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Trading with the Enemy: The Making of US Export Control Policy toward the People's Republic of China
In light of the intertwining logics of military competition and economic interdependence at play in US-China relations, Trading with the Enemy examines how the United States has balanced its potentially conflicting national security and economic interests in its relationship with the People's Republic of China (PRC). To do so, Hugo Meijer investigates a strategically sensitive yet under-explored facet of US-China the making of American export control policy on military-related technology transfers to China since 1979. Trading with the Enemy is the first monograph on this dimension of the US-China relationship in the post-Cold War. Based on 199 interviews, declassified documents, and diplomatic cables leaked by Wikileaks, two major findings emerge from this book. First, the US is no longer able to apply a strategy of military/technology containment of China in the same way it did with the Soviet Union during the Cold War. This is because of the erosion of its capacity to restrict the transfer of military-related technology to the PRC. Secondly, a growing number of actors in Washington have reassessed the nexus between national security and economic interests at stake in the US-China relationship - by moving beyond the Cold War trade-off between the two - in order to maintain American military preeminence vis-à-vis its strategic rivals. By focusing on how states manage the heterogeneous and potentially competing security and economic interests at stake in a bilateral relationship, this book seeks to shed light on the evolving character of interstate rivalry in a globalized economy, where rivals in the military realm are also economically interdependent.
411 pages, Kindle Edition
Published March 1, 2016
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May 12, 2019
Trading with the Enemy is an insightful and timely read on the history, politics, and logic of how the United States regulates the trade of dual-use technology with the People’s Republic of China (PRC). The book outlines the history of American export-controls policy in general, explaining that policy makers aimed to block technology transfers to the Soviet Union and Comintern nations during the Cold War. The author also places this history in the broader scope of the so-called containment strategy employed by the American diplomat George Keenan.
Until President Nixon’s opening-up policy, itself a part of Nixon and Kissinger’s strategy to break the bonds between the USSR and the PRC, the export-control regime was equally applied to China. American export-control policies began to treat China differently from the other Eastern bloc nations after the resumption of trade with China; this state of affairs continued into the Carter, Reagan, and H.W. Bush administrations. The author notes how the actual differences were mostly trivial and aimed at satisfying requests by China. The main driver behind treating the PRC differently was to allow the export of just enough technology to increase their potency versus the Soviet armed forces while not enabling them to challenge American dominance. It was in this vein that over-the-horizon technologies, namely Information and Communications Technology (ICTs) such as satellite and space, micro-processing and networking equipment, were banned for export.
Despite not allowing most advanced technology to be exported, the United States did use Chinese rockets for private-sector satellite launches on limited occasions during this era. The strict controls over the ICTs and the recognition of their ultimately pivotal role in future warfare anticipated the Revolution in Military Affairs (RMA) that was to come in the late eighties and early nineties, as well as Donald Rumsfeld’s failed transformation initiatives in the aughts.
Within this context, two rival camps formed within the US government, the “Run Faster” and the “Control Hawks” coalitions. Until the end of the Cold War, the hawks were dominant. However, with the end of that conflict, the US government came under increasing pressure from American and European exporters to relax controls on China just as it was beginning its meteoric growth that would last the better part of three decades.
The “Run Faster” side won out in the nineties, arguing that critical technologies could be intelligently controlled without harming the greater export markets that were critical for the continued growth of US heavy industries, space, and computing sectors. Two important moments in history caused havoc for “Run Faster” planners. The first was the Gulf War in the early nineties and China’s reaction to it, and the second was the advent of parallel computing enabled by both hardware and software in the early aughts.
After carefully studying the American military victories in the Gulf War, the People’s Liberation Army (PLA) concluded that RMA was real and not merely high-doctrine. The PLA would embark on a massive technology procurement program to transform itself into an information-centric fighting force, similar to the modern US army. Initially, they would exploit dual-use technologies that were now being more freely exported from the US and Europe under the then recently reformed controls regime. Later, they would partially substitute for some of these technologies with programs aimed at building these capabilities in China itself, which was simultaneously developing a world-class engineering workforce capable of producing high caliber ICT.
The second event, the emergence of parallel computing, would herald the end of American dominance in higher powered computing. Such American icons as IBM would be displaced in the hardware space by cheaper and more modular parallel computing architectures that could be assembled entirely from freely traded commodity hardware and chipsets such as GPUs. This development would make effective technology controls virtually impossible, and even though China would not master intricate chip fabrication until the late aughts, the PRC was ultimately able to grow its computing power exponentially to match its increasing application in industry and research.
The narrative has now more or less reached present day, where after a brief second leg of the “Run Faster” coalition during the tenure of Ash Carter and the Department of Defense’s “Third Offset”, the “control hawks” are again ascendant. The author concludes that technology containment is a fool’s errand and that it is impossible to prevent China from reaching technological parity with the United States in the mid-term. This may or may not be true. After-all, history has demonstrated that idiosyncratic architectures can make a difference in technological development. For instance, the packet switching apparatus was never developed by the Soviets, and they therefore never developed as robust an internet as the United States did from the sixties to the eighties. It is possible that similarly unique and guarded architectures can still make a difference, and thus that intelligent export controls may be viable without “throwing the baby out with the bathwater”.
Ultimately, the book offers no insight into what might come next. Given the current situation, for instance, how does the US intelligently compete in technology without being hampered by a trade war? Long term investments in education are key , but these are not yet on the table. I wish the book would have delved a bit more into topics such as this. Overall, a comprehensive and quick read. Recommended.
Until President Nixon’s opening-up policy, itself a part of Nixon and Kissinger’s strategy to break the bonds between the USSR and the PRC, the export-control regime was equally applied to China. American export-control policies began to treat China differently from the other Eastern bloc nations after the resumption of trade with China; this state of affairs continued into the Carter, Reagan, and H.W. Bush administrations. The author notes how the actual differences were mostly trivial and aimed at satisfying requests by China. The main driver behind treating the PRC differently was to allow the export of just enough technology to increase their potency versus the Soviet armed forces while not enabling them to challenge American dominance. It was in this vein that over-the-horizon technologies, namely Information and Communications Technology (ICTs) such as satellite and space, micro-processing and networking equipment, were banned for export.
Despite not allowing most advanced technology to be exported, the United States did use Chinese rockets for private-sector satellite launches on limited occasions during this era. The strict controls over the ICTs and the recognition of their ultimately pivotal role in future warfare anticipated the Revolution in Military Affairs (RMA) that was to come in the late eighties and early nineties, as well as Donald Rumsfeld’s failed transformation initiatives in the aughts.
Within this context, two rival camps formed within the US government, the “Run Faster” and the “Control Hawks” coalitions. Until the end of the Cold War, the hawks were dominant. However, with the end of that conflict, the US government came under increasing pressure from American and European exporters to relax controls on China just as it was beginning its meteoric growth that would last the better part of three decades.
The “Run Faster” side won out in the nineties, arguing that critical technologies could be intelligently controlled without harming the greater export markets that were critical for the continued growth of US heavy industries, space, and computing sectors. Two important moments in history caused havoc for “Run Faster” planners. The first was the Gulf War in the early nineties and China’s reaction to it, and the second was the advent of parallel computing enabled by both hardware and software in the early aughts.
After carefully studying the American military victories in the Gulf War, the People’s Liberation Army (PLA) concluded that RMA was real and not merely high-doctrine. The PLA would embark on a massive technology procurement program to transform itself into an information-centric fighting force, similar to the modern US army. Initially, they would exploit dual-use technologies that were now being more freely exported from the US and Europe under the then recently reformed controls regime. Later, they would partially substitute for some of these technologies with programs aimed at building these capabilities in China itself, which was simultaneously developing a world-class engineering workforce capable of producing high caliber ICT.
The second event, the emergence of parallel computing, would herald the end of American dominance in higher powered computing. Such American icons as IBM would be displaced in the hardware space by cheaper and more modular parallel computing architectures that could be assembled entirely from freely traded commodity hardware and chipsets such as GPUs. This development would make effective technology controls virtually impossible, and even though China would not master intricate chip fabrication until the late aughts, the PRC was ultimately able to grow its computing power exponentially to match its increasing application in industry and research.
The narrative has now more or less reached present day, where after a brief second leg of the “Run Faster” coalition during the tenure of Ash Carter and the Department of Defense’s “Third Offset”, the “control hawks” are again ascendant. The author concludes that technology containment is a fool’s errand and that it is impossible to prevent China from reaching technological parity with the United States in the mid-term. This may or may not be true. After-all, history has demonstrated that idiosyncratic architectures can make a difference in technological development. For instance, the packet switching apparatus was never developed by the Soviets, and they therefore never developed as robust an internet as the United States did from the sixties to the eighties. It is possible that similarly unique and guarded architectures can still make a difference, and thus that intelligent export controls may be viable without “throwing the baby out with the bathwater”.
Ultimately, the book offers no insight into what might come next. Given the current situation, for instance, how does the US intelligently compete in technology without being hampered by a trade war? Long term investments in education are key , but these are not yet on the table. I wish the book would have delved a bit more into topics such as this. Overall, a comprehensive and quick read. Recommended.
November 4, 2023
This book isn't easy reading, but it's unparalleled in terms of its research into American export control with China, and the author spared no effort to track down every possible source. The author interviewed everyone who mattered, from top officials and staffers at the "triumvirate" of export control, namely, the Departments of Defense, Commerce, and State, to congressional staffers, to industry officials and lobbyists. He read every declassified document and every public report available. There is no possible way anyone could have a better understanding of export control in this era than this author.
The basic story is that after the Korean War the "CHINCOM" committee kept an almost total embargo against China that was not replicated against the Soviet Union, what became known as the "China differential." In the late 1950s, however, the other Western nations broke away and began opening up trade with China, but the U.S. kept it lockdowned until Nixon, in the first year of his administration, opened up. After a period of "evenhandedness" between the USSR and China, the anti-Soviet hawks in the Carter administration, such as Brzezinski at the National Security Council fought off the doves such as Secretary of State Cyrus Vance and created a reverse China differential where trade was more open with China than with the Soviets. The "two times" policy was that China should get twice the openness as the Soviets, although in practice this was impossible to operationalize. The Reagan administration, where Alexander Haig and George H.W. Bush were more towards openness with China, and everyone in state except the Defense Technology Security Administration kept pushing it this openness, leading in 1985 to the U.S. even allowing "Foreign Military Sales," direct from government to government, of arms. This continued until the Tiananmen crackdown in 1989, after which an continuing arms embargo and a short-term slowdown in trade gave way to a gradual opening after the end of the Cold War.
The author focuses on export control during the Clinton and Bush II administrations. As he shows, the "Run Faster" coalition that advocated for more trade to improve U.S. competitiveness came to dominate in both. In Clinton's era the technologists at the Department of Defense, such as Secretary William Perry and Ashton Carter, became surprising advocates of trade when Defense had previously been against it. As he shows industry exploited that breakdown in the international control "COMECON" regime to argue that much of what they blocked just went to third parties. The high-tech field in particular chomped at the bit and most of debates about export control in the post-Cold War period centered on the two issues of high-tech and China, which had one point in the 1990s constituted 95% of the export licenses. The one loss for the Run Faster coalition was in satellite technology exports, which Congress banned from 1999 until 2013, after investigations by the New York Times and elsewhere showed that U.S. companies had shared confidential information with the Chinese as part of the Chinese satellite launches on their missiles. The rise of "ITAR-Free" satellites by Europeans, which featured parts not subject to the arms embargo and increased their share of international sales, became a cautionary tale about how export controls can limit an entire industry.
The number of "Deputy Assistant Secretaries" and directors of different commission and lobbying groups can become a blur here, but that's because the author interviewed everybody and sundry about their work. This is an impressive piece of scholarship, on a subject that has only increased in importance since it was written a few years ago.
The basic story is that after the Korean War the "CHINCOM" committee kept an almost total embargo against China that was not replicated against the Soviet Union, what became known as the "China differential." In the late 1950s, however, the other Western nations broke away and began opening up trade with China, but the U.S. kept it lockdowned until Nixon, in the first year of his administration, opened up. After a period of "evenhandedness" between the USSR and China, the anti-Soviet hawks in the Carter administration, such as Brzezinski at the National Security Council fought off the doves such as Secretary of State Cyrus Vance and created a reverse China differential where trade was more open with China than with the Soviets. The "two times" policy was that China should get twice the openness as the Soviets, although in practice this was impossible to operationalize. The Reagan administration, where Alexander Haig and George H.W. Bush were more towards openness with China, and everyone in state except the Defense Technology Security Administration kept pushing it this openness, leading in 1985 to the U.S. even allowing "Foreign Military Sales," direct from government to government, of arms. This continued until the Tiananmen crackdown in 1989, after which an continuing arms embargo and a short-term slowdown in trade gave way to a gradual opening after the end of the Cold War.
The author focuses on export control during the Clinton and Bush II administrations. As he shows, the "Run Faster" coalition that advocated for more trade to improve U.S. competitiveness came to dominate in both. In Clinton's era the technologists at the Department of Defense, such as Secretary William Perry and Ashton Carter, became surprising advocates of trade when Defense had previously been against it. As he shows industry exploited that breakdown in the international control "COMECON" regime to argue that much of what they blocked just went to third parties. The high-tech field in particular chomped at the bit and most of debates about export control in the post-Cold War period centered on the two issues of high-tech and China, which had one point in the 1990s constituted 95% of the export licenses. The one loss for the Run Faster coalition was in satellite technology exports, which Congress banned from 1999 until 2013, after investigations by the New York Times and elsewhere showed that U.S. companies had shared confidential information with the Chinese as part of the Chinese satellite launches on their missiles. The rise of "ITAR-Free" satellites by Europeans, which featured parts not subject to the arms embargo and increased their share of international sales, became a cautionary tale about how export controls can limit an entire industry.
The number of "Deputy Assistant Secretaries" and directors of different commission and lobbying groups can become a blur here, but that's because the author interviewed everybody and sundry about their work. This is an impressive piece of scholarship, on a subject that has only increased in importance since it was written a few years ago.
Displaying 1 - 2 of 2 reviews