To: Director, Long-Term Strategy Office, People’s Liberation Army, Beijing From: Head, American Competitiveness Division Subject: China Has Gained an Edge * * * General, a year ago you sent a memo to Chairman Xi Jinping offering some thoughts on how the global spread of the coronavirus and early U.S. reactions could offer China some broad strategic advantages vis-à-vis the United States. The Chairman appreciated the military and geopolitical factors you raised. You then tasked me with tracking several more-subtle factors affecting American competitiveness and asked me to report back after a year with data and conclusions. Herewith are those findings. Executive Summary The strategy of our division (and our country!), as stated openly and publicly, is to help China win the long-term competition against the United States for power and influence, in Asia and on the world stage, over the next century. Our net-assessment bureau keeps careful track of traditional measurements of military and geopolitical power — tanks, ships, planes, missiles, etc. As you suggested, I assigned the brightest analysts in my division to study the political, economic, and social cohesion of the U.S. Also at your suggestion, we read British historian Arnold Toynbee’s work in which he concluded that “civilizations die from suicide, not by murder.” Just so. Our own “century of humiliation,” as we call it, started with the British HMS Nemesis steaming up the Yangtze River to humble our wealthy and advanced middle kingdom and not a Chinese junk sailing up the Thames to do the same to the British. In asking why, our analysts agreed with Toynbee that this great turn in historic fortunes wasn’t simply or even mostly about guns, germs, or steel but rather about political, economic, and social cohesion and cultural confidence. We estimate that our own strategic ambitions have been advanced by a generation thanks to the self-imposed unraveling of political, economic, and social cohesion in an ever less confident United States. The bottom line: Taking those factors into account, our assessment of the past 15 months of U.S. behavior is that the Americans are doing our competitive work for us. Key Findings First, Americans can no longer do basic public policy. You might remember when you sent me and other young analysts off to the best public-policy schools in the U.S. in the 1980s and 90s. (I did not think much of the curriculum, but the basketball games were very exciting!) We really thought at the time that the Americans had, as they say, “cracked the code” — developing sophisticated methods of dealing with choices and making tradeoffs; weighing priorities, competing policy interests, and incentives; doing cost-benefit studies, and the like in public policy. Even without the analytical methods they developed, we thought at the time that they had a sophisticated political dialogue about the constant tensions in a good society between different values and different choices and had developed a system to thrive and prosper despite those natural tensions. The U.S. coronavirus response over two different administrations exposed that this system is broken. The U.S. overwhelmingly prioritized only one goal — coronavirus health issues — and let it overwhelm almost all other social- and economic-policy goals. Even with that singular focus, they failed to do the central task of their own chosen strategy — to protect the elderly and vulnerable. Over 80 percent of their COVID deaths were among the elderly. And yet, for a period of time, they shut down almost all economic and social activity by the least vulnerable populations, without any cost-benefit analysis of this approach. This contributed to all of the points below that have accelerated our strategic advantage. Despite the Americans’ professed policy focus on public health, we see good estimates that the singular health-system focus on the coronavirus at the expense of so many other health practices will likely kill far more people in the next few years than the virus itself did. Especially when you add in the issues associated with the economic privation, stress, and isolation they voluntarily underwent. Our internal data support the U.K. Department of Health report noting that, “when morbidity is taken into account, the estimates for the health impacts from a lockdown and lockdown-induced recession are greater in terms of quality adjusted life years than the direct COVID-19 deaths.” Second, because of this policy choice, America is purposely eroding the very sources of its own economic competitiveness. This is a great gift to us from the U.S. You will remember that we have worried for decades about the most fundamental American advantage that could make catching up to them almost impossible: their innovative private economy. This paramount source of American competitive advantage, which has kept them prosperous and powerful for some 140 years, could fade quickly now. In just a few months during the course of the virus, our competitor has turned to historically unprecedented levels of public spending and borrowing. That, combined with the proposed enormous increase in taxes and government-benefits programs, means the U.S. is, in effect, transferring trillions of dollars from the world’s leading private-sector economy to a middling public-sector economy. They are also transferring the decision-making about how to allocate this capital from private to public hands; some of the most productive and efficient uses of capital, which have steadily increased their wealth, are being handed over to systems that can only move the wealth around (and with much of that capital leaking out in the act of transferring it to a public benefit). A young member of my staff mentioned that there is a Western parable about geese and golden eggs that applies to this phenomenon; I will ask him to follow up. Third, their coronavirus responses have also weakened another one of their great competitive advantages: the vaunted U.S. education system. We have been flooding their universities with students over the decades, of course, to take advantage of their STEM education and a few other traditional fields. This has been a boon for us (and a ready source of income for them). Moreover, thanks to our comprehensive intelligence efforts around American universities (some of which have been, unfortunately, uncovered of late by their counterintelligence work), we have gained an intelligence bonanza. We’ve probably gotten as much as we can get there, and the timing for tapering off that effort works for our strategy. Their coronavirus responses have accelerated a series of crises in their universities: flawed business models dependent on massive debt financing, trendy nonsense curricula, credentialed but uneducated graduates, highly politicized faculties and administrations, and an odd monoculture so outside of the mainstream of American life that, a few years ago, even the incoming president of Harvard recognized that many Americans question “whether or not colleges and universities are worthy of public support” or “are even good for the nation.” In the past few years, according to polls on institutions that Americans trust, public opinion of U.S. higher education has fallen farther and faster than for almost any other institution. The shutdown (continuing as I write this memo) of their public elementary- and secondary-education system has been particularly baffling to our analysts. At first, we assumed that the Americans had a better source of data or analytical method than we did about calculating the infection risk for younger children or teachers in public schools. (I think we are still a little intimidated by that Man on the Moon achievement.) But it turns out that they simply do not want to reopen the public schools — perhaps not even in the coming fall. U.S. students have already been falling steadily behind in international comparisons of learning and achievement at almost every level (despite rising education spending). The Americans’ estimates show that this lost year-plus will deepen that slide in competitiveness. Our analysts calculate that it will be a decade before they can account for all the educational, economic, and social costs to children of these policies. I would never have predicted that we could catch the Americans in education so fast, but their rearward trajectory makes it possible. Fourth, I am happy to report that the American political experiment is declining in legitimacy — there and everywhere else. As you know, we are offering the first competitive system for political, social, and economic order — Chairman Xi’s China Dream — that America has faced since it vanquished Soviet-style communism 30 years ago. I had concerns (and still do) as to how well our system will “travel,” so to speak — despite the early conversion to it of New York Times columnist Tom Friedman. I don’t know if we’ll get more converts, but as far as their democratic-capitalist system is concerned, the air is definitely (as the Americans say) going out of the balloon. Their coronavirus response has accelerated an erosion of Americans’ self-confidence and belief in their own system, abetted by a media and political culture in which they blame themselves and the Western culture that created their system for most troubles. Another gift to us! Above, I noted the polls measuring institutional trust. You’ll be pleased to know that U.S. government institutions are at the bottom of these lists (along with journalism and big business, I should add!). Their military still enjoys a high amount of trust from Americans — and this should worry us. But my analysts are convinced that it is the trust and admiration of an observer, not of a participant. Their small all-volunteer military draws from less than 1 percent of the population, with many service members coming from military families. So, like so much else in American politics, their citizenry is disengaged. When you created this division, you required us to study the American founding. I well remember the American founders’ entreaties that their so-called republican democracy could work only if the citizens were virtuous and engaged. It was a very odd approach to governance these founders invented — self-governance relying on cooperation, uncoordinated from the top (!) — with most decisions being made in private or local governmental forums. It appeared to work for a few hundred years. But the good news is that all current measurements of a virtuous and engaged citizenry (including what Americans think about each other in terms of trust and confidence) are at historic lows. So, if their founders were right, the end could be near for their system. U.S. coronavirus policies, social unrest, and zero-sum politics over the past year have combined to isolate and pit almost all Americans against each other. They are completely self-obsessed; we were smart to grab Hong Kong when they were focused on themselves. On a related note, we recently intercepted some al-Qaeda radio traffic celebrating the Afghan withdrawal and the new U.S. focus on what they are calling “domestic terrorism.” We should lend them our Uyghur playbook (jk!). Especially obsessed with race, ethnicity, and gender identity, Americans are dividing themselves into categories on the basis of characteristics they cannot change. They are intent on correcting ills in their history through accusation and further division. We practically invented the art of political slogans, but remember how we used to envy their motto E Pluribus Unum? If it worked, they could harness the power of a radically diverse country to a set of common ideas and way of living. They could be unstoppable. But, I’m happy to report, there are big cracks in the foundation of that creed. They’ve started inventing a new one in the past 15 months — Semper Divisa perhaps. They are distrustful of almost any information given to them, and their troublesome tradition of a neutral and objective media has disappeared entirely. I’m not sure we could have planned it better! The chances of their unifying to support a renewed, coherent strategy of American competitiveness is very remote. In fact, even before the virus, their confidence in themselves was at a low. In global polls taken in over 60 countries about willingness to fight for one’s country, the U.S. is at a low of 44 percent — some 30 points below us. * * * In conclusion, General, might I indulge in a personal reflection? Thirty years ago, when you assigned me here rather than my first choice of the American Cooperation Division across the hall, I was sorely disappointed. That office was surely going to be where the Chinese success story was. When I arrived at the Competitiveness Division, all we could see was a slow and centuries-long game of catch-up to the leading global power. But now, looking back over just the past 15 months, I am liking our chances and am glad to be here. Gānbēi!