There are few more influential or respected scholars on China than Elizabeth Economy, Hargrove Senior Fellow and co-chair of the Program on the US, China and the World at the Hoover Institution at Stanford University. Between 2021 and 2023, she served as the senior advisor for China in the US Department of Commerce. She is also a prolific author. From award-winning The River Runs Black: The Environmental Challenge to China’s Future (Cornell University Press, 2004) to her most recent book, The World According to China (Polity, 2022) she has rung the changes on China’s emergence as superpower challenger to the United States. Here, she talks with AmCham HK e-Magazine editor Edith Terry about how China is re-shaping the international system and the likely response of the incoming Trump administration.

If you were advising President-elect Donald J. Trump or Howard Lutnick, his chosen US commerce secretary, on US-China relations, what would be on your to-do list for them?

I think both China and the United States need a to-do list. If there is going to be any progress in trade and investment, for example, both countries need to define clearly the boundaries of national security, economic security, and economic competitiveness. They are both taking measures around investment restrictions, export controls, and indigenous innovation and domestic manufacturing that are driving down trade and investment in ways that sometimes appear ill-considered.

There is broad agreement in Washington that the US has become too reliant on China for many critical commodities and goods and that it needs to de-risk its economy and reorient its manufacturing supply chains. However, it has joined China in evincing a lack of clarity as to the future evolution and end goal of its competitive policies and creating an unhealthy trade and investment dynamic with the potential to harm the domestic US and Chinese economies.

That being said, China’s to-do list is much longer. It has a long history of unfair trade and investment policies, a significant record of intellectual property theft and cyber-economic espionage, and a long list of countries that have been bullied through its ongoing practice of economic coercion. It is difficult for Washington to contemplate doing much to improve the relationship without China first taking significant action to address these types of practices.

The seemingly easiest area for improvement in the US-China relationship is in expanding people-to-people ties. However, this has proved not to be the case. Despite an agreement between Presidents Biden and Xi, very little progress has occurred in this area. Xi Jinping has publicly stated that he wants 50 thousand American students to visit and/or study in China. But this will never happen if China doesn’t stop creating a culture of fear through its ongoing rhetoric on “hostile foreign forces,” raids on US companies, arbitrary detentions, and tightly controlled political space. The United States will also begin to lose Chinese students and scholars if it does not stop its seemingly arbitrary border checks, inflamed rhetoric about the Chinese Communist Party (CCP), and calls to revive the discontinued China Initiative under the Department of Justice. People should be able to travel, study, and engage in both countries without fear.

There is generally support for cooperation on elements of major global issues, such as public health, humanitarian issues, artificial intelligence, and climate change but very little actual cooperation. We should begin by at least aligning our actions to realize shared objectives—even if actual cooperation eludes us.

If there are alternatives to the international system in its current shape, how do you see these taking shape? Do we need a regional or global catastrophe to clear minds?

I am not sure that we need a global catastrophe to clear minds. I think we had one with Covid-19, and we are in the midst of one with climate change. Neither has brought about the type of cooperation or new institution building that the world needs. The types of reforms that are needed in many international institutions, such as the International Monetary Fund (IMF) and World Trade Organization (WTO), require commitment and hard work—not necessarily a crisis.

Other non-economic institutions also have fallen far short of their mission—the World Health Organization (WHO) and the United Nations Human Rights Commission (UNHRC) are two that come to mind. In both of these institutions, I think China’s influence has undermined their ability to meet their objectives. These institutions need leadership that is committed to upholding the values for which they were created.

Unfortunately, I don’t know how much leadership the incoming Trump administration is likely to provide. If administration officials believe that multilateral arrangements are not serving US interests—particularly US economic interests—they will likely not fight hard to reform them but instead will threaten to pull out of them. Even then, in some cases, I can imagine the incoming administration reverting to its previous playbook and simply pulling out without even spending the time to threaten. They will just pick up their marbles and go home.

On the positive side, the first Trump administration did not shy away from competing with China on values-based issues in the international system. It established the US International Development Finance Corporation and led the charge on trusted communications networks. We will have to wait to see how President Trump balances his general disinterest in multilateralism with a desire to maintain US economic and security leadership.

You argue convincingly in The World According to China that the Global South is unhappy with the US-led international order and that China has stepped into the gap. What does the US need to do to address this malaise?

Before considering what the United States needs to do, it is worth a brief discussion of how China is shaping the international system. In some cases, China’s efforts have a positive impact, in others it is largely negative, and in still others, it is a mixed story. Through the Belt and Road Initiative (BRI), for example, China is helping countries gain access to much needed transportation, digital, and energy infrastructure. At the same time, it is exporting the externalities of its development model by the way it does business, especially a lack of transparency in the tendering process, which breeds corruption, and a failure to undertake robust environmental impact assessments, which undermines the long-term sustainability of some of the BRI projects. Many communities globally have protested BRI projects for these and other reasons related to poor governance.

China also is attempting to export parts of its political development model. For example, it has established training centers in Guangxi province and Tanzania where officials from Southeast Asia and Africa, respectively, can go to study the Chinese model. This includes everything from how best to alleviate poverty (largely a positive) to how to create a strong one-party state and control dissent (not so positive).

China has also stepped into the global governance gap by asserting itself as a leader of emerging and middle-income economies and calling for reform of the international economic system. This includes pushing for a greater share of the voting rights in organizations, such as the IMF and World Bank and calling for the de-dollarization of the global economy. Here, too, from the perspective of the United States, China’s influence is mixed—the US supports a measure of IMF voting reform but certainly is not interested in de-dollarizing the global economy. 

Of course, China also attempts to shape the international system in ways that are more overtly coercive. It uses the leverage of its market to try to force economic actors and other countries to accept its political views. Some examples here would include the Chinese boycott of Australian goods after Canberra called for an investigation into the origins of the Covid-19 pandemic or Chinese threats not to supply countries with Personal Protective Equipment if they didn’t thank China publicly or use Huawei equipment in their telecom systems.

Over the years, there have been many cases where China has not been happy with how a particular industry—for example the airline and hotel industries—in the west have identified Taiwan. Beijing has threatened these industries with closing access to the Chinese market if they don’t make clear that Taiwan is part of China. So, there is a range of ways in which China tries to shape the global narrative and order—some of which the United States might find beneficial, others which it works to counter.

For the United States to counter elements of Chinese global governance reform effectively, there is a series of steps it needs to take:  It needs to articulate a vision of what it wants the world to look like in the coming decades that is attractive to the global majority. It needs to acknowledge the failings of the current system and take steps to address them. It needs to engage the global majority in decision-making around issues such as artificial intelligence and space governance, not simply align with its fellow Group of Seven (G7) countries to write the rules of the game. And it needs to demonstrate why China’s model and its vision for global governance—however diplomatically phrased—will ultimately produce a techno-authoritarian world that few actually desire. 

The US also needs to bolster its diplomatic and media presence globally. It is far out-resourced by China both in human and financial capital. In addition, it needs to think creatively about how to bring together the elements of its economic power and political influence in one compelling initiative. The work of US companies and foundations is enormously important in shaping the broader economic and social welfare landscape of many countries in the global majority, but because they are private entities, their work does not redound to the United States government. More thoughtful forms of public-private partnership would greatly enhance both the visibility and the value proposition of US leadership on the global stage.   

How would you assess China’s efforts to compete with the US for influence using soft power, particularly in the Global South?

I think China has made significant progress in deploying soft power in emerging economies. Polls there reflect an appreciation of Chinese investment, of study opportunities in China, of China’s rhetorical commitment to non-interference, of its deep diplomatic engagement, and even of its media’s willingness to portray host countries in a positive light.  Chinese Confucius Institutes (CIs), which are Chinese government sponsored language and culture institutes, are also often well received in emerging economies, where opportunities to study Chinese language are fewer. (In advanced market economies, where funding for Chinese is more widely available, CIs fell out of favor because the contracts they signed with universities were not transparent, and the teachers and curriculum were selected by the Chinese government).

China has also become more active in small development projects in emerging economies, such as small-scale wind farms, factories or agriculture development. Host country citizens see Chinese on the ground working to help provide jobs and training. While the United States and other countries, such as Germany, the United Kingdom, and Japan, may be larger sources of aid and development assistance, China is much better at branding and marketing its efforts—in part because it is all government directed, while for democratic countries, much of the support derives from private companies and philanthropies.

Of course, China also makes mistakes. Its handling of its Covid-19 diplomacy and its wolf warrior diplomats were a self-inflicted wound. China is also stronger in public diplomacy than true soft power, which is organic. For example, a personality like Jack Ma, one of the founders of Alibaba, could be an immense source of Chinese soft power globally. He created a globally successful company, has a strong ethos of philanthropy, and has a big and positive personality. However, Xi Jinping constrains creative thinkers and entrepreneurs in order to control the flow of information, ideas, and capital. He is also perhaps uninterested in having such a well-known and popular rival on the global stage. When Jack Ma publicly and pointedly criticized Xi’s over-regulation of the private sector, the latter took steps to undermine both Ma’s business and his global stature. What should be a major win becomes instead a loss for China.

Ultimately, the challenge for Xi Jinping is that when constraining the free flow of information and ideas, there is always a story that can’t be controlled. Currently, Xi Jinping is trying unsuccessfully to control the narrative around the challenges that the Chinese economy is facing. The China growth story has traditionally been a source of significant soft power for China. However, if the problems with the Chinese economy continue, the attraction of the China model dims. If Xi would unleash the power of China’s creative talent instead of attempting to reign it in, he would produce an economic juggernaut and soft power powerhouse.

China has launched a number of initiatives, starting with the Belt and Road Initiative in 2013, with far-reaching ambitions. If you can unpack these, do they provide grounds for collaboration between the US and China or is there really no alternative to ideological, economic, technological and potentially military confrontation?

These initiatives are not equal in terms of the level of challenge they present to the US and market democracies. The Global Development Initiative (GDI), which is China’s effort to support small-scale development projects, is not an initiative that the United States should, on the face of it, criticize. The only potential challenge arises from China’s fusing of the GDI with the United Nations to get international buy-in and support. In other instances, this type of arrangement has become problematic. For example, at one point, China threatened to veto the renewal of the UN mission to Afghanistan unless the renewal included support for the BRI.

The Global Security Initiative (GSI), in contrast, has two core principles, that present a fundamental challenge to the current global order. First, it advocates for indivisible security—the notion that if a country feels threatened it has the right to take preemptive action. This was Russia’s rationale for its invasion of Ukraine, and it is easy to imagine China using this to justify military action against Taiwan. Second, the GSI calls for collective security and the dissolution of the US-led alliance system. This, too, is problematic from the perspective of the United States and its partners.

With regards to the Global Civilization Initiative (GCI), the challenge rests in China’s assertion that states have the right to grant citizens whatever rights they deem appropriate for their own citizens. This is a direct attack on the universality of human rights and the UN’s International Covenant on Civil and Political Rights. The Belt and Road Initiative, as I mentioned, has elements that are constructive and elements that are not.

So each of these initiatives presents a very different level of challenge or threat to the current international system and therefore is likely to produce a very different level of response from the United States and the rest of the world.

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