U.S. Policy toward the Indo-Pacific: The Case for a Comprehensive Approach
Testimony
Testimony

U.S. Policy toward the Indo-Pacific: The Case for a Comprehensive Approach

In his prepared statement before the House Committee on Foreign Affairs, CFR President Richard N. Haass presented a trajectory for U.S. policy toward the Indo-Pacific.

The opening session of US-China talks at the Captain Cook Hotel in Anchorage, Alaska, U.S. March 18, 2021. Frederic J. Brown/Pool via REUTERS
The opening session of US-China talks at the Captain Cook Hotel in Anchorage, Alaska, U.S. March 18, 2021. Frederic J. Brown/Pool via REUTERS
Testimony
Testimony by CFR fellows and experts before Congress.

Chairman Bera, Ranking Member Chabot, thank you for this opportunity to provide thoughts on America’s way forward in the Indo-Pacific. As always, I am speaking in my personal capacity as the Council on Foreign Relations takes no institutional positions on matters of policy.

This subject is both timely and critical. Here is why: Just as Europe was the principal theater of international politics in the twentieth century, Asia will be where much of this century’s history will get made. If the region remains largely at peace and continues to fuel global economic growth, where confrontation is minimized and cooperation enhanced, we can expect a century that is mostly prosperous and peaceful. If, however, the Indo-Pacific is marked by major power conflict, this century will take on a different and far darker future.

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Asia

U.S. Foreign Policy

This vast area presents countless opportunities for the United States. It is home to some of our most important allies and partners, which we will need to enlist to address shared regional and global challenges. It contains many of the world’s most innovative economies, is a manufacturing behemoth, and occupies an indispensable role in global supply chains. At the same time, the United States is confronted by multiple difficulties in this part of the world. Both these lists are long, and instead of touching on each item, I will focus on what I believe are the most important.

Above all, the United States must modernize its alliances and local relationships to deal with 21st century opportunities and problems. It needs to develop a strategy for managing its interactions with an increasingly powerful, assertive, statist, and oppressive China. It must reinvent its economic ties at a time when the region’s economies are becoming more integrated and doing so with little or no U.S. involvement. And it must address North Korea’s nuclear program.

While Washington will always be the hub of its alliance system, the spokes should be encouraged to do more with each other. An important piece of this effort will be to repair relations between Seoul and Tokyo. The United States should also fashion multiple coalitions of the willing, assembling a rotating set of partners to tackle democratic governance, climate change, regional disputes, maritime security, cyber governance, and supply chain security. Multilateralism should be central to the U.S. approach to the world, but multilateralism needs to be tailored and built around those countries and entities most relevant to the challenge at hand, and both able and willing to work together.

That brings me to China, but with a caveat: While it is true that China will be a formidable peer competitor for the United States in the decades ahead, it is important to think of U.S.-China relations as one element in a broader, more comprehensive Asia strategy. Crafting a strategy to contend with China is a necessary, but not sufficient, condition for American success in the region.

A critical advantage the United States enjoys over China is its network of allies and partners with which it can work to address global and regional opportunities and dangers. Put simply, the United States cannot deal adequately with China’s power and reach unilaterally. It is therefore a welcome sign that Secretary of State Blinken and Secretary of Defense Austin made their first foreign trip to Asia, where they met with the leaders of two of our closest allies, Japan and South Korea. In addition, President Biden participated in a summit level meeting with the other members of the Quad: Australia, India, and Japan. The announcement that the United States will work with members of the Quad to provide one billion COVID-19 vaccines to Southeast Asian nations is an innovative development and hopefully a preview of more to come. It also illustrates the importance for the United States to continue to provide public goods in the region, whether it be humanitarian assistance and disaster relief, or assistance in battling COVID-19.

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Asia

U.S. Foreign Policy

For too long, the economic leg of our Asia strategy has been weak. In many countries, the United States is seen as mostly a security partner. While regional economic integration is picking up pace, first with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and now with the Regional Comprehensive Economic Partnership (RCEP), Washington has remained on the sidelines. The United States risks waking up to a region where China is the ever more dominant center of trade and investment, which would give it worrisome leverage over governments’ geopolitical decisions. To address this growing problem, the United States should join CPTPP, which would provide economic benefits to American workers who are currently being shut out of markets and create an environment that would shape China’s behavior instead of being shaped or worse yet coerced by it. CPTPP could also be used to combat climate change, as energy usage in the production of a product during its lifetime could and should affect price and market access. The United States should also collaborate with its partners to offer high-quality, sustainable infrastructure as an alternative to China’s Belt and Road Initiative, possibly through a regional fund involving Australia, India, Japan, South Korea, Taiwan, and European countries.

I have argued elsewhere that U.S.-China relations lost much of their rationale in the post-Cold War period, as the shared threat that brought the two countries together disappeared and economic ties became an increasing source of friction. Hopes that economic integration would bring about a more open, moderate, and benign China never materialized. Not surprisingly, in the face of an emboldened and more assertive China, Sino-U.S. relations have become increasingly competitive and even adversarial. The challenge posed by China is far more complex than the one the United States faced when it squared off against the Soviet Union. Unlike the U.S.S.R., China is an economic powerhouse, one that is integrated into the global economy and enmeshed in nearly every supply chain. Contrary to the later stages of the Cold War, where there were well-defined spheres of influence and a modus vivendi between the two principal protagonists, those conditions are not present today. Therefore, talk of a new Cold War with China is misplaced and distortive, and fails to capture the complexities of Chinese power. At the same time, the notion of complete U.S. economic decoupling from China is misguided and unfeasible.

Xi Jinping’s China is qualitatively different than Deng Xiaoping’s or Hu Jintao’s. China is no longer content to assume a low profile and bide its time. It is forcefully asserting its national interests and pushing to revise the regional and international orders. Xi militarized the South China Sea, after pledging to President Obama that he would not do so. Under his leadership, China has quashed Hong Kong’s freedoms and democracy, in contravention of the guarantees it made to the United Kingdom and to the people of Hong Kong. It has interned millions of Uyghurs in Xinjiang. It has ratcheted up pressure on Taiwan. In short, Xi’s China is anything but a supporter of the status quo.

The United States will need to maintain a balance of power in Asia, compete with China across multiple domains, and push back harder with its allies and partners against Chinese actions that threaten U.S. national interests and democratic values. At the same time, Washington should try to bound this competition so that the two countries can not only avoid enduring confrontation and crisis, but work together on issues such as North Korea, Iran, Afghanistan, global health, and climate change. The goal of our China policy should be to shape China’s choices, to impose costs when China takes actions that harm our national interests and values, and to reward responsible Chinese behavior. While we should call out China’s domestic abuses when we see them, the principal focus of U.S. foreign policy toward China should be on shaping its external behavior, where our interests are many and large and our potential for influence substantial. What I describe here constitutes a classic diplomatic challenge for the United States and its allies and friends. It promises to be demanding, but it can be done. By contrast, regime change in China is beyond our ability to induce, and in any event is not a prerequisite to a successful China policy.

We should recognize that deterrence is eroding in the Indo-Pacific and we need to redouble our efforts to invest in capabilities that can deter Chinese adventurism and ensure that U.S. commitments are credible. This will entail shifting forces to Asia, dispersing them, and hardening systems and facilities. It will also require imploring our allies to invest more in their defense. We should continue to conduct freedom of navigation operations in the South China Sea, encouraging other nations to join, and finally ratify the United Nations Convention on the Law of the Sea (UNCLOS), which would help our standing when advocating for international law of the sea. The core point here is that if the United States and its allies do not maintain an effective balance of power in this region, it will be impossible to protect our national interests and values in the period ahead.

Much work also remains to be done to address our imbalanced economic relationship with China. In the trade realm, the phase one deal negotiated under the last administration was not sufficient, but it is important that we hold China to its commitments, which it has yet to meet. We should focus on getting China to abide by the commitments it made when it joined the World Trade Organization, and seek to work with partners to reform the WTO. While some measure of decoupling in high-tech sectors is necessary, it is counterproductive to block trade in non-strategic areas such as agriculture and basic manufacturing. We should forge a more comprehensive trade deal that provides more market access in China for U.S. firms. We need as well to place a greater emphasis on supply chain resilience and work with partners to create trusted supply chains for critical goods. Diversification of sources, stockpiling, and domestic production all have roles to play. And we should develop with our allies and partners a shared approach to push back against Chinese economic coercion.

It is essential that we develop a strategy for emerging technologies such as artificial intelligence, quantum computing, and both 5G and 6G. Decoupling in many of these areas is inevitable. But we should be more selective in choosing which technologies to put restrictions on, using a scalpel rather than an axe. We will need to build evolving coalitions to deal with each of these issues. For instance, an ad hoc group on semiconductor equipment exports should include Germany, Japan, the Netherlands, South Korea, and Taiwan. A coalition to address telecommunications technologies should count Finland, Japan, South Korea, and Sweden among its principal members. A one-size-fits-all approach to these issues is destined to fail.

U.S. success across all these domains will depend on offering better options than does China. Too often, however, the U.S. approach has been to pressure countries to reject Chinese financing and products without offering alternatives. One could now say that U.S. policy toward China begins at home. To compete with China, the United States should markedly increase federal funding for basic research and development, reform its immigration policies to attract the best and brightest, and modernize its infrastructure. It should offer to the Indo-Pacific an affirmative agenda that includes high-quality infrastructure for countries in desperate need of such investment, closer trade ties, and increased people-to-people exchanges. Joint projects with allies and partners will also give partners added reason to work with us to limit China’s access to sensitive technologies or to exploit supply-chain dependencies.

An important dimension to competing with China will be to demonstrate the success and appeal of our domestic model. To display competence in overcoming the COVID-19 pandemic, to oversee a robust economic recovery, and to demonstrate that democracy can meet today’s challenges undermines China’s attempt to justify its domestic repression and export its autocratic model. Much of what we did or failed to do in recent months and years gave China room to push its narrative that democratic principles and practices are ill-equipped to deal with this era’s opportunities and risks. This must change.

Through all of this, we should keep in mind that China also faces multiple internal problems, from an oppressive political system that can stifle creativity and criticism to an economy in fundamental

transition, an aging population that will soon shrink, environmental degradation, an inadequate social safety net, and a poor healthcare system. Its politics are top-heavy and increasingly personalized, and there is no legitimate succession plan for when Xi Jinping no longer exercises power. The United States can compete with China over the long haul if we are diplomatically, economically, and militarily present in the Indo-Pacific and strong at home; indeed, it is inconsistent to advocate a tough China policy and not push for a united, competitive America.

I want to spend some time speaking about Taiwan, because it may well be the only current issue that could lead to a full-scale war between the United States and China. The chance of conflict is increasing: China’s military modernization is giving its leaders greater confidence that they can use force to achieve their objective of unification, while Beijing likely also feels emboldened as China met little resistance when it militarized the South China Sea and moved against Hong Kong. The stakes for the United States are enormous. If it fails to respond to a Chinese use of force, there is a real risk that regional allies will conclude that the United States cannot be relied upon. These Asian allies would then either accommodate China, or they would seek nuclear weapons in a bid to become strategically self-reliant. The 24 million people of Taiwan would see their democracy and freedoms crushed. China would subsume the island’s vibrant, high-tech economy and overnight become the world’s leading semiconductor manufacturer. China’s navy would gain an increased ability to project Chinese power throughout the western Pacific.

We should act to reduce the chances of Chinese aggression and maintain the status quo in the Taiwan Strait. An agenda should include developing a credible plan to deny a PLA fait accompli, making contingency planning for a conflict a top priority for the Pentagon, and coordinating contingency planning with Japan. Parameters for U.S. planning should be to defend Taiwan and raise costs to China, but to do so in a manner that leaves escalatory decisions to Beijing. The United States will need to have tough conversations with Taiwan about the need for it to invest more in its own defense and to increase its military preparedness. The United States should make clear to China that using force against Taiwan would put its continued economic growth at risk. Congress should pass a law that would impose severe sanctions on China should it attack Taiwan. A complement to this would be to line up European and Asian support for such sanctions. The United States should work with Taiwan to help it resist Chinese coercion. Washington should assist Taiwan with cyber defense and help it diversify its economy, which the United States can facilitate by exploring a bilateral trade agreement with the island. At the same time, the United States should make clear to Taiwan that it does not support its independence.

Finally, in addition to these steps, the United States should update its declaratory policy. Strategic ambiguity has served the United States well for four decades, but the assumptions that underpinned this policy are eroding. It is time for the United States to adopt a position of clarity, making explicit that it would respond to a Chinese attack on Taiwan, as well as Chinese coercion against Taiwan such as embargoes. And as noted above, it is essential that such a change in declaratory policy be accompanied by changes in U.S. planning, capability, consultations, and commitment. All this is far more important and far more constructive than symbolic upgrades to how we conduct relations with Taiwan.

North Korea continues to improve its nuclear arsenal, and there is no evidence that the previous administration’s approach has lessened the threat. At the same time, strategic patience – which is a fancy phrase for neglect – will not work. Nor will an all-or-nothing U.S. policy that offers to remove all sanctions in exchange for North Korea’s complete denuclearization, in which case we will end up only with a growing North Korean nuclear arsenal. Instead, what we need is a more modest approach, a “something-for-something” deal. In this scenario, North Korea would halt testing and commit to limits on its arsenal in exchange for some sanctions relief. The goal of denuclearization would not and should not be abandoned, but it would be understood to be a long-term objective.

I want to close by making ten points to counter widespread myths, hopes, and narratives about the region:

1. We should stop talking about regime change in China – it is beyond our capacity to produce and it is unclear that a more liberal and restrained China would emerge. Fashioning a comprehensive foreign policy toward an authoritarian China must be a national security objective. The good news is that it is not just necessary but doable.

2. The term “Cold War” is not an accurate depiction of the U.S.-China relationship, and containment is not a feasible doctrine. China is fundamentally different from the former Soviet Union and the U.S. response should likewise be different.

3. Having frank conversations with China’s top diplomats and holding a real strategic dialogue with Beijing on a regular basis is in our national interest. Those conversations should not be made conditional on Chinese behavior or viewed as a favor that we do for China.

4. Trying to force countries to choose between the United States and China will not work. Here as elsewhere, all-or-nothing demands will likely produce the latter.

5. Talk of a NATO for the Asia- or Indo-Pacific is misplaced and unnecessary. These countries do not have shared threat perceptions, and there is too much historical baggage to put together such an alliance.

6. Europe’s appetite for confronting China is limited. Generally, European countries do not view China as a systemic problem. Europe will resist broad efforts to isolate China economically, and both will not and cannot play a meaningful role in contending with it militarily.

7. While India is an important partner, it is unlikely to become a formal ally. It wants to avoid a breakdown in its relations with China, and will zealously guard its strategic autonomy while it focuses on managing its fraught relationship with Pakistan, its domestic development, and its border with China.

8. To promote democracy and partner with democracies should not be an exclusive organizing principle of our approach to the region. The United States will need to collaborate with non-democracies like Vietnam in order to balance China, but we will also need to work with non-democratic China to deal with specific challenges, such as North Korea.

9. We should not conclude that what has worked for forty years regarding Taiwan will continue to work. What is required is an adjustment of the means of U.S. policy, not the ends.

10. Military presence is an essential dimension of what we do in the Indo-Pacific, but it cannot substitute for an adequate diplomatic and economic presence and policies. Nor can the United States succeed in the Indo-Pacific if it remains divided at home and unable to act on policies essential for its competitiveness.

Again, thank you for the opportunity to testify on a region that will, more than any other, shape this century. I look forward to your comments and questions.

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Artificial Intelligence (AI)

Sign up to receive CFR President Mike Froman’s analysis on the most important foreign policy story of the week, delivered to your inbox every Friday afternoon. Subscribe to The World This Week. In the Middle East, Israel and Iran are engaged in what could be the most consequential conflict in the region since the wars in Afghanistan and Iraq. CFR’s experts continue to cover all aspects of the evolving conflict on CFR.org. While the situation evolves, including the potential for direct U.S. involvement, it is worth touching on another recent development in the region which could have far-reaching consequences: the diffusion of cutting-edge U.S. artificial intelligence (AI) technology to leading Gulf powers. The defining feature of President Donald Trump’s foreign policy is his willingness to question and, in many cases, reject the prevailing consensus on matters ranging from European security to trade. His approach to AI policy is no exception. Less than six months into his second term, Trump is set to fundamentally rewrite the United States’ international AI strategy in ways that could influence the balance of global power for decades to come. In February, at the Artificial Intelligence Action Summit in Paris, Vice President JD Vance delivered a rousing speech at the Grand Palais, and made it clear that the Trump administration planned to abandon the Biden administration’s safety-centric approach to AI governance in favor of a laissez-faire regulatory regime. “The AI future is not going to be won by hand-wringing about safety,” Vance said. “It will be won by building—from reliable power plants to the manufacturing facilities that can produce the chips of the future.” And as Trump’s AI czar David Sacks put it, “Washington wants to control things, the bureaucracy wants to control things. That’s not a winning formula for technology development. We’ve got to let the private sector cook.” The accelerationist thrust of Vance and Sacks’s remarks is manifesting on a global scale. Last month, during Trump’s tour of the Middle East, the United States announced a series of deals to permit the United Arab Emirates (UAE) and Saudi Arabia to import huge quantities (potentially over one million units) of advanced AI chips to be housed in massive new data centers that will serve U.S. and Gulf AI firms that are training and operating cutting-edge models. These imports were made possible by the Trump administration’s decision to scrap a Biden administration executive order that capped chip exports to geopolitical swing states in the Gulf and beyond, and which represents the most significant proliferation of AI capabilities outside the United States and China to date. The recipe for building and operating cutting-edge AI models has a few key raw ingredients: training data, algorithms (the governing logic of AI models like ChatGPT), advanced chips like Graphics Processing Units (GPUs) or Tensor Processing Units (TPUs)—and massive, power-hungry data centers filled with advanced chips.  Today, the United States maintains a monopoly of only one of these inputs: advanced semiconductors, and more specifically, the design of advanced semiconductors—a field in which U.S. tech giants like Nvidia and AMD, remain far ahead of their global competitors. To weaponize this chokepoint, the first Trump administration and the Biden administration placed a series of ever-stricter export controls on the sale of advanced U.S.-designed AI chips to countries of concern, including China.  The semiconductor export control regime culminated in the final days of the Biden administration with the rollout of the Framework for Artificial Intelligence Diffusion, more commonly known as the AI diffusion rule—a comprehensive global framework for limiting the proliferation of advanced semiconductors. The rule sorted the world into three camps. Tier 1 countries, including core U.S. allies such as Australia, Japan, and the United Kingdom, were exempt from restrictions, whereas tier 3 countries, such as Russia, China, and Iran, were subject to the extremely stringent controls. The core controversy of the diffusion rule stemmed from the tier 2 bucket, which included some 150 countries including India, Mexico, Israel, Switzerland, Saudi Arabia, and the United Arab Emirates. Many tier 2 states, particularly Gulf powers with deep economic and military ties to the United States, were furious.  The rule wasn’t just a matter of how many chips could be imported and by whom. It refashioned how the United States could steer the distribution of computing resources, including the regulation and real-time monitoring of their deployment abroad and the terms by which the technologies can be shared with third parties. Proponents of the restrictions pointed to the need to limit geopolitical swing states’ access to leading AI capabilities and to prevent Chinese, Russian, and other adversarial actors from accessing powerful AI chips by contracting cloud service providers in these swing states.  However, critics of the rule, including leading AI model developers and cloud service providers, claimed that the constraints would stifle U.S. innovation and incentivize tier 2 countries to adopt Chinese AI infrastructure. Moreover, critics argued that with domestic capital expenditures on AI development and infrastructure running into the hundreds of billions of dollars in 2025 alone, fresh capital and scale-up opportunities in the Gulf and beyond represented the most viable option for expanding the U.S. AI ecosystem. This hypothesis is about to be tested in real time. In May, the Trump administration killed the diffusion rule, days before it would have been set into motion, in part to facilitate the export of these cutting-edge chips abroad to the Gulf powers. This represents a fundamental pivot for AI policy, but potentially also in the logic of U.S. grand strategy vis-à-vis China. The most recent era of great power competition, the Cold War, was fundamentally bipolar and the United States leaned heavily on the principle of non-proliferation, particularly in the nuclear domain, to limit the possibility of new entrants. We are now playing by a new set of rules where the diffusion of U.S. technology—and an effort to box out Chinese technology—is of paramount importance. Perhaps maintaining and expanding the United States’ global market share in key AI chokepoint technologies will deny China the scale it needs to outcompete the United States—but it also introduces the risk of U.S. chips falling into the wrong hands via transhipment, smuggling, and other means, or being co-opted by authoritarian regimes for malign purposes.  Such risks are not illusory: there is already ample evidence of Chinese firms using shell entities to access leading-edge U.S. chips through cloud service providers in Southeast Asia. And Chinese firms, including Huawei, were important vendors for leading Gulf AI firms, including the UAE’s G-42, until the U.S. government forced the firm to divest its Chinese hardware as a condition for receiving a strategic investment from Microsoft in 2024. In the United States, the ability to build new data centers is severely constrained by complex permitting processes and limited capacity to bring new power to the grid. What the Gulf countries lack in terms of semiconductor prowess and AI talent, they make up for with abundant capital, energy, and accommodating regulations. The Gulf countries are well-positioned for massive AI infrastructure buildouts. The question is simply, using whose technology—American or Chinese—and on what terms? In Saudi Arabia and the UAE, it will be American technology for now. The question remains whether the diffusion of the most powerful dual-use technologies of our day will bind foreign users to the United States and what impact it will have on the global balance of power.  We welcome your feedback on this column. Let me know what foreign policy issues you’d like me to address next by replying to [email protected].

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