Amid escalating tensions between the United States and China and as the U.S. government is exploring how to further limit China's access to U.S. technology, discussions about the possibility of decoupling between the two countries have intensified. As businesses operating in China grapple with the potential consequences of decoupling, APARC’s China Program hosted a panel of executives across industries from tech, retail, and finance currently engaged in reshaping their China businesses to provide a view from the ground and consider the future of decoupling with China.

The event was the second installment in a special series celebrating APARC’s 40th anniversary. Titled Asia in 2030, APARC@40, the series highlights core areas of the center’s expertise, examines Asia’s transformation over the past four decades, and considers the drivers and shapers of the region’s future.

The panel featured Dan Brody, the managing director of Tencent Investments, who is responsible for the company’s overseas investments; Frits Van Paasschen, a change management expert, former CEO of Starwood Hotels and Resorts, and former president of EMEA at Nike; and Stuart Schonberger, a founding partner of CDH Investments, one of the leading China-focused alternative asset managers. China Program Director Jean Oi chaired the panel.

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Risks and Opportunities

Van Paasschen described his extensive experience developing strategies for expanding licensing and retail in China, which involved navigating the country's infrastructure and legal framework and, as CEO of Starwood Hotels, overseeing the construction of over 100 hotels. He ascribed his success in the country to his recognition of China’s strengths and weaknesses and his finding ways to interact positively with Chinese stakeholders.

The term decoupling is an oversimplification of the relationship between the complex Chinese and U.S. economies, said Van Paasschen. He noted that retailers in many cases are looking to sources from alternative markets to China, but that he believes there are still opportunities for investment in and co-development with China that remain unaffected by current frictions. He highlighted in this context the interplay between the U.S. and Chinese travel and tourism industries before the COVID-19 pandemic.

Schonberger, who also challenged the notion of decoupling as a misleading shorthand, emphasized the need for cognitive empathy between the world’s two great powers and understanding the motivation behind China's actions. He noted that the challenges facing China today are complex, including debt problems, real estate slowdown, and productivity stagnation, but said these are "known knowns" that the Chinese government is actively working to correct.

Schonberger sees two distinct issues facing institutional equity investors worried about China: government policies that negatively affect growth and corporate prospects, and longer-term risks arising from China's geopolitical position. For private investors who are focused on total return and can tolerate overt political pressures, China remains investable, as Chinese stocks have been some of the best performers on the public markets recently, said Schonberger. The challenges are greater, however, for public entities and bond investors who are more affected by political risk in their decisions. While the risks are higher, Schonberger's firm continues to invest in Chinese companies in multiple sectors.

Changes Underway

Brody said that China remains a key player in the global economy. As a personal anecdote, he noted that, while he makes fewer trips to the United States, he is traveling more frequently to Europe, India, Japan, and Southeast Asia. According to Brody, the extent to which the Chinese economy would be affected by international fluctuations is unclear, but he expects the country to continue its economic growth and attract foreign investors. He stated that a huge amount of value in the tech sector is still being created in America, so economically driven foreign investors in the tech sector still pay close attention to developments in Silicon Valley.

Van Paasschen, by contrast, pointed out that by decoupling with China, the United States would miss out on a generational opportunity for development and could potentially lose out to other countries. China still presents an enormous opportunity for businesses, he said, particularly in the hotel industry, given the country’s rate of urbanization. He reminded the audience that every country and region presents its own set of challenges and risks for investors. The imperative is to ensure Beijing and Washington maintain a dialogue and businesses are willing to take risks to invest in China.

Van Paasschen went on to describe how the U.S.-China political tensions are affecting business operations in various sectors. For instance, in the biotechnology sector, companies might consider protecting intellectual property and ensuring sustainability in their supply chain. In the apparel business, there is a growing concern about human rights and the opacity of the cotton supply chain. Overall, Van Paasschen sees a transition underway from a bilateral and straightforward approach to trade to a much more nuanced and complicated approach.

When asked if political tensions would affect some sectors more than others, Van Paasschen responded affirmatively. He gave the example of a sovereign wealth fund that refused to support investments in Chinese hotels because of the uncertainty zero-COVID policies had created. He also said that further uncertainty could arise from countries' reactions to China’s foreign policy stance, such as China's support of Russia in Ukraine.

What advice would the three business experts give Washington?

Van Paasschen expressed his hope the United States finds ways to avoid being reactive. Schonberger, urging policymakers to keep working towards peaceful coexistence, emphasized it would be counter-productive to frame China as an enemy. He also highlighted the importance of redundancy and efficiency in trade relationships and cautioned against overlooking the cost of decoupling, reminding the audience that engagement with China has boosted global trade, lifted millions out of poverty, and created a vibrant society.

From Brody’s perspective, predictability is crucial for business, regardless of the country one is conducting business in. He also stressed that, from a personal perspective and regardless of one’s political stance on China, the reduction in people-to-people ties between China and the United States due to recent travel restrictions is unfortunate. Ultimately, these ties have always been a net positive, and it is important to recognize their value even in the midst of tensions between the two nations. While political leaders may grapple with complex geopolitical issues, the connections between ordinary citizens remain a vital foundation for maintaining a constructive relationship. By fostering personal exchanges, the United States and China can build bridges and promote mutual understanding, even in the face of challenging circumstances.

A New Reality

In his opening remarks, McFaul asked the panelists to share their mood as they enter the second year of the war. Ustinova said that just prior to the panel event, they’d been informed of an impending Russian attack.

“There is a very high probability that today, Kyiv and other cities will be shelled pretty heavily,” she said, adding that despite the threat, they weren’t going anywhere and that the parliament was still in session.

“That’s the mood of Ukrainians,” she said. “We know we can be hit any day, we can die any day, but this is the reality we have to live in.”

Honcharuk said he’d heard the opinion that authoritarian regimes are better suited for war because they are more mobile and less distracted by politics, thus creating the impression that democracies are indecisive. But, he said, Ukraine’s war effort demonstrates the opposite.

“I feel proud that Ukraine now denied this and showed the power of democracy,” he said.

When an audience member asked how the war has impacted political life in Ukraine, Honcharuk said there are challenges. For example, there are some conflicts between the central and local governments, but they don’t appear to be systemic problems. He said the parliament is still working and all Ukrainian political parties are “more or less united.” He also noted that President Volodymyr Zelenskyy has “huge support” from the Ukrainian people.

Aid and Allies

Since the start of the war, the United States has spent tens of billions of dollars on aid to Ukraine, including artillery, tanks, and rocket launchers. The support has not only helped Ukraine stave off defeat, but enabled their success in many battles against Putin’s army.

In a recent interview with Stanford News, Steven Pifer, a former U.S. ambassador to Ukraine and an affiliate at Stanford’s Center for International Security and Cooperation (CISAC), said that Ukraine’s military had considerable success in the last four months of 2022, pushing Russian forces out of the Kharkiv region and back across the Dnipro River in Kherson.

On Friday, the panelists expressed gratitude for the support of the United States and other western allies in aiding their victories on the battlefield.

“Thank you,” Matviichuk said. “Ukraine and Ukrainians will always remember how American people support us in [these] dramatic times.”

Honcharuk agreed and said he viewed the U.S. as a partner in the war. “I want American people to understand that now we are together – Ukraine on the frontline, you on the back,” he said.

The panelists also urged for continued cooperation from Western allies.

“The prescription for war is three [items],” Leshchenko said. “First is weapons, second is sanctions [on Russia], third is financial support.”
 

Looking Ahead

The group expressed hope that this year Ukraine will see a victorious end to the war. Leshchenko added that he would like to someday see Ukraine join the North American Treaty Organization (NATO) because it could make significant contributions to the alliance.

“I think the Ukrainian army [is] going to be the best army in Europe,” he said. “It would be a privilege for NATO to have the Ukrainian army’s support because it will defend Europe much better than Europe has [been] able to do with its own army.”

Ustinova said a common misunderstanding about the war is that it started last year with Russia’s invasion of Ukraine. But the conflict, she said, dates back to 2014 when Russia annexed the Crimean peninsula, and she explained how Ukrainians define success.

“Our victory is the total liberalization of each kilometer of the captured territories since 2014. Not since 2022,” she said.

She added that what’s most important to understand about the war is that it has broad implications, including for the West.

“We all have to realize, this is not a Ukrainian war,” she said. “If the West loses in Ukraine, it will be a total collapse for the rest of the world.”

This opinion article first appeared in the Washington Post.

Most world leaders, including President Biden and Japanese Prime Minister Fumio Kishida, agree that the defense of Taiwan is crucial for regional security. But most options for improving deterrence will take too long. Building Taiwan’s self-defense, developing more U.S. firepower in the region, creating the economic resilience to make severe sanctions feasible: None of these will come to fruition before 2030.

Japan could change the game now. Allied forces, responding immediately and en masse, have a chance of thwarting a Chinese invasion, according to a recent report from the Center for Strategic & International Studies. But, in meetings with high-level officials in Tokyo last month, I sensed a mismatch between talk and walk. Japan must broaden its vision of self-defense to encompass priorities and declaratory policies that will avert calamity in the region. Tokyo cannot wait until war breaks out to start the tougher conversations.

Here’s why.

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First, without Japan, the United States could be outgunned in a fight to defend Taiwan, notwithstanding Washington’s new basing agreement with the Philippines. A combined U.S.-Japan fleet, on the other hand, would boast more than three times as many aircraft carriers, cruisers and destroyers as the People’s Liberation Army Navy. The quality of many Japanese ships approaches that of its U.S. counterparts. Eight of Japan’s destroyers field a state-of-the-art Aegis weapons system used by some of the more advanced ships in the U.S. Navy.

Second, Japan’s involvement could mitigate some of the geographic vulnerabilities of the United States. Adding Japanese bases more than doubles the locations from which the two countries together could conduct operations. Japan’s southwestern islands are closer to Taiwan than mainland China. Take Yonaguni Island, just about 70 miles from Taiwan’s east coast. On it are intelligence, surveillance and reconnaissance assets, as well as anti-ship and anti-aircraft capabilities. Operating from these bases in the defense of Taiwan, allied forces would have more opportunities to quickly target an invading force. That would make attacks on U.S. bases in Japan, such as Kadena, at the southernmost tip of the archipelago, less attractive to the Chinese. Such strikes would no longer completely cripple an air effort.

Third, Japan has military strengths that would make a fait accompli almost impossible for China. Though Japanese diesel submarines are slower than U.S. counterparts, they could reach the Taiwan Strait in just two days. U.S. submarines departing from Hawaii would take at least a week; from San Diego even longer. This makes Japan the first line of defense for Taiwan. Japanese boats could also monitor key choke points through which Chinese navy submarines would be attempting to exit the First Island Chain in the western Pacific. This would free up the quieter submarines of the U.S. Navy to wreak havoc on amphibious vessels and escort ships.

In short, Tokyo could contribute significantly to a military effort to deny China the ability to take Taiwan by force. To do so, Japan must increase its stockpile of torpedoes and long-range strike weapons, as planned. Tokyo must be willing to go after the amphibious invasion force and targets on mainland China — a very controversial proposition indeed.

On the surface, it looks as if Japan is moving in the right direction. The government took the groundbreaking historic step of increasing defense spending to 2 percent of Japan’s gross domestic product over the next five years. This meant a whopping 26.3 percent increase in 2023 alone. The greatest increase in the past was in 1986, by nearly 50 percent.

Last year, former prime minister Shinzo Abe stated that the security of Japan is connected to Taiwan. He said a Chinese use of force against a U.S. vessel defending Taiwan could legally trigger the deployment of Japan’s military (known as the Self-Defense Force).

Indeed, a 2015 law allows Japan to engage in collective defense when presented with an existential threat. This provides plenty of flexibility for Japan to fight alongside the United States without the need for a constitutional amendment. The officials I spoke with in Tokyo were firm that Japan would respond if China attacked U.S. bases such as Kadena.

But all these initiatives concern self-defense. Japan does worry that military activity around Taiwan could extend to the security of its southwestern islands. Or that if China takes Taiwan, it would be emboldened to take the Senkaku/Diaoyu islands, which Tokyo administers but which China also claims. There are even concerns that Okinawa, a group of 160-plus islands that is home to 1.4 million people (and dozens of U.S. bases), could then prove enticing to Beijing.

Crudely, Japan seems to be prepared to push back against only Chinese assets that are clearly poised to attack its sovereign territory. Those heading toward Taiwan? Not so much.

While a degree of strategic ambiguity makes sense, too much could backfire. If Japan is clearly unwilling to defend Taiwan, then improvements in Japanese military capabilities will do little to deter conflict across the strait. Japanese officials don’t need to say they would attack any Chinese invading forces, but they need to let their counterparts know it is a real possibility. The officials I met were unwilling to send such strong messages; some insisted reassuring Beijing was more important.

Tokyo must make clear at home and abroad that defending Taiwan is no longer off the table. The prospect of Japan engaging in offensive operations in the defense of Taiwan would stay Chinese President Xi Jinping’s hand. Only then would recent monumental changes in Japanese politics fulfill their potential in contributing to peace and security in Asia. If Ukraine has taught us anything, it is that deterrence is costly, but war is worse.

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Military Miscalculations, Economic Dislocations

McFaul opened the first session by reviewing some of the lessons from the war in Ukraine. The international community underestimated the Ukrainian military, he said. Putin, however, miscalculated the response of the United States and NATO, on the military side, and the scope of the sanctions the global community of democratic states, including Japan, would be willing to impose on Russia, on the economic side. 

It turned out, noted McFaul, that it was possible to reduce drastically Russian oil and gas coming into Europe, and Russia today has significantly fewer resources to fight Ukraine than it had anticipated. “I think it is very important to look at just how much economic dislocation happened with Russia, a country that was not integrated into the global economic world in the same way that China is,” McFaul said. He pointed out that the international community might also be underestimating the political pressure and dislocation that will erupt if, unprovoked, China invades Taiwan. “It will have very deep economic consequences for the Chinese economy,” said McFaul.

It is important to remember that the international community did not make credible commitments to deterring Russia before 2022, McFaul noted. In the case of China, he emphasized the imperative of considering concrete ways to enhance deterrence against a Chinese invasion of Taiwan before military action begins. 

Rethinking Defense and Deterrence

China, however, is not easily deterrable, as Mastro explained in her following remarks. President Xi has been clear from early on that enhancing China’s role on the international stage would be a key part of the Chinese Communist Party’s agenda. Taiwan is a top priority issue in the Chinese Communist Party’s long-term thinking, said Mastro. She reminded the audience that at the recent CCP Congress, President Xi reaffirmed that China will not rule out using force to bring Taiwan under its control. He also elevated Party members with extensive expertise in the joint operational domain and with Taiwan contingencies to the Central Military Commission, the Chinese top decision-making body for military affairs.

How, then should the United States and its allies approach the question of deterring China? Mastro emphasized three conditions that U.S and Japanese defense policy must meet.

First, whatever the United States and Japan do in the defense realm must have an operational impact. For example, U.S. carriers will do nothing to prevent China from taking Taiwan in a wartime scenario, Mastro argued. “And along those lines, from the Japanese point of view, enhancing defense of the Senkaku Islands does nothing to deter China from taking Taiwan unless Japanese operations are going to be involved directly in stopping a Chinese invasion of Taiwan.”

The second condition is that China has to know about any defense changes the U.S. and its allies are making. For instance, if, in peacetime, there is no indication that the Japanese military is engaging in Taiwan Strait transits with the United States and the Chinese do not know about such activities, then they do not enhance deterrence.

Third, deterrence must happen before a war starts. It may seem an obvious point, but if the prevalent view is that, for example, the Japanese public will support the United States once a conflict over Taiwan erupts, then this approach does not deter China. “We have to let the Chinese know now that there is such support,” Mastro stated.

One issue China is concerned about, Mastro noted, is widening a Taiwan contingency. “China only wins Taiwan if the war is short, geographically limited to Taiwan, and only involves the United States, potentially in Taiwan,” she explained. “So I am convinced that if Japan were to commit to fighting with the United States in this contingency, that would be enough to deter China.”

Ultimately, the question before the United States and its allies is: “Do we want a happy China that is undeterred or an unhappy China that's deterred,” Mastro concluded. “Those are our only two options.” Deterrence is expensive and requires tradeoffs, but one thing that is costlier than deterrence is a major war, she emphasized.

“Let’s start thinking about how to actually change the environment with the sense of urgency that we need, because my biggest fear is that we're going to find ourselves in a major war with massive cost,” she urged the audience. There will be sacrifices to make, but the alternative, in Mastro's view, is worse.

Opportunities and Perils for Democracy

In the second session of the conference, panelists Larry Diamond and Francis Fukuyama examined the war in Ukraine and the tensions over Taiwan from the lens of democratic decline and its implications for the liberal international order.

Democracy has been in a global recession for most of the last two decades, yet the picture is not as bleak for democracies as it was just two or three years ago, said Diamond. In the United States, reforms at the state level have occurred, election deniers took control of Congress seats by a much smaller margin than predicted before the 2022 midterms, and extreme election deniers in crucial swing states were virtually defeated. Meanwhile, on the international stage, 2022 spotlighted autocrats’ inevitable shortcomings. In Russia, Putin has catastrophically miscalculated the war in Ukraine. In China, Xi has massively mismanaged the COVID pandemic, and the country’s economic growth is severely impaired.

Fukuyama said he was encouraged by the democratic solidarity shown in response to the war in Ukraine, especially in Europe, within NATO, and in Japan. Germany’s and Japan’s decisions to increase their defense budgets have been remarkably reassuring signals of strength among democracies, he noted.

But we sometimes forget that many countries in the Global South and elsewhere do not buy into this narrative, cautioned Fukuyama. Among the big disappointments in this regard is India, he stated, which raises the question of whether the issue at stake is indeed a battle between democracy and authoritarianism.

Indeed, democracies still face intractable challenges, Diamond explained. These include the corrupting influence of dirty money around the world, the trends of de-industrialization and hollowing out of the working class in advanced democracies, and social media, which Diamond sees as the single biggest driver of democratic decline. “I cannot tell you how much damage social media has done to destroy the social fabric of Truth and credibility and polarize society into tribal camps who don't have the same facts,” he said. “We have not found a way to temper that impact and win the battle For Truth.”

Taiwan and Deterrence

When it comes to the question of Taiwan, Diamond says he is worried. “There is going to be a PRC military invasion of Taiwan, probably in this decade, unless it is deterred,” he said. The three most crucial actors in deterring China are Taiwan, the United States, and Japan, he explained. Successful deterrence must involve coordination among all three in multiple arenas — from military cooperation to increased defense capacity and preparedness to impose such heavy costs in response to a Chinese invading force that will change Xi’s calculus.

Diamond observed that democracy is about uncertainty, of which there is now plenty in Taiwan as it looks ahead to a January 2024 contentious presidential election. Diamond’s prediction is that "China will intervene however it thinks it can” in Taiwan’s upcoming presidential election, as Xi would certainly prefer to pick up the island peacefully than by force, he said. “I think it's going to be very important that the people of Taiwan see that they're not alone, that the democracies of the world — not just the United States and Japan but Australia and Europe — are with them; it will increase their will to fight.”

This article originally appeared in the Korean daily newspaper Munhwa Ilbo on January 2, 2023. It was translated from Korean by Raymond Ha.

In an exclusive interview for the Munhwa Ilbo, Stanford University professors Gi-Wook Shin and Francis Fukuyama had a conversation on a wide range of topics including the war in Ukraine, U.S.-China competition, and North Korea policy.

The world faces a crisis of political leadership as each country pursues its own interests. Fukuyama stressed the importance of robust international institutions, instead of relying solely on great leaders. He pointed to NATO and the U.S.-Korea alliance as examples of institutions that uphold the liberal international order. In terms of the U.S.-China competition, he said without hesitation that “a democracy like Korea…has to make the decision that it is going to be on the side of democracy.” Fukuyama also noted that in the event of an armed confrontation over Taiwan, Korea would almost certainly be pulled in, given the significant U.S. military presence there. He was skeptical about prospects for progress over North Korea, pointing to the long history of failed negotiations and the lack of viable alternatives. “Not every problem has a solution,” he said.

Gi-Wook Shin, who led the interview, observed that the global decline of democracy appears to have hit a turning point, “although it’s too early to say if there will be a rapid recovery…or a more gradual shift.” As for the state of democracy in the United States, he said, “We will have to wait and see what happens in the 2024 presidential election.” Even though Trump’s political influence may be weaker, he observed, “pro-Trump forces are still part of the system.” In terms of Korea’s foreign policy, Shin emphasized that Seoul “should take [the Taiwan] problem much more seriously.” A crisis in the Taiwan Strait “could become the biggest challenge for the Yoon administration’s foreign policy, not North Korea,” and domestic polarization over China policy is one issue that could threaten to “become extremely controversial.”

The interview was held in-person for one hour at Stanford on December 8, 2022, with a follow-up interview held over the phone on December 27.  

[Gi-Wook Shin] Let’s start by looking back on 2022. How would you summarize this year?

[Francis Fukuyama] I think 2022 was a very good year, where we may have bottomed out in this global move away from democracy and toward authoritarian government. The year really started out in February with the Russian invasion of Ukraine, which looked very, very threatening. China was on a roll. It looked like they were beating everybody in terms of COVID policy. Then, by the end of the year, the Russians got completely bogged down. China experienced mass protests, and there were protests also in Iran. In America’s elections on November 8, all the pro-Trump forces failed to make gains and, in fact, lost almost everywhere. I think that maybe we will look back on 2022 as the year when this democratic recession that has been going on for over 15 years finally bottomed out.

[GWS] I agree, although it’s too early to say if there will be a rapid recovery toward democracy or a more gradual shift. In the United States, we will have to wait and see what happens in the 2024 presidential election. Former President Trump may be weaker politically, but pro-Trump forces are still part of the system. As for the Ukraine war, many people thought Russia would win quite easily, but now it looks like they are struggling. It’s a big question, of course, but how do you think the war will be remembered in history?

[FF] I think that it is going to be remembered as one of the biggest strategic mistakes made by a great-power leader in a very long time. I think that the mistake is directly due to the nature of the political system. You remember that Vladimir Putin was sitting at the end of this 25-foot table with his defense minister because he was so afraid of COVID. He was extremely isolated during the whole pandemic, and he had already isolated himself in a political system where he doesn’t face checks and balances. That kind of decision-making system makes you prone to make even bigger mistakes, because you don’t have other people to test your ideas against. He was completely uninformed about the degree to which Ukraine had developed a separate national identity and that the Ukrainian people were willing to fight for it. He didn’t have any idea how incompetent his own army was. If he had been in a more democratic country that required him to share power with other people, I don’t think he could have made that kind of mistake.

[GWS] Putin is struggling, as you said. There are a lot of problems in China, but Xi Jinping secured a third term. Authoritarian leaders elsewhere still hold power. By contrast, I don’t think President Biden has shown powerful leadership at home or globally. I don’t see any strong political leaders in the U.K., France, or Germany either.

[FF] I think that although Xi Jinping may succeed in stabilizing the situation in China with the protests over COVID in the short run, he is in a lot of trouble. He was creating all this social instability with the zero-COVID policy. Now that they’ve started to relax it, I think the number of cases and deaths is going to go up very dramatically, but I don’t think they’ve got much of a choice. I think this has probably damaged the people’s sense of Xi’s authority and legitimacy, and I’m not sure he can recover from that.

The most important thing is the breakdown of the Chinese economic model. For the past decade, the Chinese model has been to pump a huge amount of money into the real estate sector. That model is collapsing. The other big problem is that they don’t have economic growth anymore. Some economists think that they’re actually in a recession, with negative growth. This is like what Japan went through in the 1990s. So much of the Chinese government’s legitimacy has been based on having extremely high growth rates, and that period is over. I don’t see how they get it back, and they certainly won’t by inserting the state into every economic decision and controlling their high-tech sector. Their population is shrinking now. I’m not sure that Xi Jinping, in the longer run, is actually going to look like a very effective leader.

[GWS] But in the short term, say the next three to five years, won’t authoritarian leaders be powerful in comparison? Just as “America First” shows, some say there is a crisis of political leadership among Western democracies, including the United States, the United Kingdom, France, and Germany.

[FF] I think that apart from President Zelenskyy in Ukraine, we don’t see any really inspiring leaders in Germany or France or the United States. On the other hand, the nice thing about democracy is that it’s an institutional system for managing change. Biden has turned 80, and Trump himself is in his upper 70s. The leadership in Congress and the Democratic Party are all elderly, but they’re all about to change. In the next election cycle, there is going to be a whole new generation of people that are up-and-coming. I don’t think you need a charismatic leader with great vision, necessarily, to run any of the countries you mentioned.

[GWS] Another question is if the United States can provide global leadership. When Trump was defeated, there was a strong expectation for the Biden administration to restore global order and to do much better than its predecessor. I’m not sure whether that’s happening.

[FF] Again, I think that’s why you want to have international institutions rather than being dependent simply on leaders. This gives an institutional basis for continuity in policy. There are all of these alliance structures, like NATO. People thought that NATO was obsolete and was going to go away. It has actually proved to be very durable. The United States has security ties with Korea and Japan that also are quite old, but they’re still durable. It’s interesting that the authoritarian countries have not been able to create anything comparable to that set of alliances. There is the Shanghai Cooperation Organization (SCO), but all the Central Asian states don’t want to be part of this China-Russia dominated organization. We can’t just depend on great leadership.

[GWS] To add on to that, I think Korea should proactively participate in upholding and creating an international order that facilitates a resurgence of democracy. Korea has not really played this role before, but with the 10th largest economy in the world, it is now in a position to play a positive role.

[FF] There is a set of values that underpin America’s alliances, both in Asia and Europe. Throughout the whole Cold War, the Soviet Union never actually invaded a Western democracy, but that’s what Russia did. NATO has suddenly become very relevant once more. I think that both in Korea and Japan, there is also recognition of a comparable challenge from an authoritarian China. Unless all democracies work together and show solidarity with one another, they could be picked off by these two authoritarian powers.

[GWS] There is a lot of debate about whether China is going to invade Taiwan or not. I have a two-part question. First, could the situation in Ukraine reduce the possibility of China invading Taiwan? Second, if China still invades nevertheless, what should Korea do? This is a difficult question for Korea. It cannot say no to the United States as a military ally, but at the same time, it cannot antagonize China. I think this is the most difficult question for Korea at the moment.

[FF] This is a difficult question for the United States because it’s not clear that Congress or the American people actually want to go to war with China in order to save Taiwan. I think if you ask them a polling question stated like that, probably a majority would say, “No, we’re not going to send our troops to die.” But I think it’s likely that the United States will get dragged into such a conflict one way or the other. Among other things, the Chinese would probably have to preempt some of the American forces that are in the theater. American military personnel will get killed as the Chinese attack unfolds, and I think there will be a lot of political pressure to help Taiwan.

[GWS] How much can the United States be involved? Some in Korea are skeptical that Washington will step in.

[FF] This is really the problem. During the Cold War, we had a good idea of what a war would like look like if it actually happened. The military planning was very concretely designed against certain types of escalation. With China, we don’t have a clear set of expectations for what escalation would look like. It could just start with a Chinese invasion. It could start with a blockade. It could start with something in the South China Sea. It could actually start on the Korean Peninsula, with North Korea doing something. If it happens, it’s going to be much more devastating than the war in Ukraine. So much of global production comes out of Asia, and there’s a strong incentive not to let things get out of hand. Whether we have the wisdom to do that is not clear. I also think that people’s expectations and opinions will change once the conflict begins. The moment people see cities being bombed, they will change their minds.

[GWS] I also think that a conflict over Taiwan would affect the American people more directly than what is happening in Ukraine. What’s your view on how seriously Korea should be taking this possibility?

[FF] It is likely enough that it is absolutely important for everyone to take it seriously and plan against it. What you want to do is deter China from taking any military action against Taiwan. They’re not going to be deterred unless they see that there’s a response on the other side that is going to raise the cost for them. That’s not going to happen unless people take the scenarios seriously and start thinking about concrete ways that they could help Taiwan or stymie any kind of Chinese attack. I think it is very important for Korea to think this through and think about ways they could support Taiwan and be part of a larger alliance that can push back against China.

[GWS] I keep telling my friends and colleagues in Korea that they should take this problem much more seriously. Taiwan could become the biggest challenge for the Yoon administration’s foreign policy, not North Korea. China policy has become an extremely divisive partisan issue in South Korea, and it could tear the country apart. What advice would you have for President Yoon?

[FF] There’s two things. First is the rhetorical position. Korea should make its position clear in advance that it would oppose Chinese military action and would support the United States, for example. Korea is going to get dragged into this because so much U.S. military equipment is in Korea, and that is going to be moved in closer to the theater. I think making that position clear in advance is important.

The other thing that’s been very clear from the Ukraine war is that democracies are not prepared for an extended conflict. Everybody is running out of ammunition in Europe and the United States is running low on certain types of ammunition. The Ukrainians have used so much of it just in the 10 months they have been fighting. I think that any high-intensity conflict in East Asia is also going to be very costly in terms of supplies. South Korea is in a better position than other countries because it has been preparing for a North Korean attack for decades. Everybody needs to be prepared for an extended conflict. It may not be over in 48 hours.

[GWS] Koreans are quite nervously watching the ongoing escalation of tensions between the United States and China. In the past, the paradigm was “United States for security, China for the economy” (an-mi-gyeong-joong). Now, security and the economy are linked together. The Yoon government is promoting the strengthening of the alliance with the United States, but South Korea faces the fundamental problem of how to position itself as U.S.-China tensions escalate. Do you have any wisdom for Korea?

[FF] I don’t know if it’s wisdom, but I think Korea needs to take a clearer position. Under the previous government, there was a belief that Korea could somehow be halfway between China and the United States. That’s just not a tenable position. The tension between the United States and China has really been driven by China ever since 2013, when Xi Jinping took power. China has become a much more severe dictatorship internally, and it has become much more aggressive externally. You see the influence of the Belt and Road Initiative and the militarization of the South China Sea. In the last 10 or 15 years, China has been picking fights with India, Japan, Korea, and all of Southeast Asia over territorial issues. They built the size of their military much more rapidly than any other great power in that period of time. As a result, the United States and other countries have simply reacted to this. I think that a democracy like Korea cannot pretend that it is somehow in between the United States and China. It has to make the decision that it is going to be on the side of democracy.

[GWS] I agree that an-mi-gyeong-joong is now obsolete, but I think that South Korea must be more sophisticated in its response. As they say, the devil is in the details. On the economy, Seoul can actively work with Washington on areas closely related to security, but it can still partner with Beijing on sectors that are not. There can be a fine-tuned policy.

I now want to ask about North Korea and U.S. policy. I have been saying that the Biden administration policy is one of “strategic neglect,” not the “strategic patience” of the Obama administration. Kim Jong-un keeps testing missiles and provoking, and South Koreans are puzzled by the lack of response from Washington. Why is that? Is it because all the attention is on Ukraine and China?

[FF] Not every problem has a solution, and I don’t think this problem has a solution. You could use diplomacy. You could use military force. You could use deterrence. There are a limited number of possible approaches, and I think none of them are going to work. There has been a long history of negotiation. That has not worked. I think confrontation is not going to work. I think preemption is certainly not going to work. I just don’t think there’s a good solution, so we’ve ended up with trying to ignore the problem by default. Part of the reason North Korea is launching all of these missiles is that they want people to pay attention to them. Ignoring the problem is not much of a solution either, but it’s not as if there is a better solution.

[GWS] I agree with you that for many people in government, North Korea has been a hot potato. You don’t want to touch it because there is no clear solution, and it won’t help your career. But if we just ignore the problem, then five years later it’s going to be worse. What kind of North Korea are we going to face in five or ten years?

[FF] Everybody has been hoping that something would happen internally. It’s fine to think that, but it’s also not taking place. That said, Kim Jong-un is obese and unhealthy. Who knows what might happen?

[GWS] Let’s now turn to domestic politics here in the United States. I think many Americans were relieved by what happened in the midterm elections last month. Trump’s influence was much more limited than what people thought. But he’s still there, and he’s likely to run again. I think he is still a strong candidate for the Republicans.

[FF] He declared his candidacy, but I think that he is declining very rapidly in influence. We have had four elections now where he was playing a major role in the Republican Party. In three of those elections, he really hurt his own party. He can stir up a third of the electorate that loves him, but it’s never enough to win an election, especially in a swing state. I think he’s gotten crazier in recent months. He is doing so many self-destructive things, having dinner with neo-Nazis and repeating all these conspiracy theories. These are things that no rational candidate would do. The Republicans are going to want somebody that can actually beat the Democrats, and I don’t think it’s going to be him.

[GWS] You don’t expect a rematch between Biden and Trump in 2024?

[FF] This gets into a technical issue, but the Republican primaries are mostly winner-take-all primaries. Any candidate that can get 30% of the vote is likely to be nominated. If you have a Republican field that has several people competing, they may split the alternative vote and Trump may end up winning. I think he still has a good chance of being the Republican nominee. If you’re a Democrat, that’s not the worst thing in the world. It is probably easier to run against Trump than a more normal Republican candidate.

[GWS] Two years is still a long time in politics. You said that Trump is likely to be nominated. Would Biden also run again?

[FF] I think that Biden is going to run again. Part of the problem is in the Democratic Party. It’s not clear who the successor would be. There are a lot of potential new-generation politicians, but I don’t think any of them has enough presence and attention that they can clearly take over the mantle to run as the Democratic candidate. If there is a rematch, I think Biden will win.

[GWS] Now to South Korea. Last June, I did some interviews advocating a parliamentary system, and they received good attention. There is still a lot of hesitancy among Koreans, though. I think there are a few reasons. The first is that we need a strong presidential system to deal with North Korea. There’s no stability if the prime minister keeps changing. Second is that it may drive politicians closer to big business (chaebol) because there’s less direct accountability. What would you suggest for South Korea in terms of institutional reform?

[FF] There are several possibilities even short of a parliamentary system. You can coordinate the presidential and parliamentary terms. It’s still the case that the president has a five-year term, but the legislature is on an even-year term. If you want to have strong government, you need a president that has majority support in the legislature. If they get elected simultaneously on a regular basis, you’re more likely to see strong leadership emerge. In a presidential system, the legislature itself is a check against the president. If you don’t have a strong majority in the legislature, you can’t do anything.

[GWS] That is what is happening right now in Korea.

[FF] In a parliamentary system like the British one, if you have a majority in parliament, you can do what you want. I think the presumption that somehow a presidential system is inevitably stronger than a parliamentary system is not historically correct.

[GWS] Is a parliamentary system maybe one solution to political polarization?

[FF] Sometimes a parliamentary system will have that effect, but the kind of plurality voting system that we have in the United States and in Britain tends to promote polarization. To the extent that you make it possible for third parties to run, that’s probably a better system. If you have more parties and it becomes harder to get a majority in the legislature, that forces coalitions and some degree of power sharing.