Beijing Pursuing ‘Offensive Decoupling’ Against West: Former Senior Official

Deputy National Security Advisor Matthew Pottinger arrives for a Medal of Honor ceremony for Sergeant Major Thomas P. Payne, United States Army, for conspicuous gallantry in the East Room of the White House on Sept. 11, 2020, in Washington, DC. Drew Angerer/Getty Images

While the Trump administration drew fire for propelling economic decoupling with the Chinese regime, it is in fact Beijing that is pursuing a campaign of “offensive decoupling” against the world, according to former deputy national security advisor Matthew Pottinger.

“Beijing intends to decrease China’s dependency on the world while making the world increasingly dependent on China—and then use the resulting leverage to advance Beijing’s authoritarian political aims around the globe,” Pottinger, who served under the Trump administration, said at an April 15 hearing of U.S. Congress’s U.S.-China Economic and Security Review Commission.

Decoupling has been the Chinese regime’s strategy ever since they joined the World Trade Organization in 2001, Pottinger said, but this plan of “offensive decoupling” was made “very explicit” in the Chinese regime’s latest economic blueprint, approved in March, for the next five years.

“Beijing does want to decouple, but the purely on its terms,” he said. This tactic has been played out through the Chinese regime’s economic coercion of Australia—which currently exports more than a third of its goods to China—in response to Australia last year calling for an independent investigation into the origins of the pandemic. Since then, Beijing has slapped import restrictions on a range of Australian goods including beef, coal, barley, and wine.

The kind of decoupling that the regime does not want is the one that cuts off its access to advanced technology from the United States and other Western countries.

“They still want to have access to our technology, they want to have access to our laboratories and our intellectual property,” Pottinger said.

“The thing that scares them, that gives them night sweats, is the fear that at some point, we might pull the plug on their ability to gain so much access to our cutting edge technology.”

To counter the Chinese regime’s aggressions, the United States should do more to cut off the flow of American capital into Beijing’s military-industrial complex.

A recent analysis by the Commerce Department based on publicly available data shows that U.S. public and private equity investments in Chinese- and Hong Kong-domiciled companies from 1992 through the end of 2020 totaled $2.3 trillion in market value.

“Somehow, Wall Street missed the memo that Beijing is waging an existential fight whose objective is ’the eventual demise of capitalism and the ultimate victory of socialism,' to quote Chairman Xi,” Pottinger said.

Then-President Donald Trump in late 2020 issued an executive order banning U.S. investments into a Pentagon list of Chinese companies owned or controlled by the regime’s military. Pottinger recommended the order be codified into law by Congress and for the list to be expanded to include Chinese companies that are on the Commerce Department’s “entity list.” Dozens of Chinese entities have been added to this trade blacklist over national security or human rights concerns.

Knowing that the federal government and Congress have taken a tougher stance against Beijing in recent years, the Chinese regime has put a lot of effort into influencing American companies, Miles Yu, who was the China policy advisor to former Secretary of State Mike Pompeo, warned at the same hearing.

“They use market access to absolutely mold the behavior of these big companies, and make them sort of subjugated to the Chinese demand,” Yu said.

Yu recalled that then-Secretary of State Pompeo invited on several occasions CEOs of large American companies that do business in China.

“In a private setting, they exploded with complaints against the Chinese government’s restriction against them,” Yu said. “But in the open, no one wants to say anything.”