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Total Competition: The China Challenge in the South China Sea

Total Competition: The China Challenge in the South China Sea
(Dr. Patrick M. Cronin, January 16, 2020)

About the speaker

Patrick M. Cronin is the Asia-Pacific Security Chair at Hudson Institute. Dr. Cronin’s research program analyzes the challenges and opportunities confronting the United States in the Indo-Pacific region, including China’s total competition campaign, the future of the Korean peninsula, and strengthening U.S. alliances and partnerships. Dr. Cronin was previously senior advisor and senior director of the Asia-Pacific Security Program at the Center for a New American Security (CNAS), and before that, senior director of the Institute for National Strategic Studies (INSS) at the National Defense University, where he simultaneously oversaw the Center for the Study of Chinese Military Affairs.

Dr. Cronin has a rich and diverse background in both Asian-Pacific security and U.S. defense, and foreign and development policy. Prior to leading INSS, Dr. Cronin served as the director of studies at the London-based International Institute for Strategic Studies (IISS). At IISS, he also served as editor of the Adelphi Papers and as the executive director of the Armed Conflict Database. Before joining IISS, Dr. Cronin was senior vice president and director of research at the Center for Strategic and International Studies (CSIS).

In 2001, Dr. Cronin was confirmed by the United States Senate to the third-ranking position at the U.S. Agency for International Development (USAID). While serving as Assistant Administrator for Policy and Program Coordination, Dr. Cronin also led the interagency task force that helped design the Millennium Challenge Corporation (MCC).

From 1998 until 2001, Dr. Cronin served as director of research at the U.S. Institute of Peace. Prior to that, he spent seven years at the National Defense University, first arriving at INSS in 1990 as a senior research professor covering Asian and long-range security issues. He was the founding executive editor of Joint Force Quarterly, and subsequently became both deputy director and director of research at the Institute. He received the Army’s Meritorious Civilian Service Award upon his departure from NDU in 1997.

He has also been a senior analyst at the Center for Naval Analyses, a U.S. Naval Reserve intelligence officer, and an analyst with the Congressional Research Service and SRI International. He was associate editor of Strategic Review and worked as an undergraduate at the Miami Herald and the Fort Lauderdale News.

Dr. Cronin has taught at Georgetown University’s Security Studies Program, Johns Hopkins University’s Paul H. Nitze School of Advanced International Studies (SAIS), and the University of Virginia’s Woodrow Wilson Department of Government.

He read international relations at St. Antony’s College, University of Oxford, where he received both his M.Phil. and D.Phil. degrees, and graduated with high honors from the University of Florida. He regularly publishes essays in leading publications and frequently conducts television and radio interviews.

Transcript

Robert R. Reilly:

We are delighted to have as our speaker tonight a very distinguished person who has experience in government at a very senior level and who has an extensive experience in the academic and scholarly world and that is Dr. Patrick Cronin who is currently the Asia-Pacific Security Chair at the Hudson Institute. There his research program analyzes China’s total competition campaign, the future of the Korean peninsula, strengthening U.S. partnerships, and other lyrical subjects.

The resume is extensive. I will just say that a while back he was Senior Director of the Institute for National Strategic Studies at the National Defense University where he simultaneously oversaw the Center for the Study of Chinese Military Affairs. It was when Patrick was in that position that I first had the pleasure of making his acquaintance. He also served as Director of Studies at the London-based International Institute of Strategic Studies. Dr. Cronin was confirmed by the U.S. Senate to serve in the third-ranking position in the U.S. Agency for International Development. He spent seven years at the National Defense University and received the Army’s Meritorious Civilian Service Award on his departure from NDU. He is a U.S. Naval Reserve Intelligence Officer.

He has been a senior analyst at the Center for Naval Analysis and he has taught everywhere; Georgetown University, Johns Hopkins SAIS, and the University of Virginia. His own advanced degrees are from the University of Oxford. Tonight he is going to address us on the topic of Total Competition: The China Challenge in the South China Sea. Please join me in welcoming Dr. Patrick Cronin.

Dr. Patrick M. Cronin:

Introduction

Thank you for that welcome. It is a great privilege to be here, especially at the Westminster Institute, which is not only an organization that stands for dignity and freedom, but the name embodies the Westminster system of governance, and for me it is all about our own democratic system, our republic and the challenges we face from authoritarian institutions around the world that really drive a lot of the work I am doing.

The one thing that is different about my current position at Hudson – by the way I moved here a year ago to Hudson Institute to take up an endowed chair, so while I have done many things and I am constantly learning and trying to be ever on the lookout for new ideas, I now get to determine my own agenda. So it is a very nice, full-time position, but I am kept very busy by my wife who is producing lots of books right now, so I have to keep up with her and I now have a little more latitude to do that.

The Challenge

Now tonight I am going to talk about what I think is the most consequential at least state challenge that the United States faces, the People’s Republic of China. The Chinese Communist Party or the CCP, especially under Xi Jinping, is waging a long term struggle for preeminence across the Indo-Pacific if not globally. And before detailing what I call total competition – and this is a report that is online at both Hudson and the Center for a New American Security published this report that I did with Ryan Neuhard because I had won a grant before I walked out the door at CNS and so we agreed CNS would publish the report and I would write it.

First, I want to set some strategic contexts about U.S. policy very broadly. The 2017 National Security Strategy of the Trump administration – and I am not here to make any political sort of statements – but just to set it in [terms of] current policy, it talked about four states, two major powers and two regional powers are seeking to revise the rules-based system, r, the international order largely. Those two major powers are of course China and Russia and the two regional powers you all know are Iran and North Korea. And they keep recurring over and over. This is hardly news, but it is a reminder that these four are all driven by their own independent agendas and yet they have a couple of things in common in terms of what they are trying to achieve. One of them is that they all in their own way are trying to eclipse U.S. power, trying to dismantle the U.S. global alliance network. They may be doing that regionally, but they are chipping away at it.

Secondly, they are all trying to change the status quo without triggering a major military response and so the approaches of these revisionist powers hearken back to the immediate post-World War II period. George Kennan, the first Director of Policy Planning at the State Department, writing a top secret memorandum about the Soviet threat and describing it as political warfare, harnessing all the instruments of power short of war. That was how Kennan talked about political warfare. Well, today these four revisionist states are pursuing their own variations of political warfare, and I want to talk to you about especially the Chinese variant of that and especially as we apply it to a particular flashpoint in terms of the South China Sea because it does vary from region to region, whether you are talking about what the Chinese are doing in the Arctic or in Africa or in the South China Sea. It does differ even if there are similarities about their global approach as well.

Now all four revisionist powers are trying to avoid direct military confrontation with the United States and our allies, but there is one clear distinction among these challenges. North Korea under Kim Jong-Un – remember he only rose to power at the end of 2011 – and China under Xi Jinping have refrained from lethal uses of force against the United States and our allies and partners. That is in contrast to Russia under Putin and Iran of course under the Supreme Leader Ayatollah Khamenei, who resorted to deadly, proxy, and covert conflicts.

The drone strike on Iranian General Qassem Soleimani was among other things in this very narrow respect an attempt by the United States to try to counter Iran’s hybrid warfare, and you saw many people talk about restoring deterrence, General Petraeus for instance, well essentially trying to restore the level at which Iran in this case would pursue lethal warfare, lethal means as part of their greater political warfare strategy for influence in the region. Whether that ends up being beneficial or not we will let time tell, but needless to say I do not think the Iranian regime is changing quickly or about to defer from its preference for hybrid warfare, for essentially covert, proxy warfare. That is the way Iran wants to fight a war. They do not want to fight a direct missile war as we saw those ballistic missiles.

This is even more true of China, and as we talk about China in our new report, we are dealing with a regime under Xi Jinping who does not have the political questions being asked about his power. Yes, they are being asked in private, but he commands all the power that he can have as much as anybody since Mao, and he is unstinting in terms of his party’s direction and the strategy they want to take China, in the direction of the China Dream.

So this new report, Total Competition: The China Challenge in the South China Sea, attempts to put Beijing’s variant of political warfare as it applies to this regional zone of potential conflict, the South China Sea and the Greater Southeast Asia. I will connect this globally but the point is as you think about Southeast Asia and the South China Sea deeply, this broad strategy is what emerged. I spent a lot of time looking at this. I have been many times to the region and all over every country in the region. I am not going to get into the details of all of those countries, although I am happy to talk about them later.

I am going to keep this at the general level about the broad, integrated strategy that China is pursuing under the Chinese Communist Party. It is total competition in contrast in part to the idea of total warfare, and it is instead of political warfare because all wars have to have a political objective and this is not warfare, this is still short of force as Kennan would have used political warfare. So that is why total competition is the title that we use this to refer to because it has more in common with what the former National Security Adviser, my friend HR McMaster, calls co-option, coercion, and concealment than it does say our Defense Department’s focus on under General Mattis, under Secretary Mattis, the word lethality. We need more lethal forces, but at the same time if lethality is all you are focused on, you are missing a whole lot about the strategy of dealing with the indirect approaches that are coming from these revisionist powers and especially China.

Economic Power

Total competition comprises five dimensions. It may comprise more, but these are the five that are central as I think about especially the South China Sea and Southeast Asia. The first is economic power. Economic power is the overriding objective of the Chinese Communist Party, so unless we get that right, unless we start and understand that is where they are starting from, that is what they mainly are being driven by, it is easy to get other aspects of this wrong. It is the justification for why they have to build everything and invest so much in activities and diplomacy to control lines of communication all the way to Africa and up to Europe, but certainly through the region and in Southeast Asia and around the South China Sea.It is seen in the Belt and Road Initiative, which has become almost a brand name for Chinese infrastructure, financing, and investment because it is enticing leaders to prioritize financial ties with Beijing over their own sovereignty and security issues. And if you can co-opt the elite in many countries, that is all you need to convince. Cambodia is a good case of this in Southeast Asia.

Economic power is predicated in the Chinese case on achieving preeminence in leading edge technologies, and it is in this very decade now that we have started the 2020s that China hopes to become the world leader not just in artificial intelligence, but in their ten-year plan that they made in 2015, the so-called Made in China 2025 plan, they plan by the middle of this decade to be leading, and competing, and out pacing the United States in quantum computing. In a number of critical technologies that are information-centric – as I will talk about in a minute – and that have dual use, so it is not just going to get China potentially the economic preeminence they are after, it is going to open up the possibility for security primacy.

Now it does not mean it is automatic. I am not saying these things are automatic. It is not just a strategy, but unfortunately as your capabilities grow and your interests grow, you may change your objectives as well, so intentions can change.

This leading edge technology is sort of at the heart of the economic plan for China and you see this in something such as China’s so-called military-civilian fusion, which underscores the point that much of what the economics and the military programs of China are integrated in ways that we can only dream about in the inter-agency in the United States. It does not mean they do not have bureaucratic politics. It does not mean they do not have corruption. They have all of those things, but compared to the United States – and that is really all you have to compare it to because that is their strategy. It is focused on us. It is focused on the United States. We do not have just a China strategy. We have many strategies. They have a U.S. strategy and this economic preeminence is the first facet, and when you see it in Southeast Asia, it gives them a huge advantage. They have the interior lines of communication. They are much closer to Southeast Asia physically and geographically than we are.

Lawfare

Now, this is being backed up by some other dimensions of this total competition campaign. The next one I would mention in the South China Sea context in particular is the legal power, which is what they would call – or we call for the Chinese – lawfare because it is not always just what is legal, it is how you use the law and legal thinking to your political advantage and your strategic advantage, and China is extraordinarily capable at this or at least they spend a lot of effort on it.

China’s assertiveness in the South China Sea from our perspective is often unlawful, starting with things like the expansive Nine-Dash Line claim, which Chinese believe gives them historic rights over up to 90% of the South China Sea. Other claimant states – Vietnam, Philippines, Malaysia, Brunei, but also Indonesia which is caught up in this – are seen as much less relevant from a Chinese perspective and they are pushed around both physically and legally through lawfare. And yet, the Chinese are very sanctimonious when comes to the United States Senate not ratifying the United Nations Convention on the Law of the Sea, which is essentially a constitution for the oceans as it has been called. But the United States actually follows UNCLOS as a matter of customary law. The Chinese meanwhile have ratified UNCLOS, but they do not follow it. So which one is following international law? Which one is following the rules?

You can see this in the 2016 Permanent Court of Arbitration out of The Hague. It was a milestone case, the Philippines versus China. The Philippines was forced to pursue this case after China muscled their way into Scarborough Shoal in the Philippine Exclusive Economic Zone (EEZ) and the Philippines was too small to take the Chinese on otherwise, so they took a legal risk. And in 2016, four years later, the tribunal ruled and basically sided almost completely with the Philippines in among other things saying that the Nine Dash Line claim that China used as part of these historic rights has no basis, no standing in contemporary international law;  it is illegal. And this is clear, but unfortunately, if you can co-opt the new president who moves into Manila, Rodrigo Duterte, you can maybe downplay that Permanent Court of Arbitration ruling.

Now, it is not just the legal things that China is doing. They are spending a lot of effort in Southeast Asia on this legalism. They do it globally in other ways on other issues from world trade to nuclear weapons to space.

There has been a longstanding effort ever since the 1990s when the Philippines ran into problems with the Chinese in Mischief Reef to try to create a Code of Conduct for how the parties of the South China Sea, how the states would behave in this maritime theater. For the last eighteen years they have made very little tangible progress on creating this. The Chinese now say they want to finish this by next year [or] maybe this year. With Vietnam in the chair they are hoping to coerce the toughest, most nationalistic country in Southeast Asia in many ways, Vietnam, to buy into their plan. The Chinese lawfare here is they want a quid pro quo. They want these countries to essentially accept that Chinese will be able to control the decisions on military exercises that the Philippines or Vietnam undertake or they can control the resource exploitation of the South China Sea. Essentially, it is my way or the highway in terms of the rules of the road. This is another way that they are using lawfare.

A third dimension of total competition is something that I think does not get enough attention because it is really difficult to talk about in a democracy and it is difficult to talk to a broad civilian audience outside a narrow military one or maybe intelligence, and that is the psychological dimension of China’s policy. It sounds sinister and it is sinister to be honest because there are a lot of people in China who will watch this in the Ministry of State Security and elsewhere – hello – who will be looking for planting messages in between the ears of officials around the world and publics and people who influence the public. You can see this in the military context in China in the People’s Liberation Army’s so-called Three Warfares concept, which includes lawfare, which I talked about. It includes information warfare, which I will talk about a little bit more, and it includes psychological warfare.

But unlike our military PsyOps, it does not stop with the military or the intelligence. It continues throughout the whole of government in China. So the Foreign Ministry – especially the Foreign Ministry, my goodness – the Foreign Ministry and the state-owned media are in lock step on propagating a pugnacious, unified message. That is not too hard a statement. I could be much harsher on them. I am going to read this everyday and it is just remarkable; no deviation, such propaganda, but propaganda with a psychological message most of the time. That is the difference. So it is not one-off, it is not listening to pundits on television here in Washington who you know throw out a line or spin. This is real, psychological operations. We will hammer away at this until they change their mind, beat them down, divide them, whatever the objective is it is driven.

The Chinese Communist Party has institutionalized psychological operations from the beginning of the Communist Party. This is in their DNA as a communist party, not as a Chinese people but as a party this is in their DNA. This is what they do and that is why because it is not in our democracy, in our democratic systems. We do not do it and we do not usually understand it except for the narrow slivers of government that may be assigned the task of thinking about it.

So China weaponizes everything from rare-earths to tourism to bananas to shape a story-line, to shape a narrative, to enforce censorship abroad. The United Front Work Department plays with the minds especially of overseas Chinese. So that is why overseas Chinese in Australia can be shouted down in their own university classroom if they stand up for something like Hong Kong and the Hong Kong protests or if they talk about the Uyghurs. The Chinese go after them and they put enormous pressure on them. Through these and other means the CCP manufactures a fictional strategic narrative about China; messages like China’s rise is inexorable, America’s decline is inevitable. China preserves the rules-based system and Washington threatens the rules-based system.

China is handing out win-win propositions to regional elites: if only they accept connectivity to Beijing on its terms and forego alliances and partnerships, and that is the psychological messaging that is coming through consistent, unitary messages from the ambassador here in Washington to their ambassadors around the world to their foreign minister to every state newspaper, every state organ in China, and to their professors, their university professors even when they are independent, they are being fed the same talking points. They put their own personal spin on them, but it is the same psychological message.

Now, military power is the fourth dimension, and the reason I put it fourth is to emphasize how it is not the first dimension. This is not first and foremost a military confrontation at this point with the PLA and with China. That is too narrow a way to think about this. We may come to blows in a skirmish or a war, but that is not what they are doing, that is not their strategy. Their strategy is again to win without fighting. And so the military power of the PLA resides very much in support of the party, the communist party, and within this comprehensive framework of total competition in which economic polices like the Belt and Road are meant to expand the maneuvering room.

Indeed, Wang Jisi, the top American expert at Peking University. He helped create the Belt and Road Initiative when Xi Jinping went to Kazakhstan and went to Indonesia to set this up with major financial backing behind it to create this broad playing field, this maneuver room for Chinese policy. So that they were not just hemmed in by Taiwan anymore or some other local issue, so that was a breakout strategy for them. When we think about maneuver in the military context in the United States, we are thinking usually very tactically on a battlefield. But here you have got the Weiqi, the Go game board here with this positioning going everywhere. in this case though, making sure that they can ultimately prevail and troll the South China Sea so that they can deny the United States Navy military access to shift the balance of power against them in any way.

So they are trying to create a defense force that can nullify America’s power projection capability. That is what they have been heavily focused on for years, especially since the mid-1990s when we sailed two aircraft carriers around Taiwan in support of Taiwan after China was rattling the sabers and launching missiles to intimidate Taiwan in their election. And it goes back to even five years earlier when I went to Beijing and talked to my friends in the PLA, they were very eager to learn about our First Gulf War success, especially this precision-guided munitions regime that we seem to instantly win the war against Iraq. And lo and behold, what do the PLA build? Well, they built a precision-guided munitions regime to mirror that, and after the Taiwan episode of the mid-1990s they started building a cruise missile ballistic and missile shield in what is referred to by the Americans as an anti-access area denial strategy.

So essentially if they can reach out to a thousand miles or two thousand miles with these missiles, you put at risk with a single missile an entire aircraft carrier. You make it very risky for the United States to be able to move in the way you can see how the risk in the Persian Gulf applies to U.S. high value targets ships and so a lot of those exercises that the United States runs even though the 5th Fleet is in Bahrain are run outside of the Gulf. So you have some distance. Well, China would love to move us not just outside of the first island chain, the Philippines, out of the second island chain, beyond Guam all the way back to the United States, the continental United States even, and that is their plan for this military.

So in the South China Sea they are leveraging not just the navy, it is not just grey hull naval assets, it is what Andrew Erickson and other specialists have talked about, the three navies that China employs. Famously, they use the White Hulls, they use the Coast Guard, they use law enforcement ships. It is the biggest and best armed coast guard in the world. They are destroyer-sized, so these are basically white hull destroyers pushing around very small navies in the South China Sea. Who do you think wins that competition? Why do you think the Philippines went to the Permanent Court of Arbitration to try to challenge the Chinese?

And then, they do not just stop there. The Chinese have militarized a maritime militia in fishing fleets, so they are actually the vanguard of what they call a cabbage strategy or echelon strategy. So in the Philippines this last year around Little Thitu Island you have got the maritime militia swarming, 113 ships at one point. As the Filipinos were trying to repair the base that they have on that little island. It is a little bit intimidating, but those maritime militia were backed by coast guard, and then further back by the PLA Navy, and of course the missile forces on land and beyond as a threat. So the point was we do not even need to send you a message, clearly you know what we have, do not run afoul of Beijing’s wishes, and that is how they are operating there.

But it is the A2/AD capabilities, these missile capabilities, that they really hope – these are the df21d that you have heard about, that is a medium range anti-ship cruise missile that is meant to threaten our expensive naval ships, which are fewer in number than they should be. And our df26, which has been a longer range, it is an intermediate range ballistic missile, which is meant to strike hard targets like Guam, where we have U.S. territory and it is unfortunately a very vulnerable, small geographic area, no strategic depth. So this is exactly why the Chinese are trying to push us out of South Asia altogether so they can then write the real rules of the road.

Even more concerning to the sort of visible military components of China’s military modernization are the less visible, the invisible ones, and how they are harnessing these. And this is where the so-called new domains of cyber space, outer space, electro-magnetic spectrum often lump together. It can get very technical in terms of talking about the command and control or c4isr, command and control, communications, computers for intelligence, surveillance, and reconnaissance. It is basically all the communications at harbor that they are using that communicate with space or undersea or over land and being able to harness that or deny us the ability to communicate is really what these systems are focused on and they have created something called the Strategic Support Force. What an innocuous name. Who is afraid of the Strategic Support Force? Well, we should be. I am afraid of it because it is actually the integration of these new domains.

We do not do that. A good friend of mine, Andrew Burt, just wrote a piece in Time magazine saying maybe we need a Cyber Department because we do not even know who is in charge of cyber-space. Boys, that is too small. I mean we are already missing the fact that these things are being integrated by the Chinese with the deliberate focus on us as the target because they want to use artificial intelligence in this decade and beyond, quantum computing, unmanned systems, and the development of sys-lunar space between earth and the moon to dominate the information space, and they plan to do that by 2035.

So over the next ten to fifteen years they hope to really be able to knock us out in terms of psychologically deter us from being part of this region or to win a short, informationized as they call it ‘war’ if they have to, mostly to teach us a lesson, not to get into a big war that could risk going nuclear. Again, they do not want a direct military confrontation. They want to win without fighting. They want this to be a political, economic, psychological, and legal victory from their perspective.

They were doing a lot of this also: undersea and unmanned, underwater vehicles, submarines, undersea cables. The cloud that people talk about for the internet will be in space, but right now it is at the bottom of the sea. All communications that have to travel outside of a continent, so all transoceanic information, all data, 99% of it, travels on these cables. These cables are vulnerable. One was just cut off in Yemen and they lost all data.

But imagine the capabilities of a country like China that is building so many assets to work on the seabed. They are building a colony of artificial intelligence drones on the bottom of the seabed of the South China Sea among other things. You will not read much about these things because you get into very sensitive information about it and the Chinese are not very forthcoming about potential military uses of these. They are touting them as great scientific achievements for all of humanity, but not sharing that data. We can question whether that is going to be really all about humankind.

And this is on top of the military outposts that they have built on these artificial island reefs in the Spratly Islands where they have replicated these sort of c4isr architectures, this command and control architecture on several of these little islets because they are talking about information power and that is really the fifth dimension. It is really the main dimension. It is what is new for the United States and our allies and partners is that we have to understand that information is not just cyber. It is not just political warfare in terms of information operations. It is not just informationized warfare. It is all of this. It is the entire spectrum. It is big data. That is why they stole our OPM records. That is why they stole my classified records. That is why they are in your computer and my computer. That is why they want your health records. That is why they want to control the E-Payment systems and E-Commerce systems in Southeast Asia.

They would love to sell that to Vietnam. Vietnam says ‘you know what, maybe we could find another sort of provider than Huawei’, which would be a good idea, but we are going to have to find alternatives and work with others to do that because it is going into their big data databases that you can only imagine how big they are in terms of how they will use this information for the objectives of the Party. So information power is at the heart of everything they are doing. It is the holistic way as information and data have been central to what has been loosely called the Fourth Industrial Revolution. This is a revolution marked most of all by digital transformation of our economies, of our militaries, of our societies. It is changing all of our lives, we know that. It is changing how the military will operate. It is changing how the economy will operate, and right now China is poised to lead in that. They are not leading yet, but they are the ones who have caught up and have direction and money and purpose and a plan, and we, well, have got all of these things going on, and it is a challenge.

But this is what Xi’s China Dream depends on. It depends on scaling up the exploitation of information and leveraging information superiority. When you get into debates about whether the Chinese Communist Party will fall in the future or not or they will lose legitimacy, often it centers on their ability to harness information, the surveillance state, to actually use the state to their advantage – not the advantage that we thought in democracies that this kind of technology would be used for. Education: I can watch my nature program anywhere in the world, any time, it is great, but Chinese can also listen to me through my refrigerator. It is a strange twist in terms of how do you want to use this technology and the Chinese have a particular plan.

Now, we see this in the South China Sea in many ways. I am not going to go through this in too much detail. I will note that Admiral Philip Davidson, the Commander in U.S.-Pacific Command, as it has been renamed, did testify when he was first confirmed in that position that the South China Sea in all scenarios short of war could be controlled by the Chinese. So for the last two years this has been essentially declared U.S. military policy that we know the Chinese can actually control this right now.

That was in 2018. Go ahead ten or fifteen years, it is an open-and-shut case in terms of this. That is what the Chinese want everybody to believe, that they are unstoppable. I wrote this report in part because they are not unstoppable. We can stop them without war, right? We cannot stop them without political war. We cannot stop them without total competition short of war, and we need a strong military to back it up. But we can stop them on this issue, so that Taiwan can have a democratic election if they want to, and not be put out of business, and Vietnam can grow as we celebrate our 25th anniversary of normalization. The Philippines in their democracy even under Duterte can get back to their own values and continue to grow, that we can work with Indonesia, the largest country of Southeast Asia, on a bright future for strategic independence and autonomy, especially when you think about democracies like Indonesia and the Philippines, who can be leading lights for this region and transform it.

Anyway, economic power: I mentioned President Duterte, He has essentially been co-opted by Xi Jinping, who has dangled tens of billions of dollars of Belt and Road Initiative projects in front of him. And so far, as of right now in January, they have spent a couple million dollars as far as I can tell after tens of billions of dollars they promised. They built a couple of bridges that were not really significant. Most of the big projects have been stopped by the vetting because it turns out that the Chinese wanted to put a surveillance – a so-called ‘smart city’, a surveillance state apparatus – so that they could look over Taiwan. They could look over military installations. It is not a great idea it turns out, and there are other major problems with these Chinese investments because they have an ulterior motive in these investments. All development is difficult as somebody who has worked in this field, but nonetheless, they have run into problems here. Beijing wants a quid pro quo for the joint development of the energy resources around Reed Bank, where there is tremendous hydro-carbon exploitation to be had and the Chinese have stopped the Philippines from developing this.

So the Chinese are saying we know it is in your Exclusive Economic Zone. We are going to give you a great deal. We are going to let you keep maybe just more than 50% and we will develop it with you. In fact, we are the only ones with the equipment, so we will develop it for you and we will share, do not worry. And all you have to do, Manila, is just drop that legal issue, that 2016 arbitration panel. Just because the international community ruled that the Nine Dash Line was unlawful, you do not have to accept that. If you do not accept it, nobody has to accept it. It is the China rule. And that is what they are trying to do. That is the economic power. You see that right now. The E-Commerce and E-Payment that China is leading right now, my cousin spent ten years in Mindanao doing this. He has been going around working with the G20 countries on what he calls inclusive financing. It is a great idea for helping poverty alleviation.

The problem is the Chinese are exploiting it for big data. They will control the retail market throughout Southeast Asia on the backs of this E-Commerce and E-Payment system that they want Ali Baba and Tencent and other Chinese companies to run. There need to be alternatives and breaks on that. China does not have to be cut out of this. It is just that they should not have exclusive control. That is what will give autonomy and independence and confidence to Southeast Asia, not to be exclusively controlled by one power.

The lawfare issue I mentioned among other things, the Nine Dash Line, but it is around the Netuna Islands – very important islands for Indonesia. Indonesia is not a claimant state like the Philippines or Vietnam or Malaysia or Brunei (or Taiwan for that matter) in the South China Sea, but China has drawn this expansive Nine Dash Line and it cuts into the waters of the Netuna Islands, and so even this month – I mean you would think the Chinese are smarter than this, right? They want to court Jokowi as the President of Indonesia is popularly known. President Widodo, they want to court him and they have been courting him assiduously, including in the E-Commerce market, and yet they wanted to insist publicly that the Nine Dash Line was legal and was their historic right. And they got into a shouting match in the press this past month with Jokowi. Jokowi was the one who walked it back. He has to because everybody in the region in Southeast Asia has to balance trade with China with their security interests. President Widodo basically said, ‘well, there are no Chinese foreign ships in those waters right now, therefore there is not a problem’. But there is a problem and they know it.

So that is the lawfare issue, that China thinks law does not matter there, we will just say it is a historic right. The psychological operations at work with shows of force and military exercises, the propaganda I have mentioned. Foreign Minister Wang Yi has called the United States in the last couple months the ‘world’s leading troublemaker’, and they especially over our own criticism of Xinjiang, they are erasing the whole treatment of more than a million Uyghurs in Western China because they do not like the reporting. Literally, the China Daily had an editorial cartoon with a big, American elephant basically looking at Uyghurs in Xinjiang saying ‘fake news’. It is ‘just rumors, the world is listening to all of these rumors’, as though these are not facts. They are facts and the Chinese will not listen to them.

And their psychological operations; it is not clear that they are working. The protestors in Hong Kong had a voice, thank goodness. The voters in Taiwan had a voice, so actually China has taken a couple of beatings here recently. But they will be back, do not worry. They have a machine. This is the party, this is the system, and they will be working on this.

The military and maritime power in terms of what they have been doing recently: I mentioned the swarming around Pagasa Thitu Island when they were harassing fishermen around Reed Bank. They actually sank a Philippine fishing boat. They left the 22 Filipinos in the water without a working radio, so when I say this is political warfare and they have not killed anybody, they left them almost for dead. It was a Vietnamese boat that picked them up and rescued them. The Chinese got out of there. They did not care. This is within the Philippine Exclusive Economic Zone (EEZ), so this is not something close to China. This is the Philippines being pushed around by big China and being told what to do.

That is how they are using their military right now, and they are using these maritime militia ships because they are steel-hulled. Xi Jinping made sure the maritime militia had – not wooden boats – I have been on one of the Vietnamese wooden boats that was sunk back when they had the oil rig incident. These are steel hull boats that are designed to be able to ram, so they are using them like grey-hulled ships, like military ships. They had a surveying vessel in Vanguard Bank doing extensive continental shelf exploration, looking for hydrocarbons without Vietnam’s permission, which contravenes UNCLOS again. It goes against the International Law of the Sea, but this is how they are using their three navies and their military in general.

And then fifthly, information power. I think here another Philippines case comes up in Southeast Asia when you think about the South China Sea. So the Philippines lets China Telecom buy a 40% stake in a telecommunications company that is set up, Dito Telecommunity Corporation, and then last September, the Chinese lobby and successfully get Manila to agree that they can supply all of the Philippine military bases with their telecommunications hardware. This is not happening accidentally, right? This is a design, this is a plan. That is the difference between our system and what is happening there in China. They are actually deliberately doing this. That is why I am concerned about it. I would not be as concerned if this were literally just a commercial venture and there they were. No, they are doing it because this is part of that plan.

The challenge of response, very briefly, for me is to do three things. We have to counter China’s strategy, so understand this total competition strategy. Then we have to deter escalation because as we put pressure on that strategy, we saw what happened with Iran. They did not like economic sanctions and they tried to fight out of it and that escalated. There will be escalation from China perhaps, so we have to be able to deter escalation, that is deter China from thinking that they can use military force, that they can scare us or scare our allies and partners. The whole idea is not to fight the war too. We are working on the same script on that. We are nuclear powers. This is a bounded competition, so there is a good chance that officials will not escalate to a certain level. But we are going to have to be able to be aggressive on that because as you move into artificial intelligence and quantum computing, you are moving at a speed that we have never seen before in terms of information flow.

We are going to have to then adapt institutions. We are going to have to do things like political warfare. We used to do things like that, but we got out of that business, so we are going to have to – as we think about countering China’s strategy – clarify China’s strategy, make sure we understand this total competition, this political warfare or this gray zone operation broadly defined. We are going to have to integrate our policies better and that is a long haul for us, but we are going to have to start to break down the barriers and that starts early in education and training. It goes right through policy decisions at the top, and we are going to have to increase our public diplomacy broadly defined. To make the deterrence stick, we are also going to have to make sure we do not lose the ability to compete in these high technologies.

Again, the aim I see – in the South China Sea even – is not to allow the Chinese to have exclusive control. That is an easier objective than say, ‘I want America to have primacy in the South China Sea’. That is a harder objective. That is maybe an unrealistic objective from my perspective right now. So let us go for denying China exclusive control because we are then going with the stream. This is what every neighbor of China actually wants. They want autonomy. They want independence. Nobody, not even Cambodia, not even Hun Sen, really wants to be China’s stooge. He cannot help himself maybe because he needs the money and the support and he cannot get away from China, but everybody outside of China would like autonomy from it. Again, Taiwan, Hong Kong are pretty good examples.

We are going to have to preserve crisis management mechanisms and create new ones because we are going to be in close quarters with China from now on in these regions and they are going to be more contested under the sea, in space, as well as all of the normal domains, and we are going to need crisis management mechanisms with the Chinese and with our allies and partners to avoid escalation. There are risks involved, but I am trying to manage these risks at acceptable levels because again, I am counting on officials in both Beijing and Washington not wanting to see this go kinetic in a fight, for if it does, it will be a very contained war. But we have to be ready for that kind of China leap to kind of teach Americans a lesson to get them out basically. We are trying to prevent that, deter them from that.

We are going to have to be planning for contingencies. There has been a lot of contingency planning going on these days over Taiwan and issues in the South China Sea. To adapt our institutions, we have started at the State Department something called the Global Engagement Center. A few people have heard about it. It is not clear that it is yet of the kind of size that we foresaw when you think about the Chinese challenge, and it was dealing with Russia initially, mostly, so it has a long way to go to kind of stand up and be as responsive as we are going to need. We need a 24/7 response to the kind of agile, integrated political warfare machine that I am describing from China and that is not yet it even though they are doing good things on a shoestring basically.

It does go back to George Kennan again. When George Kennan wrote that top-secret memo – I looked at the resources he called for back in 1946 to deal with the Soviet political warfare challenge, which was existential. He said I need about six or eight people. So we are in a different world of course bureaucratically these days. You could not do as much back then, but he need a small group to be able to intellectually take on the ideas at the heart of the Soviet challenge because it was a battle for ideas in many ways. You got heavily militarized obviously, especially from the Korean War on, but it was still ultimately won with the battle of ideas. And this China competition is also very much not just about the technology that I am describing that we have to maintain our leadership in, but it is really about the ideas, and that is what we are trying to preserve. We are trying to make sure we do not lose our own ideals and values here.

And ultimately, and my last point here, is in addition to adapting our own institutions, it is to remember that we need to lead with our positive, problem-solving, cooperation-initiatives for others around the region and the world. They want to hear what we are going to do and be concerned about their interests. They are not going to see this as total competition. They cannot, they are too small, essentially. Most of these countries in Southeast Asia – Vietnam might be an exception strategically, Singapore is an exception to things strategically – but most of these countries do not think in those terms, and we should not impose that narrative on them, but we should certainly be bringing them along in understanding how they fit into China’s strategy, and in talking to them about how we help them on their terms and all the ways we take care of making sure we are working with the allies and partners who can do something about this China competition.

And some of them are outside of Southeast Asia; Japan, Australia, and India, France and the UK, and other partners around the world that also [can help]. You do not want to have neocolonialism, so you do not want to have just outside powers. We tried that with SEATO, an alliance that failed with the United States back in the Cold War days, but you do want to make sure that you have concentric circles of support to actually achieve the telecommunications or the transportation or the education goals that they have in Indonesia or the Philippines.

We have just had the new head of the Development Finance Corporation, which is a great innovation, head off to Vietnam and Indonesia this past week, and to go to Japan as well because leveraging Japanese development money is a big part of this. If we could try to mobilize private sector money and coordinate on major projects, we could actually make a difference. We could show the Philippines, we could show Vietnam, we could show Indonesia that we have long term interest in their development, in their staying power, and that could be the best rebuttal to China’s Belt and Road Initiative, to China’s heavy-handed political warfare. So I will stop there and I look forward to your questions and comments. Thank you very much.

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