A Chinese invasion of Taiwan would prompt the same existential questions about the United States’ reliance on Chinese supply chains as Europe’s reliance on Russian energy. The economic chaos would be tremendous; the solutions would be excruciatingly hard to implement in the compressed time frame a crisis would create. The United States could find itself cut off from access to semiconductors, vital pharmaceuticals, and countless other goods that play a critical role in Americans’ everyday lives.
As the Jewish grandson of Holocaust survivors and the Muslim son of a Turkish political prisoner, we know cost-free societies pay when well-intentioned policies repeatedly culminate to inaction and reaction in the face of successive warning signs by autocrats with global ambitions. Macroeconomics cannot be indefinitely divorced from geopolitics. The United States should heed those lessons and proactively redefine its economic relationship with another ruthless authoritarian power: China.
Since Russia’s invasion of Ukraine, Europe has scrambled—and struggled—to wean itself from Russian energy. “Europe has learnt its lesson; it will change its energy policy fundamentally,” former British Prime Minister Tony Blair declared. “No one will want to be in a position again where there is a conflict between what you need to do and your dependence on Russian energy.” Wrestling with the realities of reversing decades of European Union trade policy—at a cost of some $300 billion —German Prime Minister Olaf Scholz has echoed Blair’s sentiment while also noting that “this is, as you may imagine, not that easy because it needs infrastructure that has to be built first.”
Since Russia’s invasion of Ukraine, Europe has scrambled—and struggled—to wean itself from Russian energy. “Europe has learnt its lesson; it will change its energy policy fundamentally,” former British Prime Minister Tony Blair declared. “No one will want to be in a position again where there is a conflict between what you need to do and your dependence on Russian energy.” Wrestling with the realities of reversing decades of European Union trade policy—at a cost of some $300 billion—German Prime Minister Olaf Scholz has echoed Blair’s sentiment while also noting that “this is, as you may imagine, not that easy because it needs infrastructure that has to be built first.”
As the Jewish grandson of Holocaust survivors and the Muslim son of a Turkish political prisoner, we know cost-free societies pay when well-intentioned policies repeatedly culminate to inaction and reaction in the face of successive warning signs by autocrats with global ambitions. Macroeconomics cannot be indefinitely divorced from geopolitics. The United States should heed those lessons and proactively redefine its economic relationship with another ruthless authoritarian power: China.
A Chinese invasion of Taiwan would prompt the same existential questions about the United States’ reliance on Chinese supply chains as Europe’s reliance on Russian energy. The economic chaos would be tremendous; the solutions would be excruciatingly hard to implement in the compressed time frame a crisis would create. The United States could find itself cut off from access to semiconductors, vital pharmaceuticals, and countless other goods that play a critical role in Americans’ everyday lives.
Think of what the impact might be if just one company, Apple, unexpectedly lost access to its iPhone production lines in China. Apple is valued between $2 trillion and $3 trillion; the top four U.S. mutual funds have well over $100 billion invested in that company. Apple employs, directly or indirectly, more than 2 million Americans spread across every state. Now imagine that effect spread across multiple large companies.
Advocates for China often argue that this cost means nothing can, or should, be done to stop Chinese aggression. Beijing gets a free pass as long as the U.S. economy is dependent on it. Contra the apologists, the solution to this isn’t to go softer on China’s territorial aggression or large-scale human rights abuses. It’s doing the hard work of decoupling now to give the United States the freedom to act in defense of the global world order and its own values. Otherwise, Washington could end up in the same situation as Berlin, with a complacent leadership suddenly called to account by public anger and struggling to manage the economic consequences.
Low-cost technology imports from China now present a gaping national security vulnerability. The same is true of China exploiting the allure of its market to coerce U.S. companies into bending to its diktats and acting against U.S. interests. In tech, Apple’s secret agreement with the Chinese Communist Party (CCP) to invest $275 billion in strategic sectors benefiting the People’s Liberation Army is just one of many examples. In the sports and entertainment industries, China’s influence over iconic U.S. cultural institutions is chilling free speech in the United States and around the free world.
American movie studios rely on ticket sales in China, which now exceed tickets sold in North America, giving Chinese censors extraterritorial control over what can and can’t be said in movies Americans watch every day. There has not been a major U.S. motion picture that has been critical of China since Seven Years in Tibet was released a quarter-century ago. Or why actor Richard Gere’s career stagnated after he condemned Beijing’s occupation of that region. Or why Red Dawn 2 had to be digitally overhauled to feature North Korean rather than Chinese villains. As recently seen by Tencent suddenly pulling out its financing for the blockbuster Paramount movie, Top Gun: Maverick, when it included an iconic Taiwanese flag image, Beijing’s line isn’t merely drawn at censoring criticism of the CCP; celebrating the U.S. military is equally censorship-worthy. Naturally, that movie has no release date in China.
Hollywood isn’t the only iconic American institution too often beholden to Beijing. The NBA reportedly runs a more than $5 billion operation in China, and its owners have an estimated $10 billion in assets tied up in that country, forcing the league to reflexively kowtow when players or executives criticize CCP repression. The CCP celebrates criticism of the U.S. government when players take a knee during the national anthem but screams in protest when they stand tall in sneakers depicting animation graphics on Uyghurs. One player saw his NBA career cut short after he began to do just this. Likewise, TikTok, used by tens of millions of Americans each day and owned by a Chinese firm, is accused of using algorithms that promote CCP-favored narratives. Trade with China is changing the United States more than it is changing China—precisely the opposite of what policymakers promised the world when Beijing was admitted to the World Trade Organization two decades ago.
Unfortunately, the United States’ tools for dealing with a major trade partner that is also the country’s chief geopolitical adversary were conceived in an analog world when war and peace were easier to discern. In 1917, the U.S. Congress passed the Trading with the Enemy Act, which gave the president sweeping authorities to restrict trade with the United States’ adversaries in times of war. Yet this legislation (amended in 1933 and again in 1977) is ill-suited for modern-day, gray-zone warfare, where aggression takes on more ambiguous and insidious forms. The United States and China today are not at war, but neither are they at peace. China is challenging the United States through a tech-enabled “gray war” that is murkier than the proxy conflicts of the 20th century.
To meet this challenge, Congress should enact and the president should sign new legislation that is tailored to reflect the unique threat China poses. This legislation, which might be called something like the “Trading With the CCP Act,” should include stricter restrictions on tech trade: a ban on TikTok and other Chinese software apps from the American market, as Rep. Jim Banks and other representatives have proposed, and far tighter curbs on U.S. investment in Chinese technology firms, as Sens. Bob Casey Jr. and John Cornyn have advocated. The latter measure, often referred to as an “Outbound-CFIUS” (the Committee on Foreign Investment in the United States) framework, would grant the U.S. government the authority to block or restrict U.S. investments in China when they conflict with national security.
Such an act should also enshrine transparency requirements in American companies’ dealings with Beijing—requiring them to disclose secret investment agreements, for instance, or compliance with Chinese censorship or information requests—and prohibit U.S. individuals and firms from serving as lobbyists for the Chinese state or state-directed entities. The bill should strip China of its “most favored nation” status in U.S. law to encourage the reshoring of supply chains in key industries to other friendlier markets. Finally, the act should contain flexible authorities allowing the executive branch to restrict trade with the CCP when the NBA, Hollywood studios, or other firms that benefit from all the advantages the United States provides engage in transactions that compromise domestic civil liberties or national security.
As NATO Secretary-General Jens Stoltenberg concluded, “The war in Ukraine demonstrates how economic relations with authoritarian regimes can create vulnerabilities. … This is about Russia but also about China.” Much like Europe’s recent experience with Russia, reversing the United States’ economic dependence on China will be difficult and incur near-term costs. These short-term costs, however, will only be compounded and substantially greater if policy action is deferred until after a military crisis commences. The United States can start decoupling deliberately, intelligently, and strategically from China while it still has time to do so—or it can do so reactively, hurriedly, and chaotically once disaster strikes.
