How Competitive is the U.S. with China?

How Competitive is the U.S. with China?
Remarks to the Boston Community Church & East Bay Citizens for Peace

 Ambassador Chas W. Freeman, Jr. (USFS, Ret.)
Boston, Massachusetts & Bristol, Rhode Island April 18 & 19, 2025

We Americans have bet our future on competition with China.  The keys to winning this competition are domestic economic and technological renewal as well as enhanced influence abroad.  So far, the evidence suggests that we are achieving neither, yet we have just started an economic forever war with China.  What is happening reminds me of the saying: QUOS DEUS VULT PERDERE, PRIUS DEMENTAT.  “Whom the gods would destroy, they first make mad.”  

Our country now disparages public service.  It is taking a chain saw to its institutions.  Such self-sabotage weakens our state capacity, reduces our situational awareness, clouds our decision making, degrades essential government services, and fuels rather than alleviates popular discontent.  These trends invite adversaries to exploit American decline.  They also cost us the respect and support of allies and friends.

We Americans have long been in denial about our many domestic and foreign problems.  They are now visibly getting worse.  Subconsciously, we appear to understand this, but we blame it on everyone but ourselves.  Our allies and friends see us chaotically making threats, imposing tariffs, and coveting territory.  They view our predatory behavior as an irrational and incoherent response by us to challenges that are largely of our own making.

Just short of 30 percent of Americans chose Donald J. Trump as our president in the hope that he would “make America great again.”  But what he and his unelected billionaire buddies, band of talking heads, and digital delinquents are doing is not correcting the bumbling Biden administration’s legacy but undermining both our long-term competitiveness and our standing abroad.

Let me count the ways:

• Our alliances. We are alarming and alienating those countries historically most friendly and loyal to us.  We menace Canada with hostile takeover    We threaten to seize Greenland from Denmark (like Canada, a NATO ally).  Polls show that many allies now regard us as a threat rather than a partner or protector.  As we shut ourselves off from global trade, we treat them no better than our foes.  In a world of loosening relationships, this all but guarantees that some of them will seek to separate their fates from ours.
• Our friends. We are bullying Mexico with threats of economic warfare and military attack.  Tariffs on imports from Mexico would further impoverish it.  Deprived of their livelihood, more Mexicans will flee their country in a desperate search for a better life in ours.  Military threats are more likely to drive Mexico into the arms of our adversaries than to secure its cooperation.  We have transformed Panamá from a reliable friend and manager of the canal it operates into a fearful target of potential aggression by our armed forces.  By alienating neighbors, we are opening our formerly secure sphere of influence in the Western Hemisphere to inroads by great powers beyond it.
• Our moral standing. Israel’s cynical war of annihilation against the Palestinians has supplanted the European Jewish Holocaust as the global epitome of evil.  We are shameless accomplices in Israel’s genocide, sadism, land grabs, and other war crimes.
• Our reputation as a beneficent international actor. We have ended our support for humanitarian and development assistance.  Countries that once clung to us and our professed values now see us as both amoral and heartlessly selfish.  They are looking for alternative sources of inspiration and support.  They will find our adversaries eager to supply both.   China and Russia led the relief effort that followed the recent earthquake in Mandalay.  We were absent.
• Our stature as an honorable, law-abiding nation. We have become infamous for our disrespect of the UN Charter and related treaties and conventions, our invasions of other countries on flimsy pretexts, our pursuit of territorial aggrandizement at the expense of both allies and friends, our unprincipled abandonment of solemnly contracted commitments, and our punishment of those attempting to enforce international law.  Others now see our behavior as that of a Mafia don, not a responsible member of the international community.
• Our leadership on planetwide problems. We have withdrawn from an increasing number of international rule-setting bodies and are absent from ever more multilateral meetings.  We have abandoned both diplomacy and arms control as means by which to bolster global stability and peace.  Our government is no longer part of the global effort to retard or mitigate climate change.
• Our research and development capabilities. S. universities have long been the world’s most powerful magnets for global talent.  Cuts in federal support for R&D and visa restrictions now aim explicitly to debase their cultural influence.  American academic hegemony is on the way out.
• Our economic and technological competitiveness. Protectionism is an explicit admission that many elements of our economy as currently structured can no longer stand up to foreign competition.  Our new habit of banning technological innovations made elsewhere from our market is even more damaging.  This subsidizes and preserves uncompetitive backwardness.  (Consider the steel industry, electric vehicles, TikTok, DeepSeek, solar panels, wind power, and telecommunications as examples.)  By denying ourselves the benefits of intellectual advances by others, we have chosen a path that leads inexorably to technological inferiority.
• Our leading companies’ markets. Denying U.S. IT companies access to China, their largest overseas market, deprives them of the revenue they need to stay ahead of their Chinese and other competitors.

As the saying goes, when the winds of change blow, some people build walls, while others build windmills.    Rather than focusing on self-improvement and seizing opportunities, Americans have chosen to throw our declining weight around internationally.  We rely on brute-force economic, financial, or military coercion to bring other countries to heel.   This is no way to compete with China or any other rising or resurgent great power.  And it is no way to “secure the Blessings of Liberty to ourselves and our Posterity.”

Meanwhile, despite many difficulties and not a few mistaken policies, China continues to power ahead.  While we scapegoat and bully others, the Chinese remain single-mindedly focused on enhancing their economic, scientific, and technological prowess.  They are ready, willing, and able to reach out to the foreign partners we are alienating.  China had a couple of bad centuries, but it is back – and in the process of resuming its millennial position as the world’s largest economy.  [slide 2]

China’s growth has slowed, but it is still growing twice as fast as the United States.  In purchasing power terms – which avoid the significant distortions imposed by an overvalued U.S. dollar – the Chinese economy is already one-third larger than ours.  [slide 3] China produces more than one third of the world’s manufactures.  [slide 4] It is the world’s largest trading nation and the principal trading partner of more than 100 countries.  Over one-fourth of the world’s STEM workers are Chinese.  That proportion is growing.  Nearly half of the world’s patent applications now originate in China. [slide 5]

U.S. export controls, sanctions, and other efforts to hamstring or reverse Chinese advances are demonstrably not working.  Their main effects have been to stimulate China to redouble its efforts to become self-sufficient, to boost its commitment to science and technology, to further improve its already formidable educational standards, and to explore ways to counter U.S. financial hegemony.   The latest “Nature Index” rates Harvard as the world’s number one university in natural and health sciences, with MIT in tenth place.  Chinese universities hold places two through nine.[1]

China’s challenges to our global preeminence are economic, scientific, and technological.  There are no Chinese warships or bombers off our coasts.   China espouses no territorial claims against us.  But, in accordance with our heavily militarized approach to foreign affairs, our response to China’s resurgence is almost entirely military.  We have ringed China with bases aimed at it.  [slide 6] We conduct three or four aggressive patrols of its coasts and island bastions daily.

Seventy-five years ago, we intervened militarily to protect the losing side of the Chinese civil war by separating it and Taiwan from the rest of China.  Since then, the Taiwan issue has been an embryonic Sino-American casus belli.  We refuse to say whether we would use force to counter an attempt by Beijing to recover it.  But the Chinese assume we would.  They are acting accordingly.

The result is escalating Sino-American tension and an arms race that our military commanders suggest we are in the process of losing.  Of course, we can’t be sure this isn’t just their usual use of threat inflation to further inflate their budgets and gratify the military-industrial complex they expect to join upon retirement.

Still, Chinese military innovations are indeed impressive.

• A huge arsenal of very accurate missiles, including some capable of striking naval vessels at long distances, others that are hypersonic, and many that are road mobile.
• By far the world’s largest navy, including ever more capable aircraft and carriers for them as well as submarines, world-beating drones, innovative landing craft, long-range ship-to-ship missiles, and rail guns.
• The world’s third largest air force, including both fifth generation and prototype “sixth generation” aircraft. Advanced air defenses and electronic warfare as well as cyber-attack capabilities.

The initial battleground in any US-China war would be in China, including Taiwan, and China’s near seas.  China would be fighting on its own doorstep, enjoying very short lines of communication and supply lines.  The United States be projecting power to a battlefield over 7,000 miles away from our West Coast.  China would enjoy the many advantages of being on the defensive.  From Beijing’s perspective, the war would be about recovering and defending Chinese territory against foreign attack – about things that Chinese care much more about than Americans do.

Multiple wargames predict that a US-China war over Taiwan could cost both sides the bulk of their navies and aircraft.  China has the industrial surge capacity to replace its ships and aircraft, but we do not.  Losses on the scale predicted would cripple the United States as a global power, not just cost it its eight-decade-old dominance of Pacific Asia.

The one certain outcome of a war over the political status of Taiwan would be the destruction of its democracy as well as its prosperity and industrial base.  The ruin of Taiwan’s advanced electronic industries would ensure huge collateral damage to the world economy.  Such a war would have no winners even if it did not escalate to the nuclear level (which both sides assume it could).

Notwithstanding this, the focus of U.S. policy in Pacific and South Asia at present is on preparing for a trans-Pacific war with China and on persuading U.S. allies in the region to let Americans use bases on their territory against China.  In response, China is preparing for war with America.

The U.S. and China’s defense budgets are structured so differently that it is hard to compare them.  Both omit significant amounts of military-related spending and cover them in other budgets.  All in all, however, China now appears to be spending less than 2 percent of its GDP on national defense, while the U.S. defense department’s budget alone is about 3.6 percent of GDP.   Including U.S. military-related spending in other departments’ and agencies’ budgets brings total U.S. military spending to about 5.4 percent of U.S. GDP.

The disparity in spending levels reflects many factors, not least of which is the People’s Liberation Army’s exclusive focus on the security of the Chinese homeland and adjacent areas versus a U.S. military force structure designed to preserve U.S. global primacy by projecting American power to every corner of the world rather than to defend the American homeland.  Our “defense department” is misnamed.  In reality, it is  an “offense department.”   If Americans’ concern were truly limited to defending ourselves, we would spend a lot less.  We would also consider diplomacy as a cheaper and more reliable way to make more friends and fewer enemies.

Of course, defense budgets do not decide the outcome of warfare.  But the balance of fervor often does, as the failure of our effort to prevent the unification of Vietnam or to pacify Afghanistan should remind us.  In a bloody American rendezvous with Chinese nationalism over Taiwan, the balance of fervor would strongly favor China.  So, increasingly, would the military balance.  The more both sides prepare for war, the more likely it becomes.

U.S. policy has shifted from favoring a peaceful settlement of the divisions between Taipei and Beijing to de facto support for Taiwan’s indefinite separation from the China mainland.  This approach rejects diplomacy to rely entirely on military posturing against China.  It is a direct challenge to China’s sovereignty, territorial integrity, and national security as well as to its amour-propre.

China sees unsettling analogies to the evolution of U.S. policy toward the war in Ukraine.  The U.S. objective has not been to promote Ukraine’s wellbeing or its domestic tranquility – still less to save Ukrainian lives – but to counter, “isolate, and weaken Russia.”

Similarly, in the case of Taiwan, the U.S. seems less concerned about Taiwan and its inhabitants than about showing China who’s boss, weakening it, and containing its influence abroad.  China is as opposed to the strategic use of Taiwan against it as Russia has been to the incorporation of Ukraine into an alliance hostile to it, or as the United States was to a menacing Soviet presence on the island of Cuba.

Russia’s “special military operation” in Ukraine has been carefully limited.  It may seem to demonstrate that superpowers can conduct a proxy war without resorting to nuclear weapons.  But a war over Taiwan would not be a proxy war fought in a third country like Korea, Vietnam, or Ukraine but a war conducted directly between U.S. and Chinese forces on territory universally acknowledged to be Chinese – Taiwan and the China mainland.  Such a war could not and would not be “limited.”

The Chinese would inevitably respond to U.S. devastation of parts of their homeland by counterattacking ours.  Each side would be tempted to employ nuclear weapons to incapacitate the other.  The United States is currently engaged in a massive program of nuclear force modernization aimed explicitly at prevailing in a war with China.

The United States remains the only country to have used nuclear weapons against another people.  U.S. nuclear doctrine explicitly authorizes a nuclear first strike on enemies, whether nuclear-armed or not.  In the past, on at least three occasions, our government has threatened to launch a nuclear attack on China.  We have provided no assurance that we will not do so again.

This and the mounting likelihood of a Sino-American war over Taiwan have catalyzed a change in Chinese nuclear strategy.  China was long content with a minimal nuclear capability – a force de frappe – one able to respond to a nuclear attack by taking enough of a bite out of the enemy to cause it to think twice about using nuclear weapons to attack any part of China.  But China is now embracing “mutually assured destruction” and building a nuclear force that could destroy the United States, if Americans use nuclear weapons to attack it.

A war that not only cannot be won but that also risks becoming existential should obviously never be fought.  Our diplomacy should focus on ensuring that it never is.  A diplomacy-free, all-military-all-the-time U.S. policy toward China like our current policy therefore makes no sense.

China’s military posture is defensive.  Our military is in China’s face.  The People’s Liberation Army is not in ours.  It will not appear off our coasts or in our hemisphere unless we drive it to reciprocate our threatening presence on its borders.  Our current policies risk convincing China eventually to do just that.

This underscores the absurdity of how Americans are dealing with China’s return to its millennial wealth and power.  China’s eclipse of U.S. global primacy and dominance of Pacific Asia is grounded in its growing scientific, technological, and economic dynamism.  [slide 7]   It is not military, even if the People’s Republic has now built a formidable capacity to defend itself.

Unlike the Soviet Union, China does not occupy other countries or seek to impose its authoritarian ideology on them or us.  Unlike Nazi Germany, China is not in search of “Lebensraum.”  Unlike Imperial Japan or European imperialists, China does not pursue military-colonial control of foreign natural resources or labor.  Nor does China seek to replicate the imperial market preferences and mercantilism of past empires.

These analogies are false.  But groupthink born of anxieties about American decline has transformed them and evidence-free conjectures into accepted “axioms” that are constantly reiterated and that cannot be questioned.  Our present China policies are based on “politically correct” assumptions born of conjectures rather than the realities they misdescribe.  They are dogmatic, delusional, and dangerous.  And they come with high opportunity costs.

The ironies in this situation abound.

We Americans accuse China of seeking to replace the US-sponsored world order with its own.  But China is far more committed to the post-war order’s core ideas of free trade and multilateralism than we now are.  It has integrated itself into that order and used its rules to advance Chinese interests.  Unlike us, China has not withdrawn from the World Trade Organization (WTO), launched protectionist trade wars, or condemned international institutions like the World Court (ICJ) for doing their job.  The new institutions China has helped create, like the Asian Infrastructure Development Bank, complement Bretton Woods institutions like the World Bank and mirror their rules.  They supplement rather than replace the pre-existing world order.  China is among the staunchest supporters of the United Nations Charter and the Westphalian order it is meant to regulate.

We accuse China of “aggression.”  China has indeed defended its longstanding claims to islets, reefs, and fishing grounds against other claimants in its near seas and its disputed border with India, but it has not made all-out war on, invaded, dismembered, or occupied other countries as we have.  It does not seek to annex the territories or take possession of the canals in other countries.  Unlike us, China has not backed others, like Israel, in wars of annihilation and territorial aggrandizement.  Instead, it has made itself available as a peacemaker and mediator, most notably between Saudi Arabia and Iran.

We accuse China of attempting to thwart our campaign to “isolate and weaken” Russia.  But China has not recognized the separation of Crimea and other Russian-speaking oblasts from Ukraine any more than it has recognized NATO’s forced separation of Kosovo from Serbia.  China continues to trade with both Ukraine and Russia.  If China is definitely not “with us,” it is not necessarily “against us.”

We accuse China of “malign behavior.”  In practice, this seems to mean any reduction in our international influence, wherever it occurs, whatever the cause.  China has emerged as the largest contributor to the economic development of countries in Asia, Africa, and Latin America.  It may or may not now attempt to fill the vacuum that our sudden embrace of protectionism and our mean-spirited cessation of foreign assistance have created.  Other countries are poised to ask it to do so.  We shall see how it responds.

There are lots of things to criticize about China and its political system.  China also has more than its fair share of problems.  But it is for Chinese, not us, to deal with them.  In this context, mirror-imaging to produce a portrait of China that much of the world would say better describes us is not just a faulty basis for policy but counterproductive.

It is entirely correct to describe China as a “systemic challenge” to our current internal disorder and decadence, fiscal improvidence, oligopoly- and plutocracy-dominated economy, complacent sense of superiority, jingoistic foreign policy, job-stripping financial capitalism, and collapsing educational standards.  But the operative question for Americans is what to do about these things.  There are many elements of the Chinese system from which we might usefully draw inspiration, but China’s authoritarianism and disrespect for the rule of law, which we are now inadvertently emulating, should not be among them.

We cannot replay the strategy of “containment” that successfully isolated the Soviet Union until it succumbed to its own defects.  Attempting to do so with China will isolate and impoverish us rather than the Chinese.  China is outperforming us.  It faces many challenges, but it is socially stable, economically productive, ever more scientifically and technologically capable, increasingly innovative, and internationally engaged.  We may snarl at globalization, but it is continuing without us.  And China remains both at its center and a major beneficiary of it.

Attempting to perpetuate our global primacy and Pacific-Asian hegemony by cutting ourselves off from China and the world is an evasion of the pressing need to reform our system to make it more competitive.  Focusing on hamstringing China rather than getting our own act together entails huge opportunity costs.

We live on credit rollovers and pyramiding debt, yet we refuse to accept investment from China, which is capital rich and prepared to finance improvements in our failing infrastructure, establish new factories here, and help expand U.S. agricultural production to assure food supplies for its own population as well as ours.  China has the renewable energy technologies we need to go electric, but we seem determined to obstruct or ban our companies from importing or adopting them.  Our economies are complementary, as their interdependence has amply demonstrated.  We need a reset with China.

In this connection, diatribe is no substitute for diplomatic dialogue.  It alienates and does not persuade.  The Trump administration has at least one thing very right.  U.S. security does not depend on coercing foreigners into conformity with our values.  We could “make America [truly] great again” by moving away from a mindset that quixotically insists on compelling others to conform to our increasingly unrealistic self-image.  Instead, we should seek to understand other peoples – including the Chinese, respect them for who and what they are, and do our best to leverage their prosperity and technological advances to enhance our own.

 

[1] https://www.nature.com/nature-index/research-leaders/2024/institution/academic/all/all