Appendix II: The Longer Telegram: Toward a New American China Strategy (Part III)

Finally, the same logic applies to Xi Jinping’s future: “At the end of the day, it’s the economy, got it?” If not defeated by any future military action, the single biggest factor that could lead to Xi’s failure is economic failure. This would entail massive unemployment and a decline in the standard of living for the Chinese population. Full employment and the continuous improvement of living standards have been an implicit component of the social contract between the Chinese people and the CCP since the turmoil of the Cultural Revolution.

Based on the above structural principles, a detailed, actionable China strategy should include seven integrated components. Rebuild the long-term national strength of the United States on the foundations of economic, military, technological, and human capital.

Reach agreement with China on a limited set of enforceable policy red lines, under any circumstances preventing the other side from crossing them. On a broader scale, reach agreement with China on significant national security interests that, in reality, may neither be vital nor truly exist, but would trigger a series of punitive actions to signal future strategic boundaries to China.

Identify certain important but less critical areas where red lines do not need to be drawn and which do not need to be defined as core national interests, but in which the United States must engage in full strategic competition with China.

Identify areas that align with U.S. interests yet require continued strategic cooperation with China, particularly major threats such as climate destruction, global pandemics, and nuclear security.

Globally, promote a comprehensive ideological struggle that defends political, economic, and social freedom while opposing China’s authoritarian state-capitalist model.

Reach full consensus on the above strategy with the United States’ principal treaty allies in Asia and Europe to gain their cooperation, enabling this consensus to be deployed on a larger scale (economic, military, and technological) to jointly defend the U.S.-led liberal international order.

Supported by a presidential directive with cross-departmental and bipartisan backing, under the concentrated guidance of the National Security Advisor, these seven components should be implemented through inter-agency and alliance coordination. The “red line” strategy serves as a diplomatic safeguard. It is highly valuable in setting acceptable boundaries for national behavior, but if defined too broadly or ignored, it becomes a symbol of inaction rather than deterrence. The U.S. red line list should be short, focused, and mandatory.

For years, China’s strategy has been to blur this red line in order to avoid early public confrontation with the United States. The U.S. must be very clear about which Chinese actions are prohibited, and once deterrence fails, it should lead to direct U.S. intervention. These must be communicated to Beijing through high-level diplomatic channels to ensure China’s attention.

These red lines should include any use of nuclear, chemical, or biological weapons by China against the United States or its allies, or any actions China allows by inaction by North Korea; any Chinese military attack on Taiwan or its nearby islands, including economic blockades or major cyberattacks on public infrastructure and institutions; any Chinese attack on Japanese forces in defense of Japan’s sovereignty over the Senkaku Islands and surrounding exclusive economic zones in the East China Sea; any major hostile actions in the South China Sea, including further land reclamation and militarization of islands, or prevention of full freedom of navigation for U.S. and allied naval forces; and any Chinese attack on the territorial sovereignty or military assets of U.S. treaty allies.

For the United States, there is also a category of major national security issues that require an explicit U.S. response, though not necessarily military in nature. These are not the most critical national security interests, but they are very important. The U.S. toolkit includes issuing messages to China’s leadership about transgressions, as well as delivering tangible, measurable strikes to the implementing authorities. Similarly, these issues should be communicated in advance through high-level private diplomatic channels. This category should include: China’s refusal to participate within a specified time in substantive bilateral or multilateral strategic nuclear weapons reduction negotiations that set limits on China’s nuclear modernization and expansion programs; any Chinese actions threatening U.S. space assets or global communication system security; major cyberattacks by China on critical economic, social, or political infrastructure of the U.S. or allied governments; any large-scale military or economic provocations against U.S. treaty allies or other key strategic partners (including India); and any acts of genocide or crimes against humanity against groups within China.

Establishing clear and enforceable boundaries on security issues should form part of the China strategy, but a fully calibrated strategy also allows for broader strategic competition. This occurs in diplomatic and economic arenas, where policy agendas clearly conflict, but such conflicts can be addressed without military threats or other punitive measures. While these interests are important, they are neither inherently vital nor decisive.

All these areas of strategic competition share the characteristic that the United States remains confident that its potential advantages and values can exert stronger influence and succeed in an open, competitive international environment.

These areas of strategic competition should include maintaining current U.S. force levels in the Indo-Pacific region (otherwise China may perceive the U.S. as beginning to withdraw its alliance commitments), while modernizing and enhancing the region’s military-related doctrines, platforms, and capabilities to ensure strong and broad geopolitical deterrence; stabilizing U.S.-Russia relations as well as the relations between Russia and Japan; completing full cooperation in the Quad (Quadrilateral Security Dialogue) with India, Japan, and Australia by encouraging India to abandon its last political and strategic reservations; normalizing relations between South Korea and Japan to prevent South Korea from continuing to tilt strategically toward China.

In the economic sphere, strategic competition with China requires the United States to protect the dollar’s status as the global reserve currency; safeguard critical new technologies of the U.S. and its allies from Chinese acquisition; maximize economic integration between the U.S., Canada, and Mexico into a seamless market of 500 million people to consolidate long-term economic strength relative to China; and renegotiate the Trans-Pacific Partnership trade agreements. This also includes negotiating with the European Union to establish a Transatlantic Trade and Investment Partnership, as well as any other agreements on technology or other issues; prioritizing trade, investment, and aid between the U.S. and each Southeast Asian country, particularly U.S. allies Thailand and the Philippines, to prevent Southeast Asia from further shifting strategically toward China; and, through a reformed multilateral trade dispute settlement mechanism, enforcing China’s commitments to trade and investment liberalization with friends and allies.

Strategic competition also includes large-scale investments with U.S. allies in the World Bank and regional development banks, so that emerging economies can access funding for domestic infrastructure without relying on China’s “Belt and Road Initiative”; revitalizing the United Nations and other multilateral and international institutions to make them the cornerstone of global political governance; restructuring the U.S. State Department, including its operational budget and staffing, so it can compete with China globally in diplomacy; increasing U.S. overseas development assistance through USAID, and, together with U.S. allies, establishing UN humanitarian agencies to maintain donor leadership over China through coordinated global aid efforts; strengthening multilateral human rights arrangements to uphold pressure on China’s domestic human rights practices and the international political legitimacy of the CCP.