#11 - Opening Gambit - The Great Divestment

放弃 - Fang4 Qi4 - Divest

While US-PRC divestment is a slow process, it will likely grind on towards a logical conclusion: the eventual delinkage of the two largest economies in the world. As large firms like Apple continue to move critical supply chains out of the PRC while Beijing tampers with international commerce in ways that fly in the face of US values, the mutual appetite to engage in trade is fading. This process is probably best termed the great divestment. The Russian Federation has already gone through divestment so intensely that newly opening avenues of trade are largely being used for further divestment activity on the part of the West.

Besides the backdrop of clashing values and war in Europe, major drivers of divestment are also Beijing’s operations to steal valuable US intellectual property, trade secrets, research, and technology. These efforts seriously depress the return on investment of trade with Beijing. At the same time, PRC United Front efforts are pursuing political infiltration of domestic US and UK organizations, further fraying the tenuous relationship Beijing has with the West. As divestment continues to lurch towards delinkage, there will be two other phenomena likely to become common in the following years: deportations and downgrading. 

Deport

As has already happened during the previous administration, efforts to deport or block PRC individuals highly likely to engage in espionage are probably going to be a future fixture of the US-PRC relationship. These actions have already led to a cooling effect, with the number of PRC citizens applying for US student visas plunging by more than 50% through the first half of this year compared to pre-COVID numbers. As the relationship continues to deteriorate, it is almost certain that difficulties will increase for individuals traveling between the US and PRC.

Downgrade

In tandem with the individual visa issue, official relationships are likely to experience downgrading effects, such as the 2020 closure of the PRC Houston consulate and US Chengdu consulate. The fate of numerous US-PRC joint initiatives outside of official diplomacy in the track two, university, language program, and research fronts are also in question, even as the PRC begins reopening post-COVID.

Consequences for Strategic Competition:

A cornerstone of Beijing’s strategic goal of becoming an advanced nation is to steal a large quantity of intellectual output from the US while maintaining totalitarian control at home. This allows the PRC to enjoy the creative fruits of freedom while maintaining suppressive policies domestically in favor of the CCP. This strategy is facing mounting resistance every year, and it would not be surprising if after Xi Jinping’s likely third term is confirmed after the 20th National Congress, Beijing resets and formulates a parallel plan to pursue economic and technological dominance.

Simultaneously, the PRC United Front Work Department seeks to undermine and groom US politicians from early in their careers. These non-economic efforts will also induce their own friction and the time will likely come when Washington will cut off most but not all political-cultural contact with the PRC, in an echo of the Cold War relationship with the Soviet Union.