Allied Scale: Rush Doshi on US-China Net Assessment
here. Historically, these have mattered. The American economy has a high level of innovation and adaptability, while China has shown remarkable growth and resilience. However, in this context, the expectation cone isn’t just about how fast the economies can grow but how that growth translates into strategic capabilities.
For instance, while China might experience economic challenges, it could still leverage its technological advancements to maintain a competitive edge. Conversely, the U.S. could be experiencing economic growth, but without effective strategic planning, that growth might not translate into tangible advantages in geopolitical terms. Understanding these dynamics becomes crucial; it’s not merely about economic metrics but how those metrics affect decisions made on the global stage.
In conclusion, the interplay between economic performance and strategic positioning is complex. Assessing the net advantages and disadvantages of both the U.S. and China necessitates a nuanced understanding of how each country is positioning itself in terms of technology, military capability, and international alliances. As we navigate this pivotal moment in global politics, it is imperative for policymakers to embrace this complexity, ensuring that strategies moving forward are not only responsive to current assessments but also adaptable to future shifts in the international landscape. Japan, and now China. The consequence of that transition was that the U.K. lost its near-monopoly on what was a new way of organizing production.
Now, scale matters because it’s the element that allows nations to leverage their size effectively. The U.S. and China are both in a position to utilize their large populations and resources. However, the way they translate that scale into power and influence is crucial. China, for instance, has employed state-driven capitalism that allows it to mobilize resources in ways that can rapidly scale up its industrial output and technological development.
Meanwhile, the U.S. has a more fragmented approach where both public and private sectors play roles, often leading to slower mobilization of resources for national projects. Yet, the U.S. maintains advantages in areas like innovation and existing alliances. Thus, the comparative scale of output and effectiveness of organization becomes a pivotal arena for competition, especially as we look towards the future.
Additionally, historical context is important. The U.S. emerged from the post-World War II order with a significant advantage partly due to its industrial base being untouched by war, enabling rapid economic expansion. In contrast, China is experiencing both extraordinary growth and profound challenges as it seeks to transition from an export-driven economy to one focused on consumption and innovation.
As we assess the long-term trajectories of these two great powers, it’s essential to factor in not just the raw size and immediate capabilities, but also the evolving nature of their respective political systems and how they will adapt in response to both internal pressures and global dynamics. The challenge lies in accurately interpreting these complexities and recognizing the implications they hold for global stability and balance.
In conclusion, effective net assessment must consider these variables, putting aside sensationalized narratives in favor of informed observation grounded in historical and current realities. It’s a nuanced endeavor, but one that is increasingly vital in our interconnected world. to military vessels.
So we’re seeing this shift in capability that is unprecedented. The scale of China’s manufacturing and industrial base stands in stark contrast to what we’ve seen historically. Not only has China managed to ramp up its output significantly, but it has also diversified its industrial capacity across a wide array of sectors. This presents a unique challenge for the United States, as we navigate the complexities of competition in a globalized economy.
Moreover, the implications of this shift extend beyond economics. It influences geopolitics, technology, and even military strategy. Countries are beginning to adapt to this new reality, re-evaluating their alliances, and considering their positions in relation to this growing power.
As we look toward the future, it’s critical for the U.S. to confront these changes head-on. We must reinforce our industrial base, invest in innovation, and strengthen our partnerships. The stakes are high, and the outcome will shape the global order for generations to come.
In short, the scale and capabilities of China as an industrial competitor have fundamentally altered the landscape in which the U.S. operates. The challenge is not just about maintaining a competitive edge but also about redefining what it means to be a leader in the 21st century. The path forward requires a collective effort, strategic foresight, and an unwavering commitment to excellence in all domains. to warships, but 200 times writ large. That’s pretty significant numbers relative to us. But what I think is most interesting, Jordan, is also the fact that they have a pretty high share of global markets, too, when it comes to manufacturing.
It’s not just about us. They’re about half the world’s chemicals. They make half the world’s ships. They make 67, 70 percent of the world’s electric vehicles, more than three quarters of the world’s batteries, 80 percent of the world’s consumer drones, 90 percent of the world’s solar panels, 90 percent of the world’s refined rare earths, and we’re not done because they’re betting on the next industrial revolution, right?
And one stat that I think is particularly important for your listeners is this question of industrial robots. The U.S. is installing a lot of them, but China is installing seven times more, and half of all the robot installations that occurred in 2023 happened in China. You take nuclear, right? We’re all talking about how we need power to fuel the AI revolution. Well, China leads in the commercialization of a technology we invented, fourth generation nuclear technology, and it’s planning 100 nuclear reactors in the next 20 years.
And then you look at science and technology, folks say, well, they can’t innovate. We’re always going to have that. We do have an innovation edge, but they do exceed us in active patents and in top-sided publications. Now, you can quibble with the numbers. You can say they juke the stats. All that’s true. We don’t accept that slander on China talk here, Rush. We’re past this. Don’t worry. And there’s some truth to that, but the trend line is also incredible. And they probably are about even with us in those categories.
And in 10 years, they’ll be well ahead of us, even accounting for statistical manipulation. And you look at the military balance, Jordan, because all this manufacturing power translates into two forms of advantage. One is military advantage, and we’ve talked about that in the context of World War II. But the second is technological advantage as well. Innovation coming from the factory floor, tacit knowledge, process knowledge, special production capabilities that you innovate on over time and iterate on. That also creates enduring advantage for China too.
And we should know that because that’s where American innovation came from also. It came from our ability to dominate manufacturing. It’s forgotten now, but when we were becoming a manufacturing power, we were behind Europe in science and technology. We didn’t have the Nobel Prize numbers that we have today. So manufacturing was the leading edge, and the rest came later. I think we’re seeing the same story with China.
Okay. So let’s not underestimate China. I’m with you this far, Rush. What’s the answer? So one answer that you’re hearing out of the administration is like, we need to industrialize. And the problem with that is that even if you hit every policy right, like you’re getting a percent a year, half a percent a year, 2% a year, maybe on a good year when it comes to sort of like global manufacturing production.
So kind of even setting that aside of like putting, you know, re-industrialization and like growing manufacturing again as a long-term goal, you know, these are not the sorts of trends, like the sort of the laundry list that you just laid out, Rush, is not something that is going to go anywhere anytime soon.
I think that’s right. I mean, these advantages that have been built are very sticky. You know, poured concrete is poured concrete. It exists. And so a lot of China’s supply chains, they’re not going to pick up and move immediately. They’re also more resilient than people think.
You know, some folks say, look, China has a number of macroeconomic problems. Rush, you know, you’ve given us this laundry list of manufacturing statistics. Why does that matter? They’ve got, you know, problems economically, they’ve got problems demographically. But I think if you walk through those, you see those problems are probably a little overstated too.
Look at their economy, right? It’s smaller than ours in nominal terms, dollar terms. And a lot of people are taking comfort in the fact that it’s shrinking relative to the U.S. economy again in dollar terms. But Jordan, a lot of that work is being done by a strong dollar. If you take away that financial advantage, then, and you look at things adjusted for purchasing power, then China’s economy probably surpassed the U.S. economy in size 10 years ago, and is 30% larger today.
Now, there’s a lot of problems with adjusting for purchasing power. You can’t just do it willy-nilly. The indices are not perfect. But it’s a good heuristic, a good attempt at capturing the price, the local price of key strategic inputs, right? Things like infrastructure, things like weapons, things like government personnel, those are priced in local terms. And while nominal GDP might be really important for capturing quality of life, it’s purchasing power adjusted GDP that might capture some of the things that matter for generating strategic advantage. But then some people say, okay, well, fine. But the demographics are a problem, right? China is aging. And that’s true. But the question is, when will that matter? By 2100, their population will fall by half. There’ll be literally half as many people in China as there are today on current trends. That’s a big deal.
But the strategic harm of aging doesn’t really take place for another maybe 20 or so years. And that’s largely because if you look at China’s demographics, the under 14 share of the population increased between 2010 and 2020 in absolute terms and as a percentage of the total population. The population still aged. Don’t get me wrong. But that younger share grew. And the reason it grew is there was a Mao era baby boom. And these are the grandchildren, right? Demographics are lumpy. And that can help you buy time.
In addition, China’s dependency ratio won’t even be as bad as Japan’s dependency ratio today until 2050. So again, that gives them a sense of time. And we talked a little bit about industrial robots. All the investments in industrial robotics as well as embodied AI could help them with some of the productivity problems they might have from falling… I’m sorry, not productivity problems. Some of the labor problems they’ll have from a falling population. And you just look at the investments that they’re making, they’re clearly betting that their factories are not going to have a lot of people. You look at a Chinese BYD plant, they don’t have a lot of people working the assembly line.
And then people say, okay, well, that’s all well and good. But what about their debt level? And they do have really serious debt, right? 300% of GDP if you combine government, household, and the corporate sector. But that number is the same number as the United States, or also 300% if you combine government, corporate, and the household sector. So no, it matters the composition of that debt. It matters who’s holding it. But let’s just take that aggregate statistic for a second because you can move some of that around. That gives you a sense of the country’s overall indebtedness.
And if it’s comparable, maybe they’re able to weather that too if they take proper steps to recapitalize local governments. And finally, folks talk about how American companies are just killing it because they have high market caps, right? The most valuable companies on the earth are American. And they have the highest share of profits in fields like technology. But you and I both know that that market cap number is partially a reflection of people wanting to buy dollar assets, right? It’s partially a reflection of, again, a strong dollar or people investing in a strong dollar.
And that profit number matters, but that’s because American companies max out on profits. Chinese companies max out on market share. They’re willing to run losses to get there. They’re optimizing for something different, something that might matter strategically because if they can stay solvent longer than our companies can stay solvent, then they can put them out of business and deindustrialize us.
So you take all of that, and I think what it shows you is, yes, China has really significant weaknesses. They’re aging. They’re slowing. They may have deflation in their economy. They’re high youth unemployment. All of that is really important. But again, it may not matter as much in the timeframes that are determinative for great power competition. That’s the question we have to ask ourselves. When does it matter and how does it matter? And that’s what we’re trying to talk about here with the question of scale.
So, Rush, you ran through a lot of the arguments that people make to make the bear case of the 20-year China net assessment, but political instability is not one you address. So why don’t you take that one on?
No. I mean, I think this is actually the critical point, Jordan. You’re totally right. My assessments are really focused on sort of the macro indicators, demographics, financial indicators, because those are the ones that, in many ways, people are talking about when they say China might never catch up to the US. But political leadership is a tough one. I think if there’s a path to Chinese failure, right, if there’s a path to Chinese sort of inability to succeed in the 21st century, that path runs through a failed political transition from President Xi to his successor.
It’s very interesting that China was able to essentially set under Deng Xiaoping, you know, 20 years, 20 plus years of successors, right? Deng picked Jiang and he picked Hu Jintao as well, but he did not pick Xi. And so we don’t have that same longitudinal planning. We’re all living, is to leverage that scale. The balance of power has shifted in favor of the U.S. and its allies, but we need to be strategic about how we utilize that strength.
We must recognize that the fabric of international relations is not just about military might; it’s also about economic and technological partnerships. By enhancing our relationships with allies, we can create a more robust response to challenges posed by rivals like China.
Moreover, capacity-centric statecraft emphasizes the necessity of mutual support. It’s not just about the U.S. providing resources to its allies; it also involves allies contributing to U.S. efforts. This dynamic relationship fosters a more resilient collective security structure.
The discussion around allied scale is crucial. If we bring our resources together effectively, we can operate on a level that diminishes the competitive advantage of adversaries. The combined capabilities of the U.S. and its allies are substantial, and we should capitalize on this.
When we talk about investment in a path to scale, it means investing in technologies, supply chains, and innovation in a way that aligns with our allies’ strengths. This alignment will not only enhance our defensive posture but also send a message to adversaries about our united front.
As we move forward, it’s essential for policymakers in Washington to understand the importance of this cooperative approach. Engaging with allies to build capacities that can collectively deter aggression is paramount. The potential benefits of this strategy could redefine the landscape of global power dynamics.
In conclusion, the era of unilateral decision-making should be behind us. A collective, capacity-centric approach will not only safeguard national interests but pave the way for a more stable and prosperous global environment. The United States, through collaboration with its allies, must strive to create a balance that can effectively counter global challenges. is taking that theoretical advantage and making it real. It’s realizing that kind of sense of scale.
And too often, we think of our allies in terms of hierarchy. We think of them in terms of post-World War II and Cold War era habit. We’re too focused on military issues in the alliances. We think of alliances fundamentally, it’s always talked about whether they’re tripwires, whether they’re protectorates, maybe they’re vassals, maybe they’re status markers. But our contention is they have to be platforms fundamentally for building capacity.
And there’s a lot of ways in which you could imagine that, Jordan. You could imagine, like, take defense. You could imagine Japanese and Korean investment in American shipbuilding, right? Something we haven’t gotten right, but they have three to five times more productivity per worker in that industry. And then you could imagine us putting out more technology to our allies. AUKUS was an example. Kurt and I worked very closely on AUKUS, on launching AUKUS. It was about making sure that the U.S. and the U.K. helped Australia acquire a nuclear submarine capability. That’s our crown jewel, most sensitive military technology. But it’s going to build meaningful Australian capacity in the Indo-Pacific. That kind of capacity building is critical.
You could imagine, by the way, in the military dimension, new efforts at capacity building that we haven’t considered. Think about novel joint military formations. The British and the French had a brigade that they kind of created together. You could imagine the U.S. and Japan or the U.S. and Korea creating anti-ship cruise missile battalions, where we can train each other on the best tactics for shooting and scooting when it comes to that kind of warfare, learning the best practices from the Marine Corps under General Berger. You could think about a variety of different efforts, too, that don’t involve the U.S., right? Part of allied scale is allies help each other.
And the role of the U.S. in that transaction might be facilitating collective action or facilitating these kinds of linkages. Imagine, for example, if the ROK helps Europe rearm, right? The ROK has an incredible defense industrial base. It has the weapons. It’s making the weapons that Europe needs. The Scandinavians have some of the best anti-ship cruise missiles in the business. They could sell them to Southeast Asia. France is one of the best at operating LEU, nuclear-powered submarines. They could help India with that technology, too. India has the same nuclear-powered LEU submarine program. That is what allied scale looks like, where the U.S. isn’t always at the center but maybe is providing a gravitational role in facilitating collective action.
And that’s just the security side. I mean, there’s a lot more we could say about the economic and tech side, too. So let’s stay on the security side for a little while. You guys were just in government for the past four years, and you were trying, right? These ideas didn’t come out of nowhere. And the fact that the U.S. plus its friends is going to be 2 to 3x whatever China and its friends will be over the next few decades, assuming the balance of friends stays the same, is not a new fact.
So, you know, as you and Kurt were pushing for this stuff, what was… and you had a president who was as sort of ally forward as you could ever hope for. You know, what were some of the roadblocks in the way, both from a U.S. as well as a partner perspective?
Yeah. Let me just start really quickly with this question of whether the allied scale stuff is intuitive, right? I think it is intuitive. I think we all know collectively that if we don’t hang together, we’ll hang separately. But what I think has been missing from most diagnoses is the sense of urgency. People say you have to work with allies because it’s good. It’s sort of like American apple pie and motherhood, right? It’s like a good thing.
But why is it essential? That’s the different argument, right? And the reason it’s essential is because we’re underestimating China’s sense of scale. The reason it’s essential is because Great Britain failed as a great power because it couldn’t get scale, right? Lord Seely looked to uniting with British colonies to create a sense of scale that could rival the other great powers of that age, and he failed. They all failed at that effort, right? They were too little, too late, and everyone drifted apart.
The question for the U.S. is essentially, will we face that same fate? We have an advantage. We don’t have an empire. We have allies who are very capable on their own. That is a huge advantage relative to the U.K. But what I’m trying to say to you and in that piece with Kurt is essentially that this is urgent, that we have to. get this right or we lose the century to China. That is not the usual frame that I think people think about with allies. They think allies, great; not allies, four alarm fire; you need this, five alarm fire; you need this right now. The reason that this is hard to do is partly because people don’t see it as urgent. They see it as conventional common sense.
Okay. To be clear, the U.S. and China independently are roughly going to be running neck and neck or far too neck and neck for comfort in the vast majority of futures over the next few decades. So like the most important thing America can do is leverage the rest of the world who is much more likely to want to partner up with us than partner up with a CCP controlled PRC. And that is the way that you change the balance of power. That is the most straightforward way to dramatically change the balance of power over the coming decades.
Yeah. I’ll just add one thing to that, which is that I’m not sure we’ll be neck and neck in all metrics that matter for a strategic value. We’re not neck and neck in manufacturing. We’re going to be one quarter of them. If you take the U.S. versus China on a lot of these metrics, we’re behind. We don’t have scale. We have a great number of advantages: capital markets, immigration, innovation, talent, generally political stability. But we don’t have scale.
And so I think what my concern is, is that there’s a world in which the U.S. is not running neck and neck with China. The only way we can run neck and neck on some of the metrics that matter for great power competition is with allies. That’s why this is urgent. Without them, we will be smaller. We’ll be like the U.K. to the U.S. and Russia or like Florence to the U.K. We’re one quarter their size. As productivity equalizes around the world, which is partly a factor of institutions and technology, China will be productive. And they are productive. They outmanufacture us. They are at the leading edge in a lot of industries.
And so there is an urgent need for the U.S. to find its own path to scale, and that is allies. As I said a moment ago, the British could not get scale because they didn’t find a way to unite with their colonies. They didn’t find a way to pull them in together to build scale. They thought that was the path. They didn’t get there. What the U.S. has that’s different is not colonies, not subjects, but truly capable, independent, sovereign allies who share our values. If you are able to join together with them, it’s not even a contest with China. We completely outscale them.
So I think this is a really important point. Modern-day Japan and modern-day Germany are not India circa 1890. We are talking about very different allies in terms of their latent ability to contribute to the Metropole’s national power.
Yeah. And actually, you know, even in the case of Lord Seely, he was saying to exclude India. He thought it was a resource pit. He was totally obviously wrong about that, about India’s potential. He was saying Canada, South Africa, Australia, New Zealand, sort of the white settler colonies. But take Japan versus any of them or take Korea versus any of them. The American alliance system has within it incredible performers, really powerful, technologically advanced, economically impressive performers who also, by the way, make really great military equipment and are committed, broadly speaking, to the values that we also care about.
That is a home run. That is unbelievable. In world politics, almost nobody has this advantage. And don’t take my word for it. Take China’s. China believes that our single greatest advantage, asymmetric advantage, is allies. Back in 2017 and 2018, their glee at this idea of populism eroding the Western position emerged from really one thing, Jordan. That was the sense that populism was breaking American alliances apart. They have always seen alliances as our critical advantage.
They know what we don’t know, which is that alliances also have economic and technological power that they can bring to bear in competition. That’s why right now, you know, I’m talking about scale. The Biden administration had a theory of how to get there. That theory had good parts and bad parts. The Trump administration has a theory, too. It also has good parts and bad parts. I don’t think the piece we’re writing is partisan.
We’re not saying you got to do it our way. What we’re saying is the destination has to be scale. There are a number of ways there. There is a path to allied scale with, quote, Trumpian characteristics. Great. Figure it out. Let’s get that done. If it has to be that way, then let’s get that scale together. But my concern is unilateralism that focuses on. Resolving bilateral issues without thinking about the larger strategic context vis-a-vis China. And right now, the Trump administration has a chance to land several bilateral deals around the world. My hope is that they do so in a way that focuses on the question of pooling our shared capacity and building scale against the PRC.
There’s the sort of J.D. Vance mindset, promoting the AFD in Germany. If they don’t win an election, then the German right isn’t our ally anymore is a very insidious mindset. Because, as you said, Rush, we forget how good we have it in terms of all of these countries being on the same wavelength as we have been.
But two world wars against Germany and one against Japan. These were the preeminent industrial powers of their regions in the 20th century and part of the 19th century as well. They are stalwart American allies. We’re not always happy with each other; we have disagreements, but they’re on our side. They share our values. That is an incredible accomplishment and success story.
The idea that culture war issues should dictate how far we go with these allies on the greatest geopolitical challenge America has ever faced is cutting your nose to spite your face. It doesn’t make a lot of sense. Now, that being said, the Trump administration could still get scale. One critique of our piece is that, well, Kurt, Rush, it’s a beautiful dream. It’s very idealistic. It probably made sense five years ago, but it doesn’t make sense anymore.
I really don’t accept that. I think that there is a Trump path to scale too. I mean, it probably is less focused on persuasion the way that President Biden was and more focused on coercion. You could critique the Biden administration for being not sufficiently coercive. My whole point is this: you probably have to mix and match different tools depending on who you’re dealing with. But at the end of the day, we all know the place we have to go.
It can’t be the U.S. versus China one on one. A unilateral America that retreats to its own sphere is an America that is poor, less powerful, where quality of life deteriorates and that does not have global influence, including on the things that make us prosperous. And that’s obviously not a good idea.
What are the sort of errors you get from being too conciliatory versus being too coercive with respect to trying to get allies on board with scaling up together? One critique that the Trump administration makes of the Biden administration is that the focus on allies was too much on persuasion and not enough on pushing allies, or what you could call coercion. The result was free riding.
I think there’s a good counter to that, which is there was a lot of progress with AUKUS and the Quad, and European involvement in Asia and Asian involvement in Europe that began to take a step in the direction of allied scale. But I think the Trump administration’s critique is that more needs to be done. And they’re not wrong because Kurt and I think that more scale is necessary immediately; that AUKUS, in many ways, was a down payment on the kind of approach with allies that we have to start institutionalizing across the board.
I say that as somebody who was deeply involved in AUKUS in 2021, working on the negotiations for the White House under Kurt Campbell. It was novel at the time. We have to get to a point where that is less novel. The Trump administration’s error, conversely, would be being too coercive, thinking you can bully everybody into doing what you want.
There’s another error, which is thinking that fundamentally allies don’t matter, that America can go it alone, and that all that matters with Japan or Korea is the size of the bilateral trade deficit and whether or not they buy U.S. treasuries. We actually have other equities here. Let’s think for a second about the economic picture, Jordan. If we want to be able to make sure that we have scale for our industries, when China is more competitive on a marginal cost basis, we can protect the American market just fine.
But if we don’t also have access to allied markets, and if allies don’t have access to our market, then none of our companies can achieve scale relative to China. We have to be able to have pooled market share. The Trump administration has talked about putting up a kind of tariff wall; if you ask me, a regulatory wall might be even better against certain Chinese exports. I think that’s right.
In addition to doing that, you also want to reduce trade barriers among allies, so you can facilitate greater scaling up. within the protected mode. Now, to get there, you’re going to have to have a mix of coercion and persuasion. You’re going to have to have a mix of the Biden and Trump approaches. Right now, we’ve seen President Trump, with Liberation Day, take the coercive route. Now there’s negotiations happening and deals to be made. Let’s hope that those deals are in the persuasive category.
And you could imagine, Jordan, what those deals should look like, right? You could imagine a deal in which allies invest more here. We reduce trade barriers. Maybe we go to zero zero, as some on the Trump team have talked about. Allies spend more on their own defense as part of the deal, or we work with them to improve their military capability and capacity. And maybe there’s additional steps taken to prevent China from dominating allied markets, including coordinated and shared tariffs and regulatory policies to build a kind of moat behind which we can all live. That kind of deal is achievable.
And my hope is that as the Trump administration rushes to push these deals, that’s the model that they have in mind. And I’ll end with this. Folks are saying they’ve got to negotiate 75 deals, and that’s too many. I don’t think that’s right, Jordan. I think they’ve got to negotiate maybe eight to 10. And if they can get those eight to 10 right, they can start building that allied scale a very different way from how President Biden might have done it. And they can declare victory and say, we did what they couldn’t. And that’s fine. They can say whatever they want. The point is to get scale. And if they get it, I’ll applaud them.
So let’s stay on the Germany example for a second, because that was my whiny Lib’s owned case study that I referenced earlier. You guys were not able to get Germany to break its debt covenants and spend a trillion dollars on defense, right? So on the other hand, it basically took administration officials saying stuff so intense that Germany and Poland decided that extended deterrence is not something that we can really trust anymore.
So, I mean, we’re in a very different world state than we were in September of 2024. And I don’t know, let’s talk a little bit about the trade-offs of—I don’t think the wake-up moment has necessarily come for Taiwan and Japan and South Korea, but we do seem to be in a very different timeline in the European context.
Yeah, you know, it’s an interesting point. The risk of the current approach, though, is that it’s so intense that it pushes Germany out of being a core US ally on the things that we care about. There’s a lot of flirtation in Europe right now with different forms of strategic autonomy, which could on their own be interesting, but taken fundamentally out of a dissatisfaction with the US, that might mean they’re not on our team, and we need them to be.
And I’ll give you some concrete examples. Back in 2020, remember, the Europeans and the Chinese negotiated what was called CAI, the Comprehensive Agreement on Investment. That was fundamentally negotiated because there was a concern in Europe that they couldn’t rely on the US. We in the Biden administration were very upset. We thought this is ridiculous. We’ve just come into office. How could you do this? That agreement eventually blew up, right? But there’s a world in which it doesn’t.
And right now, what I worry about is you’re seeing Europe make these signals that they want to hedge with China. That’s obviously not a sensible policy. They shouldn’t do that. But great powers can commit suicide for fear of death. They can commit suicide, again, for fear of death. That’s a political science phrase I’m applying to this context.
And what it means is when you push an ally so aggressively, you can change their domestic politics to make it more anti-American. You can activate questions of face and respect that lead them to make bad decisions. Countries don’t always do what’s in their rational self-interest, especially at times like this.
So as I say, you can critique the Biden administration on some reasonable grounds as not having pushed allies hard enough. And you can critique the Trump administration for perhaps pushing too hard in ways that can undermine transatlantic unity on China, which is, by the way, extremely important to preserving the American position.
And the truth is, Jordan, as you and I both know, you kind of have to do a little bit of both. You’ve got to have a nuanced approach. And we probably could get there in either administration if folks are thinking about how scale is urgently needed and how there needs to be a bit more humility and urgency in American statecraft.
What we’re talking about, capacity-centric statecraft, is humble, right? We’re saying there are capacities America has that its allies need. Great. we can provide them. But we’re also saying there are capacities America has lost that only our allies have. And we need to get them back. How easy will it be to get Germany or Japan to manufacture in America if their domestic politics turns anti-American and the country’s governments feel like any kind of accommodation of the United States is contrary to their political self-interest? That’s the thing that we have to keep in mind. And so that’s the risk, right? This approach, we’ll see how much Germany follows through, but we might also lose the transatlantic relationship that we need if we’re not careful.
Yeah. So dark timelines. How does Trump 2.0 turn into America’s Gorbachev moment? Yeah. I mean, that was a provocative line in the piece. And I want to say that personally, I’m cheering for that not to happen, right? I mean, I think Kurt and I, our hope was that this piece provides a strategic theory of how America should conduct itself with alliances. It’s different from how it’s done in the past. And by the way, also has value for the Trump administration. It’s not meant to be a partisan piece. It’s not meant to be a partisan hit.
And the Gorbachev moment line is really about two things, right? There is a risk that we neglect, as I said a moment ago, that our allies have agency, that they have respect, that they have face, that they have autonomy, and that they move in their own direction away from us if we push them too hard. That’s sort of what I mean by Gorbachev moment. I don’t think Mikhail Gorbachev assumed that every Soviet Republic was going to push the eject button on his experiment. But essentially, that’s what happened. And that could happen to the American system, right? You start renegotiating the foundational elements of it. You start becoming more unpredictable. You try to interfere in the domestic politics of your allies by backing particular political parties. You are dismantling some of the tacit bargains that make up the American alliance system, right? That make up the American order.
And if that all comes apart at the seams, you could have fragmentation. And that Gorbachev moment has a different element as well, which is that everything I’ve talked about being able to compete successfully with China, it requires state capacity. And Gorbachev’s reforms, and especially Yeltsin’s shock therapy, destroyed the state capacity of the Soviet Union and then Russia in many respects. And it made it harder for it to accomplish its geopolitical and domestic aims.
And I do worry that we are taking apart our institutions. I’m not saying they shouldn’t be reformed or renewed. There’s a different way that Doge could have been done, just like there was a different way the trade war could have been waged. What I worry about is in both cases, these are extremely important things, and they were done in not the most strategic way.
Take for a second the trade war. Let’s do a thought experiment, Jordan, just the two of us. Let’s imagine for a minute that before the trade war, like the day before Liberation Day, that the Trump administration had basically given everybody a theory of the case. They’d come out with policy papers saying, we’re only going to raise tariffs on China, but everybody else is on notice. See this chart? That chart will happen to you if in 90 days you don’t strike a grand bargain with us. And that grand bargain has to include not just economics, trade and finance, but also security and your relationship with China.
And let’s imagine that before they announced all this, they had talked to a few countries and worked out the rudiments of a powerful dealer too. And then they put out the press conference. And that same day, they have a few wins on the board already. The Chinese didn’t see this kind of collective approach coming. And the markets think that there is a logic, a grand design behind this approach.
Would we be in the same place? Would the yields be spiking? Part of what’s happening is the market doesn’t think we have a plan. It doesn’t know what we’re trying to do. What I’m saying is this rationalization that the Trump administration has created ex post about his trade war. Imagine, Jordan, if it had been ex ante. Imagine if it had come first. I think we’d be looking at a very different strategic circumstance right now. You don’t go to war without preparation. Look at Russia in Ukraine. You don’t wage a global trade war without preparation.
And what I worry about is there is no piece of paper anywhere that says exactly what we hope to achieve globally, bilaterally, and multilaterally in the global trading system. And without that piece of paper, we’re just making it up. And that’s frightening.
Well, the problem is there were pieces of paper, but the president chose the dumbest piece of paper because he thinks that tariffs are a great revenue-raising tool and he doesn’t like trade. So, I mean, it’s tough, but this is the kind of timeline we’re living in. As much as I want the Rush Doshi version of the Trump administration, I’m pessimistic we’re going to end up getting it. Imagine we’d done this differently. This could be a moment of strategic advantage for the United States where we finally change the global trading system in a way to better reflect what it needs to with respect to China’s participation. Instead of that, what we have is a kind of unilateral, smaller American position with the world in its entirety angry at us. I don’t know that that was the best way.
You’re right. There are other people with other pieces of paper. My argument is that they should have basically made a different case, and I don’t know that anybody made this case. This is the case they’re making now, Jordan. This is what they’re saying now. This is the ex post facto rationalization. All I’m saying is rewind the clock two months. There was a transition. Make this the case then and tell the press. Do all the same things if you have to put the tariffs on the allies if you have to. I don’t think it’s a good idea, but have a story of what you’re doing before you do it. That story didn’t even make it out.
We have a number of potential futures. One is all the allies, all these Democratic allies realize that maybe they can’t count on the U.S., but they band together, get their houses in order, start spending on defense, and do some good deals between South Korea and Germany and whatever.
Well, first, let’s explore that path. What does the alliance and global order look like with China, a checked out America, and the rest of the developed world, which is not comfortable with Chinese ascendancy? We’re seeing China right now, pretty excited. You’re seeing leadership traverse different countries and strike deals. They see an opportunity. I met with some Chinese academics recently who basically said that the propaganda department in China is in heaven right now because they feel they have tons of ways to point out how China is a better partner than the United States.
Now, nobody should really believe that. People should be skeptical of that. But the Chinese are certainly trying to wedge the U.S. from its allies and partners, using trade as the way of getting there. What I worry about is, let’s say we run the bear case play. Let’s say we don’t reconstitute our alliances, see greater transatlantic ruptures, and are not able to strike a great deal with our East Asian partners.
If America retreats more to the Western Hemisphere and tries to make a stand in the West, that approach is not going to work. You cannot cede the whole world to China’s world-beating industrial power and expect that an America that retreats to the West can somehow defeat the Mackinder trap. Mackinder talked about how you don’t want anybody to control essentially the world island of Eurasia. Essentially, us pulling back to the Western Hemisphere is exactly that.
That’s why it was dismissed as a grand strategy in World War II. It’s why it doesn’t make sense now. It especially doesn’t make sense in a globalized world where, quite frankly, even if you fragment the trading system, the reality is that it’s going to recreate itself with somebody else at the core. That somebody else could end up being China, and then we’re frozen out globally. All the innovation, technological progress, and efficiencies built in that part of the world don’t make it to us. America as the Galapagos Islands is not a good future for America.
So we have to be global. We have to fight for a globe in a world order that reflects America’s interests. By the way, that isn’t America first. If you have to be an America first person, that isn’t an America first approach too because you’re talking about American prosperity, not just American geopolitical leadership. You’re talking about the quality of life Americans have, and that rests on the fact that we are 5% of the world’s population and yet extraordinarily wealthy because a system has been built to sustain that quality of life.
We can’t just blow it up hoping everything will work out. That’s a very Yeltsin shock therapy kind of approach, and that didn’t really work great for the Soviet Union and Russia. So that’s the world I worry about: an America that pulls back as a world where the world is China’s to lose. We obviously don’t want that.
All right, so China’s to lose. We had a Trump administration before this, and we had the same leadership in China. You can argue they had the same perspective. of blew it from a sort of global diplomatic alliance-making perspective. I don’t know. Do you think they learned their lesson when it came to how to engage with these countries? What are the different likelihoods of potential playbooks that China may be running with this moment right now?
I think you can never discount the fact that China will find a way in diplomacy with others to get in its own way, right, to basically trip itself up. And so that’s true. What you said is right, Jordan. There’s a lot of confidence, right? So in my past work on Chinese grand strategy, I talk about how the biggest variable that shapes it is, in many ways, their perception of American power. And beginning in 2016, their perception changed. They thought the world was undergoing great changes unseen in a century. And it led to a more aggressive and assertive Chinese policy, including with the very countries that they should have been courting. I mean, one of the greatest strategic puzzles of all time. Why is China always going out of its way to alienate India? You know, China pushes India towards the United States, and India might prefer on its own to be more of a swing player, but China makes it impossible.
There’s all kinds of ways they could blow it again. But there’s also the reality, Jordan, that the approach that we’re taking now is fundamentally in order of magnitude different from anything attempted in the first Trump term, right? That was a trade war with China, which you could argue was overdue in a sense. It was also a kind of effort to renegotiate the terms of certain security agreements with allies and partners. But it wasn’t essentially, you know, hitting control-alt-delete on the entire global trading system, which is basically what has happened now. And we’ve got a 90-day pause, but also a 10% blanket tariff. I mean, the 10% tariff is itself a revolutionary act.
And if you were to just have that on its own and not consider the chart that the president unveiled, we would still be shocked by it. And now, because the comparison point is that chart, we’re sort of giving the 10% a pass. But all of this stuff is different, right? So let me answer your question directly. American policy is much more revolutionary than it was in the first Trump term. That means China’s opportunity is much greater as well. And the question is, if they don’t do a great job pursuing it, but do a marginally better job than in the past, there’s a lot of points on the board they can still win. And that’s what I worry about.
Yeah. And it comes back to our point earlier about political instability. They might screw it up. They might not. But fine, give them a 50% chance of screwing it up. That is still a large number of futures that you don’t want to be living in, where you’re betting on all these small countries in the world to figure out all the coordination problems that they’re going to need to figure out without the US providing the glue and lubricant, which is scary.
Yeah, I mean, I think that’s right. And, you know, a world which is essentially divided, where the US does not play the role of collective action, is one of these puzzles. It’s one of these hard things to imagine. What allows people to come together and act in common, right, when there are incentives to just go your own way? America is an anchor for collective action. We can make collective action possible. But if we withdraw, then, you know, maybe everything fragments, right? Maybe allies are divided and conquered, right? And so we might be in this divide phase of divide and conquer for China right now, but we’re helping them with the divide. And then the conquer comes later.
Every once in a while, people ask me, Jordan, why don’t you turn into the Matt Levine for China policy? And my answer is, fundamentally, Matt Levine thinks securities fraud is funny. And I think this stuff is deadly serious. And, you know, you as well are someone who cannot stare at the stakes of the conversation that we’ve had for the past hour and sort of shrug your shoulders and laugh about it and go on with your life. So do you have any advice, Rush? It feels very helpless when the Overton window of errors from a sort of lasting geopolitical perspective seems as large as they have ever been in either of our lifetimes. So, like, I don’t know. Give me the pep talk. How do I just keep putting one podcast in front of another?
Let me try. Look, I think there’s a few things to keep in mind. First of all, the Trump administration can negotiate these agreements with allies and partners in ways that actually achieve scale. It’s conceivable. And there are signs that some folks that are Running the negotiations are thinking in these terms. We know many of the people staffing the Trump administration at the level of mid-level staff, that the key principles, etc. I’m not talking about the cabinet specifically, but many of the people below that believe in allied scale. They may not have called it that, but they understand its logic.
So there is that group of people, and there is the possibility of landing the ship in that spot. I can’t say what the odds are. I do worry about that. But I don’t think we should be despondent. I think part of what has to happen is we have to talk about this. One reason Kurt and I wrote the piece is because we wanted to make the argument for why allied scale matters. And I hope that as that argument gets out and as others reinforce that argument, that it helps shape some of the Trump administration’s thinking.
The piece is not meant to be a partisan hit piece. It’s meant to be a strategic piece that any administration could adopt. And I guess the last thing I’d say is that this administration won’t be forever. Congress might flip in two years. America is always changing. And so for allies and partners out there, they will find ways to work with the United States, whether it’s the legislative branch or pockets in the executive or a suddenly enlightened executive that negotiates better deals. It’s not over.
And I guess the final thing is that great power competitions can be lost in short periods of time, but China does have a lot of challenges too. They can’t get out of their own way at consolidating and pressing their advantages. And America has real advantages as well that we shouldn’t neglect. We do have two oceans, abundant resources, 70% of the world’s capital markets. We have the ability to attract the best from all over the planet. We have general political stability. All of these things are huge advantages for us. And they’re not going to disappear overnight.
They’ll be damaged, perhaps. Some of them might be tarnished, but some of them might even be strengthened. And I think we have to keep in mind that this competition will not resolve itself in two years or four years where you have to make investments for the long haul. And again, Congress can do a lot. Everything that the Biden administration did to build allied scale was supported, funded, endorsed, and praised on bipartisan terms by Congress. So again, we have to remember that Congress does have power over this as well.
All right. One last one, Rush. I remember DMing you during the administration being like, they’re not going to let you talk about this book, right? And you’re like, yeah, sorry. But here we are now. We’ll have you back to do a deeper dive and I think like an updated dive into it. But I’m curious, assuming that pretty much everyone in this audience has read the book, what did your experience of being on the inside, reading intelligence and interacting with the Chinese government do to some of the conclusions that you took towards the end of your research for that project?
Yeah. Well, so thanks, Jordan. I’m really proud of the long game. It was unfortunate I couldn’t really talk about it when I was in government. And I’m glad people thought it was useful. You know, the book was based on a kind of assessment of 5 million words of Chinese Communist Party material, as well as a really what we would call a social scientific approach to their behavior.
And the conclusion was that China had, since the end of the Cold War, a grand strategy to displace American order first at the regional level and then at the global level. And I’d say that my time in government basically reinforced my view that those conclusions were right. In the book, I argue that, you know, you go back to the 80s, the US and China were basically quasi-allies against the Soviet Union, but then everything changes.
We have the Gulf War, the Soviet collapse, the Tiananmen Square massacre, and all of a sudden, China thinks America is the biggest threat. And they inaugurate a new policy, right? Hiding capabilities and biding time, ta guang yang hui, what I call blunting American power quietly, non-assertively, while benefiting from America’s system. So in military terms, they pursue the anti-accessory denial approach to keep us out.
In economic terms, they want MFN and PNTR to tie our hands. And in political terms, they want to basically stall American-led institutions in Asia, lest they become platforms for attacking China. And that approach works pretty well until the global financial crisis. And there again, you know, you see in Central Committee materials, China changes its perception of American power. And with that comes a new strategy made by the Central Committee, right? It’s essentially that China should actively accomplish something, or jiji yosuo zuo wei. And that approach, again, had military, economic, and political components. It was about building order within Asia, not just blunting American order. And we see militarily China invest in power projection capabilities to basically tell its neighbors what to do. In economic terms, we see the Belt and Road and efforts to use economic statecraft against others. And in political terms, we see China build international institutions meant to serve as the foundation for order building within Asia.
And then I write in the book that that worked until 2016. And then China’s assessment changed again. They had a new phrase, a new TIFA to kind of guide Chinese policy, which was, “bai nian, wei yuzhi da bian ji,” or great changes unseen in a century. And the idea there was that the kind of opportunity that China has now, and sort of the risks as well, are unlike anything they’ve had in 100 years. And we see the inauguration of a global Chinese grand strategy, one focused on global military bases and winning in Taiwan, one focused on dominating economically supply chains and making the world more dependent on China, what President Xi calls dual circulation.
And technologically, it was about leading and winning the fourth industrial revolution, making sure that China essentially doesn’t just win those technologies for the sake of prosperity, but also for the sake of power. And politically, it’s about changing global institutions to make the default more conducive to autocracy. All of this is motivated by a desire to rejuvenate China, which is a 100-year goal.
And the Chinese Communist Party, yes, they’re a nationalist party, right? They want to see rejuvenation. They’ve always been that way. They’re a Leninist party, right? They also want to centralize power in pursuit of that goal. And that’s why I say China has a grand strategy. It has the concepts, the capability, and the conduct to pursue that vision. It doesn’t always get it right. It makes a ton of mistakes. But there is a strategic intention here. And the goal is essentially to create a kind of partial hegemony over part of the world reflected in those military, economic, and technological indices that I mentioned.
And I’ll end with this. I mean, I think that this was a conclusion that the intelligence community had put out in previous threat assessments but had not substantiated in open source. And I am more confident of this set of conclusions now than I was even when I wrote the book. And I think if you look at President Xi’s behavior over the last five years, if you look at what China’s Communist Party has done over the last five years, I think it sustains the argument that they are pursuing a global grand strategy. Not always well, not always brilliantly executed, but nonetheless, deadly serious.
All right. Let’s take us into the future, Rush. What’s the broader open source project that you’re launching at CFR? Sure. Well, let me just say, for me, I’m continuing my research at Georgetown as a professor there. I run the China program at the Council on Foreign Relations. I think one of the things we’re most excited about is when I wrote the book, The Long Game, I was relying on Chinese texts and material to basically make my arguments.
And now what we’re going to do is we’re going to mass acquire, digitize, and translate those kinds of texts at scale and make them more available to the public so that people can basically read China in their own voice. And I think that if you do that, China kind of tells you where it wants to go. The Chinese Communist Party has to communicate to itself and its cadres. And what we want to do is basically make those communications available to others.
That’s something, by the way, that the US government used to do from FDR in 1941 to 2013, Barack Obama, when we had what was called the Foreign Broadcast Information Service that translated all this foreign material. That stopped really in 2013 being available to scholars. And our hope is to rebuild it at scale with a far greater source base and with the help of artificial intelligence. And we’ve made major investments in this effort. We have access to a large cache of material. And we’ll have more for you on this very soon.
Yeah. I mean, I think it has been sort of uniquely frustrating, I think, over the past few months to have China be so important rhetorically to like every policy and decision that is happening. But the kind of curiosity of understanding the country seems to be at a real relative low ebb in terms of people actually wanting to understand the net assessment piece, as well as the sort of strategic intention piece.
And look, it’s on us to make this stuff accessible and interesting. So we can’t just whine about it. We got to do the work and really make the case strongly that this is both important and fun. So that’s what you do with your podcast. I’m very excited to watch you manifest. The long game sold. There is an appetite for this.
So I fully believe in the mission and have more faith in you than pretty much anyone else on this planet to make Chinese strategic discussion something that the world cares about and takes seriously.
So Godspeed, Rush. Let’s end on that then. Thanks so much for all your work. This has been great. A lot of fun. Thank you for the opportunity.