Containment: A Poor Fit for China

ACADEMIC INCUBATOR — Since its launch in 2013, China’s Belt and Road Initiative (BRI) has secured a central position in China’s foreign policy with the promise of China-funded infrastructure. Western attention to China’s infrastructure financing has grown into worry, primarily regarding the strategic implications of China’s cross-border infrastructure projects. However, the Chinese government rarely provides insight into its infrastructure financing, which spurs competing theories and debates regarding the true nature of China’s funding agenda.

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In his famous 1947 “Mr. X” article in Foreign Affairs, George Kennan laid out the principles for an American strategy to contain the Soviet Union. By forcing the Soviets to engage in a long-running competition, he argued, the inefficiencies inherent in their system would eventually lead to internal collapse. Although Kennan originally saw containment as a primarily political and economic strategy, an “adroit and vigilant application of counterforce at a series of constantly shifting geographical and political points” led quickly to a highly militarized strategy. Kennan’s successor at the State Department’s Policy Planning Staff, Paul Nitze, envisioned a drastic increase of the military budget, writing in National Security Council Paper no. 68 (better known as NSC 68)—the seminal document laying out US national security architecture for most of the Cold War—that, “a defeat of free institutions anywhere is a defeat everywhere.” Nitze envisioned a much more muscular, militarized approach to U.S. foreign policy than Kennan had proposed—not merely containing Soviet influence, but instead actively “rolling back” Soviet power around the world.

In pursuit of this policy, U.S. troops were soon stationed abroad permanently, a first in peacetime, and organizations like NATO institutionalized military cooperation between Cold War allies. By the Reagan administration, U.S. military spending was doubling annually each year, increasing from $142.6 billion USD to $286.8 billion in the period from 1980 to 1985. With billions of dollars committed to defense spending and hundreds of thousands of conventional troops deployed abroad, US policy towards the Soviet Union was heavily militarized with a focus on full-scale conventional deterrence.

China

Today, the United States is faced with a new challenger: China. Unlike the Soviet Union, China is an economic peer competitor rather than simply a military rival.

Seeing the threat, the American policymaking community has started to react. Calls for a Soviet-style containment policy against China have cropped up in Foreign Affairs, and H.R. McMaster, President Trump’s former national security adviser, wrote a Mr. X-style essay in the Atlantic highlighting the peculiar combination of ambition and fear that makes Chinese Communist Party leadership so intractably opposed to American interests.

However, any American policy predicated on economic decoupling and full-scale militarized containment of China is unlikely to work. The intertwined nature of the U.S.-China economic relationship, growing cost of military acquisitions, and uncertainty of continued U.S. economic growth threatens the viability of an economically separated, military-focused strategy based on outlasting China.

U.S Pushback

Recently, the United States has started to push back on aggressive Chinese actions. The Trump administration played a key role in this, recognizing China as a “strategic competitor” in its 2018 National Defense Strategy. The Biden administration has continued this trend, signing the AUKUS naval agreement with Australia and the United Kingdom, which gave Australia access to US nuclear submarine technology to counter the People’s Liberation Army Navy (PLAN)’s growing strength in the Indo-Pacific.

Within these developments, a new, Cold War-esque strategy to “contain” China may be brewing. As noted previously, American policy towards the Soviet Union was guided by the strategic concept of containment, undergirded by a heavy reliance on conventional deterrence, especially towards the later stages of the Cold War. There are two reasons for this military emphasis in Cold War containment. First, the U.S. and the Soviet Union had a shallow economic relationship, with the USSR accounting for 1.5 percent of America’s total exports and only 0.2 percent of its imports in 1984. This is a paltry sum compared to the total volume of trade with China, estimated at $659.5 billion USD in 2020, and illustrates how the US-Soviet relationship during the Cold War was primarily military-based.

In some ways, this lack of economic interdependence freed Washington to pursue an aggressive policy of confrontation with the Soviets. The Soviet military presence in Eastern Europe directly threatened Western European allies, whose vital importance to the United States had just been demonstrated through two world wars. At the same time, there was little to no economic relationship with the Soviet sphere and substantial trade would have required fundamental reforms to the Soviet’s command-and-control economy that the Communist Party never would have agreed to. Combined with the USSR’s ideological drive to spread Communism throughout the world and in Western societies, the Soviets presented a clear, global threat that containment was uniquely suited to address.

Containment: A Poor Fit for China

China presents a categorically different challenge for the United States. Previous rivals Washington has faced were either one-dimensional peer competitors a la the Soviet Union—colossal militarily but economically fragile—or strong regional, but not global powers, like Nazi Germany, or otherwise U.S. allies. For example, Japan in the 1980s was an economic competitor but still a U.S. military ally.

Some American observers assert that a Kennan-esque strategy will “patiently exploit” China’s underlying economic vulnerabilities. Citing America’s strong network of regional allies like Australia and Japan, the dominance of the U.S. Navy, and the geographic constraints of the East Asian littoral on the People’s Liberation Army’s Navy (PLAN), these analysts suggest a militarized version of containment against Beijing is achievable, feasible, and necessary.

This view has support among certain segments of U.S. policymakers. In fact, Trump’s China policy was widely considered to signal the start of a new Cold War with China. Given the preeminence of economic concerns with China, this version of containment focuses on sharp, aggressive moves to push back Chinese economic dominance with an emphasis on building up America’s military capabilities to conventionally deter China.

Nonetheless, there are three problems with this approach. First, China is simply too large economically to be contained. While the Soviet economy was small and weak, China is the world’s largest manufacturer and one of the largest holders of America’s national debt. The best way to think of modern U.S.-China relations is the idea of “competitive interdependence,” a term coined by Ryan Hass at the Brookings Institution. Though U.S. competition with China is deepening, the Sino-American economic relationship is difficult to untangle. Even with the steps the Trump administration took to “decouple,” according to a Rhodium Group estimate, “U.S. investors [still] held $1.1 trillion [USD] in equities issued by Chinese companies, and that there was as much as $3.3 trillion [USD] in U.S.-China two-way equity and bond holdings at the end of 2020.”

Likewise, attempts to duplicate domestically what low-end Chinese manufacturing has already achieved—low-cost production of surgical masks, textiles, etc.—runs the risk of following in India’s Import Substitution Industrialization (ISI) footsteps by devoting copious amounts of capital and resources to inefficient industries that stymie long-term economic growth and development. By attempting to wall-off the Chinese economy to reveal its economic inefficiencies, Washington runs the risk of creating its own.

Furthermore, the amount of money required to fund a conventional military build-up necessary to deter a peer-level competitor like China is cost-prohibitive. Recent acquisitions projects like the F-35 have had the dubious distinction of becoming the Department of Defense’s most expensive weapons platform. In fact, the cost of defense acquisition has grown so prohibitive that some observers argue the Pentagon is spending itself into “unilateral disarmament,” pursuing weapons so expensive they can’t be fielded.

While some observers say that this continued growth in spending is feasible—noting that current defense outlays amount to 3.5 percent of gross domestic product, compared to 5-10 percent of GDP during the Cold War—the long-term outlook for U.S. economic growth is mixed. According to some estimates, climate change alone could shave $23 trillion dollars from the world economy by 2050 while reducing U.S. economic output by 10.5 percent by 2100. Future policymakers could very well be faced with the choice of abandoning extensive, expensive defense commitments, or crowding out the long-term investments necessary to make the American economy competitive—the same dilemma that led to the downfall of the Soviet Union.

Conclusion

Containment is simple to understand, flexible to operate, and powerful in implementation. Yet, while containment may be a good conceptual fit for U.S.-China competition, it is a poor practical one. Rather than offering Washington a framework to guide it through conflict, modern-day containment theory against China risks entangling the United States in a costly, long-running showdown. The rising cost of military equipment, China’s own ability to match U.S. military spending, and the uncertainty of future economic growth all point to the uncertain outcome of this competition. There are other, more prudent uses of national resources, like preparing America’s economy for the coming climate crisis, which will do more to gird the United States for the challenges posed by China than those that would be required for a policy of militarized containment. While strategic competition with China is necessary, containment is an alluring conceptual trap that must be avoided by American policymakers.

Peer Reviewed by: Matthew Fay,  PhD Candidate, George Mason University

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