Skip to main content

Kennedy School Review

Topic / Development and Economic Growth

How the US should respond to Xi’s assertive China

The unprecedented rise of China has been one of the most notable geopolitical phenomena of the last century. China’s decision to open up to the global economy in the 1980s sparked an economic miracle that has fueled growth for the past three decades, making it the world’s second-largest economy. But the country today harbors greater ambitions than mere economic dominance. Under the leadership of President Xi Jinping, a newly-assertive China is pursuing a sophisticated whole-of-society strategy that exploits all elements of state power to strengthen its position in the world and challenge the US.[i]

At home, President Xi has demonstrated greater personal authority than any Chinese leader since Mao Zedong. With a recent constitutional amendment allowing him to stay in power for a lifetime, the horizons of Xi’s ambitions have broadened. His rise can be characterized by dramatic changes in government policies in four major areas: economic development, military modernization, information sharing, and China’s role in the world.

Policymakers in the US and other great powers are concerned by China’s rise but should resist the temptation to be reactionary. The United States cannot and should not oppose the growth of Chinese power per se, but rather seek to steer it in a direction that reinforces existing institutions and norms.[ii] While the US should ready itself to meet credible aggression, it should also reaffirm its commitment to norms that reflect American values and resist Chinese efforts to challenge them.

From Labor Intensive to High Tech Industries

Ever since China opened up its economy in 1978, the Chinese government has been able to draw on a plentiful supply of cheap labor to craft an export-based and labor-intensive manufacturing industrial strategy. In 2013, China overtook the US to become the world’s biggest goods trading nation.[iii] Revenues from huge volumes of export earnings helped the country finance its national poverty reduction strategy and raise the incomes of average Chinese citizens.

However, the shrinking of the working-age population, lack of innovation, and growing income inequality pose challenges for China. As George Magnus argues in Red Flags: Why Xi’s China is in jeopardy, “China is falling into a middle-income trap”: it has made significant progress in reducing extreme poverty but is struggling to reach high-income status.[iv] As capital, labor, and regulatory costs rise in China, it could lose its economic momentum.

To prevent itself from further falling into that trap, Xi’s government initiated the controversial “Made in China 2025” policy. To leapfrog into the 21st-century innovation-based economy, the Chinese government is subsidizing emerging high-tech sectors, such as robotics and artificial intelligence.[v] This may catapult China to the forefront of these emerging sectors. While the US—housing tech giants like Apple, Amazon, Google—still reigns as the technology epicenter of the world, Xi aims to climb the tech ladder by patronizing national tech champions like Huawei.

Military Modernization 

On the military front, the Chinese military—the People’s Liberation Army (PLA)—aims to preserve the Communist Party’s rule and project its power beyond the region.[vi] The PLA’s focus has shifted from a land-based defensive strategy to a sea-based “active defense” strategy in which the military is prepared to fight and win external wars. It has invested heavily in building a world-class Navy that is capable of forward deployment in the Indian and Pacific Oceans, its geostrategic priorities. As part of this buildup, China has established military bases on strategic checkpoints from the Indian Ocean to the South China Sea.

To achieve that goal, China has allocated plentiful resources to the PLA. According to the Stockholm International Peace Research Institute, in 2018, US spent $649 billion on its military while China spent $250 billion.[vii] China is the second-largest military spender after the US, and it may soon catch up. From 2009 to 2018, China’s defense budget increased by 83%, while the US budget decreased by 17%. If China can avoid the middle-income trap and continue to grow at a fast pace, it will be able to invest further resources for PLA modernization and expansion—potentially undermining US dominance and the regional power balance.

Controlling Information

Since the establishment of the People’s Republic of China, the Chinese Communist Party (CCP) has censored the flow of information to redirect public opinion in its favor.[viii] Even a decade ago, there were few news outlets in China, enabling the government to spread state propaganda and control criticism. However, as China opened up to the world and 800 million internet users came online, commercial and online outlets have sprung up with a sensational and diverse reporting style.[ix] Now, thanks to an abundance of social media and online news portals, Chinese society relies less on traditional state-owned news outlets.

Problematically for the CCP, new outlets have enabled investigative journalists to report irregularities and corruption on the part of party leaders. The CCP initially tried to tackle this challenge by ratcheting up the censorship and extending it to digital surveillance.[x] This approach has had limited success, however: while the so-called Chinese great firewall may be able to censor unwanted information in China, millennials still can access international media by using VPNs and other means. The party concluded that it is almost impossible to control all the unwanted information as it successfully did in the past.

When Xi came to power, the CCP’s communication strategy has shifted from “information controlling” to an approach that could be described as “information sharing.”[xi] The party has formed a cyber command that carries out information warfare worldwide. Alongside official government accounts, this command operates many fake and manufactured sites—masquerading as independent outlets—to counter anti-party narrative and disseminate propaganda.[xii]

Influencing Smaller Economies

After maintaining a low profile for decades, China is now using trade, investment, and hard and soft power to attempt to remake the world order in its favor. Xi’s signature project, the Belt and Road Initiative, is funneling substantial Chinese infrastructure funding to smaller states in Asia, Africa, and Latin America, enabling them to build much-needed transport and energy infrastructure.

The BRI helps to export the “China model” (zhong guo mo shi)—a fusion of rapid economic development and an authoritarian governing style—to developing countries around the world[xiii]. Within the framework of the BRI, China is able to maximize bargaining leverage with smaller countries via its trade, investment, and loans. There is growing speculation outside China that BRI funding is designed to push small countries like Laos, Cambodia, and Sri Lanka into the Chinese debt trap,[xiv] enabling China to coerce them into supporting its agenda on the world stage.

It may be that for the first time, another country has emerged to match and, in some cases, surpass US bilateral financing assistance on a global scale. BRI is lending unprecedented amounts of hard financing to several countries where the US already has a considerable presence, including the Philippines, Cambodia, and Vietnam. China’s checkbook diplomacy may soon become a serious counter to US influence in South, Southeast Asia and beyond.


The US Response

The initial US responses to rein an assertive China have been ad-hoc. The terminology has changed through different administrations, from Obama’s Pivot to Asia to the Free and Open Indo-Pacific Strategy (FOIP) under Trump. Whatever the name, the US has yet to undertake a whole-of-government grand strategy to meet China’s global challenge. Unlike China, US has a distinct strength—its allies and partners, which should be in the epicenter while dealing with China.

As the Chinese offer billion-dollar loans for China-centric infrastructure projects across the Euro-Asian region, the US and its allies need to offer substantial alternatives to countries in need of infrastructure investment. The US should not compete dollar for dollar with China, but should instead build partnerships in the Indo-Pacific region to protect countries from China’s predatory economic coercion. Rather than simply competing with China to build roads and bridges, the US should continue to propagate values of transparency, democracy, the rule of law, human rights, and free speech. The United States’ Indo-Pacific diplomacy can—and should—support its values abroad.

The US must stop withdrawing from multilateral trade agreements, and should consider re-entering into treaties like the TPP, which brought 12 countries from around the Asia-Pacific together to lower barriers to trade, protect intellectual property rights, improve workers’ rights, protect the environment, and limit government support of state-owned enterprises. Such partnership not only promotes global alliance but also promote the values for which America stands.

Countering Chinese assertiveness is crucial if the US is to maintain the existing rules-based order that has ensured peace and prosperity since World War II. US foreign policy should remain outside the realm of partisan politics to protect the national interest. While the US must acknowledge that the world is moving into an era with multiple global leaders, we should seek to steer it in a direction that preserves our core norms and values.

Edited by: Anna Mysliwiec

Photo by: Wikimedia Commons

[i] Mark Warner, “The China Challenge and Critical Next Steps for the US,” Brookings Institute, 15 May 2019,

[ii] Michael J. Mazarr, Timothy R. Heath, Astrid Stuth Cevallos, China and the International Order (Santa Monica, CA: Rand Corporation, 2018).

[iii] Angela Monaghan, “China surpasses US as world’s largest trading nation,” The Guardian, 10 January 2014,

[iv] George Magnus, Red Flags: Why Xi’s China Is in Jeopardy (New Haven, CT: Yale University Press, 2018).

[v] Wayne M. Morrison, “The Made in China 2025 Initiative: Economic Implications for the United States,” Congressional Research Service, 12 April 2019,

[vi] Andrew Scobell, Arthur S. Ding, Phillip C. Saunders, and Scott W. Harold, The People’s Liberation Army and Contingency Planning in China (Washington: National Defense University Press, 2015).

[vii] ”World military expenditure grows to $1.8 trillion in 2018,” Stockholm International Peace Research Institute, 29 April 2019,

[viii] Beina Xu and Eleanor Albert, “Media Censorship in China,” Council on Foreign Relations, 17 February 2017,

[ix] Niall McCarthy, “China now boasts more than 800 million internet users and 98% of them are mobile,” Forbes, 23 August 2018,

[x] Elizabeth C. Economy, The Third Revolution: Xi Jinping and the New Chinese State (New York: Oxford University Press, 2018).

[xi] Hauke Gierow, Karsten Luc, and Kristen Shi-Kupfer, “Governance through information control: China’s leadership struggles with credibility in social media,” Berlin, Mercator Institute for China Studies, 19 January 2016,

[xii] Adrian Shabaz, “Fake news, data collection, and the challenge to democracy,” Freedom House, October 2018,

[xiii] Shirley Z. Yu, “Belt and Road Initiative: Defining China’s Grand Strategy and the Future World Order,” Master’s thesis, (Harvard University, 2018),

[xiv]Lina Benabdallah, “Contesting the international order by integrating it: the case of China’s Belt and Road initiative,” Third World Quarterly 40, no. 1 (2017).