The U.S.-China competitive dynamic has been evolving rapidly and is at a critical crossroads. Policymakers can benefit from a new framework for thinking about this challenge that draws on an assessment of Chinese intentions, addresses how the dynamic does &mash; or could &mash; play out across various elements of national power, and offers realistic and actionable recommendations that are sensitive to the limits of U.S. competitiveness.

A Guide to Extreme Competition with China

Christopher Paul, James Dobbins, Scott W. Harold, Howard J. Shatz, Rand Waltzman, Lauren Skrabala

ResearchPublished Dec 1, 2021

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The U.S.-China competitive dynamic has been evolving rapidly and is at a critical crossroads. Rather than fostering greater cooperation, the global COVID-19 pandemic escalated tensions and is driving calls to rethink, reframe, and strengthen the U.S. competitive position. The United States might have the capacity and capability to counter China's influence, but China's rapid rise means that decisions about when and how to compete come with significant or even prohibitive costs. These decisions are also bounded by U.S. and international law, or even just the burden of upholding international norms and standards. China is opportunistic in exploiting these gaps.

In the long term, societal and economic trends will put the United States at a disadvantage as the next generations of policymakers assume responsibility for the China challenge. Now is the time to revise federal spending priorities to address current and emerging barriers to growth, innovation, and cooperation.

The purpose of this report is not to add to the overflowing catalog of policy guidance, strategic directions, and cautionary advice; it is, rather, to offer realistic, actionable policy options that align with U.S. interests but are mindful of the limits of U.S. influence. Policymakers can benefit from a new framework for thinking about this challenge that draws on an assessment of Chinese intentions and addresses how the competitive dynamic does — or could — play out across the diplomatic, informational, military, and economic elements of national power while remaining sensitive to the limits of U.S. competitiveness.

Key Findings

For the United States, there are risks in competing with China, but the risks of not competing are greater

  • There is a widespread perception that China is breaking norms and "getting away with it," including by antagonizing neighbors over disputed territories, diplomatically marginalizing Taiwan, ensnaring developing countries with high and potentially unsustainable levels of debt, and coercing its diaspora, as well as engaging in widespread espionage, intellectual property theft, and surveillance.
  • The United States has the capacity and capability to counter, compete with, or defeat China's influence, but there are risks associated with doing so.
  • Decisions about how to compete with China are bounded by U.S. and international law or the burden of upholding international norms and standards, and China is opportunistic in exploiting gaps in these measures.

Policymakers can benefit from a new framework for thinking about U.S.-China competition that considers the risks and rewards to both sides

  • Policy responses are likely to fall into five categories: (1) retaliating against, reciprocating, and deterring unacceptable behavior by China; (2) extending existing norms and promoting news ones, setting international rules and standards, and defining and exposing transgressive behavior by China; (3) sustaining U.S. leadership in providing for the global good; (4) supporting and building global coalitions and partnerships; and (5) restoring the health and vitality of the American system.
  • International institutions can threaten or impose large-scale diplomatic, economic, and military costs, but such responses are all but impossible without accurate intelligence, continual gaming of strategies, and field-testing of capabilities and partner interoperability.

Recommendations

  • Draw on capabilities across the elements of U.S. national power and build international consensus in formulating strategies to compete with China.
  • Shore up U.S. domestic capabilities, and use tax incentives and other federal programs to diversify supply chains.
  • Invest in military innovation and partnerships, which can allow the United States to take greater risks in competing with China.
  • Sign on to treaties that enforce current norms and standards and join alliances to strengthen trade relationships, taking the lead on committees and commissions in policy areas that are of interest to China.
  • Exercise leadership in cyberspace, bringing it under international laws of armed conflict and encouraging the adoption of standards that prioritize security.
  • Actively counter economic practices that give China an outsized advantage.
  • To enhance trust, promote an image of the United States that is cooperative, generous, protective of partners, and supportive of press freedom.
  • Pursue development financing initiatives and offer carefully monitored incentives to encourage investment in countries that are vulnerable to Chinese economic coercion.
  • Build partnerships, coalitions, and security cooperation arrangements that provide alternatives to alignment with China; this should include relationships with Chinese diaspora communities in the United States and elsewhere.
  • Expand the organizational infrastructure to publicly disseminate messages of condemnation and discredit Chinese propaganda and coercion through a coordinated, centralized mechanism; credible messages should be backed by a comprehensive understanding of China's activities.

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Paul, Christopher, James Dobbins, Scott W. Harold, Howard J. Shatz, Rand Waltzman, and Lauren Skrabala, A Guide to Extreme Competition with China. Santa Monica, CA: RAND Corporation, 2021. https://www.rand.org/pubs/research_reports/RRA1378-1.html.
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This research was funded by generous gifts from James and Nancy Demetriades and Russell Carson and conducted within the International Security and Defense Policy Center of the RAND National Security Research Division (NSRD).

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