{"id":604544,"date":"2026-04-24T23:33:08","date_gmt":"2026-04-24T23:33:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/604544\/"},"modified":"2026-04-24T23:33:08","modified_gmt":"2026-04-24T23:33:08","slug":"the-free-worlds-competitive-edge","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/604544\/","title":{"rendered":"The Free World\u2019s Competitive Edge"},"content":{"rendered":"

This is an excerpt from a discussion of global and strategic issues published in Finishing the Inflation Job and New Challenges for Monetary Policy, edited by Michael E. Bordo, John H. Cochrane, and John B. Taylor (Hoover Institution Press, 2026). Click here<\/a> to buy.<\/p>\n

The defining competition of the twenty-\u00adfirst \u00adcentury has been and will continue to be one between closed, authoritarian systems and \u00adfree, open socie\u00adties. \u00adFree and open socie\u00adties appear to be at a disadvantage, \u00adbecause the United States, \u00ad European countries, Japan, Australia, and \u00adothers \u00adwere, for much of the past two \u00ad decades, absent from critical arenas of competition. That absence was due to what we might call strategic narcissism: the tendency since the end of the Cold War to define prob\u00adlems as we might like them to be and indulge in the conceit that \u00adothers have no aspirations or agency of their own.<\/p>\n

Strategic narcissism led some to believe that the \u201carc of history\u201d had guaranteed the primacy of \u00adfree and open socie\u00adties over authoritarian and closed systems. Some also assumed that old features of geopolitics and international relations had become pass\u00e9; global governance and a great-\u00adpower condominium had displaced great-power competition. A corollary to \u00adthose assumptions was that<\/p>\n

China, having been welcomed into the international order, would play by the rules and, as it prospered, would liberalize its economy and its form of governance.<\/p>\n

Overcoming our self-\u00adreferential view of the world requires an emphasis on what historian and Hoover national security visiting fellow Zachary Shore<\/a> calls strategic empathy. Strategic empathy attends to the ideology, aspirations, and emotions that drive and constrain competitors. Empathy fosters a higher degree of competence \u00adbecause understanding the other exposes the unrealistic, often implicit assumptions that underpin policies, and it reveals dangerous cognitive traps such as optimism bias and confirmation bias.<\/p>\n

Assumptions about the post\u2013\u00adCold War world turned out to be false. In this \u00ad century, a new great-\u00adpower competition has emerged. The actions of the Chinese Communist Party (CCP), actions driven by the party leaders\u2019 fears and ambitions, have revealed to the world that its Leninist system \u00adwill prevent the Chinese \u00adpeople from realizing Milton Friedman\u2019s and John Taylor\u2019s vision of a \u00ad free market that empowers individuals and drives prosperity by allowing \u00adpeople to make their own choices. As Friedman once observed, \u201cUnderlying most arguments against the \u00adfree market is a lack of belief in freedom itself.\u201d<\/p>\n

The CCP is intensifying efforts to extend and tighten its exclusive grip on power internally and gain preponderant power in pursuit of \u201cnational rejuvenation\u201d externally, through a campaign of co-option, coercion, and concealment.<\/p>\n

China co-opts countries, international corporations, and elites through false promises of impending liberalization, through insincere pledges to work on global issues, and especially through the lure of short-\u00adterm profits and access to the Chinese market, investments, and loans. Co-option includes debt traps set for corrupt or weak governments.<\/p>\n

Co-option makes countries and corporations dependent and vulnerable to coercion. The CCP coerces \u00adothers to ignore its efforts to extinguish human freedom internally. And it applies coercive power to reshape the international order to \u00adfavor its authoritarian, mercantilist model. Examples include the CCP\u2019s subversion of the World Health \u00adOrganization, the \u00adHuman Rights Council, UNESCO, and the International Civil Aviation \u00adOrganization, to name a few.<\/p>\n

While some industry groups and individuals still advocate for the accommodation of the CCP, it has become painfully clear that the free world must return to arenas of competition. To compete effectively, we must correct fundamental misunderstandings concerning the nature of the threat from the CCP and then discuss how the \u00adfree world might prevail in competition and secure a better \u00adfuture for generations to come. A common understanding of the nature of the threat could then generate the resolve to turn what authoritarian regimes regard as the weaknesses of \u00adfree socie\u00adties and free-market economies into our greatest competitive advantages.<\/p>\n

\u00b7\u00a0\u00a0 \u00b7\u00a0\u00a0 \u00b7<\/p>\n

The CCP uses two fundamental misunderstandings to justify various forms of aggression internally, as it perfects its Orwellian surveillance state, and externally, as it pursues primacy through programs such as Military-\u00adCivil Fusion, Made in China 2025, and One \u00adBelt One Road. As our colleague Elizabeth Economy has made clear, the CCP is pursuing a multipronged strategy composed of several high-\u00adprofile initiatives that together aim to reshape global norms in accordance with China\u2019s state-\u00adled model. \u00adThese include the Global Development Initiative,<\/a> the Global Security Initiative,<\/a> and the most ambitious of all, the Global Civilization Initiative<\/a>, to extend CCP influence over economic, security, and cultural governance worldwide.<\/p>\n

The first misunderstanding is that Chinese aggression is the result of US-\u00adChina tensions, a reaction to the Trump administration\u2019s description of China as a rival, or the imposition of very high tariffs. This misunderstanding derives from the narcissistic assumption that the party has no aspirations of its own and has no volition except in reaction to the United States. However, consider the party\u2019s deliberate suppression of the COVID-19 outbreak, the persecution of doctors, journalists, and \u00adothers who tried to warn the world, and the subversion of the World Health \u00adOrganization. Adding insult to injury, the party\u2019s \u201cWolf Warriors\u201d<\/a> obscured China\u2019s responsibility for foisting the pandemic on the world and portrayed its response and its authoritarian system as superior. Consider the massive global cyberattacks on medical research facilities in the midst of the pandemic and the punitive cyberattacks<\/a> on and economic coercion of Australia for having the temerity to suggest an inquiry into the virus\u2019s origins.<\/p>\n

In 2024, the US Department of Justice revealed that the China-linked cyber group Volt Typhoon had stealthily infiltrated US critical infrastructure networks for future espionage.<\/p>\n

Consider physical aggression on India\u2019s Himalayan frontier, in the South China Sea, in the Senkaku Islands, and especially \u00adtoward Taiwan. Consider Xi Jinping\u2019s boasts of his intention to expand concentration camps in Xinjiang as he races to perfect an Orwellian surveillance state.<\/p>\n

It should be clear to all that it was not the United States or even Donald Trump\u2019s constant refusal to be respectful of \u00adothers that caused this be\u00adhav\u00adior. So let all of us acknowledge that CCP aggression is not a US prob\u00adlem. It is a whole-\u00adworld and especially a free-\u00adworld prob\u00adlem.<\/p>\n

It is essential that we correct this misunderstanding, since its corollary among nations in \u00adEurope and across the Indo-\u00adPacific region is that the United States is asking them to choose between Washington and Beijing. And it is not a choice between Washington and Beijing; it is a choice between sovereignty and servitude.<\/p>\n

The second misunderstanding is that competition with China is dangerous or even irresponsible \u00adbecause of a Thucydides Trap<\/a> that pre\u00adsents us with a binary choice between passivity and a destructive war. That is a false dilemma, and I would argue that passivity in connection with CCP aggression in the South China Sea and elsewhere has put us on a path to conflict. Had we remained complacent \u00adunder the strategy of engagement and cooperation, China would likely have become even more aggressive. But the party promotes the false dilemma associated with a Thucydides Trap to portray efforts to defend against its aggression as simply the status quo power, the United States, trying to keep the rising power, China, and its \u00adpeople down.<\/p>\n

\u00b7\u00a0\u00a0 \u00b7\u00a0\u00a0 \u00b7<\/p>\n

Although the CCP views freedom of expression as a weakness to be suppressed at home and exploited abroad, our competitive advantage is what we regard as unalienable, universal rights: the \u00adfree exchange of information and ideas.\u00ad<\/p>\n

People who direct academic exchanges or are responsible for Chinese students\u2019 experiences should ensure that \u00adthese students enjoy the same freedom of thought and expression as other students. That means adopting a zero-\u00ad tolerance attitude for CCP agents who monitor and intimidate students. When universities and other hosting bodies protect the freedoms that \u00adthese students should enjoy, it serves to \u00adcounter the propaganda and censorship to which the students are subjected in their home country.<\/p>\n

Freedom of expression and freedom of the press also play a key role in promoting good governance to inoculate countries from bad deals \u00adunder One \u00ad Belt One Road. Exposing the CCP\u2019s co-option of corporate and governmental elites and its coercive practices that force companies and governments to act against the long-\u00adterm interests of their shareholders and their citizens prevents the CCP from portraying its egregious acts as normal. \u00adFree and open socie\u00adties must condemn the punishment of courageous Chinese journalists who expose the party\u2019s repression and persecution of its \u00adpeople. And companies should stop the practice of helping the party obscure its heinous repression of \u00adhuman freedom in Xinjiang, in Hong Kong, and across the country.<\/p>\n

As with freedom of expression, the CCP views tolerance of diversity as a threat. Although some might see expanded immigration from an authoritarian state as a danger, the United States and other \u00adfree and open socie\u00adties should consider issuing more visas and providing paths to citizenship for more Chinese \u00adpeople, especially \u00adthose who have been oppressed at home. Immigrants who have experienced an authoritarian system are often most committed to and appreciative of demo\u00adcratic princi\u00adples, institutions, and pro\u00adcesses. They also make tremendous contributions to our economies.<\/p>\n

The CCP views its centralized, statist economic system as bestowing advantages, especially the ability to successfully coordinate efforts across government, business, academia, and the military. And it views decentralized, free-\u00admarket economic systems as unable to compete with China\u2019s centrally directed strategies. That is why our free-\u00admarket economies need to demonstrate the competitive advantages of decentralization and unconstrained entrepreneurialism.<\/p>\n

Competition between the \u00adfree world and authoritarian regimes\u00ad will determine \u00ad whether democracy and free-\u00admarket economies prevail over authoritarianism and statist economic models. China and Rus\u00adsia have expanded their self-\u00addescribed \u201cpartnership with no limits\u201d into an axis of aggressors that includes the dictatorships in North \u00adKorea and Iran, while they advance initiatives to displace US influence and power.<\/p>\n

Winning this competition and addressing other cross-\u00adborder challenges and threats such as terrorism, climate change, and proliferation of weapons of mass destruction requires a statecraft that draws on all sources of national power in an integrated manner. \u00adThese sources of power include US military strength, its global diplomatic reach, the gravitational attraction of American ideals such as liberty and opportunity, and the US economy.<\/p>\n

US administrations consistently undervalue the degree to which strategic application of economic power is essential for advancing US vital interests. President Trump has a historic opportunity to correct this chronic shortcoming in US \u00adgrand strategy with an integrated strategy for economic statecraft oriented on securing the nation, reinforcing our technology innovation ecosystems, and shaping fair, reciprocal trade and commercial relationships.<\/p>\n

Action is necessary to \u00adcounter Chinese economic aggression, coercive or nonmarket actions by the CCP that bully allies or hurt American manufacturing. Action is also necessary to foster market conditions to ensure that the private sector meets critical national security needs in semiconductors, critical minerals, and other sectors.<\/p>\n

The Trump administration must recognize, however, that \u00adthese more interventionist economic statecraft policies \u00adwill inevitably result in trade-offs. An overarching framework of principles and objectives\u2014\u00ada strategy\u2014is therefore essential to help policymakers decide among competing trade-\u00adoffs.<\/p>\n

A first step \u00adtoward preserving competitive advantage is to crack down on Chinese theft of our technologies. The Trump administration should require companies to report investments by China-\u00adrelated entities, technology transfer requests from China, and participation in the CCP\u2019s core technology development or in its \u00adPeople\u2019s Liberation Army (PLA) modernization programs.<\/p>\n

There is much room for improvement in the effort to prevent China from using the open nature of our economies not only to promote its state cap\u00adi\u00adtal\u00adist model and undermine confidence in our democracies but also to perfect its surveillance police state.<\/p>\n

Finally, strengthening free-\u00admarket economies and demo\u00adcratic governance could be the best means of countering the CCP\u2019s campaign of co-option, coercion, and concealment. Deregulation and permitting reform are crucial for competing with the \u00adPeople\u2019s Republic of China. Government and private-\u00adsector investment in technologies in the areas of artificial intelligence, robotics, augmented and virtual real\u00adity, and materials science \u00adwill prove crucial for maintaining differential advantages over an increasingly capable and aggressive PLA.<\/p>\n

Support for\u00ad free markets and demo\u00adcratic institutions, as well as the unalienable rights that should be afforded to all \u00adpeoples, is not just an exercise in altruism. Protection of \u00adthese rights and promotion of demo\u00adcratic governance are practical means of competing effectively with the CCP while building a better world for \u00ad future generations.<\/p>\n","protected":false},"excerpt":{"rendered":"This is an excerpt from a discussion of global and strategic issues published in Finishing the Inflation Job…\n","protected":false},"author":2,"featured_media":604545,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,3,21,19,22,20,25,24],"class_list":["post-604544","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-states","tag-america","tag-news","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-usa"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/604544","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=604544"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/604544\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/604545"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=604544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=604544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=604544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}