US–China Economic Rivalry More Challenging Than Cold War, Experts Say

By Emel Akan
Emel Akan
Emel Akan
Emel Akan is a senior White House correspondent for The Epoch Times, where she covers the Biden administration. Prior to this role, she covered the economic policies of the Trump administration. Previously, she worked in the financial sector as an investment banker at JPMorgan. She graduated with a master’s degree in business administration from Georgetown University.
July 22, 2020Updated: July 22, 2020

WASHINGTON—China is the most powerful adversary that the United States has faced in recent history, and Washington needs to respond effectively to counter Beijing’s growing strength and aggressive behavior, according to experts.

During a hearing held by the Senate Banking Committee, titled “US-China: Winning the Economic Competition,” on July 22, a panel of experts shared their proposals about how to compete with and beat China.

In his opening remarks, Sen. Tom Cotton (R-Ark.), chairman of the economic policy subcommittee, said that “China is the most formidable adversary the United States has faced in living memory.”

“At the height of its power in 1980, the Soviet Union’s economy was 40 percent of the size of the American economy,” Cotton said, adding that in 1943, the combined economies of Nazi Germany and Imperial Japan were also at the 40 percent level.

“Today, China’s economy is two-thirds the size of our economy. So China is richer than any adversary we’ve faced.”

To Walter Russell Mead, professor of foreign affairs and the humanities at Bard College, today’s situation is far more complex than the challenges the United States faced during the Cold War with the Soviet Union.

“Unlike with the Soviet Union, the economies of the U.S. and its allies are deeply connected to the Chinese economy,” he said in his testimony.

He noted that the United States’ relationship with Communist China “can’t simply be business as usual.”

“Given the party’s ambitions, other countries have no choice but to monitor Chinese investment and financial flows, to audit supply chains for key materials, and to eliminate strategic dependencies on China, and to eschew the use of Chinese tech that threatens their telecom and infrastructure security,” Mead said.

The U.S. government also needs to ensure that corporations control their own supply chains to prevent using slave labor, according to Mead.

“One thing that we should do is look at some of the examples that we’ve seen from the World War II era, where Japanese companies and German companies have had to pay compensation for slave labor,” he said. “We should construct a framework so that companies that are using slave labor can’t get away with it.”

China Gamble

The U.S. government recently released a list of companies tied to the Chinese military that are operating in the United States. The list includes the aviation company AVIC, China Industry Shipbuilding Corp., Huawei, and Hangzhou Hikvision.

“No one would have thought to allow the Soviet Union and its state-owned enterprises to invest in U.S. electric grids or to invest in our information technology,” Tim Morrison, senior fellow at the Hudson Institute, said during the hearing.

“And I think we are still in the beginning stages of the course correction of the gamble that we made, that if China has McDonald’s, there will be a peaceful future.”

Not only should these Chinese companies be barred from operating in the United States, but their lobbyists in Washington and their U.S. joint venture partners also should be questioned, Morrison advised.

To win the economic competition with China, Morrison suggested in his testimony that Washington form a trade bloc with allies that uphold Western values. He proposed that the new U.S.–Mexico–Canada (USMCA) free trade agreement could be expanded to include countries such as the UK, Japan, Australia, South Korea, and New Zealand.

Long-term multilateral cooperation among like-minded countries is key to winning the economic competition, according to Martijn Rasser, senior fellow at the Center for a New American Security.

“The United States should diversify and secure supplies for key technology inputs such as rare-earth elements and semiconductors by investing in domestic industries and working with partners to build trusted international supply chains,” he said in his testimony.

Digital Currency

Digital currency is another area of competition with China, and the United States is falling behind, experts warn.

“It would be foolish to take the dollar’s predominant global status for granted. We must future-proof the dollar for a digital tomorrow,” Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission, said at the hearing.

Giancarlo, who is also the creator of the Digital Dollar Project, made the case for the creation of a digital dollar. He said the United States needs to enhance the dollar’s technological capability in the world, and suggested exploring a digital dollar in a series of well-conceived pilot programs.

That’s what China and other central banks around the world are seeking to do with their own currencies, he said.