A Global China Tax Is Needed to Defend Democracy and Freedom of the Seas

December 8, 2021 Updated: December 8, 2021

News Analysis

Beijing is so powerful that we cannot expect any one country to accept the sole economic burden of defending the world from the Chinese Communist Party (CCP).

Over the last few years, there has been a sea change in public understanding of the increasing threat from China. Nothing has demonstrated the China threat more clearly than Beijing’s increased military threats against the peaceful and democratic island nation of Taiwan.

But there is a complete lack of clarity on what needs to be done to protect the world from Beijing, which seeks hegemony, and targets not only democracy, but the linguistic, ethnic, and religious diversity of China’s own people, and by extension, diversity around the world. There has never been a greater threat to humanity, yet the world is paralyzed in its lack of response, which continues to allow the trade with China that daily increases the CCP’s power.

What would have been impossible five or ten years ago, because of a lack of understanding, is now possible and should be seen as necessary: the containment of the CCP’s increasingly illiberal form of power in both geographic space and in the technological depth to which it reaches in China itself, with a bleeding edge globally.

Since the founding of the CCP in 1921, it has expanded more quickly than any other political entity in the world, and that expansion is now exponential because of the Party’s acquisition of advanced surveillance, social control, and military technologies from the very global democracies that it continues to target in the 21st century.

The Precedent of 1941

As political power is usually zero-sum, which the CCP strategically elides, China’s own growth has been at the expense of all other political systems globally, including democracy and the international rule of law championed especially by the United States and Britain after World War II.

As outlined in the Atlantic Charter signed by Winston Churchill and Franklin Roosevelt in 1941, the most basic international agreements for which the allies fought, and by which the generations that followed have benefited, are peace, democracy, social security, and the freedom of international trade.

If you have not read the Atlantic Charter, do so today in order to remember what our ancestors fought for in World War II, and to better understand how those principles are again under threat.

While the Charter targeted Nazi Germany, Imperial Japan, and Fascist Italy, its final point is directly applicable to the necessities emerging from today’s struggle against the CCP’s threat to global peace.

“Since no future peace can be maintained if land, sea, or air armaments continue to be employed by nations which threaten, or may threaten, aggression outside of their frontiers, they believe,” Churchill and Roosevelt wrote in the third person, “pending the establishment of a wider and permanent system of general security, that the disarmament of such nations is essential. They will likewise aid and encourage all other practicable measures which will lighten for peace-loving peoples the crushing burden of armaments.”

In the Atlantic Charter, then, we have clues to two parts of the solution to the China threat.

First, the CCP should be disarmed, which really means it should be abolished. For if Mao Zedong’s power of the gun were extinguished, the CCP’s political power would be extinguished. This is the nature of all tyrannical power and the means to its pacification.

Second, the burden on peace-loving peoples of pacifying the CCP should be lightened.

How to achieve these two goals peacefully?

Think Outside the Box

Solutions to seemingly intractable problems always require thinking outside the box, which will not be easy as the boxes within which we have been thinking are comfortable and date from the 17th century. Those revered forms of thought are our highest ideals applied to international politics, but ones that will be the death of democracy if we allow totalitarian aspirants to hegemony, like Xi Jinping, to use them against us. We must protect and deny these principles to the CCP during the current fight, and bring them forward again when the threat is gone.

First of all, the CCP is using the notion of state sovereignty and non-interference into other state’s internal affairs, to protect its own totalitarian form of power with which it threatens global democracy. No longer should this be allowed in diplomatic circles.

China should be excluded from the international community of nations, through denial of visas for Chinese diplomats to all United Nations organizations in New York, Paris, Rome, and Geneva—where most U.N. organizations are to be found. This can be done through the joint decision of four democracies: the United States, France, Italy, and Switzerland. Once Beijing’s diplomats are no longer allowed at the U.N., they cannot as easily use it against democracy and diversity globally. Communist China can be voted out of the U.N. without threat of a veto from Beijing.

Chinese vessels at South China Sea
Chinese vessels, believed to be manned by Chinese maritime militia personnel, are seen at Whitsun Reef, South China Sea, on March 27, 2021. (Philippine Coast Guard/National Task Force-West Philippine Sea/Handout via Reuters)

Second, the CCP is using the principle of freedom of the seas, developed by the Dutch jurist and philosopher Hugo Grotius in the early 17th century, to promote the international trade upon which China’s economy and, therefore, its military depends. There should be no freedom, of any type, granted to a political party whose goal is to take away freedom. The two freedoms are self-contradictory and, therefore, lacking in both ethics and strategy.

Deny Freedom to the Anti-Freedom Party

What would it mean to deny the CCP—and by extension any country over which the CCP has control—the privileges accorded by freedom of the seas?

The extreme approach would be to decouple China entirely from the world economy. Decoupling, through trade embargos and naval blockades, has frequently been imposed on belligerents during wartime, and Beijing frequently threatens war. A forceful decoupling of China with the world would be justified but dangerous, as Beijing, like Tokyo in 1941, could strike back militarily. Unlike Japan in 1941, Beijing has nuclear missiles capable of defeating our anti-missile defenses.

The world, which has become dependent on Chinese products, would also suffer from rapid decoupling, though likely less so than allowing a continuation of unmitigated trade with the totalitarian state. Decoupling from China is good. But how best to achieve this so that a single country, like the United States, does not provoke a military response or economically isolate itself in the process?

A Global China Tax

A better option is to gradually decouple China from the entire globe, not just single countries, while using the mechanism of that decoupling—tariffs on Chinese trade—to fund the military expenditures, including improved missile defense, required to contain China. This is the Atlantic Charter’s lightening “for peace-loving peoples the crushing burden of armaments” that are necessary for protecting peace and democracy.

In 2019, China exported $2.5 trillion to the world. It imported $2.1 trillion, resulting in $400 billion in excess purchasing power annually—a positive balance of trade for China. China’s total 2019 trade, or exports plus imports, was $4.6 trillion. As the rest of the peace-loving world should not be responsible for paying, in risk and treasure, for Beijing’s aggression, this global trade can and should be taxed in order to pay for the globe’s defense.

If taxed at a rate of 10 percent, China’s global trade would yield approximately $460 billion annually in defense expenditures to contain China. This might not be enough.

The U.S. defense budget was $725 billion in 2020 and it was insufficient to keep up with Beijing.

To be on the safe side, democracies should tax China’s global trade at about 30 percent in order to yield an approximately $1.4 trillion defense procurement supplement for division by front-line democracies and friends that are holding the line against China and its Asian ally, North Korea.

Beneficiary countries of the China tax should include the United States, Taiwan, Japan, India, South Korea, Australia, and the aggrieved South China Sea claimant countries, namely the Philippines, Vietnam, Indonesia, Malaysia, and Brunei.

This consortium of countries are well-placed, strategically, geographically, and by the incentive of self-preservation, to both enforce the tariff on global China trade and to benefit their defense expenditures in proportion to their level of trade, effort, and need.

The global China tariff would not only provide for a greater defense against Beijing, but weaken it economically and, therefore, militarily. At 30 percent, a China tariff would substantially decrease China’s exports and increase the cost of its imports. This would increase internal pressures on Beijing to democratize and return from exile as a rogue nation, to the fold of the international community, with all its benefits and responsibilities. Global trade would reorganize itself away from China, sidelining it economically and decreasing its global political influence.

If the tariff is imposed gradually over time, the risk of a military reaction by Beijing could be minimized. The dual and positively interacting economic and military effect could be sufficient to pacify the Beijing regime before the full 30 percent tariff was imposed.

Epoch Times Photo
Cargo containers are stacked at Yantian port in Shenzhen in China’s southern Guangdong Province on June 21, 2021. (STR/AFP via Getty Images)

An internationally-coordinated effort along these lines could change the CCP’s strategy toward a more pacific approach through a symbolic agreement alone if Beijing believed that the measure was not a bluff and that the consortium, knowing and accepting the risks, was nevertheless ready to impose the full tariff if necessary.

The United States is today the only country militarily capable of imposing and, therefore, of leading such a tariff strategy of dual economic and military containment of China. But it is not the only country at risk, and so the benefits and risks of a China tax should be shared. It will require far more resources and coordination with allies than we currently have.

Conclusion

To achieve a global China tax likely requires two major changes to everything that international politics has stood for over the last 400 years. First, a tactical and temporary end to non-interference in the internal affairs of the state, notably that of China. Second, an end to freedom of the seas for China, until that freedom is again guaranteed and accepted by Beijing through positive and public acceptance of the rights of Taiwan and the South China Sea claimant countries to their sovereign independence and exclusive economic zones for fishing, hydrocarbon, and other economic exploitation.

Both principles were 17th-century innovations, and both served the world beautifully until the CCP started using them to destroy them. Now the only way to defend the principles is to likewise fight fire with fire.

First, we must contain China from empowering itself through the global trade of commerce and influence that depends upon freedom of the seas and diplomatic access to international organizations.

Second, and overlapping the first, we should democratize China so it is no longer the totalitarian and hegemonic threat of today. A free China will be an ally to freedom globally, not its biggest threat. Fighting for a free China is, therefore, the fight for freedom globally.

We need not dispose of the principles of non-interference and freedom of the seas entirely. We can leave them largely intact for other countries, as long as they do not benefit China. And we can bring them back for China once Beijing comes to its senses and democratizes and disarms. But no longer can we allow China the freedom to empower its autocratic internal system, nor to empower its economy and diplomacy through global trade on the seas or anywhere else.

To both contain China’s economic growth, upon which its military depends, and fund the alliance of democracies and friends necessary to do so, a global tax on China trade should be implemented, the proceeds of which should flow to countries that are on the front lines with China in the protection of their own diverse political systems and democracy more generally.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Anders Corr
Anders Corr has a bachelor's/master's in political science from Yale University (2001) and a doctorate in government from Harvard University (2008). He is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk, and has conducted extensive research in North America, Europe, and Asia. His latest books are “The Concentration of Power: Institutionalization, Hierarchy, and Hegemony” (2021) and “Great Powers, Grand Strategies: the New Game in the South China Sea" (2018).