Vice President Mike Pence’s extraordinarily aggressive speech to the Hudson Institute in Washington last week was clearly aimed at the president’s Republican base. The November mid-term elections could result in a Democratic majority in the House or, less probably, the Senate with potentially dire legal and political consequences for Trump and his presidency. Amplifying Trump’s accusations against China at the U.N. Security Council in September, Pence claimed—without providing much concrete evidence-- that Russia’s alleged interference in U.S. elections “pales in comparison” to China’s ”whole of government” activities designed to influence American elections and public opinion. Thus Pence designated China as the most serious threat to the United States, but U.S. policy towards Russia is unlikely to change.
However, while the November elections may have helped to account for its timing, Pence’s speech has much broader significance. Pence affirmed the emergent Washington consensus, now increasingly prevalent throughout the upper echelons of corporate America: since joining the WTO in 2001 China has pursued a systematic policy of intellectual property theft, militarization of the South China Sea, alongside a host of mercantilist trade policies in violation of WTO rules. The struggle for global military and economic supremacy necessitates a forward strategy on the part of the United States. In important respects Pence’s speech resembles the Truman Doctrine of 1947: the end of “engagement” and the beginning of a systematic policy of containment that enjoys bipartisan support and will endure beyond the Trump presidency.
The broader U.S. offensive signaled by Pence—apparently set to be accompanied by a forthcoming massive show of force by the U.S. Pacific Fleet-- also reflects the ascendance of the trade hawks in the Trump administration who believe they hold the upper hand in trade negotiations. Notwithstanding the tariffs, the U.S. economy is growing at 4%, the stock market has soared to record levels, and unemployment has declined to its lowest (official) rate (3.7%) since 1969. By contrast, China’s growth is slowing, accompanied by a sliding yuan and seemingly unsustainable debt levels. Each of China’s indexes has fallen by 18% over 2018. At the same time, the Trump administration has agreed on a new trade agreement with Mexico and Canada, the USMCA, that allows it to veto an attempt by either party to negotiate a pact with a “nonmarket” economy—an implicit warning to China. The Trump administration considers the USMCA a template for trade agreements with South Korea, Japan, and the European Union and ultimately the basis for a united front against China.