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Chartbook Newsletter #23
Biden's China strategy: a chronology
Timelines are a handy tool in grasping the complexity of historical processes. Over the last six months I’ve been trying to keep abreast of the evolution of the Biden administration’s stance towards China. This newsletter started life as a chronological listing of news items. No such listing is innocent. Principles of selection are involved. I compiled this list out of a sense of anxiety about the widening Sino-US antagonism. Putting it together has reinforced my sense that we are witnessing a historic shift. But the limitations of such an approach are obvious. PLEASE NOTE, in this compilation I am looking only at the US side. It is just one facet of a complex process in which Beijing is an active player, as are America’s allies. Nor is this a comprehensive treatment of the American side. The attitude of American business and society are more multifaceted than presented here. But with these provisos in mind, I hope this may serve as a useful compilation for those interested in the Biden administration’s early history. More to come …
China is going to eat our lunch? The “reprogramming” of Mr Biden:
Joe Biden has come a long way on China. At the beginning of his Presidential run in May 2019 at a speech in Iowa he still adopted a blithe attitude of superiority. Invoking his years of diplomatic experience he reassured the crowd: "there’s not a “single solitary” world leader who would trade the problems the United States faces for those confronting China. “China is going to eat our lunch? Come on, man … I mean, you know, they’re not bad folks, folks. But guess what? They’re not competition for us.”
By 2020, as the campaign heated up, Biden’s soft line on China was out of tune with a growing bipartisan consensus on the need to confront China's rise. As one of his advisors would later remark to the Economist, "During the campaign Mr Biden had to be “reprogrammed” on China.”
The people who did the reprogramming were the members of the DC foreign policy “blob” that gathered around Biden. The most widely reported connection is with the WestExec consultancy set up in 2017, closely tied to the Pine Islands Private Equity firm run by John Thain, ex-CEO of Merrill Lynch. "WestExec’s founders include Antony J. Blinken, Mr. Biden’s choice to be his secretary of state, and Michèle A. Flournoy, (then) one of the leading candidates to be his defense secretary. Among others to come out of WestExec are Avril Haines, Mr. Biden’s pick to be director of national intelligence … Ely Ratner, who is helping organize the Biden transition at the Pentagon; and Jennifer Psaki, now Mr. Biden’s press secretary.
Blinken and Flournoy who anchored WestExec also served as advisers to Pine Island Capital, which raised $218 million for a new fund to finance investments in military and aerospace companies,. As Pine Island declared in its SEC filing, its team “was chosen based on its members’ “access, network and expertise” to help the company “take advantage of the current and future opportunities present in the aerospace, defense and government services industries.” Amongst the associates of Pine Islands is Lloyd J. Austin III, a retired Army general who became Biden’s Defense Secretary.
Unsurprisingly, most of the reporting about Biden’s links to WestExec and Pine Island focused on ethics issues. But the policy imprint was no less marked. Its first fruit was Biden's flagship foreign policy campaign statement that appeared in March/April 2020 in Foreign Affairs under the title “Why America Must Lead Again. Rescuing U.S. Foreign Policy After Trump”. Far from dismissing China it was now mentioned 17 times. "China is playing the long game by extending its global reach, promoting its own political model, and investing in the technologies of the future ….” Biden and his ghostwriters declared. “… The most effective way to meet that challenge is to build a united front of U.S. allies and partners … even as we seek to cooperate with Beijing on issues where our interests converge, such as climate change, nonproliferation, and global health security. On its own, the United States represents about a quarter of global GDP. When we join together with fellow democracies, our strength more than doubles. China can’t afford to ignore more than half the global economy. That gives us substantial leverage to shape the rules of the road … The Biden foreign policy agenda will place the United States back at the head of the table, in a position to work with its allies and partners to mobilize collective action on global threats. The world does not organize itself."
A year later, on March 3 2021, Antony Blinken, whose team presumably helped write Biden’s article, would repeat precisely these lines in his first speech as Secretary of State.
Of course, US policy is not made by the White House alone. The anti-China turn was dramatically reinforced by key Democrats in Congress. On September 17 2020 Chuck Schumer, then minority leader in the Senate launched America LEADS, touted as “the most comprehensive strategy yet to confront and compete with China” providing more than $350 billion over a decade to build the United States’ industrial capacity and challenge Beijing. It was promoted amongst others by progressive Senator Sherrod Brown as “getting the broader Indo-Pacific strategy “right.” Brown endorsed Schumer’s call for, “(b)old, aggressive action … to confront the clear and present threat China poses to our economic prosperity and national security.”
By the time of the presidential debates on Sep 30 2020, Biden and the Democrats could go toe to toe with Trump in their anti-China positioning.
In January 2021, as we waited for the Biden administration to take office, National Security Advisor nominee, Jake Sullivan, announced that the Biden administration would focus on consolidating the Pacific ‘Quad’ Relationship, which binds the US to India, Japan and Australia.
Any doubt about the priority of Asia and the strategic line to be followed in that arena was dispelled by the nomination of Kurt Campbell in mid-January 2021 as White House coordinator for Indo-Pacific policy. Campbell was one of the principal architect of Obama-era pivot towards Asia. He is a staunch advocate of America’s alliance with the ruling conservative LDP in Japan. This goes hand in hand with skepticism towards the center-left government in South Korea. Campbell is a bipartisan figure and founder of CNAS think tank with close links to WestExec. At least 13 of Biden's key staff come from CNAS roster. According to a report by the Center for Economic and Policy Research, CNAS receives substantial funding from many of the military contractors that supply US forces in Korea and Japan, including General Atomics, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, and Raytheon.
On Feb 4 2021 when Biden made his first speech at the State Department he was squarely on message: "American leadership must meet this new moment of advancing authoritarianism, including the growing ambitions of China to rival the United States … we’ll also take on directly the challenges posed by our prosperity, security, and democratic values by our most serious competitor, China. … we are ready to work with Beijing when it’s in America’s interest to do so. We will compete from a position of strength by building back better at home, working with our allies and partners, renewing our role in international institutions, and reclaiming our credibility and moral authority, much of which has been lost."
On February 10 2021, almost three weeks after Biden’s inauguration, he finally conducted a two-hour phone call with Xi. This was billed as confidence building, but it was flanked by hard power action.
On February 9 two nuclear-powered carrier groups led by USS Nimitz and USS Theodore Roosevelt conducted unusual joint exercises in the South China Sea. Sending a “powerful signal to China ...”, demonstrating the U.S. Navy’s ability to operate in challenging environments”.
On the same day as his conversation with Xi, Biden announced the formation of a DOD China Task Force to provide a baseline assessment of the stance towards China. Ely Ratner, now special assistant to Secretary of Defense Lloyd J. Austin III, lead the four-month sprint.
At the virtual Munich Security conference on Feb19 2021, Biden cast the China-challenge in dramatic terms: "We are in the midst of a fundamental debate about the future and direction of our world. We’re at an inflection point between those who argue that, given all the challenges we face — from the fourth industrial revolution to a global pandemic — that autocracy is the best way forward … and those who understand that democracy is essential …. Historians are going to examine and write about this moment as an inflection point … ."
In Congress Chuck Schumer, who was now majority leader, renewed his anti-China push. On February 23 Schumer announced that he had “directed lawmakers to craft a package of measures to counter China's rise, capitalizing on bipartisan hardline sentiment on Beijing to strengthen the U.S. tech sector and counter unfair practices." With the fate of Biden’s infrastructure package hanging on narrow majorities, Schumer's bipartisan anti-China initiative took on extra significance. As Douglas Holtz-Eakin (former director of the CBO and president of the American Action Forum, a right-leaning group) put it: “Hating China is a big bipartisan thing, and Schumer has the opportunity to take ownership of being against China.”
On Mar 9 2021 in a Senate hearing Republican lawmakers joined the fray, portraying China as a growing national security threat. “As commander of INDOPACOM, you’re on the front lines of military competition with China,” Sen. Jim Inhofe, R-Okla., told Admiral Philip Davidson (soon to retire). “Your job, as I see it, is to ensure that there never comes a day when the Chinese Communist Party leadership concludes it can achieve its goals through the use of military force." Davidson concurred. "Our deterrence posture in the Indo-Pacific must demonstrate the capability, the capacity and the will to convince Beijing unequivocally, the costs of achieving their objectives by the use of military force are simply too high … Our number one job is to keep the peace. But we absolutely must be prepared to fight and win should competition turn to conflict." Davidson called China the “greatest long-term strategic threat of the 21st century.” Sen. Tom Cotton, R-Ark., asked Davidson whether China could achieve “nuclear overmatch” against the United States before the end of the decade if it were to triple or quadruple its nuclear weapons stockpile … Adm. Davidson responded that, yes, China would surpass the U.S. in nuclear capability should China quadruple its stockpile. Whether they would do so, was another matter. “They’ve quadrupled their nuclear capabilities since the turn of the century and they will at least double it during the course of this decade.” Cotton portrayed the situation as an arms race. “It is very expensive and hard work to win an arms race, but it is much better to win an arms race than to lose a war,” he said. Sen. Roger Wicker, R-Miss., posed similar questions regarding capabilities — this time concerning China’s growing arsenal of aircraft carriers, amphibious assault ships, and other warships. Citing an unnamed report, Wicker said China would within four years have three times as many aircraft carriers and amphibious assault ships and nine times as many other warships as the U.S. Navy. Admiral Davidson is expected to retire this year. The Biden administration has nominated Adm. John Aquilino, currently head of U.S. Pacific Fleet, to replace him.
On March 10 it was announced that talks would be held between Blinken and Sullivan and their Chinese counterparts on March 18 in Anchorage Alaska. But, in the week prior, tension was further escalated.
On March 12, five Chinese companies – Huawei Technologies Co., ZTE Corp., Hytera Communications Corp., Hikvision Digital Technology Co., and Dahua Technology Co. – were named to a new blacklist published by the US Federal Communications Commission (FCC) on national security grounds. This makes the FCC the latest regulator to maintain such a list. Other agencies with similar lists include the US Department of Commerce and the Department of Defense. On March 17 the FCC doubled down announcing the launch of a proceeding to determine whether to strip the local business license from China Unicom Americas as well as Pacific Networks and its wholly-owned subsidiary ComNet, citing national security concerns.
On March 12 the first ever leader-level meeting of the Quad – US, India, Australia, Japan - was staged as a video conference. The communique does not mention China explicitly but insists that the Quad shares a common interests in maintaining the Indo-Pacific as "a region that is free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion … We will begin cooperation on the critical technologies of the future to ensure that innovation is consistent with a free, open, inclusive, and resilient Indo-Pacific. We will continue to prioritize the role of international law in the maritime domain, particularly as reflected in the United Nations Convention on the Law of the Sea (UNCLOS), and facilitate collaboration, including in maritime security, to meet challenges to the rules-based maritime order in the East and South China Seas."
On March 14 2021 ahead of their first visit to Japan and S Korea, Sec of State Blinken and Sec of Defense Austin declared: "America’s partnerships are ‘force multipliers’ in the world." Some countries seek to "challenge the international order — that is, the rules, values and institutions that reduce conflict and make cooperation possible among nations. … China in particular is all too willing to use coercion to get its way … Our combined power makes us stronger when we must push back against China’s aggression and threats. Together, we will hold China accountable when it abuses human rights in Xinjiang and Tibet, systematically erodes autonomy in Hong Kong, undercuts democracy in Taiwan or asserts maritime claims in the South China Sea that violate international law. If we don’t act decisively and lead, Beijing will." Defense Sec Austin described China as "our pacing threat”. “For the past 20 years, the United States had been focused on the Middle East while China had been modernizing its military. “We still maintain the edge,” he noted, “and we’re going to increase the edge going forward.”
On March 17, during his visit to Japan and South Korea, Blinken announced sanctions on 24 Mainland China and Hong Kong officials, in response to latest Beijing actions in Hong Kong. In Japan, Blinken and Austin rebuked China for destabilizing action in Senkaku islands. In Washington DC Kurt Campbell denounces China's undeclared economic war on Australia.
Perhaps unsurprisingly, the talks in Anchorage on March 18-19 2021 were more of a confrontation than a negotiation. “After one session of heated arguments in front of reporters and two sessions of closed-door discussions”, the two sides ended their two-day meeting – without releasing a joint statement. During the first day’s open session, both sides leveled sharp rebukes of the other’s policies for over an hour.
Not on my watch
On March 19, a bipartisan National Security Commission on Artificial Intelligence chaired by Eric Schmidt, ex of google, delivered its final report calling for decisive action to counter China.
On March 22, joint US and EU Treasury sanctions over Hong Kong and Xinjiang come into effect. China's reaction derailed ratification of the EU-China investment treaty signed in December.
On March 25 at his first press conference President Biden declared: “China has an overall goal ... to become the leading country in the world, the wealthiest country in the world, and the most powerful country in the world,” he told reporters at the White House. “That’s not going to happen on my watch because the United States is going to continue to grow.”
Meanwhile in the Senate, Schumer has directed eight committees to craft legislation aimed at increasing competitiveness in science and technology and countering China’s influence on the world stage. The package could also include funding for efforts to promote semiconductor manufacturing and research in the U.S. The aim was to “counter the growing economic threats we face across the globe, especially from the Chinese Communist Party,” Schumer told fellow Democrats.
Defense spending to counter China was one thing that the Republicans were happy to vote for. On March 23 the Senate held hearings with Admiral John Aquilino who has been nominated to lead the US Indo-Pacific Command. Republican Senators wanted to know whether 11 aircraft carriers required by current law were enough. Aquilino was asked by Sen. Roger Wicker, R-Miss., whether the Navy has enough carriers to deter China in the Pacific while still operating in the Middle East and elsewhere. Are 11 enough? Wicker asked Aquilino. "Just tell us -- we need to know. We can change the law of the land if we get enough votes. Acquilino did not take the bait. Carrier strike groups were a tremendous form of deterrence he agreed, but he demurred on saying the Navy needed more. "I think currently that the size of that force is correct unless additional challenges show themselves". In 2019 the navy leadership faced criticism from Congress when they proposed retiring a carrier early to invest in new technologies. USNI News reported this month that Pentagon leaders are again considering a reduced carrier force structure as part of its upcoming 2022 budget submission to Congress. Wicker released a statement Monday calling for a bigger Navy in response to growing presence at sea from Russia and China. He urged the Biden administration to embrace a military plan released under President Donald Trump to increase the fleet to 405 manned Navy ships by 2051."
In late March, Blinken made his first trip to Europe. On Mar 25, the same day as Biden’s press conference, he appealed to America’s European partners in NATO to recognize the China threat: “We know that our allies have complex relationships with China that won't always align perfectly. But we need to navigate these challenges together. That means working with our allies to close the gaps in areas like technology and infrastructure, where Beijing is exploiting to exert coercive pressure."
On March 31, Biden presented his infrastructure plan - The American Jobs Plan – and he did so as an answer to the China challenge: "Like great projects of the past, the President’s plan will unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China."
The need for a concerted economic program to meet the China challenge was highlighted on April 7 2021 by the widely-read letter to shareholders by Jamie Dimon of JP Morgan: “China’s leaders believe that America is in decline”, Dimon opined. While the U.S. has faced tough times before, today “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” Dimon wrote. “Unfortunately, recently, there is a lot of truth to this.”
JP Morgan itself, along with its major US competitors, was doubling down on its investment in China. Far from decoupling, the first half of 2021 would be a banner period for Wall Street in China. That, however, ran counter to the political trend in Washington.
On April 8 2021, US Senators introduce the Strategic Competition Act of 2021, seeking to counter China. The bill set out the following policy goal: to “sustain its [US] global leadership role” and asserted that the Chinese government has been leveraging its political, diplomatic, economic, military, technological, and ideological power to compete with the US on the global stage. Sanctions on Chinese officials accused of alleged human rights abuses in Hong Kong and Xinjiang, authorize funds to “promote democracy” in Hong Kong, and void all restrictions on US officials’ interaction with Taiwanese counterparts. It will also establish a program to help Indo-Pacific countries develop infrastructure to counter China’s Belt and Road Initiative (BRI) and would expand the scope of the Committee on Foreign Investment in the US (CFIUS) to monitor relationships between Chinese and American educational institutions.
2021 April 8 The US Commerce Department added seven Chinese supercomputing entities to its Entity List.
Meanwhile, John Kerry was trying to preserve constructive momentum on climate policy. On March 26th the Biden admin announced that it was inviting world leaders to a virtual climate summit on 22-23 April. Could Kerry insulate climate policy from the increasingly confrontational tone of relations with China and even persuade China to attend the summit?
On April 4 Kerry declared that: "No single country can solve the climate crisis — and the American pursuit of greater research and development on climate change is not a counter to China". On April 13 he headed to Shanghai to woo China. After a major diplomatic row at the UN, both sides hope to co-operate over plans to drastically cut emissions. The US wants China to cease building coal-fired power stations and to stop financing coal ventures abroad. China wants the US to give more cash to developing countries to obtain clean technology and adapt to climate change. It also wants Washington to announce deep cuts in emissions. Kerry: "Yes, we have big disagreements with China on some key issues, absolutely. But climate has to stand alone.” On April 16 Kerry and China’s Special Envoy for Climate Change Xie Zhenhua met in Shanghai and announced that they would “cooperate to promote a successful COP 26 in Glasgow”.
That same day, April 16, Biden conducted his first face to face meeting with a foreign head of government. He chose Japan’s Yoshihide Suga – following precedent set by Obama – clearly signaling the priority that the US gives to its East Asian ally. The two leaders pledge to strengthen alliance to counter China’ rise.
On April 20 2021 the Endless Frontier Act was referred to the Senate Committee on Commerce, Science, and Transportation. It would significantly increase federal investment in domestic science and technology research, supply chain resiliency and diversification, crisis response, and jobs training to allow the United States to compete more effectively with China.
The following day, April 21, the Strategic Competition Act of 2021, approved by the Senate Foreign Relations Committee signals continued bipartisan supporting for countering China. As far as Mitt Romney was concerned the only question was whether it went far enough: "I don't believe anyone would think that this legislation is going to change China's march toward a global hegemony of autocracy and repression," Republican Senator Mitt Romney said. "...I would suggest we have a lot more work to do." The Strategic Competition Act of 2021 was amended to provide more aid to Africa and Latin America to counter China’s financial aid to these countries, grant greater funding for US technology industries, and strengthen the US International Development Finance Corp to compete against the China Development Bank, which has played an instrumental role in Beijing’s signature Belt and Road Initiative.
On April 22-23 Biden's climate conference went ahead with perfunctory attendance by the Chinese. The meeting was notable for the lack of dramatic new commitments from any of the participants.
As if to resist any accusation of naivety, on April 26 2021 climate envoy Kerry reassured journalists that the US would use satellites to monitor China’s progress on commitments to carbon emissions, as though they were nuclear weapons. “What we’ll do here is verify. We have massive capacity with satellites to know exactly what’s being produced where — and that will be true for all major corporations with major supply chains, we’ll know what they’re doing …. We know a lot about the Chinese coal structure, we’ve had long discussions about it and now we have to have some very direct conversations about where they are actually headed versus the rhetoric. But there’s no naivety, trust me.”
On May 12 Kerry doubled down on the new and more aggressive tone on climate. He announced that he was weighing sanctions on Chinese producers of solar panels who were accused of using forced labour. In further remarks, Kerry positioned China as an adversary and global economic competitor …"It's not a matter of taking things by trust," Kerry said. "It would be stupid and malpractice if we just set up a sort of trust thing." ... he noted talks with China last month grew “very heated” over the nation’s financing of overseas coal-fired power plants … “We’ve got to go back to work … We’ve got five more months left to get them to embrace something we hope you will view as legitimate. … We’re not there yet.”
Deterrence, the virus and trade
On May 25 in his prepared statement to Congress, President Joe Biden's nominee to become the next Secretary of the Air Force, Kendall said “That [countering China] is the reason, perhaps, that I’m interested in coming back into government". According to Kendall, China studied the U.S. victory in the 1991 Gulf War and has subsequently worked to emulate America’s capabilities, “with the clear goal to defeat the ability of the United Sates to project power near China.” … Kendall effectively endorsed the last Administration’s National Defense Strategy … there’s general consensus, now, that China is the pacing threat”. In written answers to committee questions, Kendall said the Air Force’s responsibilities for two legs of the nuclear triad are “by far its most important” mission. He added the national command and control network to the triad, calling it the “quad” of deterrence. … Kendall said he believed the defense budget to be forwarded to Congress Friday will be “adequate,” … Kendall supported a figure of 145 B-21 bombers mentioned by former Air Force Chief of Staff Gen. David Goldfein at a posture hearing in 2020. The Air Force has been shifting its position on the number of B-21s from “at least 100” to 145 over the last two years, with Global Strike Command now quoting 220 as the “right-sized” bomber force …. Stealthy B-21 Raiders … are set to supplant its existing B-2 Spirit stealth bomber fleet, which comprises just 21 jets … The B-2s remain the Air Force's most capable aircraft for penetrating through dense enemy air defense networks to prosecute strikes, including those in service with near-peer opponents, such as China or Russia. The B-21 will build on those capabilities, and offer capacity, especially as a counter to China, which is also actively developing its own stealth strategic bomber.
It was not until this point that the Biden administration opened discussions about trade with China. On May 26 Chinese Vice Premier Liu He spoke by phone with US Trade Representative Katherine Tai.
A day later on 2021 May 27 Biden ordered an investigation into the origin of the corona virus and the possibility of a lab leak.
On that same day, in a speech at Stanford, Kurt Campbell, coordinator for Indo-Pacific affairs on the National Security Council doubles down: “The period that was broadly described as engagement has come to an end”. U.S. policy toward China will now operate under a “new set of strategic parameters … the dominant paradigm is going to be competition.” Chinese policies under Xi are in large part responsible for the shift. Beijing’s behavior was emblematic of a shift toward “harsh power, or hard power”. “For the first time, really, we are now shifting our strategic focus, our economic interests, our military might more to the Indo-Pacific,” Campbell said'
That set the stage for the Biden administration’s delivery on May 28 of its Pentagon budget proposal. The basic strategy is to cut troop strength and outdated equipment so as to free resources to invest in a new generation of high-tech weapons to counter China. The $715 billion spending plan sidelined ships and hundreds of aircraft to pay for fast-flying hypersonic missiles and newer generation warships. Deputy Defense Secretary Kathleen Hicks said: “The PRC has become increasingly competitive in the Indo-Pacific region and around the world. It has the economic, military and technological capability to challenge the international system and American interests within it.” The $715 billion request is $11 bn up on 2020. $112 billion are for R&D on new weapons. Pentagon officials said it is the highest R&D request ever and a 5 percent increase over the previous year’s request. “This will provide the foundation for fielding a full range of needed capabilities such as hypersonic missiles, artificial intelligence, and 5G,” Hicks said. Cutting old weapons to pay for new ones was first proposed by the Trump administration. F-35 procurement to be reduced. F/A-18 programs to be run down. Republicans object to cuts. The budget requests more than $27 billion to modernize the U.S. nuclear arsenal. Progressive democrats have called for canceling these projects. The Biden administration is proposing $36.6 billion for shipbuilding, a 13 percent increase from what the Trump administration requested last year. It also wants to spend $16.7 billion on space-related projects, that’s an increase from $15.5 billion.
If there is one constituency that has been consistently pleased with the turn of policy since the beginning of year it is the major defense contractors. In earnings calls with investors they have been gleeful. On 2021 Jan 26, CEO James D. Taiclet, CEO of Lockheed Martin #1 defense contractor remarked on an earnings call: "I take solace in … the national security and intelligence and international affairs team that President Biden is proposing … many of them having decades of senior government experience … a lot of continuity in policy and also in focus on how important a strong defense is for this country … And unfortunately, frankly, the threat outside against potentially United States is growing. It's accelerating too by the way and when we look at the national defense strategy, it reorients itself and reorients our defense enterprise toward great power competition and it's something you cannot just sit still and watch go by because we will be overtaken because of the aggressiveness of our potential peers. So I'm taking solace in these trends … We feel that supports a stable defense budget going forward. I mean if you go all the way back to the primary notion that we're back into a world of great power competition, it's important to look I think beyond our own defense industrial base structure but outward to those of the competitors, which are China, Russia, Iran, and North Korea for example and compare our capabilities in the defense.” Lockheed was hoping that, in future, its acquisition of smaller rivals would be looked upon favorably in light of the Chinese competition, “vertical integration concerns from a classic antitrust perspective are dwarfed by the lack of velocity and inability to integrate and added cost frankly that comes from the existing defense industrial base structure that is stratified with a supply chain that's quite fragmented …we cannot predict the decisions of individual regulators and those coming into office, but I do think that it's critical that those decisions look through the lens of great power competition and how we compare to the defense industrial base certainly of China."
On April 20, Taiclet found his confidence confirmed: “the Biden administration clearly recognizes that we're all in the year of this resurgent great power competition and regional disruptive powers that are out there as well like Iran and North Korea. That's a world that's not going to get any more peaceful anytime soon … And so strong national defense is a priority of the administration…. Secondly, the Biden administration is reinforced and elevated the criticality of alliances to actually meet this kind of situation. And that again is a positive for international defense cooperation. The third item that I note is that there's a very experienced and capable foreign policy national security cadre … And then fourth, there's going to be some process alignment between the White House, the Department of the State Department of Defense and Congress on how to actually conduct all of this. … that would benefit Lockheed Martin I expect."
Phebe Novakovic -- Chairman and Chief Executive Officer of General Dynamics was similarly effusive. On April 28 she remarked: “It's a very good start to the year … unfortunately, for the state of humankind, the world has become an increasingly dangerous place. … So we look for nice steady demand signals … we see that nice cadence continuing in terms of our orders."
As Northrop Grumman’s CEO Kathy Warden told analysts on April 29, “the Biden administration has signaled that it views competition with China as the most pressing long-term security challenge … the administration described several priority efforts that are closely aligned with our portfolio and technology leadership. These include space, modernizing the nuclear deterrent, advanced weapons and long-range fires capabilities and R&D for breakthrough technologies, such as artificial intelligence, advanced computing and cyber."
G7 and NATO
On 1 June Chinese Vice Premier Liu He and US Treasury Secretary Janet Yellen held their first video meeting to discuss economic ties.
Two days later, on June 3, the Biden administration expanded a Trump-era order that banned U.S. investment in Chinese companies that support China’s military to include those selling surveillance technology, calling the entities a threat to U.S. interests and values.
On June 8 the first fruit of the bipartisan consensus on confronting China emerged from the Senate in the form of the US Innovation and Competition Act of 2021 approved by a vote of 68 to 32. The bill headlined spending of US$250 billion into American semiconductor manufacturing, boosting the National Science Foundation, creating regional technology hubs, and spurring 5G innovation. In the month since its introduction, lawmakers have debated a slew of amendments, as many sought to attach their own China-focused measures. The U.S. Innovation and Competition Act, or USICA, combines “as many of the “stop the China rise” and “lift the U.S. game” ideas that had been floated in the Senate in recent memory. As sharp-eyed critics at the Niskanen Center pointed out, it was in fact far from an adequate or coherent technology policy. America was getting the worst of both worlds. A confrontation geopolitics combined with an inadequate industrial policy.
2021 June 10 At the conclusion of the Ratner task force, U.S. Defense Sec Lloyd Austin issued an internal directive calling for several initiatives to counter China.
2021 June 13 US persuades G7 leaders to issue communique denouncing China on Hong Kong and Xinjiang and adopting a “collective approaches to challenging non-market policies and practices which undermine the fair and transparent operation of the global economy.” B3W global infrastructure initiative is pitched as answer to China’s BRI.
2021 June 14 US persuades NATO to declare China a “global security risk”. China’s “stated ambitions and assertive behavior present systemic challenges to the rules-based international order”. The newly passed NATO 2030 strategy demands that the alliance member states spend more resources on dealing with China’s growing global influence.
2021 June 15 Pentagon leaks news of a new naval task force for Indo-Pacific and a named China-containment mission which will allow reallocation of resources.
Was there any pushback?
One solitary piece by Tom Wright in Atlantic on June 9 2021 noted: "to many within the Democratic Party, the speed with which Biden has adopted this stance has been a surprise. Some in the party’s foreign-policy establishment hope that his views on China are not yet settled, and that he will moderate his rhetoric and outlook over time, deemphasizing the contest between democracy and authoritarianism. They worry that the United States could find itself embroiled in an ideological struggle with China akin to the Cold War. Like Biden in 2019, they think that China’s strengths are overstated, and that the U.S. can afford to be patient and restrained. … the US needs to quickly transition to a point of peaceful coexistence with China—basically a restoration of the Obama administration’s approach. A Biden-administration official, speaking on the condition of anonymity to candidly discuss government deliberations, told me that while the top foreign-policy officials are simpatico with the president, some in the government share the restorationists’ concerns, while others have yet to grasp the significance of the president’s statements.”
To be continued ….