What's driving dynamics across Asia? In our latest Pacific Polarity episode, Dr. Evan A. Feigenbaum of the Carnegie Endowment for International Peace breaks down the key geopolitical trends reshaping the Indo-Pacific.
Our expansive dialogue covered several topics, including:
Climate change in the Pacific,
A prospectus of AUKUS and U.S.-Australia relations,
China’s hardware-software tech ecosystem,
The future of rule-setting in Asia,
U.S.-China economic statecraft, and
The importance of American strategists to understand the concerns and aspirations of Asian states as independent actors, as opposed to pawns in the competition between the United States and China.
Richard Gray
On this episode of Pacific Polarity, we are speaking with Dr. Evan A. Feigenbaum, who is vice president for studies at the Carnegie Endowment for International Peace. He served as deputy assistant secretary of state for South Asia, deputy assistant secretary of state for Central Asia, and other senior roles within the State Department with a regional focus on East Asia and the Pacific. Following his time in government, he forayed into think tankery at the Paulson Institute, Council on Foreign Relations and in consulting at Macro Advisory Partners, the Eurasia Group, and his private practice. Dr. Feigenbaum, pleasure to be speaking with you.
Evan Feigenbaum
Thanks. Good to be with you.
Richard Gray
As a starting point, your PhD was somewhat narrowly focused within Chinese politics. Since then, your career expanded to East, South and Central Asia, in public and private contexts. Given the laser focus of Washington currently on China, what made you look beyond that to see Asia as a broader region, about half the world population? And is there a through line between the continent subregions in your experience? What would that be?
Evan Feigenbaum
My career started as a very conventional China guy. I got a PhD in Chinese politics. I wrote a book on China. I was teaching on China. And then what happened, essentially, is I went in the government. And in the context of government service, I began to evolve into a set of roles that dealt with other regions of Asia. So I like to joke sometimes that at some point, my career began to converge with Genghis Khan, as I stormed from one region of Asia to another region of Asia, not necessarily conquering everything along the way, but nonetheless getting a taste of the different regions.
The interesting thing about that is the timeline, because as you said, it happened really in the first decade of the 2000s. And that was a period when these different subregions of Asia began to reintegrate economically, financially, and to some extent strategically in a way that was much closer to the natural patterns of the history of Asia than what I sometimes say is the Cold War anomaly.
Just take Central Asia as an example. When it was part of the Soviet Union and before that the Russian Empire, a lot of the traditional and natural connections across Asia through trade routes, spread of religions, of ideas, really dissipated. Same thing with India and East Asia.
There are all of these legacies of India's role in East Asia, even the names that we ascribed in English to these places, Indonesia, Indochina, the fact that Cambodia still has Hindu temples, and you can see the legacies. But in a British colonial context, a lot of India's traditional connections to its wider and more natural region were severed.
And so what was going on, as my personal and professional trajectory began to converge away from just China to a broader set of roles and responsibilities on the region, was that the region itself was undergoing not just a transformation, but a reversion back to some of the traditional patterns of history.
In Central Asia, for instance, China is the leading trade and investment partner for most of those countries now; in a way, even though it's in a different context, that mirrors the role that China or influences from China played in the region's history in the pre-Russian period. And there's Asian money flowing across Asia looking for yield, looking for investment in ways that were not the case 20, 25 years ago when I got started in this business. So in that sense, it's interesting because I think Asia is reverting back to some of the historical patterns and norms that were both more natural but also defined the evolution of the region, but then were broken up by artificial, political, strategic and institutional context.
One question that's worth interrogating is whether the United States, because I'm American, is well positioned itself to deal with a region that's more Asian and less specific and more integrated in the way that it is. And, if you know anything about my work, my general answer to that question is no, the U.S. is not well positioned at all. And so I think the region 20 years from now is going to look a lot different than it did when I got into this business really around the 1990s.
Richard Gray
In 2009, you and Robert Manning co-authored a special report with the Council on Foreign Relations titled “The United States in the New Asia”. Looking back on that report, it's somewhat remarkable how the United States today is in combination either doing the opposite of what you recommended, or small pieces of which are largely dissipating. You pointed to the importance of engagement and multilateral fora, which successive Democrat and Republican administrations have not had the greatest of track records and continual engagement. I still don't really have a clear sense of what the U.S. vision is for collaboration with ASEAN as an institution. And we are many, many decades out from that initiating.
When the Biden administration did adopt some flavor of a latticework approach to institution building, not all of which is inclusive of the United States, that was very security focused and so missing some of those important economic components; the security pillars in themselves also have a level of uncertainty about what their future might be going forward. These are a lot of like security, economic and institutional components; what exactly went wrong here? And to coin your phrase, are we really the Hessians of Asia today?
Evan Feigenbaum
First of all, it's worth backing up a little bit and asking the question about what makes the United States a leader in this part of the world, and whether, if you project forward in 10 years, the things that would sustain American leadership would be the same pillars that sustained American leadership 15, 20 years ago, much less in the context of the Cold War.
The United States was traditionally a leader in Asia, as I wrote in a different piece with Bob Manning a few years later in 2012 called “A Tale of Two Asias”, not just because it was a security provider, but also because it was a major provider of economic-related public goods and other benefits to the region.
On the security side, the United States largely kept the peace, because both for its allies and for those who were not allies, but took a free ride off the security that the American presence provided through alliances, forward deployed military presence, carrier battle groups, that security role provided assurance. And for basically everybody except, let's say, China and North Korea, provided a kind of security blanket for which to pursue their own goals, including development, growth, prosperity.
Which brings us to the second pillar. The United States wasn't just a leader in this part of the world because it was a security provider. It was also an important economic leader, because it was the demand for which Asia's export-led economies relied on to power their way to prosperity. And it was a major setter of standards, writer of rules, and driver of norms.
Okay, so that was the traditional role. So now, if you fast forward to today, it's worth stepping back and asking the question, is the US still, through its policy and posture, playing that security role, but also that economic role? And my answer in the first instance would be, in the security realm, the answer is largely yes, because most countries are afraid of China and want the United States around.
But in the economic realm, if you project out 10, 15, 20 years, that pillar of American leadership is likely to recede in relative terms, even if the United States continues to play a big role in absolute terms. U.S. trade with every country in the region is going up in absolute terms, but declining everywhere in relative terms as a share of their trade; if you look at where China was 25 years ago versus where China is now, for example. And then over multiple administrations, but particularly in this administration, the United States is increasingly perceived as closing its market, raising barriers, being unwilling to join pacts and agreements that are rule setting or standard setting. That's a very different configuration of American power. And what that means is that Asians themselves increasingly are going to find ways to write rules together with or without the United States in the room.
So number one, let's recognize that's a very different setup than during the Cold War or in the immediate post-Cold War aftermath. But second, there's the question, and this is what Bob and I were getting at in that CFR report that you talked about, whether the United States is adapting to that situation. In other words, if Asians are going to write rules with one another, does the United States want to be in the room? Does the United States need to be in the room? What role is the US going to play if there's Asia-only institutions, pacts, agreements, understandings, as has been the case with, for instance, the Regional Comprehensive Economic Partnership, the United States is on the outside, the Comprehensive and Progressive Trans-Pacific Partnership, the United States is on the outside, the Digital Economy Partnership Agreement, the United States is on the outside. So you have this trend toward writing of rules in which the United States is on the outside with its nose pressed against the glass or is actually absenting itself from the process. That raises a lot of questions about how the US wants to posture itself.
Where I would conclude this is just to say, what that means is the US is facing a big crisis of confidence in the region, but particularly in Southeast Asia, about what kind of role it can play, wants to play, and therefore will play, and how Asian countries ought to position themselves. That's not the first time the US has faced a crisis of confidence in the region. If you think about 1975, When the US lost the Vietnam War, there are a lot of questions about whether the US had any staying power in the region. But I think this moment is particularly salient because, given the way the Trump administration is posturing itself on things that really matter to Asian governments: firms, markets, people, trade, tariffs, protectionism, terms of trade, there's a lot of concern about what kind of role the US is going to play. And so I would say the U.S. isn't adapting itself very well. And that's what Bob and I were getting at, is the U.S. needed to be prepared for a more Asian moment and couldn't just presume its own centrality. And I think in Washington, there's still too much of that presumption that because everybody fears China, the U.S. will be the alpha and omega of the region into infinity. And I'm sorry, that's just not the case.
Jersey Lee
Perhaps emblematic of this, yesterday at a Lowy Institute event, CSIS CEO John Hamre argued that Undersecretary of Defense for Policy Elbridge Colby has an unusual amount of power in this administration due to dysfunction at the top, and is also someone that Hamre described as “mono-dimensional on fighting a war with China”. Meanwhile, his boss Pete Hegseth's Shangri-La speech was also laser-focused on competition with China, referring to everyone else in the room as “allies and partners” in this endeavor. So it really seems like all of America's Asia policy is being boiled down to China policy, as you say, and this is also something that does go beyond the current Trump administration. But at the same time, there is the reality that China is growing ever more powerful and ever more salient, so that would obviously amplify voices in Washington arguing for such a laser-focused approach.
So can or even should this trend be changed at this point?
Evan Feigenbaum
If the U.S. wants to be relevant in the region, it needs to speak to the goals and aspirations of Asian countries themselves. And the reality is, first, that for most countries in the region, they're not willing to divorce from China. But second, they don't really have the luxury of it because their agenda is growth, employment, sustainability, upskilling. And on those things, China has an offering in the region that I see very few countries in Asia that are prepared to simply reject out of hand. The US is not going to get a lot of traction in 90% of the region by running around and saying, write China out of the story of Asia. Don't take China's money. Don't take China's technology. It's a cliche to say the United States needs a competitive offering, but it's more than just competition. It's that the United States needs to compete, but also set the terms and context jointly or in complementary ways with Asian partners that shape the way China interacts and postures itself in the region.
I had a boss in the State Department who recently passed away, Richard Armitage, who was Deputy Secretary of State when I was in the department, he was a longtime Japan hand and Asia hand. And Rich famously said something like, “to get China policy right, you need to get Asia policy right”. What Rich meant by that, I think, was that the United States can't always have a lot of success in shaping China's choices. But if it shapes the strategic context in which China operates with partners, it will at least contribute to the incentives and disincentives that Beijing sees in deciding on its own policy trajectory.
What you're getting at with the way you set that question up is that the United States has turned Armitage upside down and inside out. Instead of getting China policy right by trying to get Asia policy right, increasingly over several administrations of both parties, it's basically made every policy initiative and strategy in Asia derivative of its focus on competing with China. Unfortunately, that's not how most countries in the region see it, the China centrism.
Second, the American approach to that is entirely securitized. Everything's a national security issue. Technology, national security. People to people exchange, national security. Economic flows, national security. Chinese investment in your economy, national security. That's how Americans see it, but it's not necessarily how Malaysians see it. It's not even necessarily how Vietnamese see it, for all the ambivalence in Vietnam about China. The U.S. isn't going to get a lot of traction with that. And what's more, it undermines the American offering to the region.
So can that be recalibrated, as you asked? I'm not so sure, because I think we have a broad political and bipartisan trajectory that's kind of baked into the American body politic now to focus, as you said, in a laser-like way on security competition with China and to try to shoehorn regional strategy into that. And I think that's why the U.S. isn't getting the kind of traction that that it wants and needs, frankly, outside the Quad countries. There's a huge disconnect in the region between the Quad narrative and basically the narrative in most other countries, with a few exceptions like the Philippines. But as you know, if you follow it, the Philippines is like a whole new country every six years. So I wouldn't presume the trajectory that we're on in Manila today is the trajectory we're going to be on five years from now. So that's the challenge.
And without commenting on specific aspects of the current administration's policy, I think when you have a president like President Trump, who has an approach to the region that is neither principled nor strategic, it's very hard to imagine a scenario in which the United States really builds coalitions that are aimed at shaping the region rather than a narrow, heavily securitized and largely self-interested set of American objectives. And that's the problem with so-called America First, is that if you walk in the shoes of other people in the region, they say, does America First mean us last? And the region is filled with sizable, capable, self-interested middle powers that want to have something to say about the way the region's future is shaped. And I just think that the political trajectory here is not really conducive to being adaptive to that. And it's why I've been crankily writing articles for 15 years about how the United States is going to fade from the region.
Richard made a comment earlier about something I'd said on another podcast about the US becoming the Hessians of Asia. We sail boats and fly planes around, but we're short on everything else. And I really worry about that. And I think if you project forward for 10 years, just screaming China in a crowded theater is not going to have a lot of resonance. There's a role for the U.S. in deterring China in the eyes of other countries in the region. But in other areas, in a lot of ways, the region's just kind of moving on into a de-Americanized, post-American era. And that's what I meant by a crisis of confidence. People can't just presume that other than in the security space, the U.S. is going to be there in a way that speaks to their goals and objectives.
Hegseth hasn't really answered the mail on that, partly because he's the Secretary of Defense, who by vocation talks a lot about security, but if what the region is worried about is that the United States is long on security and short on everything else, you can't just divorce the security stuff from what's happening more broadly in American policy and posture. If you're tariffing everybody out the wazoo in ways that actually attenuate their growth and development, you can't just come in and say, oh yeah, but we're your security partner of choice and hey, let's forget about all that other stuff. It's much more organic in the eyes of Asian countries. And so again, I go back to where I started, which is I think the US role in the region is gonna look a lot different in 10 years than it has historically.
Jersey Lee
Kind of getting at what you're talking about, facing the US-China strategic rivalry, you've also recently argued that some countries in the region could stand to gain by extracting benefits from one or both powers. However, could Trump's transactionalism, his different approach, as you mentioned, change this calculus? For example, the scale of the May US-China trade war ceasefire was quite unexpected, particularly as China had in some respects gotten a better deal than the UK, leading to some fears of there being a “G2”, between just US and China. Here in Australia specifically, this has given more salience to arguments against greater strategic alignment with the US, with people arguing that the US could just leave Australia “out to dry”, in a way reminiscent of Nixon going to China and surprising the then Australian government, leaving them with an awkward foreign policy posture in Asia. So how might the regional impacts of the U.S.-China strategic rivalry evolve?
Evan Feigenbaum
There isn’t going to be a G2 in Asia, because as I said, there are a lot of sizable, capable, self-interested countries that get a vote on what the future of the region is going to look like.
You can see that in relief if you look in the trade area. I sometimes tell this story that back in 2016, when President Obama was trying to make the case for American participation in the Trans-Pacific Partnership, he argued the case partly by saying that if the United States didn't write the rules in the region, China would write the rules in the region. So that's a different kind of G2. In other words, it's not a G2 through consensus between the US and China writing rules. It's that there's a kind of bipolarity in the region. And if the US doesn't do it, China will. It'll be a Sinocentric region or an American-centric region. But as we all know, that's not even in the TPP context how things evolved, right? If President Obama had been right about that, then when President Trump took the United States out of the TPP, what should have happened? China should have come in to become the rule writers. But as we know, and you particularly know because you're in Australia, and Australia played a role in this, that's not what happened at all. Instead, the other 11 got together, solidified an agreement, and neither the United States nor China is party to the agreement. So what I take away from that is that other countries get a vote and sometimes get to write rules themselves and have something to say.
I've sometimes argued that what the region is heading for outside the security area is something more like fragmentation, where there are going to be a lot of different rules in a lot of different areas and on a lot of different functions. And the question facing the region is whether and who is going to integrate those in a way that drives growth and development in the region in a salutary way. So, for instance, if you look at the data economy, cross-border data rules vary a lot from country to country. India's data localization rules are not at all to American liking. Korea's data localization rules are pretty hefty, too. So there's a patchwork of rulemaking that's going on in the region, and that's not something that you can just take a G2 strategic concept and overlay it. In other words, the region is neither going to be America's to win and set the rules for, nor China's, but it's going to be a shifting set of function-specific coalitions, where how the region evolves is going to depend a lot on how open, how market driven and how stable the rule writing is going to be, and then who adheres to those and how you enforce compliance with them.
On the implicit thing that you're asking, could the US and China get together in a smoke filled back room and make a deal and play basketball over the heads of everybody else? No, the answer is no, because there's just too much mistrust between the two of them. What would a G2 really look like? The US would have to put its alliances on the table. China would demand the US put Taiwan on the table. The US would demand that China put various aspects of its domestic system on the table. And so, Trump's transactionalism aside, it's a kind of very limited, deal-specific transactionalism. It's not high-level strategic condominium kind of transactionalism. So I just don't see it. And I think the reality is, while some fear it, they fear it in ways that are largely tactical and inimical to their interests in specific areas. I don't know any serious person that thinks the United States and China are going to get together and just decide the future of the region. It's kind of preposterous.
Richard Gray
So I want to briefly go back to Hegseth’s Shangri-La speech. He's given a take on whether or not he does or doesn't engage in non-security questions. So what he would talk about, he'd try to disentangle the economics from the security, but not necessarily the social or moral from the security. One of the items that he talked about was not lecturing the region. There was a very specific example he gave about what the Pentagon would and would not lecture the region on, and that was climate change.
This was a really strange one to focus on, because if you're talking particularly to South and Southeast Asian representatives, and saying that you're not going to lecture them on climate change, it does seem quite out of touch, as Indonesia is moving its capital, as India is losing millions of hectares of arable land, as the Mekong Delta is projected to submerge. I mean, these are things where it's one item to say that the United States shouldn't be preachy to countries. It's another to miss that one of the most important items of their political, economic and social trajectories is that very thing which you don't want to lecture them on.
Evan Feigenbaum
First, I would reject the premise that it's largely the United States that's been lecturing countries in the region on climate change. The reality is it's largely been the other way around. If you think about countries in the Pacific, states like Vanuatu, which actually brought a lawsuit against Western countries in international bodies over issues related to climate change, it's the smaller countries, countries for whom climate change is a very salient issue in terms of their future, Fiji, Vanuatu, Kiribati, Tuvalu, Tonga, countries where the United States talks about strategic competition with China, for whom climate related issues are largely existential. And if you've spent time with people from the Pacific, their view is if the United States just wants to talk about strategic competition with China, but isn't prepared to talk about climate change, that the US isn't really speaking to an agenda that matters to them because it's existential. So I think just in a fact-based way, that's an ideological point that Hegseth is making, that's largely a function of US domestic politics and domestic debates about climate and green energy. But the reality is it's largely been countries in the region that have wanted to talk to the United States and China for that matter about that set of issues.
So if you take that set of issues off the table, you're going to raise a lot of questions across the Pacific and in Southeast Asia and elsewhere, but particularly in smaller island states about whether you could care less about the agenda that matters to them. And even if your only agenda is to compete with China, that's not a good starting point because it's hard to compete if you're perceived as uninterested in existential issues. And I think that's really handicapped the U.S. and the Pacific. Now, you layer on top of that what's happened to the U.S. Agency for International Development, development finance in the region, including but not limited to the Pacific, it becomes even harder to make that case. I think the larger issue though is that people just view the United States as being largely, as I said earlier, China-centric and security-centric.
I get what Hegseth and Bridge Colby are trying to say, which is that the United States has not always had a lot of traction in the region lecturing countries on their domestic politics. So let's put climate change over here and talk about regime type, ideology, domestic politics. Even if you think the US doesn't have the luxury of a value-free foreign policy in this part of the world, and I don't think the U.S. has the luxury of a value-free foreign policy in this part of the world, it is a reasonable proposition to say that a highly ideological policy doesn't work well in Asia. Biden ran into this when they had a construction about democracy versus autocracy being the organizing principle, and people in the region said that kind of ideological approach, where you shoehorn everybody into your ideology, that doesn't work in Asia. That narrative is worth interrogating seriously because that's something that a lot of Asians have said. And frankly, a strategic approach to the region, including to competition with China, requires that the United States work with countries like Vietnam that are not exactly paragons of openness and political virtue in terms of their domestic institutions.
But I don't think that's what they really mean by it. I think what they really mean by it is that they want a narrow focus on competition with China and everything else gets kind of put into secondary tertiary position. And I think that circles us back to the problem we talked about earlier, which is security competition with China is not irrelevant to everybody else's trajectory, but it's not the alpha and omega of what matters to them. Because what matters to them, as I said earlier, is growth, development, upskilling, sustainability, innovation. And China's part of that picture. The United States needs to have an offering on that picture. And for the United States to just say, forget about all that, let's just talk about security, and you should be afraid of China, be very afraid, and if you're very afraid, all this other stuff will just go away, it should sharpen the mind; that's just not very well anchored in the realities of the region. And I think that's the problem.
And by the way, even in the security realm, if you follow Vietnam's trajectory, Vietnam is basically run by cops and security guys now who, in a lot of ways, actually kind of like China. And since To lam took over, every other week, somebody from the Vietnamese Politburo seems to be up in Beijing getting their photograph taken and talking about coordination on internal security policing. They love buying surveillance equipment from China. So the U.S. may be the external partner of choice for Vietnam security, but the internal partner of choice is absolutely China. And they see it in like-minded ways. So even in the security realm, as a couple of my Carnegie colleagues, Sheena Greitens and Isaac Kardon, have written, security is becoming more multidimensional and variated even in countries that are natural partners for the United States in thinking about competition with China. And I'm not sure the formulations coming out of the Defense Department now really encapsulate that well.
Jersey Lee
In terms of the international security angle, there's just this big recent piece of news that lots of Australians care about right now, that Elbridge Colby is apparently leading a review into AUKUS. And the Pentagon statement on that reads, “Hegseth has made clear this means ensuring the highest readiness of our servicemembers, that allies step up fully to do their part for collective defence, and that the defence industrial base is meeting our needs.” The fact that Australia Prime Minister Albanese recently rejected Hegseth’s demand for 3.5% of GDP to be spent on defence, has led many to conclude that this may be an attempt to force Australia to accede to such a demand. Others are saying this review is routine and not a big deal. What’s your view? What effect would this have on the US-Australia alliance?
Evan Feigenbaum
I think there's been a lot of rah-rah about the alliance over the last decade. I'm part of the rah-rah. I'm a longtime participant in the Australian-American Leadership Dialogue. I've been the co-chair of the dialogue. And I think it's both in the United States' interest and in Australia's interest, to build this alliance out, especially but not limited to the security realm, in new directions that prepare us for the possibility of high-intensity conflict in the Indo-Pacific.
Beneath the rah-rah, there are a lot of expectation gaps and contradictions that have not been properly aired out. I edited at the Carnegie Endowment a big alliance review report that dug into some of this regional strategy, forced posture, defense innovation, and science and technology. Because the reality is, despite all that hoo-ha about 3%, 3.5% as Hegseth said at Shangri-La, the budget issue belies the fact that there are other expectation gaps that are gonna matter a lot. American and Australian defense strategies are closely aligned, but they're not actually identical.
Increasingly, the United States is raising the bar of its expectations for Australia and U.S. forces rotating through Australia to be integrated with U.S. war planning in ways that Australian governments, even on the Coalition side of the aisle, would probably resist for reasons related to Australian sovereignty and the idea of pre-commitment, right? Because it cross cuts Australian politics in very complicated ways. So that stuff needs to be aired out. And in that sense, we haven't had a very serious public conversation about the expectation gaps in the alliance, and we need to. Another aspect of that is the geographic locus of focus, right? Australia has traditionally been focused in its defense strategy closer to home. The US is focused in particular on one contingency. So there's nothing wrong with an alliance review, much less an AUKUS review, and particularly what it means for U.S. capabilities, alliance roles and missions, but also what the Australian defense spend can buy, if so much of the budget is basically directed at the AUKUS mission, both in Pillar 1 and Pillar 2. I do see that as largely routine.
I think the reason it's been so politically combustible that the prime minister felt he needed to come out and address it, was because of the way the United States appears to be teasing the linkage between the defense spend and what the US is going to be able to do on AUKUS. In the Financial Times piece yesterday that you're referring to that reported on the review, it was Demetri's scoop, it was almost explicit. Essentially, Australia get to 3.5%, or else maybe no AUKUS. That's absolutely politically combustible in Australia. I think even after an election in which Albanese was reelected with a majority, the base Labor voter has a view of AUKUS that in ALP politics is a little bit different than where folks in Russell or Richard Marles in public have kind of positioned the government. That's going to cross-cut Australian politics.
But I do think there's an opportunity for the government, given where the Liberals are, to forge some cross-party and cross-bench consensus on a higher defense spend. And the U.S. isn't going to lessen the pressure on that. I think the pressure to raise the spend because of capabilities-based needs, but also because the way the U.S. is thinking about roles, missions and partnership now is not going to go away. And that's something that just going out and talking to cameras isn't going to wish away. Australia can stand to spend more on defense. And as Charlie from CSIS pointed out in another piece I read, the defense choices are pretty stark because AUKUS sucks up so much of the budget that actually Australia, relative to a lot of other US partners, even though the defense spend is rising, is not rising at an equivalent rate or at a rate of equivalent speed. So I don't think that's going to go away, and I don't think the US pressure is going to go away. And I'm not expecting AUKUS to just be canceled. But I do think it's a teaser of what's coming, and the Australian defense establishment seems pretty ready for it. The question is whether the political class and the public are ready for it, because the government doesn't have social license for it yet, and they're going to need it.
Richard Gray
I was recently in Guangzhou, China, and one of the really fascinating things was that parts of the city seem like time capsules of the American imagination of what China is. So the American perception of China is a textile factory as opposed to a country of mass capital mobilization, technology and political power. And I think textiles really is a good place to start when thinking about China, because you can think about the United States in Europe designing a luxury bag and then a Chinese factory creating a replica of it.
But that's not really the same as we think about a digitizing China. It is true that if you go to a Huawei store, their MacBook or their Devices look very similar to MacBooks with Windows operating systems, but in a lot of domains like EVs, batteries, transformers, and transit systems, China is in many ways leapfrogging quite quickly. And so I think in the American perception, we view China as in many ways of just replicating but not innovating. I think that's changing quite rapidly. How do you view the shifting balance of power and technology, particularly domains that we care about in the security space? And what would a world dominated by Chinese tech look like?
Evan Feigenbaum
Textiles wouldn't really be my metaphor for where China's heading. I think the better metaphor is the hardware ecosystem in Shenzhen rather than Guangzhou, if you want to stay in one province, Guangdong province, right? Because the ecosystem in Shenzhen is really unique. And despite efforts to replicate it elsewhere in Asia, being able to prototype, build, turn around a product on a short timeline and then tweak, innovate it, and just keep doing it over and over again within a small localized geographic, there's nowhere in the world like Shenzhen. It's like a wonderland of hardware.
The way I think about textiles increasingly is like Cambodia, Bangladesh, Southeast Asia, South Asia, and actually a lot of it with Chinese investment. The fastest growing investor in a lot of those economies happens to be who? It's China. And a lot of the China plus one that's happening is actually Chinese firms moving and then bringing their multinational partners with them. So my metaphors for where China is heading, one would be kind of that hardware ecosystem in Shenzhen. And then the other is the hardware software integration of that you see in an industry like drones. Why is DJI the market leader? That's a hardware package that, if I'm not mistaken, is flying a Microsoft software package on the drone. And so China mastered the hardware, then figured out how to integrate the software with the hardware in a way that made it the market leader, often with multinational complicity. There are not a lot of places that have had a lot of success in replicating that.
If you think about Taiwan, for example, Taiwan really excels in hardware. Software, not so much. Hardware software integration, not so much. And so competing with China, or creating alternative centers to China means creating an alternative hardware ecosystem that isn't just about building somewhere else, but Shenzhen can prototype, turn things around on short product cycles in ways that only China has been able to master. Second, in a lot of these emerging and foundational industries, integrating software and hardware in really creative and functional ways. There are going to be a lot of industries like that.
Before we get to EVs and semiconductors and robotics and all these life sciences and all these amazing innovations, there's just that. A lot of what China's doing better than anybody else is basically to automate manufacturing and do advanced manufacturing in ways that others have tried to do but are just not doing effectively. And I think on that, China is still in a lot of ways going to continue to be dominant just because of the nature of the hardware ecosystem.
On the innovation side, you have to get really granular and industry specific. It's very hard to generalize, right? Semiconductor is not so successful. EV supply chain, much more successful. Life sciences and biotech, interesting story, because the first generation of Chinese biotechs were all CROs, contract resource outsourcing. But those firms have become increasingly innovative. And in a country that has 1.4 billion people and is 26% or 27% of global cancer cases, it is not shocking that China is developing drugs and therapies that come from its own innovation and its life sciences ecosystem. And so one question is how innovative China is going to be. The second is how dominant China is going to be. But a third is whether the United States and others want to plug into that. I sometimes joke that if Chinese scientists cured cancer, half the people in Washington would say, oh, that's awful. Oh, how terrible. Oh, my God. They probably stole the technology or it's probably fake, they faked the clinical trials. If somebody cures cancer, we should be thrilled.
I think that's the part of the cross-border innovation that's being lost is if everything is security, even biotech and the life sciences, what are we losing from opting out through cross-border connections in that ecosystem and co-innovation? Life sciences, to me, more than any other area, exemplifies that, because China is going to develop drugs and therapies that may be a China-specific and global South phenomenon, in which the West just kind of opts out of it, and my country in particular opts out of that. And I'm not so sure that's good or in the interest of science. And it kind of ignores the fact that China is actually going to innovate in these areas. Does that answer your question?
Richard Gray
Yeah, I think that's right. My broader point was that on the Guangzhou textile piece is that that was like sort of a time capsule of American perception of China.
Evan Feigenbaum
I don't think Americans see it that way. I think it's a very small subset of Americans that think China is trapped in the 1970s. You've got one set of Americans who basically think China is like King Kong and Godzilla and is eating the world with its technology. And then you've got another set of people who say, well, if they're doing that, it's because it's all been stolen and they're not innovative. And then you've got another set of people, it's not the time capsule, it's more just they think China makes bad stuff, it's cheap stuff; I mean, look at the commentary on Twitter from the commentariat. There's a lot of people saying, what do we need China's cheap stuff for? I'm sorry, that's kind of a 1970s view.
To use your textile example, I was in a meeting with a very senior US official not so long ago, where in a discussion about technology, this official literally said, well, I wouldn't be unhappy if China sewed socks and made underwear forever, it's that high tech stuff that I'm not so happy about. I said something like, listen, pal, China hasn't sewed socks and only socks and underwear since 1983. There's a lot of other stuff going on in the Chinese technology ecosystem. If you just want them to darn socks and sew underwear, you're about 25 years out of date. I do think there are people like that, but not many.
The dominant narrative here is China eating the world in ways that are not good for the industrial and technology base of this country. That's a debate worth having, because there are national security implications to it, because so many emerging and foundational technologies are dual use. China mastering the AI or fast computing that can do amazing things with biomedicine, they can also simulate a nuclear weapons test and do lots of other stuff. That's a legit debate, but we haven't figured out how to segment the securitized and the less securitized parts of the debate or find a balance, as I said in the life sciences, that would, for example, help cure cancer. And if you've had a relative, as I have, die of cancer, it wouldn't have been the worst thing in the world if there had been a treatment for cancer. So I think that's what's missing from the debate. It's less about is China a behemoth or is China backward, but rather in a world where China's kind of a hybrid of those things, dominating in some areas, catching up in others, but behind in others, what do we in a self-interested way want to get out of a technology and science relationship with China? And if the answer is we don't want one, what do we lose by not having that kind of relationship? And I'd argue in some areas of biomedicine in particular, we lose something for sure.
Richard Gray
One of the interesting things about the recent US-China—I don't know if we want to call it agreement, armistice or whatever—in London, was it seems the general perception is that Washington has been caught on the back foot because they've consistently underestimated China's ability to enact export controls on critical minerals. And it's weird in that this has been something that the Biden administration knew about and presumably didn't do a whole lot about, or at least not enough quickly enough. But more broadly, I think the sense that the utilization of export controls on semiconductors was kind of the tripwire for the Chinese to think about the applications of these tools in a responsive mechanism. And so as the Trump administration used broad, across-the-board tariffs, China seemed more willing to use very targeted economic measures for broad economic measures in which the U.S. has applied. And so, seeing these negotiations, I know we don't have all of the details in print yet, but there is a general sense from the administration, but also in previous White Houses, that China's ability to utilize and take advantage of American dependencies and vulnerabilities and choke points has been massively misrepresented and understated.
As you see this deal coming into fruition in whatever form it might be, whether it's durable or not, whether it has concessions or not, what is your thought on that dynamic and American economic statecraft going forward with some of these minimizations of the risks, which seem to be incumbent at this point.
Evan Feigenbaum
I'm not sure the US underestimated Chinese leverage. I think it's more that the US has overestimated its own leverage. And I think this administration is particularly guilty of that, because they just thought China wanted to wheel and deal in the way that we wheel and deal. And that's not really the dynamic in Beijing these days. And what's more, the Chinese had a lot of time to prepare for this. You're talking about magnets and rare earth stuff; that's one part of it. But there's a lot of mundane things that go into the supply chain, like printed circuit boards, PCBs, China is completely dominant on PCBs. They could cut off PCBs. And it takes a while to adapt to that. So some of that leverage for China can be used once. Some of it can be used repeatedly, but eventually it just takes a long time to diversify.
In any case, it's very clear that the Chinese were prepared to meet the moment in ways that they were not in Trump's first term. That's not surprising because frankly, if I may be blunt about it, they learn from the best. The US has been waging economic warfare on China by using administrative and regulatory instruments as a tool of essentially national security and competitiveness policy through several administrations now and China's copycatted a lot of the architecture. So institutionally, every tool that's in the OFAC toolkit, China's got the same, like the U.S., or the commerce toolkit. The U.S. has an entity list; China has an unreliable entity list. The U.S. has sanctioned individuals; China's sanctioned individuals. The U.S. has sanctioned companies; China's sanctioned companies. The U.S. extraterritorializes its export controls and tries to get third parties to deny licenses to China; China's actually written things into its legislation that are designed to do exactly what China condemns, which is so-called long-arm jurisdiction of US controls: There's an article in the Hong Kong National Security Law, Article 29, Section 4 of the Hong Kong National Security Law, that makes it a violation of the law to implement foreign sanctions. Okay, so there you go. Inherent dual compliance problem. You're out of compliance with the law if you're complying with foreign sanctions. So this is all deliberate.
I wrote an article in Foreign Affairs with Adam Szubin, who used to run OFAC, the Foreign Asset Control Office at the Treasury Department. We pointed that out that basically China went from loathing sanctions to loving sanctions. That doesn't mean they've always pulled the lever, but they've been getting ready, if anyone's paid any attention to this trajectory, over time. They're very careful students of where their leverage is, so I don't find any of it very surprising. I think in some areas, like some of the mining and critical minerals, there's a lot of effort underway by the US, Australia and others to think through, maybe not by next Thursday, but over time, how to reduce that set of dependencies on China. So it's more of a short-term problem than a forever problem. But that's not necessarily true in all areas. The reality is both the United States and China have discovered through this that they have leverage on each other and they have vulnerabilities to each other. Neither can presume that this is going to be completely cost-free, which ought to incentivize a deal.
The problem is that I think the American impulse, particularly in any area that's technology intensive, which after all is what China wants, is to control. On the Chinese side, the impulse is to indigenize. The dynamic here is really, if you think about it as a Venn diagram, what's at the interstices of the American impulse to control and the Chinese impulse to indigenize, is the flow of technology and knowledge; there's not much left at the center of that Venn diagram, that China wants and the U.S. is prepared to give, notwithstanding what, at Trump's behest, Bessent, Lutnick, and Greer may have put on the table on export controls in London, and we don't know.
So on the surface, this doesn't look like a great deal to me. American consumers got stuck with a 55% tax, on everything they buy from China. Meanwhile, China's going to sell rare earths and magnets that the US had access to already before all this started back in April. Basically, we're going to rewind the clock to buying what we already were buying before, except now we have a 55% tax on everything for the American consumer. That may not be the end of the story. Bessent, in particular, has been teasing that there's more here. Let's see. It's hard to give the administration the benefit of the doubt, but let's do it and let's see what came.
I think the harder piece is, I just don't think it's the end of the story given the president's impulses. Lutnick came out yesterday and said something like, 55%, that's the end of the story, that's the ceiling. We're not going to move this. I wasn't aware that he could commit his boss, the president of the United States to anything, because number one, the boss loves tariffs and number two, the boss changes his view of what the objective is here, sometimes on an hourly basis, and number three, the administration has articulated not one, not two, not three, not four, but at least five different rationales for what they're trying to do, some of which require you to keep adjusting tariff rates and keep shifting direction.
If your goal is to raise revenue, then you need tariffs pretty high, but not so high that they become trade prohibitive. If your goal is to reassure everything, then you need tariffs that are trade prohibitive. If your goal is to make deals with China and with others, you need to be prepared to actually roll back the tariffs. If your goal is to build an anti-China coalition, as Bessent teased at one point, then I'm sorry, that's gaslighting because then you never would have tariffed all your partners in the first place in the way that they did. I think whatever it is, it's not the end of the story, but the bottom line is, both sides are prepared to weaponize economic tools in ways that can hurt the other. And that kind of mutual vulnerability raises the cost to ordinary people in ways that ought to incentivize at least some deal making within the constraints of national security.
Jersey Lee
Finally, a bit of a meta question, I guess. So in discussions with senior Asia policy people, one of the common sources of dejection is that deep regional expertise is no longer valued, or that people would work decades to receive appointments that today have much more to do with political allegiance. For example, Nikkei Asia's Ken Moriyasu had a profile of four figures who will be the continual stewards of US-Japan relations following the passing of Rich Armitage and Joseph Nye: Mira Rapp-Hooper, Zack Cooper, Meghan O'Sullivan and Thea Kendler. However, within Trump circles, this piece was admonished as out of touch in an era of America First politics. So I guess, do you sometimes feel like you're just screaming into a hurricane? How can strategic thinkers reassert influence over the actions of this administration to any extent?
Evan Feigenbaum
Yeah, I sometimes feel like I'm screaming into a hurricane, because even though I'm a card carrying member of the Washington strategic class, everything we've been talking about for the last 40 minutes is a little bit at odds with the bipartisan consensus and the way on a bipartisan basis we tend in Washington to talk about the region. The way the U.S. has tended to talk about the region for about 15 years now is kind of, you know, China bad, allies good, yay Quad, hooray Indo-Pacific, Xi Jinping is a very, very bad man, everybody fears China, let's all get together. And as I've been saying to you, that's an Asia of American wishes, dreams, and fantasies. And since I live in a world not populated by leprechauns and unicorns, I think the US could stand to have a more reality-based view of the region.
The whole Indo-Pacific thing is an example. And I'm an enthusiast for Indo-Pacific for the reasons that I said at the very beginning, when Richard asked me the question about my career. I think a more organically integrated region is just the natural order of things. But if you think about the economic and trade discussion we had earlier, the three trade packs setting standards, CPTPP, RCEP, DEPA, who's on the outside of all three of those? The United States and India. So the largest economy in the Indo and the largest economy across the Pacific are both missing in action. And if you have no Indo and you have no Pacific, what is it to talk about Indo-Pacific as your organizing principle? It's Asia.
The US discussion is not really prepared for that. So just to back up from your question, I think the Washington conversation, even before Trump, even before America First, even without that dynamic, is a little divorced from some of the realities of the region. Because I'm selfish about American national interests, I'm American, I want the United States to be a leading player in this part of the world. I think even if the U.S. doesn't have the kind of primacy it did during the Cold War, the U.S. could be much more adaptive to these realities in a way that sustained its leadership for the long term, and we're not.
The two guys you mentioned, Rich Armitage and Joe Nye, who were both either bosses or mentors of mine, champions of the US-Japan alliance. What they were was deeply experienced, deeply tied to Japan and brilliant strategists who cared a lot about the alliance. Rich in particular became a very important figure in the alliance, because he really believed in the centrality of it, to the point where when Colin Powell and Rich Armitage left the State Department in 2005, at a farewell party, because I stayed in the department, Rich put his hand on my shoulder and said, over to you. You've got to help sustain this Japan thing.
For example, when I became the Deputy Assistant Secretary of State for Central Asia with Rich Armitage in my head, I organized the first US-Japan consultations on Central Asia. And not just foreign ministry to foreign ministry. We had JBIC, the Japan Bank for International Cooperation, doing project finance. We had JICA, the aid agency in these.
But whether it's generalists or it's people with narrow regional expertise, they need a reality-based view of what's happening in the region. And I think there's no substitute, in that sense, for a broad view of what's happening in the region. And if the window that Americans have on Asia is overly security-centric, overly focused just on one aspect of the alliance context, you miss a lot of the story. And I think that is what I would argue for, rather than worrying about the kinds of things that you said people were wringing their hands about.
The reality is the best strategists in the United States should be thinking hard about competition with China. The best strategists in the United States should be thinking hard about how Asia fits into American global policy. The best strategists in the United States, like Rich Armitage, like Bob Zoellick, like Brent Scowcroft, these people should care a lot about America's relationships and partnerships in Asia, as Rich did. And it's why he's a hero to so many of us, as Joe did, which is why he's a hero and mentor to so many of us.
So it's not a generational thing. It's not necessarily a regional specialty thing, but it's having a broad and reality-based view of what's happening in the region. I do fear that, Trump aside, on a bipartisan basis, we're losing that. And we're also losing a connection to history. There are very few people around like, for example, Alan Romberg, another person who is deeply steeped in the region and understood very well the nature of the triangle between the United States, Taiwan and China and the set of understandings that had been reached through negotiations in that triangle. And I think some of that connection to history is being lost in the context of this kind of oversimplified narrative that I lampooned earlier. You know, if you're starting with just China bad, everything flows from that. You miss a lot of what's happening in the region.
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