Thank you, Roger, for that kind introduction. I’d like to speak today about the greatest foreign-policy challenge America faces: our new Cold War with China. There’s no better group to address on this topic than the Reagan Foundation, which bears the name of the president who won America’s first Cold War—without firing a shot, just as we want to win this new Cold War.
Today I’m releasing a report, titled “Beat China: Targeted Decoupling and the Economic Long War.” This document details a strategy for competition with a new Evil Empire, Communist China.
This Evil Empire preys on—and spies on—Americans. It imprisons innocent people in concentration camps. It uses slave labor to fuel its factories. And it denies basic freedoms to all its 1.4 billion people.
We need to beat this Evil Empire—and consign the Chinese Communists, like the Bolsheviks, to the ash heap of history.
But this Cold War will be more complicated than the first. China is wealthier and more populous than any enemy America has ever faced. It’s also more entangled with us economically.
America’s deep dependence on China didn’t grow overnight. It was the work of decades, as Washington politicians pursued a so-called “strategic partnership” with China and Wall Street and Corporate America worked to integrate our economies.
Many believed that open markets and open borders would make China rich—then make China free.
So for decades they fed the tiger—and made it more powerful. A tidal wave of Chinese imports flooded our markets, sweeping away millions of high-paying American manufacturing jobs and devastating the communities that depended on those factories. This made China rich. But instead of reforming, the Communist Party began to exploit the new connections between our free society and its totalitarian society.
When American schools began admitting hundreds of thousands of Chinese nationals each year to work and study, the Chinese government turned some of them into spies.
When American companies scrambled for China’s vast market, the Beijing forced them to hand over proprietary technology and pledge never to speak out against the Party in any way, or speak up for its victims.
And finally, when America outsourced production of even essential goods to China, the Communist Party began threatening to cut us off. Just this week, the Chinese government proposed export controls on rare-earth elements that are essential to our most advanced weapons system, such as the F-35. China has a virtual monopoly on rare-earth mining and processing. That means Beijing could ground our jets at almost any time, just by cutting off access to a few key inputs. It’s sad that a great nation would ever find itself in such a position.
The Chinese Communist Party is no paper tiger, and we cannot afford to wait passively for its collapse or reform.
But for all the challenges we face, it’s vital to remember that China faces its own challenges. And while we depend on China in unsettling ways, the knife cuts both ways. Chairman Xi should be worried for his future.
First, for all its investment and five-year plans, China still relies on the United States to access advanced science and technology. Its students and researchers come here—not the other way around.
Second, and related, China’s export-oriented economy depends on U.S. consumers to fuel its growth and U.S. financial markets to broker its transactions. This is a vulnerability, as Beijing learned to its chagrin during the recent trade war.
Finally, the myth that we can both tame a totalitarian regime and use it as an offshore factory and trading post has been punctured and is rapidly losing air.
While it was possible for Joe Biden to raise a champagne toast to Chairman Xi at the White House less than 10 years ago, today such an event would be a grave scandal.
The will and need to confront Communist China is growing. Now it’s time for action.
Any serious strategy to beat China must start with a commitment to decouple our countries in key areas, in order to exploit the leverage we have over China and minimize its leverage over us. As we pull apart, we’ll also have to rebuild parts of our economy to minimize the costs of separation.
We can start by building on the previous administration’s strategy of sanctioning the Communist Party’s worst actors, such as human-rights abusers, to cut them off from the U.S. financial system. We ought to expand this campaign to include entire Chinese companies that steal American intellectual property—or even benefit from stolen IP. The message should be clear: steal from Americans once, look over your shoulder forever.
We should also correct one of the great, bipartisan failures of this century by terminating China’s Permanent Normal Trade Relations status. There’s nothing “normal” about our trade relationship with China, and we cannot afford for it to be “permanent.” So we ought to return to the old system, where the president and Congress reviewed China’s trade privileges each year in light of its progress on human rights.
We can also tighten our export controls to prevent China from obtaining cutting-edge technology with military applications, such as semiconductors, 5G telecommunications equipment, Artificial Intelligence, and quantum computers. We must pair export controls with investment in R&D and manufacturing so the future of these critical technologies is made in America, not in Asia—and certainly not in China.
In addition to cutting-edge technology, we need to break our dependence on China for basic goods that are critical to survival, such as essential medicines, medical supplies, and rare-earth elements. The United States foolishly sent much of this production overseas in the belief that it was “low value.” Now we have to bring it back. A nation that cannot heal itself, care for its sick, and keep its aircraft in the sky is not secure—and will not remain a superpower for long.
In a similar vein, we need to cut off the spigot of money that has fueled China’s rise and corrupted our elites, creating a China Lobby stretching from New York and Washington to Silicon Valley and Hollywood, touching corporate boardrooms and college campuses in between. The United States must more carefully scrutinize inbound investment from China, while preventing outbound investment that will build the next Huawei or ZTE. That means preventing American pension funds from investing in companies with close ties to the Communist Party or People’s Liberation Army. And it means closing loopholes so unscrupulous investors can’t simply route their transactions through offshore third parties to skirt our laws.
Just as we need to stop funding China’s rise, we also need to stop training its engineers and admitting its spies. We need to admit fewer Chinese nationals for work and study—and we need to admit none in advanced STEM fields at the graduate level and above. No doubt this will be a painful divorce for universities and Big Tech companies that rely on Chinese nationals to pay their bills and staff their labs; no doubt they’ll resist out of self-interest and a commitment to “open-mindedness” so fanatical their brains have fallen out. But with the right incentives and support, we can replace Chinese nationals with American students—and once the supply of bright young Americans has been exhausted, we can turn to our allies, instead of deepening the talent pool of our number-one enemy.
Finally, carrying out this strategy will depend on coordinated and effective action by the federal government, which hasn’t been tested by great-power competition in 30 years. So decoupling must come with a reorganization of government. In particular, export-control authorities such as the Bureau of Industry and Security ought to be moved from Commerce to a department that puts national security first, such as State. The Department of Treasury’s Office of Foreign Assets Control ought to be expanded considerably, with a separate task force devoted to sanctioning China’s IP thieves, military companies, and state-owned puppets. Finally, the Secretary of Defense ought to have a more prominent role at CFIUS, to ensure the national-security perspective takes precedence in decisions regarding Chinese investment in our country.
The strategy I’ve just outlined is merely a sketch. But fundamentally, this strategy is about repositioning and rebuilding. Repositioning, so the Chinese Communist Party is no longer able to exploit our entanglement. Rebuilding, to prepare for a protracted Twilight Struggle that will determine the fate of the world.
During the depths of the Cold War, Ronald Reagan spoke of America’s duty to confront Soviet Communism. He called it our “rendezvous with destiny”—a contest between “spirits, not animals,” between freedom and slavery.
Thanks to President Reagan’s steady leadership and vision, we met that moment and prevailed. Today, we face another test against another Evil Empire. If you doubt the comparison, let me tell you a story.
In 2014, Chairman Xi traveled to far-western Xinjiang Province to tell his lieutenants how to deal with a religious and ethnic minority people known as the Uighurs. Xi called for a [QUOTE] “all-out struggle against terrorism, infiltration, and domination.” That struggle, said Xi, should be waged using the [QUOTE] “organs of dictatorship” and should show [QUOTE] “absolutely no mercy” to enemies of the Party. The world has now seen what Chairman Xi meant by merciless dictatorship: the Uighurs are victims of genocide on a sickening scale.
If that’s what the Chinese Communist Party does to its own people, imagine what it’ll do to the rest of the world. And while many countries deplore the Party’s tyranny, only one country is in the position to stop it. That’s the United States of America. That’s our new rendezvous with destiny.
Let’s pour our whole hearts into meeting this challenge so America and the Free World prevail once again. Thank you.