U.S. Vice President Mike Pence speaks during a news conference at the Europa building in Brussels, Belgium. (Photographer: Jasper Juinen/Bloomberg)

China Hack Shows Weakness of Pence’s New Hard Line

(Bloomberg Opinion) -- If you thought the U.S.-China relationship couldn't get much worse, consider what happened on Thursday alone. First there was a bombshell report from Bloomberg Businessweek of a major Chinese espionage effort targeting dozens of U.S. corporations and the Pentagon. Then came Vice President Mike Pence’s speech, which offered the sharpest, most comprehensive indictment of Beijing’s behavior by any American leader since the Cold War. Pence labeled the situation with China a "great-power competition." Which raises a tough question: Is America really prepared for that competition?

Consider how aggressively the Chinese conduct espionage against the U.S. The Bloomberg article disclosed how the People’s Liberation Army intelligence apparatus inserted extremely small chips into the motherboards that go into high-end computer servers. The goal was apparently to infiltrate and monitor the servers and networks of dozens of American companies — including behemoths like Apple — as well as government contractors.

It is not clear how much, if any, damage was actually done.  The companies named in the Bloomberg Businessweek story, including Apple, all deny that any of this happened. But China’s success in corrupting a critical global supply chain is nonetheless a remarkable feat of technological espionage.

Pence’s speech, meanwhile, shows how much official U.S. views of China have hardened. He argued that one great American hope of the post-Cold War era — that China would evolve toward steadily greater economic and political freedom — has proved an illusion, as Beijing has instead chosen the path of authoritarianism, mercantilism and aggression. Building on that basic theme, he gave the entire bill of particulars regarding China’s conduct at home and abroad.

Pence accused China of pursuing protectionist, predatory economics meant to give it dominance in high-tech industries while undermining the U.S. industrial and technological base. He condemned Beijing for seeking to expel the U.S. from the Western Pacific by intimidating allies, throwing its weight around in the South China Sea and East China Sea, harassing U.S. ships and aircraft, and conducting an enormous military buildup that has lasted over two decades.

Pence argued that Beijing is using ever-more repressive methods at home, while also supporting authoritarian regimes and undermining democratic governments overseas. Not least, the vice-president called China out for meddling in U.S. society and politics, through methods such as co-opting think-tanks and academic institutions, conducting ambitious propaganda campaigns and seeking to swing the midterm elections against the Republicans and President Trump.

To be sure, this wasn’t Churchill’s Iron Curtain speech of 1946 or the famous Truman Doctrine address to Congress in 1947, which rallied Americans to an all-encompassing struggle with the Soviet Union. But it’s the closest thing we’ve seen so far in today’s U.S.-China competition.

As striking as Pence’s speech was, however, it didn’t come out of the blue. Tensions with China have been rising for years, a trend that has accelerated under Trump. The 2017 National Security Strategyidentified China as a revisionist authoritarian power working diligently to undermine American interests and values. Just in the past week, senior administration officials have given public pronouncements framing the relationship in explicitly competitive terms, and making clear that the U.S. is not shying away.

Pence himself characterized a number of the administration’s recent policies — more money for defense, modernization of the nuclear triad, tariffs on imports from China, stricter curbs on Chinese investment — as part of a concerted effort to counter Beijing’s malign practices.

Most of this should be quite welcome. As I’ve argued in previous columns, China is one area where the Trump administration has gotten more right than wrong, particularly in simply being willing to talk honestly about the threat Beijing poses in the Asia-Pacific and beyond. There’s not really much to disagree with in Pence’s indictment of Chinese behavior (although it is a bit misleading to say that Beijing is “meddling” in U.S. elections in the way that Russia did in 2016), and it is high time that Americans understood the reality and the stakes of the relationship. The question is not whether the administration has gotten the diagnosis right. It is whether it has an adequate solution.

Here, there is reason to worry. The Pentagon is now investing more in readiness and in near- and medium-term capability enhancements. But experts such as Chris Brose, the longtime staff director for the Senate Armed Services Committee, have pointed out that investments in the potentially transformative future capabilities needed to beat the Chinese military in its own backyard have been comparatively anemic.

On the geo-economic front, the Trump administration is finally taking some small steps to compete with China for influence in the Asia-Pacific and elsewhere. Yet it still has no replacement for the Trans-Pacific Partnership, which would have tied key economies in the region more closely to Washington. The U.S. has also failed, so far, to mobilize private sector resources and investment in ways that would allow it to better offset China’s Belt and Road Initiative of infrastructure development across Asia.

On trade, taking a harder line makes sense, given China’s intellectual property theft, forced technology transfer policies and other transgressions. Yet alienating democratic allies by slapping tariffs on them makes no sense whatsoever.

Finally, in a welcome change from the administration's previous reluctance to stand up for human rights and democracy abroad, Pence and Secretary of State Mike Pompeo have started to offer an ideological critique of China’s regime, whose brittle, authoritarian nature remains a deep strategic vulnerability. A bipartisan group of senators and representatives have called for sanctions to be imposed on Chinese officials responsible for the horrific repression in Xinjiang. But real ideological competition is hard to do when one has a president who genuinely seems to admire dictatorial leaders.

The U.S. is finally starting to say the right things when it comes to the China challenge. But it is still struggling to do what is necessary to succeed.

In fact, the administration may not even know precisely what it is trying to achieve. Trump seems to see his tariffs as a bargaining chip that can be cashed in for a comprehensive trade deal that would return the relationship to a more cooperative state. Yet other officials at the Pentagon, White House and elsewhere in government reportedly see the tariffs as part of a longer-term effort to cut China out of global supply chains, undermine its economic growth, and give America greater strategic autonomy. And no one has yet answered the question of what victory looks like. Does the U.S. simply seek to hold the line in the Western Pacific and prevent China from overturning the existing international order? Does it aim to force Beijing into some comprehensive economic and geopolitical settlement? Or does the administration think it will be impossible to have a normal relationship with China as long as the Communist Party regime is in power?

It surely feels good, for officials and policy wonks who have worried about China’s rise for years, to talk frankly about Beijing’s misdeeds and declare that competition is no longer a “four-letter word.” Yet until the U.S. figures out what its long-term objectives are, until it assembles a comprehensive set of policies for obtaining those objectives, it is unlikely to win the struggle it now seems to be embracing. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Hal Brands is a Bloomberg Opinion columnist. He is the Henry Kissinger Distinguished Professor at Johns Hopkins University's School of Advanced International Studies and a senior fellow at the Center for Strategic and Budgetary Assessments. His newest book is "American Grand Strategy in the Age of Trump." 

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