There Is No Substitute for Victory: Winning the Competition with Communist China | Hudson Institute

Remarks as prepared for delivery : It’s great to be back at the Hudson Institute. Last week I was in Japan and Korea with some of America’s closest friends. One afternoon, I stood at the DMZ and stared across the line at some decidedly less friendly faces. The regime across that line survives on a lifeline from Beijing. So today I want to talk about America’s most dangerous adversary, the Chinese Communist Party: what it wants, what’s at stake, and how we’ll know we’re winning.  I’ll also describe why a winning strategy is increasingly dependent on strengthening our relationships with allies like Japan and South Korea. Let me begin with this: twenty-five years ago, we bet wrong about the motivations and intentions of our primary adversary. When China joined the World Trade Organization in 2001, Washington made a bipartisan bet that trade would make China free. A few years later, I joined the Bush administration, first at the Commerce Department and later at Treasury. I never believed trade would make China free, but I did hope China would play by the rules. I saw early that it would not. In 2005, as Under Secretary of Commerce for Export Administration, I implemented tough controls on American technology headed to China’s military; a very aggressive Chinese president, Hu Jintao, complained about them to President Bush personally. I took it as a compliment. Over time, Beijing turned our good faith into leverage and used it to outbuild us. In 2017, President Trump broke the old consensus and finally called China what it is: an adversary. Our dispute is not with the Chinese people. It is with the Chinese Communist Party, the most powerful totalitarian regime on earth and the gravest threat to our security since World War II. It has committed genocide in Xinjiang, jailed Pastor Ezra Jin and other religious leaders, and sentenced Jimmy Lai to 20 years for running a newspaper. And Xi Jinping wants nothing less than to supplant America as the world’s superpower. The AI revolution is accelerating this competition and increasing the stakes. This is a generational fight, just as the Cold War was. Then as now, leaders should talk, as President Trump and Xi Jinping did at the White House last month. But diplomacy works only from strength. China, Russia, Iran, North Korea, and radical Islamists may have different designs on the world. But they all agree on step one: a diminished, powerless United States. Beijing sits at the center. It supplies Russia’s war machine, keeps North Korea afloat, and was Iran’s biggest oil customer until our Navy shut that trade down. Leaders I met in Tokyo and Seoul don’t need to be persuaded the danger is real. Neither should we. We did not invite this contest, nor did we seek their enmity. The CCP’s own words and concrete ten-year plans make clear that it opposes America and the world we created. It seeks to build a new world hostile to freedom and our way of life. We cannot let Communist China dictate the terms of technology, privacy, commerce, and communications. We must answer in the only language they understand: power. So what are we trying to accomplish? Not war, which would be a disaster for the region and the world. Our mission is peace through strength. Ronald Reagan’s goal for the Cold War was simple: “We win, they lose.” Ours should be just as clear. Can we win? Yes. Beijing has customers and clients. America has allies and partners. Together, the free world has nearly four times China’s economy, more than five times its defense spending, and nearly twice its share of global manufacturing. But victory is not assured. So how will we know we’re winning? I’d offer four measures of success. The first is that we are beating China in the innovation race and restricting access to everything it needs to catch us. This race is not new. Sixty-two years ago today, Communist China, a fast follower, detonated its first atomic bomb. The CCP has always understood that technology is power, and it will pay any price to get it. Today the arena is AI, chips, quantum, and biotech. Same Party. Same ambition. And what it can’t build, it steals. For decades, America helped arm its own adversary. That ends now. We must presume that any Chinese company seeking our technology or our capital will end up serving China’s military. That means denying Beijing our most advanced chips and chipmaking tools, closing the cloud loophole with my Remote Access Security Act, treating chip smugglers like arms traffickers, and sanctioning anyone who steals American AI through distillation. It means—as President Trump has expressed so clearly—ending China’s free ride. As a start, Congress should revoke China’s permanent normal trade relations status, a privilege Beijing has abused for a quarter century. And it means making sure America and our allies field the most technologically advanced militaries on earth. Japan’s Defense Minister Shinjiro Koizumi and I discussed exactly that last week in Tokyo. Meanwhile, we need to strengthen American research and innovation. Federal research spending has fallen by two-thirds as a share of our economy since 1964, the year China tested its bomb. Private industry has stepped up, nearly tripling its R&D as a share of the economy. But companies mostly fund the next product, not the basic science behind the next breakthrough. America needs more science, not less. The second measure of success is that we are building more, faster, and American workers are prospering. Look at my home state of Pennsylvania. In just over a year, we’ve attracted more than $100 billion in investment and tens of thousands of jobs. Our shipyards and steel mills are once again roaring to life. Our defense industrial base is expanding. New power plants and advanced manufacturing are taking root across the state. And foreign direct investment from Japan and Korea is a big reason why. We’re also building the data centers that will decide the AI race, despite Beijing’s efforts to poison the issue. When your adversary doesn’t want you to build something, pay attention. But building isn’t enough. I grew up in Bloomsburg, Pennsylvania, and watched globalization hollow out towns like it as Washington elites sacrificed working families on the altar of cheaper goods. This time, American workers have to share in the windfall: rising wages, great jobs, and a real stake in AI’s success. If American working families are winning, America is winning. The third measure of success is that our allies are out-innovating and out-building China alongside us, investing in America, and carrying their share of the defense burden. I went to Japan and Korea to see whether our allies are in this race with us. They are. They are investing in America. Japan’s Nippon Steel is investing $14 billion in U.S. Steel, creating or saving over 100,000 American jobs, including more than 25,000 in Pennsylvania. In Korea, I stood aboard a frigate rising in one of the world’s most advanced shipyards. Hanwha is bringing that capacity to Philadelphia with a $5 billion investment, part of Korea’s $350 billion pledge to invest in America. And they are carrying more of the load, as President Trump has rightly demanded. Japan hit 2 percent of GDP on defense two years early and just requested a record budget increase. Korea proposed its largest defense budget ever and committed to buy $25 billion in American military equipment. Defense Minister Kang Shin-chul and I agreed we should build more of it together, from drones to robotics. That matters because the character of war is changing. Cheap drones and autonomous systems are decisive battlefield technologies, and China dominates the world’s drone supply chain. Japan and Korea are world leaders in robotics, batteries, and chips. We should be working with them hand in hand. Those three measures together are central to a strategy of deterrence. We have to out-innovate China on the battlefield, learning the lessons of Ukraine and the Middle East faster than Beijing. We have to out-build China, with a defense industrial base that can outproduce it in a long fight. And we have to stand with our allies, training, planning, and fighting as one. If we get this right, Beijing will look across the Taiwan Strait every morning and conclude, “Not today.” The fourth and final measure of success is not about what we do, but about who we are. Two hundred fifty years ago, our founders conceived a radical new nation, dedicated to liberty and the creed that all men are created equal. Thomas Paine put it simply: “The cause of America is in a great measure the cause of all mankind.” That is why freedom-loving people around the world take risks, sometimes enormous ones, to be our friends. Our commitment to freedom is not simply an ideal; it is a source of national power. In the coldest realpolitik terms, a freer world makes America stronger. Beijing understands that. Xi has told Party officials to prepare for “the eventual demise of capitalism and the ultimate victory of socialism.” And here at home, socialism is gaining ground on the left and, to a lesser degree, on the right. Gallup finds that among Americans under 35, socialism now beats capitalism. Beijing is glad to help, using fake American voices to turn Americans against their own country. So we have to make the case for freedom again, with confidence, starting at home. Let me end where I began, at the DMZ. The people on both sides of that line share a language and a history. Seventy years ago, both were desperately poor. Today one builds the ships and chips of the future, including in Philadelphia. The other can’t keep its lights on. The difference is freedom. Make no mistake: America is good, and we should be unapologetic about it. Because it is good, we are the most exceptional country in human history. And this fact wins us friends and allies around the world. This century must belong to free people, not to the Chinese Communist Party. We can win this fight and defend the world we made. Our task is to convert innovation into capacity, capacity into national power, and national power into enduring American leadership. As General Douglas MacArthur warned Congress during the Korean War, “There is no substitute for victory.”Thank you to Hudson for helping lead the way. And thank you all.