Taiwan’s Options under the ‘Neo-Washington Consensus’

More than 20 years ago, when internationalization was in full swing, the United States was actively seeking to win over China, urging the World Trade Organization to accept China’s application for membership. At that time, the U.S. government’s hope was that, once ushered into this multilateral, international trade organization under the trend of globalization, China’s steps toward systemic reform of the market economy and acceptance of international norms would be facilitated by the rules of international trade. There were even those who optimistically (and naively) expected the development of a market economy and the formation of a middle class to eventually lead to a reform of China’s political system and to the democratization of its politics.

Over the past 20 years or so, the result of this development has been that China has successfully developed its foreign trade by taking advantage of the benefits of free trade as a developing country. It has not only tripled its overall gross domestic product, overtaking Japan to become the second largest economy in the world, but it has also surpassed the United States to become the world’s largest trading nation. But the development that countries around the world were expecting has been the complete opposite of what was envisioned at the start. The last two decades have shown that, in every respect, China has been transforming the norms of world trade, rather than accepting them. Moreover, the development of China’s economic system has been characterized by “advancing state, retreating private sector” government, with the role of the party extending into every nook and cranny of business — and this development has led to a major turnaround in U.S. policy toward China. Since 2018, U.S. national security strategy has been to actively obstruct China’s technological advancement and the development of its foreign influence, and to prevent the spread of Chinese influence in various aspects of trade and technology. The Biden administration understands that the U.S. economy currently accounts for only 25% of the world economy in GDP terms, as opposed to the 40-50% that it did during the Cold War. Therefore, if it is to win this new cold war, the United States must work with the European Union and Japan in matters of trade and technology.

I recently attended an academic seminar at the University of St. Thomas in Houston, Texas, on the triangular relationship between the U.S., China, and Taiwan. At the conference, Professor Robert Sutter of George Washington University presented the Washington Consensus, which states that, whether conservative, liberal, Republican or Democrat, there is a unanimous push against China in today’s America. For almost 33 years, Professor Sutter was a researcher on China policy at the Congressional Research Service, and four years ago, he said that he had never seen such bipartisan consensus in Congress on a single policy such as the current one on China. He now stresses that the executive and legislative branches are united in their opposition to China, so no matter which party is in power, it will not change policy toward China on either side of the political aisle. He believes that the current policy toward China is a rare Washington Consensus that will not be affected either by the upcoming midterm elections or by any changes in congressional seats.

Originally, the term "Washington Consensus” referred to International Monetary Fund conditionality with regard to loans. This means that countries seeking a loan from the fund must accept certain conditions imposed on them by the IMF. Many countries that receive loans therefore consider the Washington Consensus a big price to pay, and there is a certain irony in having a Washington Consensus for Third World countries.

Professor Sutter is now using the term to refer specifically to policy toward China. As it risks being misconstrued by laypeople, some scholars have suggested that it would be more appropriate to use the term “Neo-Washington Consensus” to refer to changes in U.S. policy toward China. In the Cold War era, an 8,000-word telegram from George F. Kennan (1904-2005) came to form the backbone of the U.S. containment policy toward the former Soviet Union; now, in the new cold war era (and although the terminology is still up for debate), the concept of the Neo-Washington Consensus put forward by Professor Sutter is bound to become the ground rule for American opposition to China. The U.S. insistence on freedom of navigation in the Indo-Pacific, particularly in the South China Sea, and the security guarantee that the status quo in the East China Sea (the Senkakus) and the Taiwan Strait remain unchanged has become the basic policy of the United States toward China. This writer believes that the “three Cs” can be used to express the aspects of economy, trade and technology: Competition, which is a matter of course; cooperation, which is a “like-to-have”; and confrontation, which is an “if need be.” These “three Cs” are the trade and technology policies writ small of the United States toward China at present, and they enjoy support from the European Union, Japan, Australia and other allies.

Since the 20th National Congress of the Chinese Communist Party, China has not only maintained a one-party dictatorship, but it has also concentrated power in the hands of General Secretary Xi Jinping alone. While the authoritarian political system of “no faction within the party, no party outside the party” lasts, it is unlikely that there will be any significant improvement in the relationship between the United States and China. In a recent assessment of strategic defense and security by the U.S. Department of Defense, Secretary Lloyd J. Austin indicated that the Russian threat to the United States would be short-lived, and that after the Russia-Ukraine war, which would eventually come to an end, it was certain that Russia would be a medium-sized country with nuclear weapons, but one whose economic power would pose no threat to America’s national security. In the long term, though, it is the burgeoning China that poses the greatest threat to the United States: Xi’s “Chinese Dream” has been interpreted by Western scholars as the restoration of a Middle Kingdom with China at the world’s center, so the United States must actively prevent the expansion of Chinese influence and its bullying of other countries. This new development may well be what “panda hugger” Henry Kissinger refers to as “dangerous disequilibrium.” In fact, it is a confrontation between democratic and autocratic political systems, and it is also a contest between two ways of life: that of liberal democracy, and that of collective control (as seen in the lockdowns of cities).

During the Cold War, American support of the then-government of the Republic of China was predicated on strategic considerations of anti-communist solidarity and nonendorsement of the authoritarian political systems of the time. In the 1960s, liberal former Secretary of State Dean Rusk once argued that authoritarian rule on both the far left and the far right was a disservice to democratic politics. Geopolitical considerations aside, the United States is now supporting Taiwan for its democratic freedoms and indispensable role in the global supply chain — especially in the supply of semiconductors, where the United States and Taiwan are heavily reliant on each other. Therefore, the U.S.-Taiwan relationship will be more robust than it was during the Cold War.

Given the ongoing confrontation between the United States and China, what options does Taiwan have? During the Q&A session, it was suggested that the United States would certainly support Taiwan’s efforts to defend itself against China, but does the island possess a “Taiwan Consensus”?