CSCC felt honored to bring in formerDeputy Assistant Secretary of State, Susan Shirk, for our annual public lecture. Ms. Shirk titled her January 31st talk, “Overreach and Overreaction: The Crisis in U.S.-China Relations.”
While Ms. Shirk blamed China’s overly aggressive foreign policy agenda, she also critiqued the U.S.’s overly restrictive protection measures. Sheargued that the U.S. has overreacted by defining critical technology too broadly, by inflating threats of intellectual property theft and Chinese spies,and by attempting to detangle the U.S. and China’s economies. She believes that these policies not only damage the U.S.-China relationship but also harm America’s competitive edge.
She began by explaining how China has engaged in self-defeating behavior.
Her first big takeaway was that China’s foreign policy has become costly for its international reputation. Shirk gave historical background mixed with policy analysis. She explained thatChina’s maritime sovereign disputes mark a huge shift from restrained foreign policy under Deng Xiaoping to assertive foreign policy under Xi Jinping. By trying to defend claims to the entire South China Sea, China is encroaching on claimants’ legal rights and is angering its neighbors in pursuit of a “selfish project.” This coercive action sparked countries to view China as a risk-taking power, willing to pursue sovereignty over national security.
Her second big takeaway was that China’s technology policy has become costly for foreign investment. Shirk noted that China employs statist technology methods in orderstrengthen its military. She again began with history.Sincethe 2008 Global Financial Crisis, the Chinese Communist Party (CCP) has taken over more control of the economy and has adhered less to market reforms. China has acquired foreign technology through IP theft, foreign technology transfer, and cyber theft. It has also shown favoritism to State-Owned Enterprises (SOEs) and native Chinese companies. Because foreign businesses cannot compete on a level playing field in China, they have started to doubt engagement. Fearing retaliation from the CCP, however, they have called on Washington to get tougher on China.
As former Deputy Assistant Secretary of State, Shirk naturally focuses on how America can best positionitselfin the international arena.
In terms of how to counter China’s harmful technology practices, Shirk proposes that the U.S. adopt Robert Gate’s “small yard, high fence” approach. Shebelieves that the U.S., in terms of CFIUS and export controls, has defined critical technology too expansively. By labeling all of artificial intelligence, biotechnology, autonomous vehicles, and battery storage as “sensitive”, the U.S. looks as if it is practicing technological protectionism and/or technological containment of China. In order to address the real threat that China poses to some high tech areas, Shirk suggests that the U.S. should more precisely define the most important dual-use military technology. By restricting visas to Chinese students studying robotics or aerospace, the U.S. prevents Chinese talent from advancing the American innovation ecosystem. In order to outcompete China, Shirk urges the U.S. to turn it into a “Sputnik moment” and to welcome Chinese STEM students to create more Chinese-led startups in the U.S. than in China.
Shirk urged the audience to try to actively prevent an “anti-Chinese red scare. Shethinks that the U.S. exaggerates the threat of Chinese spies in the United States. FBI Director Christopher Wray’s comment that “China is a whole-of-society threat” worries her that the U.S. will see another version of a red scare. While she acknowledges that China should not have used ethnic Chineseto carry out technological espionage, she calls upon Americans to speak out against widespread anti-Chinese sentiment.
Shirk also stressed the importance of economic integration. She rejected the notion that China and America should economically and technologically “decouple.” Unlike with the U.S. and USSR during the Cold War, the U.S. and China, now, remain economically intertwined. Global supply chains have served as the economic platform for peace in the last 40 years of the U.S.-China relationship. Shirk asserts that trying to detangle these interdependent economies would disrupt the global economy and would shake the process of globalization. Instead, she urged Americans to have more faith in the technological and economic systems in the U.S.
Penn professors, students, and researchers found the talk quite engaging. They stayed to ask Susan Shirk her thoughts on China’s Belt and Road Initiative, Trump’s tariffs, and the Chinese Communist Party’s security objectives.