Strategic Competition in China-US Relations MICHAEL NACHT SARAH LADERMAN JULIE BEESTON Livermore Papers on Global Security No. 5 Lawrence Livermore National Laboratory Center for Global Security Research October 2018 Livermore Papers on Global Security # 1 Lewis Dunn Redefining the U.S. Agenda for Nuclear Disarmament (2016) # 2 Yukio Satoh U.S. Extended Deterrence and Japan's Security (2017) # 3 Dave Johnson Russia's Conventional Precision Strike Capabilities, Regional Crises, and Nuclear Thresholds (2018) # 4 John K. Warden Limited Nuclear War: The 21st Century Challenge for the United States (2018) Available in hard copy from CGSR or download at cgsr.llnl.gov Strategic Competition in China–US Relations MICHAEL NACHT SARAH LADERMAN JULIE BEESTON Livermore Papers on Global Security No. 5 Lawrence Livermore National Laboratory Center for Global Security Research October 2018 Table of Contents About the Authors...................................... vii Preface ...............................................ix Introduction ...........................................1 China’s Grand Strategy ...................................5 Modernization of the Chinese Military ......................43 Potential China–U.S. Military Flashpoints ....................73 China in U.S. Security Policy ..............................99 U.S. Competitive Strategies and China ..................... 109 Conclusions ..........................................117 About the Authors Michael Nacht is the Thomas and Alison Schneider professor of public policy at the UC Berkeley Goldman School of Public Policy, where he was dean from 1998–2008. Nacht has twice served in Sen- ate-confirmed positions, most recently as assistant secretary of de- fense for global strategic affairs (2009–1010), for which he garnered the Distinguished Public Service Award, the department’s highest civilian honor. Under President Clinton, he was assistant director for strategic and Eurasian affairs (1994–1997) of the U.S. Arms Control and Disarma- ment Agency, participating in five presidential summits—four with Rus- sian president Yeltsin and one with Chinese president Jiang Zemin. His latest publication, co-authored with Zachary Davis, is Strategic Latency: Red, White and Blue: Managing the National and International Security Consequences of Emerging and Disruptive Technologies (Livermore: Lawrence Livermore National Laboratory, 2018). Sarah Laderman recently graduated from the University of Califor- nia, Berkeley, with an M.S. in nuclear engineering and M.A. in public policy. She served as a research fellow in the Nuclear Science and Security Consortium while working on nonproliferation and conflict escalation issues. In 2016–2017, she was a graduate research fellow with the Center for Global Security Research at Lawrence Livermore National Laboratory. Sarah now works for the International Atomic En- ergy Agency, Department of Safeguards. Julie Beeston has an M.A. in international studies from North Caro- lina State University (2017), where she served as a research assistant sponsored by the Consortium for Nonproliferation Enabling Capabili- ties. She has a B.A. in Asian studies with a focus on China-area studies and is proficient in Mandarin Chinese. Beeston was a research fellow with the Center for Global Security Research at Lawrence Livermore National Laboratory in 2017. STRATEGIC COMPETITION IN CHINA–US RELATIONS | vii Preface How should the United States approach strategic competition with China? This has been a central question in U.S. foreign and defense policy for decades. Each new presidential administration has tried to find the right balance between competition and cooperation in an evolving bilateral relationship with complex political, economic, and security dimensions. The Trump administration has reset the balance with a sharp shift toward competition and even confrontation. In its National Security Strategy, it has described both China and Russia as challengers to American power, influence, and interests, “attempting to erode Ameri- can security and prosperity.” It criticizes past U.S. engagement with Russia and China and their inclusion in international institutions and global commerce as having been based on a “false premise” that this “would turn them into benign actors and trustworthy partners.” In its National Defense Strategy, the administration has described China, along with Russia, as a revisionist power seeking to undermine the international order, to reorder the Indo–Pacific region to its advantage, and to compete with the United States across all dimensions of power to achieve regional hegemony in the near term and displacement of the United States as the globally preeminent power in the long term. In its Nuclear Posture Review, it has set out its specific concerns about Chi- na’s program of strategic military modernization in support of China’s efforts “to substantially revise the post–Cold War international order and norms of behavior.” The administration has not entirely set aside cooperation, as in each document it expresses a commitment to work with China where the interests of the two countries overlap. But the net result of the Trump administration’s policy reviews is a comprehen- sive reframing of the U.S. approach to China—an embrace of a “return to rivalry.” The Trump National Defense Strategy also enjoins the United States to foster a competitive mindset, calling on the Department of Defense “to out-think, out-maneuver, out-partner, and out-innovate” potential U.S. adversaries. This suggests a long list of potential ques- STRATEGIC COMPETITION IN CHINA–US RELATIONS | ix tions in China–U.S. relations. How should a more competitive mindset be applied to China–U.S. relations? What forms of competition should the United States pursue? Are there any it should avoid? What reac- tions from China are likely? What can be learned from past U.S. efforts to gain long-term advantages through competitive strategies? It re- quires also that we explore related questions: What are we competing for? What does it mean to win, or lose? And how broad or narrow are the features of competition in the U.S.–China relationship? If narrow, how can we keep them from overwhelming the broader cooperative agenda? If broad, how can we sustain elements of cooperation? In anticipation of a widening discussion of these matters within the United States, with U.S. allies, and also of course in China, we turned to Michael Nacht. As a scholar of international relations and as a policy practitioner in two presidential administrations, he has deep insight into the China–U.S. strategic relationship and the enduring challenge of how best to balance competition and cooperation. This paper provides essential context for the current policy debate, as well as insights and recommendations of immediate relevance. Dr. Nacht then turned to two research fellows at CGSR for assistance with this project, who played a significant role in writing the report. Sarah Laderman and Julie Beeston contributed importantly to the analytical work reflected here. We are grateful to all three coauthors for such a timely and important piece of analysis. We are also grateful for the good counsel of an exter- nal reviewer and for supplemental research support provided by other members of the CGSR research team. Brad Roberts Director Center for Global Security Research x | MICHAEL NACHT, SARAH LADERMAN, AND JULIE BEESTON Introduction For many years, the United States has been reluctant to embrace strategic competition with the People’s Republic of China (PRC), prefer- ring to balance competition with cooperation and take an optimistic view of the relational trajectory. The Clinton administration sought a “constructive strategic partnership” in which China was integrated into the emerging post–Cold War order and conflict over Taiwan was avoided. The George W. Bush administration initially cast China as a rising challenger, but after the terrorist attacks of 9/11 tried to engage China as a “responsible stakeholder” in the international order. The Obama administration attempted to “rebalance” political and economic engagement with an Asia–Pacific policy that was prominently a military posture aimed at countering increased Chinese assertiveness. The Trump administration has expressed a clear commitment to working with China in areas of shared interest, such as North Korean nuclear proliferation. Nevertheless, the administration emphasizes strategic rivalry with China, especially as to military modernization, economic coercion, and China’s diplomatic attempts to roll back the existing regional and global orders. Historically, China has been reluctant to embrace strategic compe- tition as a central theme in any bilateral relationship, though this stance has shifted in the last decade or so. While Beijing must necessarily balance competition and cooperation, it perceives U.S. policies as op- positional to China’s rise and recovery. China interprets the military modernization of the U.S. as aimed primarily at the encirclement and containment of China—in direct challenge to Chinese sovereignty—and as preparation for armed confrontation over Taiwan and other peripheral lands. Beijing has felt directly threatened by U.S. military polices and taken steps to improve its position without provoking “China-threat STRATEGIC COMPETITION IN CHINA–US RELATIONS | 1 syndrome” in the U.S.—that is, the view that China embraces the United States only to hold its enemy close while quietly readying for war against the U.S. and its allies.