CCP General Secretary Xi Jinping

CCP General Secretary Xi Jinping

Playing for Keeps: China Has Made the Free Market a Fool’s Market

We must never forget that the only way for globalization to bring the peace and prosperity envisioned by Tom Friedman in The World is Flat is to have a level playing field for all.

Source:  The National Interest  Oped: Keith Krach & David Stilwell

The godfather of globalization, Thomas Friedman, recently published an op-ed suggesting that actions taken to defend U.S. global economic security and prosperity could lead to war with China. He starts off by claiming that the U.S. withdrawal from Afghanistan left Americans regretting their decision, declaring that “If only we knew back then what we know now, we would have never gone down that path.” Then he raises the question: in twenty years, what current foreign policy decisions might we look back at and say the same thing?

His one-word answer: China.

Now, Friedman does not recommend altering the status quo of forty years of intolerable technology theft and the penetration of U.S. institutions by the Chinese Communist Party (CCP). Similarly, he sees no need to respond to China’s decisions to snuff out democracy in Hong Kong, wipe out Uyghur Muslim culture in western China, or use its economic power and wolf warrior diplomats to intimidate neighbors like Australia from even asking for a proper investigation into the origins of the novel coronavirus in Wuhan.

Friedman fears that losing the “benefits” of forty years of U.S.-China globalization and integration might lead to outright confrontation. “Are we sure we understand China well enough to decide that its mission is the global spread of authoritarianism?” he asks.

The answer to that question is an easy one for us. We have been traveling to China since 1981, and we both have a love for its culture, history, and people. The reason we agreed to serve at the U.S. Department of State was because, despite our vastly different careers, we saw the CCP’s growing global authoritarian ambition for what it is—the evolution of China’s market competition over the last few years into a form of techno-economic aggression by General Secretary Xi Jinping.

We now know the free world faces a new reality of ever-increasing cyber warfare and a seemingly ceaseless variety of intense, persistent, and weaponized economic competition. The CCP is playing the long game, and it’s playing for keeps. It’s playing a four-dimensional game of economic, military, diplomatic, and cultural chess with little respect for human rights, intellectual property, international law, transparency, the environment, or the sovereignty of nations. These are ideals that we honor and the CCP does not. They are ideals that also protect our freedoms and form the basis for trust.

Globalization assumes that everybody plays fairly and that the benign economic forces that regulate international trade obviate the need to take protective measures. Friedman’s famous book, The World is Flat, describes the many benefits of globalization. But it has one major flaw: it doesn’t account for disruptive actors like the CCP.

We believe in free trade. But when somebody doesn’t play by the rules, the market is no longer free. Think about it. If I’m competing against you, and you can steal my intellectual property, utilize slave labor, engage in bribes, subsidize your own companies, increase the use of coal-fired power plants, and never have to be transparent, the level playing field that the rules-based international order and globalization depend on is gone. You have become the law, which means you’re going to win every time. This is what China has been doing for forty years to give itself a strategic advantage, and there is not a shred of evidence that Xi is going to slow down anytime soon. That isn’t a free market—that’s a fool’s market.

However, defending ourselves from CCP predations need not lead to open war, as Friedman suggests. Here is proof. Let’s take Friedman’s example of 5G and Huawei, one of China’s “national champion” enterprises that also serves as the backbone of its surveillance state. In February 2020, both sides of the political aisle were hitting the panic button. It looked like Huawei was unstoppable, and the CCP’s master plan to control utility grids, power generation systems, sanitation systems, manufacturing processes, and the Internet-of-Things through Huawei’s 5G hardware was inevitable. Nobody wanted to imagine a world where an authoritarian regime controls technology. Earlier efforts to stem the tide had failed.

Many in Washington thought it was about technological and economic supremacy alone, and that the boat had sailed on 5G. But we realized it was about something much bigger than just technology and economics: it was about trust. Here’s the dirty little secret we discovered about the CCP: its biggest weakness is its lack of trust.

That’s when we harnessed America’s three biggest areas of competitive advantage by rallying our allies, leveraging the innovation of the private sector, and amplifying the moral high ground of democratic values. The result was the Clean Network alliance between like-minded countries, companies, and civil society organizations who operate by a set of trust principles to advance freedom and stand up against authoritarianism. These trust principles included things like respect for human rights, transparency, reciprocity, and national sovereignty.

In one jiu-jitsu move, we used these trust principles to our advantage, weaponizing them to protect our freedom and that of the members of our growing “clean” alliance around the world. The Clean Network eventually grew to include sixty countries, representing two-thirds of the world’s GDP, 200 telecommunications companies, and dozens of other tech companies. Against Huawei’s seemingly unstoppable momentum, we proved China is beatable. And in the process, we created an enduring, proven, and replicable model for all areas of economic competition.

But perhaps most importantly, the Clean Network’s bipartisan model has provided unity and continuity of policy between Republican and Democratic administrations, which is critical to our allies, and is what Xi fears most.

The Clean Network’s trust principles explicitly state that while no nation is excluded forever, countries that do not abide by the trust principles will be excluded from membership until they reform problematic practices and laws. These principles encourage countries to do what every truly free market requires most: fair play. By building a technology alliance based on these trust principles, the Clean Network might prove to be too large of a market for the CCP to ignore. It gives China a choice: sacrifice the largest market or play fair.

We must never forget that the only way for globalization to bring the peace and prosperity envisioned by Friedman in The World is Flat is to have a level playing field for all.

Otherwise, when our grandchildren ponder the same question, “If only we knew back then what we know now, what would we have done differently?” the answer will still be “China,” but it might be in Chinese.

Keith Krach was unanimously confirmed as U.S. Under Secretary of State and is currently the Chairman of the Purdue Tech Diplomacy Center. He served as Chairman and CEO of DocuSign and Ariba and Chairman of the Purdue Board of Trustees. Krach was sanctioned by China.