03/23/2021

How to beat China Inc.

Author: KEITH KRACH
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How to beat China Inc.

In the first U.S.-China meeting of the Biden administration, the Chinese Communist Party’s top diplomat Yang Jiechi and State Councilor Wang Yi came out swinging as they faced off with Secretary of State Antony Blinken and national security adviser Jake Sullivan. Dispensing with diplomatic protocol, Yang and Wang lectured America against meddling in China’s “internal affairs,” telling Blinken, “You do not come from a position of strength.” Yang then told the media, “China’s development and strengthening is unstoppable.”

Not so fast, Yang.

Citizens of the world have woken up to the truth about the Chinese Communist Party’s doctrine of concealment, co-option, and coercion. They now understand that the pandemic is a result of the concealment of the virus. They have witnessed the CCP’s co-option of Hong Kong, which has eviscerated the freedoms of its citizens. They realize the brutal coercion of Uyghurs in Xinjiang has grown into punishable genocide. And they don’t like it. This awakening has given the political will to government leaders and CEOs worldwide to stand up to the CCP bully. In Washington, this is one of the most unifying bipartisan issues of our time.

Yang and Wang understand the world’s sentiment has dramatically turned against China. This vulnerability led the CCP diplomats to adopt their aggressive “wolf warrior” posture. They follow the lessons of the ancient Chinese military general Sun Tzu, who famously wrote in The Art of War, “Look weak when you are strong and strong when you are weak.”

Ironically, the most critical factor in this great power competition is not about two governments facing off. It’s about one word: trust. Let me demonstrate this to you in a case study fresh off the competitive battlefield. It’s called the Clean Network.

One year ago, the CCP’s master plan to dominate 5G was in high gear. It appeared that Chinese telecommunications giant Huawei’s momentum was unstoppable. White House officials said it would be “nothing short of madness” to include the Chinese company, which was the backbone of the CCP’s surveillance state and its human rights abuses, in the world’s 5G infrastructure. At the Munich Security Conference in February 2020, Speaker of the House Nancy Pelosi warned European countries they would “choose autocracy over democracy” if they let Huawei take part in rolling out 5G technology.

A few days later, at a press conference in London, Huawei’s president of carrier business Ryan Ding boasted, “We have 91 commercial 5G contracts worldwide, including 47 from Europe.” The U.S. effort to alert allies around the world about Huawei’s threat to national security was failing.

The big aha moment came during my service as the undersecretary of state. After more than 60 bilateral meetings with economic ministers and foreign ministers, a common theme emerged. These officials would often say about China, “Well, it is an important trading partner.” Then, they would lean in and whisper, “But we don’t trust it.”

By the time our team took on the 5G challenge, it was obvious that our strategic positioning should be all about trust. “Trust” is the most important word in any language. It’s the basis of every relationship — business, personal, or otherwise. You buy from people you trust, and you partner with people you trust.

As my team at the State Department traveled to dozens of countries in Europe, Asia, Latin America, and the Middle East, meeting with government officials and telecommunication CEOs about the real and urgent threat to their 5G networks from Huawei, we boiled it down to one question: “Who do you trust with your citizens’ personal data, your companies’ intellectual property, and your country’s most sensitive information?”

It also became clear that everyone seemed terrified of China. Nobody even wanted to use the words “China” or “Huawei.” The elephant in the room was always the CCP’s bullying. Countries and companies were afraid of its retaliation. However, the key to beating all bullies is to confront them head-on. When you confront a bully, he backs down. And he really backs down if you have your friends by your side. The key to defeating China Inc. lies in the power of assembling a network of trusted partners to serve as a security blanket against China’s retaliation. To confront the CCP threat in 5G, we built the Clean Network.

In my Senate confirmation hearing, I outlined the strategy to address the China challenge: “My focus will be on harnessing three powerful areas of competitive advantage: strengthening our partnerships with friends and allies, leveraging the innovation and resources of the private sector, and amplifying the moral high ground of our democratic values.”

The Clean Network’s mission was to build an alliance of democracies to reverse China’s dominance of the critical economic sectors, starting with 5G, by harnessing the synergies of the U.S. government, our allies, and the private sector while leveraging our competitive advantage and existing initiatives. The core principles of this initiative were grounded in democratic values that form the basis of trust: integrity, accountability, transparency, reciprocity, and respect for the rule of law, property, labor, sovereignty, human rights, and the planet.

In their Washington Post op-ed “America’s partnerships are ‘force multipliers’ in the world,” Blinken and Secretary of Defense Lloyd Austin discussed the national security imperative to push back against the CCP. These force accelerators, as the “Clean Team” called them, successfully built the Clean Network alliance of 60 “clean countries,” more than 200 “clean telecommunications businesses,” and dozens of industry-leading “clean companies.”

As Blinken points out, “When we’re working with allies and partners, it’s 50 or 60% of GDP. That’s a lot more weight and a lot harder for China to ignore. China sees alliances as a core source of strength for the United States, something they don’t share and enjoy.” Today, the Clean Network represents nearly 67% of the world’s GDP. That’s why the Wall Street Journal called the Clean Network “an undisputed success” and perhaps the “most enduring foreign-policy legacy” of the last four years.

As the Biden administration works to devise a strategy to confront the China challenge, the good news is it’s not starting from scratch. The Clean Network Alliance of Democracies turned the tide on Huawei and showed how to beat China Inc. Most importantly, it exposed the CCP’s biggest weakness: lack of trust. The Clean Network provides a proven, replicable model in confronting China. It is a beachhead that can be leveraged in what Blinken called “the biggest geopolitical test of the 21st century.”

Borrowing again from Sun Tzu, “No one has ever achieved anything of note without having alliances. Knowing how to conquer is the first step, building the alliances to get it done is the second.”

Keith Krach served as the U.S. undersecretary of state and the chairman of the board of trustees at Purdue University. He is also the former chairman and CEO of DocuSign and Ariba. As a result of the Clean Network’s success, Krach was sanctioned by China.