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Tuesday, September 21, 2021

OPINION:

President Biden has identified China as the preeminent international challenge facing the United States, but his administration lacks a coherent policy.

President Xi has repeatedly stated China’s authoritarian system can better marshal resources than democracies, and it has accomplished remarkable social and economic progress.


Since 2000, China’s R&D spending has increased 16 percent annually. It is on track to exceed the United States by 2025 with the aim of matching and surpassing the West in artificial intelligence, microprocessors, computers, electric vehicles, and other critical technologies.

U.S. government support for R&D as a share of GDP has been falling for more than a decade. A bipartisan majority in the Senate recently passed a $250 billion bill to address the issue and provide $52 billion to boost semiconductor production.

The administration and House leadership are preoccupied with the bipartisan infrastructure bill and the $3.5 trillion American Family Plan. The Democrats’ new taxes are not likely to raise the necessary funds for new entitlements like expanded Medicare, universal pre-K education, and free community college.

The actual cost is closer to $5.5 trillion, the annual federal deficit would reach $2 trillion, and the Democrats can’t match Mr. Xi on industrial policy carrying that burden.

Technology provides munitions, but the war is fought in two theaters—defense and trade.

China is building an impressive modern Navy to claim dominance in the Pacific. The U.S. trade deficit with China continues to swell—that finances Beijing’s Belt and Road initiative, which purchases influence into Eastern Europe.

The president withdrew from Afghanistan to deliver on the promise to pivot to the Pacific but combatting terrorism will cost more without a troop presence in Central Asia.

The U.S. fleet needs bolstering and reorientation toward smaller, more agile, and unmanned vessels. This is unaffordable, with defense spending falling from 4.7 percent of GDP in 2010 to less than 3 percent in the Biden budget. The Navy is faced with decommissioning large surface ships before new, more agile resources hit the water.

If China invades Taiwan, the United States won’t be able to defend it.

In Afghanistan, the United States abandoned vast deposits of lithium—the critical resource in modern batteries. Taiwan is the home of the most important global microchip foundry—the Taiwan Semiconductor Manufacturing Company.

This situation developing would have been akin to President Reagan handing the Soviet Union control over Middle East oil.

The Senate Armed Services Committee added $25 billion to the Biden Administration’s annual military budget request. Still, on the House side, 27 members sent a letter to Armed Services Chairman Adam Smith demanding the Committee drop that addition—it relented.

Defense Secretary Lloyd Austin, an experienced land-war general, has not articulated a strategy for the Pacific, and that vacuum in administration policy is mirrored on trade.

All we know is that U.S. Trade Representative Tai is not interested in new trade agreements — though exigencies in the Pacific might make Taiwan an exception—and trade policy must be pro-union and pro-middle class.

She has deflected Japan’s urgings that we rejoin the Trans-Pacific Partnership. Trump’s tariffs on China remain in place, and industry leaders are becoming increasingly impatient.  They need to know whether those are permanent to plan investments in China, the broader Pacific basin, and the United States.

The National Manufacture Association and an industry coalition led by the U.S.-China Business Council and U.S. Chamber of Commerce have sent recent letters to U.S. Trade Representative Tai and others in the administration asking for clarity but have received little substantive response.

Secretary Yellen says those tariffs hurt consumers, while Ambassador Tai says they provide leverage. They could at least chat on the phone to get their talking points straight.

Secretary Austin and Ambassador Tai came to their positions with impressive records for implementing their superiors’ military and trade policies. Still, neither has written nor said very much about a broad Pacific strategy.

For example, how exactly should American forces be reconfigured in the Pacific, and what would moving resources from the Middle East entail. How should the WTO and regional trade agreements be reconfigured to address China’s mercantilist practices? Or what should the United States offer Asian allies, if not the TPP, to resist the gravity of the Chinese market?

They exhibit a disturbing absence of ideas and vision but have initiated reviews of defense and trade policy.

If I have learned one thing in nearly half-century in Washington, when high-level political figures are in over their heads, they order top to bottom policy reviews. That’s Lloyd Austin and Katherine Tai — and Joe Biden.

• Peter Morici is an economist and emeritus business professor at the University of Maryland and a national columnist.


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