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Foreign Policy

America’s Strategic Intent

Aug 07 , 2020
  • Zhang Monan

    Senior Fellow, China Center for International Economic Exchanges

With the trade war marking the start of a strategy to contain China, the United States is now entering a new stage. The recently launched Economic Prosperity Network represents a new move to suppress China by building an anti-China economic alliance.

Current thinking in the U.S. features the idea of “America first” and the replacement of market logic with hegemonic logic. The new network is the latest manifestation of this trend.

Initiated by the United States, the network is seen as an alliance of “trusted partners” that involves corporate and civil society in the U.S., Japan, Australia, India, South Korea and Vietnam. Members will adopt the same set of criteria and reduce dependence on China through coordinated planning. The program is wide-ranging, including commerce and trade, investment, energy, digital economy, infrastructure, healthcare, education and research and development. Therefore, the measures and means available within the plan may likewise be comprehensive and diverse.

Combined with suppression and other strategies in science and technology, finance and other sectors, it may contribute to the formation of systematic implementation programs. The strategic goal is pushing China out and creating a new global supply chain dominated by the U.S., which would strengthen cooperation with network members and create new global industrial, supply and value chains to replace the existing ones.

The first desire is to build a new economic alliance between friend that is focused on American interests. The so-called principled realism of the U.S. administration’s foreign policy is by its nature defined by the pursuit of interests, for which President Donald Trump has abandoned multilateralism for the narrow interests of the U.S. alone and advocated a highly transactional form of diplomacy.

The Economic Prosperity Network initiative is a new manifestation of this strategy. In recent years, the Trump administration has pulled out of multiple international organizations, agreements and arrangements by scrapping what he has labeled unfair agreements and concluding new ones that reflect the interests of the U.S. and its allies to a greater extent, such as the U.S.-Mexico-Canada Free Trade Agreement and the resumption of bilateral trade negotiations with Japan, the United Kingdom and the European Union. The network is a further signal that the American intent is to rebuild the global economic, trade and industrial systems with the U.S. at the center.

The second object is to build an economic alliance with the strategic goal of brushing back China. The members include mainly traditional U.S. allies and major trading partners of China. The network has clear objectives and features prominently in the industrial division of labor. The existing member countries can form various industrial and supply chains, as well as complementary manufacturing sectors. For example, Australia may provide major mineral resources and energy; Japan and South Korea may provide technology and manufacturing of high-end products; and Vietnam and India may manufacture low-end products.

It is clear that these members were hand-picked by the U.S. as proxies. They all have some level of competition with China in global industrial and supply chains. For example, in Japan’s supplementary budget, JPY 220 billion ($2 billion) is aimed at funding companies to relocate production of high-value-added products back to Japan and JPY 23.5 billion ($214 million) to transfer production to other countries, mainly in Southeast Asia. Moreover, the possibility exists that in the future, the U.S. may push for the signing of FTA agreements with EPN members similar to the one with Mexico and Canada and insert poison pill rules into bilateral and plurilateral agreements with a view toward decoupling from China.

The third is to form an anti-China economic alliance supporting America’s geopolitical security. With the definition of strategic policies toward China, the Trump administration is making various arrangements in line with the new policy. Among them are the adjustment of the G7 and the reform of core deliberative bodies in the West to include key Indo-Pacific countries. This would integrate trans-Pacific and trans-Atlantic Western allies behind the U.S. Also, the EPN is offering a strong support for political alliances.

The U.S. is using both pressure and incentives for other countries to join its blockade and suppression of science and technology development in China. The U.S. and other Western powers have gone all out to secure their technological edge, from COCOM to the Wassenaar Agreement; from technological collaborations to the Five-Eyes Alliance; and now the EPN. Additionally, the EPN may also be used to counter the Belt and Road Initiative. Members of the network are required to work with other partners on infrastructure, demonstrating a clear intent to compete with the BRI. In the Blue Dot Network scheme, the U.S. proposed competing with the BRI for more profitable infrastructure projects, such as energy and telecommunications. The Economic Prosperity Network has been designed with a similar purpose in mind.

The EPN signals the replacement of neoliberalism with state interventionism, market logic with power logic, and global rules with long-arm jurisdiction, all of which is bound to shake up the global system of rules to some degree. If dispassion still exists in view of the global economy, blocking China is obviously an emotional exercise that will exact a painful price on both sides. The plan fundamentally grounded on “America First” will not only make it difficult for the U.S. to provide real and fair benefits for network members but also incur even greater losses in countries breaking away from the Chinese market featuring cost advantages, consumption prospects and huge potential in the next few years when market resources become even more scarce.

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