US-China Trade Talks and American Strategy

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By George Friedman

The United States is shifting from military to economic warfare.

As the U.S. continues to negotiate a trade deal with China, a shift in American global strategy has emerged. The United States is reducing its use of direct military action and instead using economic pressure to drive countries like China, Russia, North Korea and Iran into conceding to U.S. demands. Even in places where the U.S. is still engaged militarily, such as Afghanistan, serious talks are underway for a withdrawal. It’s a shift that has been long in the making. In my book “The Next Decade,” published in 2011, six years before Donald Trump took office, I argued that the United States would reduce its military activity dramatically because it couldn’t maintain the tempo of engagement it had established over the years. I also discussed the topic in a 2018 article titled “The Trump Doctrine,” which argued that the United States would eventually be forced to scale back its foreign engagements. The use of economic power to shape behavior isn’t new; what is new is the focus on economic rather than military warfare.

An Inexperienced Power

The U.S. is a global power, engaged and exposed in many theaters. Having used its military presence in far-flung corners of the world as a symbol of its global reach and superiority, the U.S. spread itself thin and became unable to defeat even enemies whose forces and capabilities were far inferior. The classic example is Korea in 1950, where the United States had deployed an insufficient force, a result of the military drawdown. The North Koreans chose to strike, compelling the U.S. to fight for three years to a truce that left the North Korean regime intact and the boundaries roughly the same as before the war. The U.S. could not initiate war with the force it had. The North Koreans could and did.

Since World War II, the United States has been victorious in only one major conflict: Desert Storm. For 28 of the past 74 years, the U.S. has been at war in places like Korea, Vietnam, Afghanistan and Iraq but has failed to achieve victory in most cases. Neither Rome nor Britain used main force to wage wars. They relied instead on capable local powers with an interest in defeating the same enemy to do most of the fighting. They underwrote the conflicts and supplied some minimal force and material aid, but they tried always to limit their own exposure. The United States, a much younger and more inexperienced power, has consistently used its own force as the main combatant, and failed.

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There is a core geopolitical reason behind the U.S. failure in these wars. The United States has fought most of its conflicts in Europe and Asia, where force deployment is a substantial logistical effort. The challenges of intercontinental logistics limit the number of troops that can be sent. More important, the moment the United States sets foot in Eurasia, it is vastly outnumbered. The U.S. has tried to overcome this challenge through technology, but as we saw in Korea, technological superiority is enough to contain the enemy but not enough to defeat it. In Vietnam and the Middle East, the United States fought dispersed forces, native to the area and therefore with better intelligence on American forces than the Americans had on them.

The U.S. failures were also due in part to the fact that no one could define what a sufficient force was, and even if they could, it would likely be much larger than what the U.S. was willing to commit to the effort. The U.S., therefore, fought long wars based on the mistaken belief that the force it was willing to supply was enough to defeat the enemy. And while the United States is outstanding in conventional war, it’s not good at occupying a country that is unwilling to be occupied.

Charting a New Path

Inevitably, the time came when the United States recognized that continuing to do what it had been doing for years and expecting a different result was insane. And so, it has developed a new path, one which Trump has followed in his dealings with several countries thus far. The first step in this new strategy is to intimidate the adversary. When that doesn’t work, threaten to carry out military action without actually doing so. The final step is to resort to economic warfare by initiating or extending sanctions or a blockade. (In some cases, Trump has used some military force to enforce sanctions but, rather than going ashore, has used the Navy as the primary vehicle of military operations.)

It’s within this context that we should view the U.S.-China trade talks. Chinese trade practices seen by Washington as establishing an unfair advantage for Chinese producers is a reasonable topic for discussion and negotiation. But such negotiations are also a powerful alternative strategy for dealing with China’s potential emergence as a global power. For Beijing, the buildup in the South China Sea is an attempt to break out of the ring of islands surrounding the sea and, therefore, undermine a geographic advantage the U.S. would have if it chose to blockade China. The U.S. wants to retain this advantage. But even more important, it also wants to retain the Western Pacific – a region from which it fought to expel Japan during World War II – as a buffer against Asia. If China broke out of the South China Sea, it could become a Pacific threat. The U.S. could prevent this from happening by committing a major military force to the region. It could also initiate an attack on the Chinese navy. But it also has a third option that requires no military commitment at all: impede the reason for China’s policy in the South China Sea in the first place – securing safe passage for Chinese exports.

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China is heavily dependent on exports, which account for roughly one-fifth of its gross domestic product – possibly more given doubts over the accuracy of Chinese GDP figures. About 18 percent of Chinese exports are destined for the United States. In contrast, U.S. exports to China account for only about 0.5 percent of U.S. GDP. This is classic asymmetric warfare. China is far more dependent on its exports to the United States than the United States is on exports to China. Certainly, some Americans will be hurt by a trade war, but the U.S. as a whole is much less vulnerable than China is. The U.S. has therefore found a way to threaten vital Chinese interests without threatening war (though it also has some forces located near the South China Sea).

The U.S. has applied a similar approach to Iran, whose expansion throughout the Middle East is a concern for the U.S. and its allies. It’s questionable whether military action against Iran would succeed, so the U.S. has resorted to economic warfare here, too. It pulled out of the nuclear deal and imposed sanctions on Iranian energy exports that have hurt the Iranian economy. As for North Korea, the United States, in concert with the United Nations, introduced strict sanctions to try to limit Pyongyang’s nuclear program. It even seized a North Korean cargo ship last week that allegedly was used to violate sanctions. Similarly, the U.S. has accepted that it can do little militarily in eastern Ukraine or Crimea, but it has organized painful sanctions against Russia and made clear that additional sanctions are possible.

The U.S. is the world’s largest military power, but it is also the world’s largest economy and importer. For the most part, U.S. military engagements over the past 74 years have not ended well, but the use of economic warfare, which takes advantage of the fact that China and other countries are heavily dependent on the U.S. market, gives Washington an alternative to the military option.

It is not clear whether Trump will continue to use this approach, but thus far he has done so. As I have argued elsewhere, political leaders’ actions are shaped by geopolitical reality. The geopolitical reality of our time is that economic action has emerged as a major foreign policy tool of the United States.