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  As with freedom of expression, the CCP views tolerance of diversity as a threat. It is in this area that the United States and other countries might draw a strong contrast. Although some might see expanded immigration from an authoritarian state as a danger, I believe the United States and other free and open societies should consider issuing more visas and providing paths to citizenship for more Chinese, especially those who have been oppressed at home. Immigrants who have experienced an authoritarian system are often most committed to and appreciative of democratic principles, institutions, and processes. They also make tremendous contributions to our economy. Should the CCP intensify the coercion of its own people in Hong Kong and elsewhere as it did in Xinjiang or engage in brutality reminiscent of the Tiananmen Square Massacre, the United States and other nations should consider offering visas or granting refugee status to those able to escape the repression. Following the bloody crackdown in Tiananmen Square, President George H. W. Bush issued an executive order that granted Chinese students in the United States the right to stay and work. In the following decade, more than three quarters of the highly educated mainland Chinese students stayed after graduation. Many Chinese Americans who remained in the United States after Tiananmen to become U.S. citizens were at the forefront of innovation in Silicon Valley. The Chinese diaspora could, through its familial connections, provide a significant counter to the CCP’s propaganda and disinformation.18

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  THE CCP views its centralized, statist economic system as bestowing advantages, especially the ability to successfully coordinate efforts across government, business, academia, and the military. And it views America’s and other nations’ decentralized, free-market economic systems as rendering them unable to compete with China’s centrally-directed strategies, such as Made in China 2025, OBOR, and Military-Civilian Fusion. That is why the United States and other free-market economies need to demonstrate the competitive advantages of decentralization and unconstrained entrepreneurialism while defending themselves from Chinese predation. Here, the private sector plays a vital role. Companies and academic institutions at the forefront of developing and applying new technologies must recognize that China is breaking the rules to take advantage of our open societies and free-market economies. A first step toward preserving competitive advantage is to crack down on Chinese theft of our technologies. Although there have been significant reforms in national security reviews of foreign investments, another effective defense would be to enforce requirements that U.S. companies report investment by China-related entities, technology transfer requests, and participation in the CCP’s core technology development or PLA modernization programs.19

  There is much room for improvement in the effort to prevent China from using the open nature of the U.S. economy to promote not only its state capitalist model, but also to perfect its surveillance police state. Many universities, research labs, and companies in countries that value the rule of law and individual rights are witting or unwitting accomplices in the CCP’s use of technology to repress its people and improve PLA capabilities. For dual-use technologies, the private sector should seek new partnerships with those who share commitments to free-market economies, representative government, and the rule of law. Many companies are engaged in joint ventures or partnerships that help the CCP develop technologies suited for internal security, such as surveillance, artificial intelligence, and biogenetics. Others accede to Chinese investments that give the CCP access to such technology. In one of many examples, a Massachusetts-based company provided DNA sampling equipment that helped the CCP track Uighurs in the Xinjiang region.20 Google has been hacked by China, used by the CCP to shut off the Chinese people’s access to information, and refused to work with the U.S. Department of Defense on artificial intelligence. Companies that knowingly collaborate with CCP efforts to repress the Chinese people or to build military capabilities that might one day be used against those companies’ fellow citizens should be penalized.

  Tougher screening for U.S., European, and Japanese capital markets would also help restrict firms’ complicity in helping the CCP’s authoritarian agenda. Many Chinese companies directly or indirectly involved in domestic human rights abuses and violation of international treaties are listed on American stock exchanges. Those companies benefit from U.S. and other Western investors. There are more than seven hundred Chinese companies listed on the New York Stock Exchange, about sixty-two on the NASDAQ Composite index, and more than five hundred in the poorly regulated over-the-counter market.21 One company that is a candidate for delisting is Hikvision, a company responsible for facial recognition technology that identifies and monitors the movement of ethnic Uighurs. Hikvision produces surveillance cameras that line the walls of Chinese concentration camps in Xinjiang. Together with its parent company, the state-owned China Electronics Technology Group, Hikvision is on the U.S. Commerce Department Entity List (what many call “the Blacklist”). Free-market economies like ours have far more leverage than they are using because they control the vast majority of the world’s capital.

  Defensive measures, however, are inadequate. Free and open societies need to become more competitive through reform and investments. China here has a clear advantage in the adoption of new technologies. Its centralized decision-making system, government subsidies, underwriting of risk, the relative lack of the kinds of regulations and bureaucratic hurdles typical in the United States and other democratic nations, and the lack of ethical impediments (e.g., in the areas of biogenetics and autonomous weapons) all foster fast application of technologies in the civil sector and the PLA. Although the United States and other nations should not compromise their ethics, many of the weaknesses relative to China are self-imposed. For example, the U.S. national security institutions suffer from chronic bureaucratic inertia. The slow, inflexible nature of defense budgeting and procurement in the United States has long been studied, with little effective change. But the stakes are now too high to tolerate the lack of predictable multi-year procurement budgets, convoluted procurement systems, and deferred defense modernization. The sheer difficulty of doing business with the Department of Defense discourages the most innovative small companies from contributing to defense capabilities and makes it difficult to innovate within the life cycle of emerging technologies. The old model of multi-year research and development to design and test a capability is no longer valid. The U.S. Department of Defense and military services risk exquisite irrelevance as the PLA develops new capabilities and countermeasures that vitiate long-standing American military advantages. Reducing barriers to collaboration between the private sector and national security and defense-related industries could release the potential of free-market innovation in this critical area.

  But even streamlining bureaucracy will prove insufficient to compete with the vast investments China is making in emerging dual-use technologies that will advantage its data economy and its military capabilities. That is why government and private-sector investment in technologies in the areas of artificial intelligence, robotics, augmented and virtual reality, and materials science will prove crucial for the United States to maintaining differential advantages over an increasingly capable and aggressive PLA.22 Defense cooperation across the Indo-Pacific region should extend to multinational development of future defense capabilities, with the ultimate goal of convincing the CCP that it cannot accomplish objectives through the use of force. Multinational cooperation in the development of space and cyberspace capabilities could also deter Chinese aggression in these contested domains. And Taiwan’s defense capabilities must be sufficient to ward off China’s designs for what would be a costly war with the potential of expanding across large portions of East Asia.

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  JUST AS the CCP views our free markets as a disadvantage, so, too, they see the rule of law in the United States and other democratic nations as a relative weakness. The CCP considers the supremacy of the law as an unacceptable encumbrance; so too, the requirement to treat all
people equally before the law and the standards of fairness in the application of the law.23 Here, again, what the Chinese see as weakness is in fact a foundational advantage of free and open societies that we must apply to competition with the CCP. It is the rule of law and, in particular, investigations conducted under due process of the law (the results of which are then made public) that give the people, companies, and governments the information they need to counter Chinese espionage. For example, in 2019, when it became obvious that Chinese communications infrastructure combined with a sustained cyber-espionage campaign posed a severe threat to economic security and national security, the United States, Australia, New Zealand, Japan, and Taiwan banned the Chinese telecommunications company Huawei from their networks and urged others to follow suit.24 In February 2020, the U.S. Department of Justice charged Huawei and its subsidiaries with racketeering and conspiracy to steal trade secrets.25 Law enforcement investigations will continue to play an important role, but CCP infiltration of universities, research labs, and corporations is so pervasive that others, including investigative journalists, are needed to expose the full range of Chinese industrial espionage.

  Freedom of expression, entrepreneurial freedom, and protection under the law are interdependent. Together, they bestow competitive advantages useful not only in countering Chinese industrial espionage and other forms of economic aggression, but also in defeating CCP influence campaigns designed to mute criticism and generate support for CCP policies. From 2018 to 2020, studies of Chinese influence in mature democratic countries, including Australia, Germany, Japan, and the United States, exposed methods the CCP uses to cultivate witting and unwitting agents across national and local governments, industry, academia, think tanks, and civil society organizations.26 The free press in those countries exposed the CCP methods, and CCP agents were prosecuted under due process of law. International cooperation among like-minded nations magnifies competitive advantage. For example, in December 2018, the United States and its closest allies revealed China’s twelve-year-long cyber offensive in twelve countries and applied a complementary range of sanctions and indictments.27

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  STRENGTHENING DEMOCRATIC governance at home and abroad could be the best means of inoculating free and open societies against the CCP’s campaign of co-option, coercion, and concealment. The party sees its exclusive and permanent grip on power as a strength relative to pluralistic democratic systems. There is growing evidence, however, that citizens’ participation in the democratic process in countries targeted by the CCP has been effective in countering predatory policies under One Belt One Road. From 2018 to 2020, Chinese “investment” was no longer playing well with populations who were the real victims of the CCP’s “debt traps.” In 2019, the new (and former) prime minister of Malaysia, Mahathir Mohamad, promised to renegotiate or terminate the “unequal treaties” with Beijing—a term designed to evoke Chinese memories of the century of humiliation. New governments in small countries such as Sri Lanka, the Maldives, and Ecuador exposed the degree to which Chinese-funded and -constructed infrastructure projects had indebted them, violating their sovereignty.28

  Strengthening democratic institutions and processes in target nations may be the strongest remedy to China’s aggression. After all, citizens want a say in how they are governed and want to protect their nation’s sovereignty. Wang An migrated to the United States from China in the 1950s and founded the groundbreaking computer company Wang Laboratories. Of his adopted country, the United States, he observed, “As a nation we do not always live up to our ideals, [. . .] but we have structures that allow us to correct our wrongs by means short of revolution.” That is why support for democratic institutions and processes is not just an exercise in altruism. Democracy is a practical means of competing effectively with China and other adversaries who attempt to promote their interests at the expense of other nations through corrupt practices. If functioning democracies identify predatory actions by the CCP and act to hold leaders accountable for defending against them, the party will have coercive influence only on authoritarian regimes who prioritize their leaders’ affluence and exclusive grip on power over the welfare of their citizens.

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  A GOOD offense based on the competitive advantages of our free and open societies requires a strong defense against the CCP’s sophisticated strategies. The case of Huawei, the Chinese telecommunications giant at the forefront of the CCP’s effort to control global communications infrastructure and the data it carries, provides an example, showing the effectiveness of bold, aggressive measures from the United States and the continuing importance of working with our allies. From the outside, Huawei looks like a highly successful company. Founded by former PLA military technologist Ren Zhengfei in 1987, Huawei surpassed Cisco as the world’s most valuable telecommunications company after it stole the latter’s source code. By 2020, Huawei controlled approximately 30 percent of the global market share in telecommunications equipment. It had also made tremendous progress toward its goal to dominate the emerging market in fifth-generation communications networks, or 5G. Throughout its expansion, Huawei benefited from a comprehensive campaign of cyber espionage and subsidies from the CCP.29 It and other telecommunications companies, such as ZTE, are indispensable to Made in China 2025 and Military-Civil Fusion because they are on the cutting edge of acquiring the technologies (e.g., microchips and energy storage) and manufacturing know-how critical to Chinese self-sufficiency in high-end manufacturing. They also provide a communications backbone that allows the exfiltration of data critical to the future global economy. The “data economy,” as it is known, is an emerging global digital ecosystem consisting of data suppliers and users. Whoever controls data, the protocols associated with it, and analytical tools powered by quantum computers will be in a position of tremendous competitive advantage. The CCP stands to gain significant intelligence, military, and economic advantages if a company it created and a company that must by law act as an extension of the Chinese government captures global data flows.30 Moreover, control of communications infrastructure gives Huawei and, by extension, the CCP the ability to cripple communications and data flows vital to national defense and routine economic and financial activity.

  The United States took defensive measures when, in 2019, it imposed tariffs on Chinese imports and banned U.S. companies from using networking equipment from Huawei. Earlier that year, Huawei’s chief financial officer, Meng Wanzhou, was indicted by the U.S. Department of Justice and arrested in Canada on charges involving circumvention of sanctions on Iran.31 In response, the CCP engaged in hostage taking, arresting two Canadian citizens without cause. Then, they sentenced to death another Canadian citizen for drug offenses after retrying him in one day. The CCP reactions demonstrated clearly that China cannot be regarded as a trusted partner and also exposed the lie that Huawei is a private company not associated with CCP policies.

  While many countries joined the United States in restricting Huawei from its communications infrastructure, France decided to allow the company to build two of its three 5G networks. France, in effect, gave China’s Ministry of State Security easy access to 67 percent of its telecom networks as well as the internal computer network of France-based companies. But it is actually worse than that because 5G, a system up to one hundred times faster than the 4G network, will permeate every aspect of citizens’ personal lives, corporate world, national infrastructure, transportation, health, and defense. U.S. policy makers made a similar mistake two decades earlier, when they allowed China Telecom to establish a network in California. The rationalization was that the network’s limited geographic scope would mitigate any security risks. It took the United States a decade and a half to understand the immensity of the Trojan horse it had let in. Terabytes of the most sensitive corporate, personal, and government data were redirected from all over North America to Beijing via China Telecom points of presence in the United States and Canada.32

  There should no longer be any di
spute concerning the need to defend against Huawei and its role in China’s security apparatus. In 2019, a series of investigations revealed incontrovertible evidence of the grave national security danger associated with security vulnerabilities in a wide array of Huawei’s telecommunications gear. An independent researcher found that many Huawei employees are simultaneously employed by China’s Ministry of State Security and the PLA’s intelligence arm. Furthermore, Huawei technicians have used intercepted cell data to help autocratic leaders in Africa spy on, locate, and silence political opposition.33 China’s use of major telecommunications companies to control communications networks and the internet overseas is a one-way street: American and other Western companies have little to no presence in the Chinese market. On the global scale, with tremendous subsidies, illicit financing techniques, and industrial espionage, Chinese companies are attaining monopolistic control of the industry, in another example of how a failure to defend against Chinese economic aggression turned a strength of free-market economies into a weakness.34 A priority area for multinational cooperation should be the development of infrastructure broadly and, in particular, 5G communications to develop trusted networks that protect sensitive and proprietary data.

  The United States and other free and open societies must work together to defend against the broad range of Chinese economic aggression to include unfair trade and economic practices. The Obama administration attempted to counter China’s unfair trade practices with a painstakingly negotiated multilateral trade agreement with eleven nations, including seven from the Asia-Pacific region. The Trans-Pacific Partnership, however, would have met fatal opposition in either a Hillary Clinton or a Donald Trump administration after 2017. In 2018, the Trump administration imposed the first in a series of escalating tariffs on Chinese imports as a defensive measure against Chinese industrial overcapacity, overproduction, and dumping of products on the international market. Although the national security justification for initial tariffs on steel and aluminum (and simultaneous tariffs on those products imported from other countries, including close allies) was questionable, the subsequent “trade war” that followed marked a return of the United States to the arena of economic competition with China. Subsequent tariffs lent a sense of urgency to the extended negotiations, mainly between the exceptionally knowledgeable and determined U.S. trade representative Robert Lighthizer and China’s vice premier, Liu He. The initial result was a phase-one trade deal that President Trump and the vice premier signed in January 2020. More important than Chinese promises to buy more U.S. goods were pledges to reduce barriers to entry to the Chinese market, to avoid currency manipulation, and to implement a new Chinese law to protect intellectual property and sensitive technology. The trade deal, however, marked only the end of the beginning of what will be a protracted competition with the United States and its fellow free-market economies on one side versus China and countries that opt into its statist economic model on the other. The grievances concerning China’s unfair economic practices (e.g., government subsidies to state-owned enterprises) are likely to prove intractable because the party cannot address those grievances without loosening its grip on power.