Chaos Under Heaven

Chaos Under Heaven Plot Summary

Introduction

On a crisp December morning in 2016, President-elect Donald Trump did something no American leader had done in nearly four decades—he accepted a congratulatory phone call from Taiwan's president. This seemingly simple diplomatic courtesy sent shockwaves through the corridors of power in Washington and Beijing, signaling that the carefully managed relationship between the world's two largest economies was about to enter uncharted waters. What followed over the next four years would transform America's approach to China more dramatically than at any point since Richard Nixon's historic opening in 1972. The story of America's strategic awakening to China is one of competing visions, bureaucratic battles, and a fundamental reassessment of four decades of engagement policy. Through this tumultuous period, we witness how the United States gradually recognized that China under Xi Jinping was not evolving toward liberalization as many had hoped, but instead was becoming more authoritarian at home and more assertive abroad. This realization triggered a comprehensive rethinking of America's approach across economic, technological, diplomatic, and security domains. For policymakers, business leaders, and citizens seeking to understand the most consequential geopolitical relationship of our time, this account offers essential insights into how and why America's China policy transformed from engagement to strategic competition.

Chapter 1: Divided Visions: The Trump Administration's China Policy Confusion (2016-2017)

When Donald Trump entered the White House in January 2017, his administration lacked a coherent China strategy despite campaign rhetoric promising to get tough on Beijing. Instead, competing factions within his team pulled policy in contradictory directions, creating confusion both in Washington and Beijing about America's intentions. This chaotic beginning would set the stage for four years of policy whiplash in the most consequential bilateral relationship in the world. The administration's China team initially split into three distinct camps. The economic nationalists, led by trade advisor Peter Navarro and strategist Steve Bannon, viewed China as an existential threat that had hollowed out American manufacturing through unfair trade practices. The Wall Street faction, including Treasury Secretary Steven Mnuchin and economic advisor Gary Cohn, prioritized financial cooperation and market access for American companies. Between these poles stood the national security professionals like Defense Secretary James Mattis and Secretary of State Rex Tillerson, who sought a balanced approach of competition without confrontation. This factional infighting played out dramatically during the administration's early months. In April 2017, Trump hosted Chinese President Xi Jinping at Mar-a-Lago for their first face-to-face meeting. Despite achieving little of substance, Trump emerged declaring they had developed "a friendship" and praising Xi as "a very good man." The president abruptly dropped his campaign promise to label China a currency manipulator, explaining, "Why would I call China a currency manipulator when they are working with us on the North Korean problem?" This transactional approach, linking trade concessions to security cooperation, established a pattern that would undermine strategic coherence throughout his presidency. Meanwhile, behind the scenes, National Security Council officials like Matthew Pottinger were developing a more comprehensive framework for competition with China. A former Marine and journalist who had reported from China, Pottinger understood Beijing's growing authoritarianism under Xi Jinping and pushed for a strategy that would address not just trade imbalances but also technology theft, military expansion, and political influence operations. His efforts culminated in a classified document that would eventually form the basis for a new approach to China, though its implementation remained inconsistent due to Trump's personal diplomacy with Xi. By late 2017, the administration had taken its first significant steps toward confrontation. In August, U.S. Trade Representative Robert Lighthizer launched a Section 301 investigation into China's unfair trade practices, laying the groundwork for future tariffs. The National Security Strategy released in December explicitly labeled China a "strategic competitor" and "revisionist power" seeking to "shape a world antithetical to U.S. values and interests." This marked a dramatic departure from previous administrations' characterization of China as a partner or stakeholder in the international system. The first year of Trump's presidency thus established a pattern that would persist throughout his term: strategic documents and official statements articulated a competitive approach to China, while the president himself often undermined this stance through personal diplomacy and transactional deal-making with Xi. This contradiction between institutional policy and presidential instinct created openings for Beijing to exploit, while leaving American allies confused about where the United States truly stood in this evolving relationship.

Chapter 2: Economic Confrontation: From Trade Disputes to Technology War (2017-2018)

By spring 2018, the Trump administration had moved decisively from rhetoric to action in its economic confrontation with China. On March 22, the president signed a memorandum directing tariffs on approximately $60 billion of Chinese imports, citing decades of intellectual property theft and forced technology transfer. This marked the beginning of what would become the largest trade war in modern history, eventually encompassing hundreds of billions in goods and fundamentally altering the economic relationship between the world's two largest economies. The Section 301 investigation that provided the legal basis for these tariffs had documented systematic Chinese practices that disadvantaged American companies. These included requiring foreign firms to form joint ventures with Chinese partners, thereby facilitating technology transfer; discriminatory licensing restrictions; state-sponsored acquisition of sensitive U.S. technology firms; and outright cyber theft of intellectual property and trade secrets. The report estimated these practices cost the American economy between $225 billion and $600 billion annually, figures that helped justify the administration's aggressive response. China quickly retaliated with tariffs on $3 billion of U.S. goods, targeting agricultural products from states that had supported Trump in the 2016 election. This began a cycle of escalation that would continue for nearly two years. By September 2019, the United States had imposed tariffs on approximately $360 billion of Chinese imports, while China had placed duties on about $110 billion of American products. The economic impact was significant: U.S. manufacturing activity contracted, farm bankruptcies increased, and global supply chains faced disruption. Meanwhile, China's economic growth slowed to its lowest rate in nearly three decades. Behind the headline-grabbing tariff battle, a more consequential technology war was unfolding. The administration grew increasingly concerned about Chinese telecommunications giant Huawei and its potential to dominate global 5G networks. In May 2019, the Commerce Department placed Huawei on its Entity List, restricting its access to American components and technology. This move reflected growing fears that Huawei's equipment could be used by the Chinese government for espionage or sabotage, particularly as countries around the world were building next-generation telecommunications infrastructure. The Committee on Foreign Investment in the United States (CFIUS) became another key battleground. In 2018, Congress passed the Foreign Investment Risk Review Modernization Act (FIRRMA), expanding CFIUS's authority to review and block Chinese investments in sensitive sectors. This legislation reflected growing bipartisan concern about China's acquisition of American technology through investment rather than innovation. As Senator John Cornyn, a key sponsor of the bill, explained: "China has a coordinated, whole-of-government strategy to acquire the crown jewels of American innovation and use them against us." By late 2018, what had begun as a dispute over trade balances had evolved into a comprehensive technological competition with profound implications for future economic and military power. The administration had recognized that China's economic model—characterized by state subsidies, market access restrictions, and the blurring of lines between private enterprise and government control—posed a systemic challenge to American interests. The question was no longer whether to compete with China economically, but how to do so effectively while minimizing damage to the U.S. economy and preserving America's technological edge.

Chapter 3: Influence Operations: China's Systematic Campaign in American Society

While trade tensions dominated headlines, a more insidious challenge was emerging: China's sophisticated influence operations targeting American institutions and public opinion. By 2018, national security officials had begun to recognize that Beijing was conducting a coordinated campaign to shape perceptions, silence criticism, and advance Chinese interests across multiple sectors of American society. This "whole-of-society" approach represented a novel threat that traditional security frameworks were ill-equipped to address. The Chinese Communist Party's influence activities operated through multiple channels. In academia, Confucius Institutes established on American university campuses ostensibly promoted Chinese language and culture but also served as vehicles for censorship and surveillance. FBI Director Christopher Wray testified in February 2018 that these institutes were part of China's "whole-of-society" approach to intelligence gathering and influence operations. Similarly, Chinese Students and Scholars Associations on campuses often functioned as extensions of Chinese diplomatic missions, monitoring Chinese students and organizing protests against speakers critical of Beijing. In the media sphere, China pursued a dual strategy of expanding its own propaganda outlets while attempting to silence critical voices. State-run entities like China Global Television Network and China Daily purchased inserts in major American newspapers, while Beijing pressured international publications to soften their coverage by threatening to withhold visas or market access. Meanwhile, Chinese officials embraced social media platforms that were banned in their own country, using Twitter and Facebook to amplify pro-Beijing narratives. Perhaps most concerning was China's targeting of state and local governments through what became known as "subnational diplomacy." Chinese officials cultivated relationships with governors, mayors, and state legislators, offering investment opportunities and sister-city partnerships while encouraging policies favorable to Chinese interests. As one senior U.S. official explained, "Beijing realized that while Washington was increasingly skeptical of China, many state capitals were still eager for Chinese investment and trade opportunities." The business community faced particularly intense pressure. Companies dependent on the Chinese market found themselves forced to apologize for perceived political offenses, modify their products to satisfy censors, and even police the speech of their employees. When the general manager of the Houston Rockets tweeted support for Hong Kong protesters in October 2019, the NBA faced an immediate backlash from Chinese partners and sponsors, revealing how economic leverage could be weaponized to enforce political compliance. In response to these challenges, a loose network of government officials, academics, journalists, and civil society activists began to organize. Informally known as the "Bingo Club," this group met regularly in Washington to share information about Chinese influence operations and develop strategies to counter them. Their efforts contributed to increased public awareness and policy responses, including new disclosure requirements for Confucius Institutes, restrictions on Chinese media organizations operating in the United States, and enhanced scrutiny of academic collaborations. By 2019, addressing Chinese influence operations had become a rare area of bipartisan consensus in Washington. Congress passed legislation requiring Chinese media outlets to register as foreign agents, while universities began closing Confucius Institutes amid growing concerns about academic freedom. However, these measures represented only the beginning of what would be a long-term challenge: how to protect democratic institutions and values from foreign interference while avoiding xenophobia or unnecessary restrictions on legitimate exchange and cooperation.

Chapter 4: Strategic Competition: The Emergence of a New Consensus (2018-2019)

By late 2018, a fundamental shift in America's approach to China had crystallized across the foreign policy establishment. What began as primarily an economic dispute had evolved into a comprehensive strategic competition spanning multiple domains—diplomatic, military, technological, ideological, and even cultural. This transformation represented the most significant reorientation of American foreign policy since the end of the Cold War. The intellectual foundation for this shift was articulated in Vice President Mike Pence's landmark speech at the Hudson Institute on October 4, 2018. For the first time, a senior U.S. official publicly called out China's "whole-of-government approach" to advance its influence in America and accused Beijing of interfering in American politics and elections. "Beijing is employing a whole-of-government approach, using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States," Pence declared. The speech signaled that competition with China was no longer just about trade but about the future of the international order itself. This new consensus was further codified in the Pentagon's 2018 National Defense Strategy, which identified China as a "strategic competitor" and prioritized great power competition over counterterrorism for the first time since 9/11. The document warned that China was leveraging "predatory economics to intimidate its neighbors while militarizing features in the South China Sea." Similarly, the State Department began developing a comprehensive strategy to counter China's influence operations, while the Justice Department launched the "China Initiative" to combat economic espionage and intellectual property theft. China's actions during this period reinforced the perception that a more competitive approach was necessary. In Xinjiang, the Chinese government intensified its campaign of mass detention and surveillance targeting Uyghurs and other Muslim minorities, with over a million people held in what Beijing called "vocational training centers" but what human rights groups described as concentration camps. In Hong Kong, pro-democracy protests erupted in response to Beijing's erosion of the territory's autonomy, leading to violent crackdowns and the eventual imposition of a draconian national security law. These human rights abuses made it increasingly difficult for advocates of engagement to argue that China was evolving in a positive direction. The strategic competition framework gained bipartisan support in Congress, where China emerged as one of the few issues that could unite Democrats and Republicans. The 2019 National Defense Authorization Act included numerous provisions aimed at countering Chinese influence and military expansion, while the BUILD Act created a new development finance institution to compete with China's Belt and Road Initiative in developing countries. Senator Chuck Schumer, the Democratic leader, found himself aligned with President Trump on the need for a tougher approach to China, even as they disagreed on virtually every other issue. By 2019, the debate in Washington was no longer about whether to compete with China, but how to do so effectively. This emerging consensus represented a remarkable shift from just a few years earlier, when engagement remained the dominant paradigm. The challenge now was to develop a coherent strategy that could protect American interests and values without triggering a destructive conflict or closing off opportunities for cooperation on global challenges like climate change, pandemic prevention, and nuclear nonproliferation. As one senior official observed, "We need to compete with China where we must, cooperate where we can, and confront where we have to."

Chapter 5: Pandemic Turning Point: COVID-19 and the Acceleration of Rivalry (2020)

The emergence of a novel coronavirus in Wuhan, China, in late 2019 would prove to be the most consequential development in U.S.-China relations during the Trump era. What began as a public health crisis quickly evolved into a geopolitical flashpoint that accelerated existing tensions and created new ones, fundamentally altering the trajectory of the relationship between the world's two largest powers. The initial Chinese response to the outbreak established a pattern that would define the pandemic's early months. Local officials in Wuhan suppressed information about human-to-human transmission, while doctors who tried to raise the alarm, like ophthalmologist Li Wenliang, were silenced by police for "spreading rumors." By the time Beijing acknowledged the severity of the situation in late January 2020, the virus had already spread beyond China's borders. This lack of transparency, combined with China's initial reluctance to allow international experts access to Wuhan, fueled suspicions and recriminations from Washington. On January 31, the Trump administration announced travel restrictions on China, a move that Beijing condemned as an overreaction driven by xenophobia. This early dispute set the tone for what would become an increasingly bitter war of words. As the virus spread globally, Chinese officials promoted conspiracy theories suggesting the U.S. military had brought the virus to Wuhan during the Military World Games in October 2019. Foreign Ministry spokesman Zhao Lijian tweeted: "It might be US army who brought the epidemic to Wuhan." President Trump countered by repeatedly referring to COVID-19 as the "Chinese virus" or "Kung Flu," language that contributed to a surge in anti-Asian hate incidents across America. The pandemic also exposed critical vulnerabilities in global supply chains. As the world scrambled for personal protective equipment and medical supplies, China's dominant manufacturing position gave it significant leverage. Reports emerged of Chinese officials using medical supplies as diplomatic tools, prioritizing shipments to countries that refrained from criticizing Beijing's handling of the outbreak. This "mask diplomacy" highlighted the strategic implications of economic interdependence in ways that abstract debates about trade deficits never could. Questions about the origins of the virus added another layer of controversy. In April 2020, reports surfaced about U.S. diplomatic cables from 2018 warning of safety issues at the Wuhan Institute of Virology, which conducted research on bat coronaviruses. While scientific consensus initially favored a natural origin through animal-to-human transmission, the lack of transparency from Chinese authorities fueled speculation about a possible laboratory accident. This debate further poisoned bilateral relations and complicated international cooperation on pandemic response. By mid-2020, the pandemic had accelerated the decoupling of the world's two largest economies. Supply chain disruptions prompted calls for "reshoring" critical industries, while new export controls targeted China's access to advanced semiconductor technology. Public opinion in both countries hardened, with polls showing record-high negative views of China among Americans and similarly negative views of the United States among Chinese citizens. Perhaps most significantly, COVID-19 transformed the broader geopolitical context of U.S.-China competition. China's relatively successful containment of the virus after its initial missteps, contrasted with America's struggles to develop a coherent national response, became central to Beijing's narrative about the superiority of its governance model. Meanwhile, China's increasingly aggressive "wolf warrior" diplomacy during the crisis alienated many countries that might otherwise have remained neutral in U.S.-China tensions. As one European diplomat observed, "China has lost Europe," referring to the growing skepticism toward Beijing across the continent.

Chapter 6: Decoupling Begins: The Unraveling of Four Decades of Engagement

By 2020, the U.S.-China relationship had entered a new phase characterized by systematic decoupling across multiple domains. After four decades of deepening integration, the two countries were deliberately disentangling their economies, technologies, and institutions. This process, which began with tariffs and investment restrictions, had expanded to encompass scientific collaboration, educational exchange, media access, and people-to-people ties. The era of engagement was over, replaced by what some analysts called "selective decoupling" or "strategic competition." The technology sector experienced the most dramatic separation. In May 2020, the Commerce Department announced new export controls targeting Huawei's semiconductor supply chain, effectively cutting the company off from chips made using American equipment or software. This move represented a significant escalation, as it not only restricted U.S. companies from selling to Huawei but also imposed a form of extraterritorial control over foreign manufacturers using American technology. Later that summer, executive orders targeting Chinese apps TikTok and WeChat signaled that the technology war was expanding from hardware to software and data services. Financial markets, long considered the most integrated aspect of the relationship, also began to decouple. The administration threatened to delist Chinese companies from American stock exchanges if they failed to comply with U.S. accounting standards. The Federal Retirement Thrift Investment Board was blocked from investing federal employees' pension funds in Chinese stocks. Meanwhile, the Treasury Department placed sanctions on Chinese officials responsible for human rights abuses in Xinjiang and Hong Kong, restricting their access to the U.S. financial system. Academic collaboration, once the bedrock of U.S.-China relations, came under unprecedented scrutiny. The Justice Department's China Initiative led to dozens of prosecutions of researchers for failing to disclose Chinese funding or affiliations. Visa restrictions for Chinese students in certain scientific fields were implemented, while Confucius Institutes closed across American campuses. Chinese students, who had numbered nearly 370,000 in the United States before the pandemic, faced growing uncertainty about their future in America. The business community, long the strongest advocate for engagement, found itself caught in the crossfire. Companies with significant China operations faced growing pressure to take sides on sensitive issues like Hong Kong and Xinjiang. The NBA lost hundreds of millions in revenue after a team executive tweeted support for Hong Kong protesters. Apple removed apps at Beijing's request while moving Chinese user data to servers controlled by a state-owned company. These incidents revealed the increasingly untenable position of multinational corporations trying to operate in both markets. This decoupling process was not without costs. American universities lost talented students and research funding. Farmers lost export markets. Companies faced disrupted supply chains and regulatory uncertainty. Scientific progress on global challenges like climate change and pandemic prevention was impeded by reduced collaboration. Perhaps most concerning, communication channels between the two governments atrophied, increasing the risk of miscalculation during crises. Yet despite these costs, the momentum toward decoupling continued to build. The experience of the pandemic had convinced many Americans across the political spectrum that economic interdependence with China created vulnerabilities that outweighed its benefits, at least in critical sectors. As one senior official put it, "The goal isn't complete decoupling, which would be impossible and self-defeating. The goal is to reduce our vulnerabilities in critical areas while maintaining beneficial economic ties where possible." By the end of 2020, the architecture of engagement built over four decades had been substantially dismantled. While some connections remained, particularly in trade and investment, the trajectory pointed toward increasing separation rather than integration. This institutional decoupling represented not just a policy choice but a structural shift in the relationship that would constrain options for future administrations. As one official observed, "We're not going back to the way things were. That world is gone."

Summary

The story of America's strategic awakening to China from 2016 to 2020 reveals a fundamental transformation in how the United States perceives and engages with its most consequential geopolitical rival. What began as primarily an economic dispute over trade imbalances and intellectual property theft evolved into a comprehensive strategic competition encompassing technology, security, ideology, and global influence. This period marked the definitive end of America's decades-long strategy of engagement with China in the hope that economic integration would lead to political liberalization. The lessons of this tumultuous period remain essential for navigating the US-China relationship in the decades ahead. First, economic interdependence creates vulnerabilities alongside benefits, particularly when values and political systems diverge so dramatically. Second, competition with China requires a whole-of-society approach that aligns economic, technological, diplomatic, and security policies toward a coherent strategy. Third, America's response must be rooted in its democratic values rather than mirroring China's authoritarian methods, as the competition is ultimately about which system better serves its citizens and humanity. Finally, effectively managing this rivalry requires not just recognizing the competitive nature of the relationship, but developing a balanced approach that allows for necessary cooperation on global challenges while protecting core interests and values. The challenge for future leaders will be to navigate this competition without triggering a destructive conflict that would harm both nations and the world.

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Josh Rogin

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