The World Turned Upside Down

n almost every administration there appears a would-be successor to the great George Kennan; someone who aspires to assume the mantle of the grand strategist who defines a pathway for the nation’s foreign policy challenge of the era. Less than a week after the inauguration of President Biden and before the inaugural canapes had gone cold, the latest entrant made themself known with the publication of the “Longer Telegram." In this case, the “anonymous” author is a former senior government official who chose to pen a 73-page document (including an 11.5-page executive summary) filled with lists, bullet points, and ideas for how the United States can confront and contain China.

While one may parse the Longer Telegram’s strategy and quibble with its structure, the broader and perhaps more important point is that its publication is indicative of the fact that the United States is still struggling to craft and implement a sensible policy towards China. It is the greatest national and economic security challenge facing the United States; how it plays out will define the remainder of the 21st century. That Washington has consistently failed is likely due to the complexity of the challenge and that many of the assumptions underpinning America’s policies towards China are fundamentally wrong. Chief among these is the belief that China will liberalize its politics and its economy—a falsehood that Clyde Prestowitz lays bare in his newest book “The World Turned Upside Down."

“The World Turned Upside Down” struggles to find its feet at first. Readers will be forgiven for not grasping the message of the book from the outset, but will be rewarded for sticking with Prestowitz to the end. Prestowitz’s book is likely the most forceful declaration that the policies of the past towards China have been ineffective, that they will remain so, and that those invested in the system are unlikely to change their tune. It is, in a way, a call to arms for the United States to recognize the “China challenge."

The greatest challenge to implementing sensible policy on China isn’t a lack of ideas. The “Longer Telegram” is just the latest addition to a growing library of policy documents churned out annually from America’s think tanks. From (re)engagement to decoupling, confrontation to cooperation, and everything in between, policymakers in the White House and Congress do not suffer from a want of ideas. Rather, it is a lack of political will to confront the broader challenge of policy implementation and the diversity of actors who have an interest in China policy.

The first third of the book is a concise, albeit brief, history of China, the structure of the Chinese Communist Party, and its strategy. This section concludes with a chapter attempting to define whether China is a “threat” that is arguably the weakest of the section. The second third explores the rise of the United States and its economic dominance, as well as the “false god” of “constructive engagement”—in Prestowitz’ words—in which the United States believed opening China would liberalize China politically and economically. Prestowitz then takes many of the acolytes of this false religion to task. Finally, he outlines a plan of action for the United States to confront China, but also to strengthen its domestic position. Doing so, he argues, will help better position the United States in competition with China, but also lead to national rejuvenation. He boldly concludes with a “State of the Union” speech that he hopes would martial the United States to act.

The China Fantasy

Prestowitz firmly and forcefully addresses the elephant in the room of America’s historic policies towards China—the expectation that “constructive engagement” with China would lead to political and economic liberalization. If only Beijing entered into the World Trade Organization, if only international barriers to trade were reduced and China’s markets opened, and exports and imports increased, then China would become increasingly liberal and less authoritarian. This has proven demonstrably false.

He certainly does not lack vitriol for many of the actors who he suggests have been seduced by the allure of the constructive engagement fantasy. Perhaps the most vocal acolyte of the fantasy was President Bill Clinton and his team that aggressively pushed for the inclusion of China in the World Trade Organization. Arguments in favor of Beijing’s inclusion along with permanent Most Favored Nation status suggested that it was a win-win-win scenario for the United States—exports and jobs would increase, trade deficits would decrease, and China would become more like the West.

As of late, China managed to control the internet and censor the information Chinese citizens saw. The Chinese Communist Party strengthened its grips on the levers governing the country’s economy—granting western companies limited concessions and drawing out economic reforms. The leadership became more authoritarian and less open. China used international institutions to its advantage, and the win-win-win articulated by advocates of China’s entry into the global economy never materialized. It has managed to expand its influence in the region and globally, manipulating the system, but never becoming a full party to the western international order.

Prestowitz takes many to task for finding second careers as lobbyists and acolytes for Beijing’s interests and policies. In so doing they often lose perspective, parroting talking points from China and advancing Chinese interests instead of American. Whether overtly part of, or a tangential result of, China’s United Front effort to advance propaganda beneficial to the Chinese Communist Party (differentiated from China’s United Front Work Department), the result is the same. Former senior government officials, executives, political figures, and corporate leaders end up advancing not the interests of Washington, London, or Berlin, but Beijing.

Beyond the figures themselves, it is the corporations that are equally vulnerable to the allure of China’s lucre, sacrificing western liberal values in pursuit of greater market share. Prestowitz recounts how Apple, under pressure from Beijing, removed an app that allowed protestors in Hong Kong to track police movements. The National Basketball Association backtracked as well after the Houston Rockets GM tweeted out support for those same protestors. Individual and corporate self-censorship in the face of potential or real retaliation achieves the same result—advancement of the Chinese Communist Party’s interests and narratives.

Mirror-Imaging China

Prestowitz’s strength is clearly in his mastery of economics and trade policy. His analysis of the failed trade policies, their impact and effects, and how China has followed its playbook is cogent, pointed, and convincing. Despite the hopes and dreams of many in Washington, China has not, and will not, play by the rules of Western institutions or the post-World War II international order. To be sure, Beijing will engage in negotiations and dialogues but will pursue its own path and interests.

Of course, this is the prerogative of every state and every state does this, but the Western liberal international order provided structure and stability for competition, ensuring it remained peaceful and governed by international law. The result is nearly 70 years of global stability, prosperity, and growth. China’s use of these institutions, engagement in “lawfare” (using legal and international systems for their advantage), and cooptation of many international governmental organizations has confounded Washington’s policymakers for many years—policymakers who still believe that if the United States plays by the rules, so too will China.

There is also a fundamental problem in mirror-imaging in China analysis and policy at the macro-level—the belief that an actor behaves the same way as the observer. Here, American businesses believe that Chinese businesses operate along the same lines, with the same restrictions or freedoms, and structure as they do.

It is unthinkable that the Democrat or Republican parties would have a say in the governance or board structure of the FAANGs (Facebook, Apple, Amazon, Netflix, and Google), but that is, in effect, how Chinese companies operate. The Chinese Communist Party has a direct link into every company above a certain size, with party committees operating in a parallel fashion to the corporate boards. State-Owned Enterprises (SOEs) enjoy lucrative advantages over their foreign competitors, including preferential loans and credit, access to reduced utilities, and other factors that allow them to undercut their rivals. Yet, many of these structures and connections are hidden, deliberately obfuscated by language and design. Is it any wonder, then, that Huawei and ZTE were able to corner the 5G market?

The military dimension of the competition between the United States and China is not fully explored by Prestowitz. While he does touch upon it in the broader context of China’s rearmament and military modernization, and China’s regional behavior, it is a notable omission, especially as one of his recommendations is the merging of the National Security Council with the National Economic Councils. Too often books on China focus on one dimension or the other—security or economics. The reality is that they are fundamentally intertwined and Washington’s inability to grasp this and craft sensible policy is proving to be the most significant obstacle.  

Confronting China, Challenging America

At a macro-level, Mr. Prestowtiz’ conclusions and recommendations are aimed not so much at China, but at the United States. From requiring greater declarations of business ties to Chinese companies or departments to adjusting monetary policy, and from tightening market access and major governmental reorganizations, Prestowitz offers a platform of reforms that he believes would better position the United States for competition with China.

The challenge is, again, not in the ideas, but the implementation. The complexity of the China challenge and the fact that it affects every aspect of American life—and average Americans in particular—makes reform particularly challenging. Increasing trade barriers to China will undoubtedly result in increased prices, as would de-coupling from Beijing. That will have a demonstrative impact on Americans’ purchasing power and will result in a political backlash. Any policy will also have to confront the China lobby and the power of corporate interests.

Combining the National Security and National Economics Councils into one entity sounds sensible at face value, but obfuscates the complexity of such an effort and the likelihood of overlap, redundancy, and bureaucratic confusion. Merging NASA, DARPA, the Departments of Energy and Commerce, and others into a Department of Competitiveness makes for an interesting discussion point on paper, but in practice is impractical, inefficient, and likely to make matters worse, not better.

The greatest strength of Prestowitz’s book is its articulation of the lie that western policymakers bought into—that China would become more western if the west opened its doors and economy to Beijing. By dismantling the fantasy, identifying those who are party to it, and attempting to divine a path forward, Prestowitz’s contribution is a welcome addition to the discussion. Ultimately, the real challenge is in corralling all the parties and all the interests across the D.C. political and policy spectrum, along with the corporate and vested interests, and the American people to confronting what is the greatest single challenge America will face in this century. If Washington is unable to do so, Beijing will surely dominate the coming decades.