Trans-Pacific View | Diplomacy

Competition With China Goes Subnational

Can Beijing successfully exploit divisions between local and central governments?

By Scott Moore for
Competition With China Goes Subnational
Credit: Illustration by Catherine Putz.

We’re used to hearing about how China’s growing overseas political influence campaigns are reshaping alliances and partnerships from South America to the Central Asian steppe. Most of the time, concern over such campaigns naturally centers on attempts to lobby presidents, prime ministers, and other high-level national officials. But lately, signs are growing that the competition for global geopolitical influence is now a multi-level game – played not just in national capitals, but at the city and state level, too.

In a remarkable speech last month to the National Governors Association, Secretary of State Mike Pompeo warned the chief executives of America’s 50 states that “competition with China is not just a federal issue… competition with China is happening inside of your state, and it affects our capacity to perform America’s vital national security functions.” Beijing’s diplomatic representatives in the United States, Pompeo went on to allege, are “very politically active at the state level.” The secretary’s claims were more than a little exaggerated, and may even have something to do with his rumored ambitions to run for office in his native Kansas. But they also raise an important substantive question: What role do subnational governments like states and cities play in great-power competition?

In November 2018, the Australian state of Victoria opened an unlikely front in the growing global debate over China’s political influence in democratic countries. The state government, without consulting Canberra, signed a Memorandum of Understanding (MOU) with China’s ambassador to Australia, making Victoria the first and so far only subnational government to formally endorse Beijing’s Belt and Road Initiative (BRI). Even more shocking than the fact that this bit of subnational diplomacy came as a surprise to Australia’s federal government is that Victoria initially signed the agreement in secret, releasing the text only after an outcry from Prime Minister Scott Morrison. And while the language contained in the agreement proved to be largely innocuous, its implications are anything but. 

Victoria’s action raises the prospect that China or other foreign powers might exploit central-local political divisions to gain support for its strategic objectives. In the case of Victoria, the state government’s support for the BRI directly contravened the federal government’s opposition to the initiative. The director of the Australian Strategic Policy Institute, for example, attributed China’s motive to the fact that “They didn’t get the answer they wanted from one jurisdiction… so they went to another one, really with the effect of undermining the federal government’s position.” In effect, the division of powers between central and local levels of government creates an opening for China or other foreign powers seeking political influence to “forum shop,” moving from one government to another until they find a receptive audience.  

And while Victoria’s MOU had little concrete impact, elsewhere Beijing appears to have engaged in forum-shopping to greater effect. Barely a year after Victoria’s BRI debacle, the governor of the Solomon Islands’ Central Province was discovered to have signed an agreement to lease an entire island, along with its deep-water port, to a Chinese Communist Party-linked investment firm. Just as in the case of Victoria’s MOU, the text was secret, and the central government unaware it was even under discussion. The agreement was so obviously flawed that it was quickly ruled illegal by the Solomon Islands Attorney-General, who concluded that the provincial government had exceeded its authority in pursuing the deal. 

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Even the United States may be vulnerable to some forms of malign foreign influence at the subnational level. All known attempts by foreign powers to electronically interfere with U.S. elections have targeted weaknesses in state-based electoral systems. The prospect that foreign powers might attempt to influence politics at the subnational level was also highlighted in September 2018, when the state-run China Daily ran a four-page supplement in Iowa’s largest newspaper detailing the impact of President Trump’s trade war on the state’s crucial soybean crop.

And while China’s attempt to play subnational politics unfolded squarely in the public eye, the state-level lobbying efforts of other foreign powers have been more furtive. In Texas, lawmakers grew sufficiently alarmed about covert lobbying on behalf of the Iraqi government that they introduced a bill requiring lobbyists to disclose any ties to foreign governments.

Yet if the facts partly bear out Pompeo’s fear that great power competition increasingly extends to the subnational level, what’s less clear is what either central or local governments can or should do in response. For one thing, many countries explicitly restrict subnational involvement in foreign affairs. In a 2012 case, the U.S. Supreme Court barred states from taking actions that have even an “incidental or indirect effect” on U.S. foreign policy. At the same time, there’s increasing consensus that subnational governments have an important role to play in tackling global challenges like climate change. Former New York City Mayor Michael Bloomberg, for example, argues that subnational actors need to play a greater role in implementing the Paris Agreement in order to combat inaction from recalcitrant or bureaucracy-bound national governments.    

On balance, it seems fair to say that while the prospect of foreign powers exploiting political divisions between central and local levels of government is concerning, it would be a mistake to over-react. In some cases, policy divergence between national and subnational governments can be healthy. Even as Washington seeks to clamp down on alleged espionage and intellectual property theft on the part of China, for example, most state officials remain resolutely supportive of free trade with the world’s second-largest economy. This tension is increasingly visible in China-related cases undergoing review by the Committee on Foreign Investment in the United States (CFIUS), a growing number of which pit pro-trade state officials against much more skeptical administration officials. Given the many reasons to believe that a liberal trade policy benefits the United States both politically and economically, such pushback promises to produce better outcomes than if central and subnational officials were of one mind.

At the same time, it’s both sensible and prudent for decentralized democracies like the United States and Australia to take steps to prevent malign subnational political influence on the part of China or any other foreign power. First, federal foreign ministries can establish dedicated subnational communication channels to avoid foul-ups like Victoria’s BRI endorsement. The U.S. State Department, for example, used to have an office dedicated to engagement with state and local officials, and a recently-introduced bill proposes to create a new Office of Subnational Diplomacy. Second, national law enforcement agencies and security services should strengthen their ties with state and local officials. This has been a key element of counterterrorism strategy in decentralized countries like the United Kingdom – and it’s been extremely effective in proactively identifying national security threats. Third and finally, state governments should follow Texas’ lead and adopt the same requirements for disclosure of ties with foreign powers that exist at the U.S. federal level. Such disclosure can help put a stop to any concerns of foreign interference at the state level before it begins.

Decentralized and federal systems like those employed by the United States, Australia, and other democracies have many advantages. Not least of these is the ability for central and local officials to hold different views and pursue different priorities. But when faced with a determined foreign adversary, decentralized political systems also create potential vulnerabilities. The U.S., Australia, and other decentralized democracies need to address them before their adversaries find them.   

Scott Moore is Director of the Penn Global China Program at the University of Pennsylvania.