approach with timely incentives and costs, or

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credible threats thereof. When quiet diplomacy proves futile, the United States will increase
public pressure on the PRC government and take action to protect United States interests by
leveraging proportional costs when necessary.

The PRC government has fallen short of its commitments in many areas including: trade and
investment; freedoms of expression and belief; political interference; freedoms of navigation
and overflight; cyber and other types of espionage and theft; weapons proliferation;
environmental protection; and global health. Agreements with Beijing must include
stringent verification and enforcement mechanisms.

We speak candidly with the Chinese people and expect honesty from PRC leaders. In matters
of diplomacy, the United States responds appropriately to the CCP’s insincere or vague
threats, and stands up alongside our allies and partners to resist coercion. Through our
continuous and frank engagement, the United States welcomes cooperation by China to
expand and work toward shared objectives in ways that benefit the peace, stability, and
prosperity of the world. Our approach does not exclude the PRC. The United States stands
ready to welcome China’s positive contributions.

As the above tenets of our approach imply, competition necessarily includes engagement
with the PRC, but our engagements are selective and results-oriented, with each advancing
our national interests. We engage with the PRC to negotiate and enforce commitments to
ensure fairness and reciprocity; clarify Beijing’s intentions to avoid misunderstanding; and
resolve disputes to prevent escalation. The United States is committed to maintaining open
channels of communication with the PRC to reduce risks and manage crises. We expect the
PRC to also keep these channels open and responsive.

Implementation

In accordance with the President’s NSS, the political, economic, and security policies outlined
in this report seek to protect the American people and homeland, promote American
prosperity, preserve peace through strength, and advance a free and open vision abroad.
During the first 3 years of the Administration, the United States has taken significant steps
in implementing this strategy as it applies to China.

1. Protect the American People, the Homeland, and the …