Technology, Innovation and Great Power Competition,TIGPC, Gordian knot Center, DIME-FIL, department of defense, dod, intlpol 340, joe felter, ms&e296, raj shah, stanford, Steve blank, AI, ML, AI/ML, china, unmanned, autonomy, economic coercion,

1. Team Catena
Akshay Malhotra
PhD Financial Economics
BS Economics & CS
Bill Benesi
MS Management
BS Strategic Studies
Katie Meyer
BS International
Relations
Theo Strauss
BS Progress
Studies
30 Interviews
China’s cryptocurrency ban presents the U.S. with
an opportunity to strongly influence blockchain
development, attract technical talent, and leverage
digital asset technology. We plan to identify
opportunities for innovation and mechanisms to
capitalize on this space.
Where we started
The CCP’s economic coercion makes countries
such as Australia dependent on China's economy
and vulnerable to the party’s will. To eliminate
China's leverage, the U.S. must analyze which key
Australian industries are most threatened and
determine viable alternative trading partners.
Where we are now

2. Initially, it seemed that China’s cryptocurrency efforts were
a threat to American economic influence
The CCP’s work on a central bank digital currency seemed like it could disrupt:
1. The U.S. dollar’s status as the world’s reserve currency.
2. American influence in the global financial system.
3. Our allies’ economic independence.
BLOOMBERG
“China’s Digital Currency
Could Challenge Bitcoin
And Even The Dollar”
FORBES
“China Will Use Its Digital
Currency To Compete
With The USD”
“China Wants To
Weaponize Its Currency. A
Digital Version Could Help.”
CNN WSJ
“China Rolls Out Pilot
Test of Digital
Currency.”

3. However, early interviews showed that crypto innovation
was not as urgent an issue from a competitive perspective
1. The CCP hindered its domestic crypto innovation with a ban on all
non-sanctioned crypto in China
2. Many nations have started researching and launching their own digital
currencies
3. The legal and regulatory frameworks in the U.S. for encouraging crypto
innovation do not exist yet and will not be solidified for some time
Experts expressed that sensible laws governing crypto in the U.S. are needed before
the government can take advantage of the technology.
KEY LEARNING

4. Experts alerted us to China’s use of coercive diplomacy that
exposes our allies to major political and economic risk
The CCP’s unique style of economic coercion through arbitrarily imposed measures
without an official acknowledgement of the link between their interests and the
actions gives China high leverage and our allies a major source of risk.
“A more direct and relevant problem in the space of Chinese economic tools may be
economic coercion & coercive diplomacy.”
KEY QUOTE – KEITH HENNESSEY, STANFORD

5. Australia is an ideal case study of Chinese coercive
diplomacy...
1. Recent target of Chinese coercion campaign
2. Second hottest region in terms of Chinese targets for economic coercion
3. Key American ally in China’s neighborhood
4. English-speaking country
5. Middle power: not too big, not too small
How can the U.S. help Australia in responding to and
eventually deterring China’s coercive tactics?

6. Pivotal Interview: Dr. Derek Scissors, Senior Fellow at AEI
“They could, but they don’t.”
Is it because China doesn’t want to seriously hurt
Australia, or because China needs the iron ore?
“The safe case: 90% - 90%.
The danger case: 90 - 5%.”
Can we turn 90% - 5% into 90% - 50%?
We were asking the wrong question. It wasn’t which
political triggers but which industries were in danger.
KEY LEARNING

7. A solution: an index of which Australian industries are most
threatened by economic coercion by China
By using Australia as a case study, we can develop a playbook to better anticipate
and counter Cinese economic aggression:
1. Identify asymmetries within key industries on both sides of the Australia-China
trade relationship
2. Determine dependence measures for each key industry
3. Identify alternative trading partners and diversification plans for each key
industry

8. Trade
Volume
(Billions,
USD)
Threat Index Value
Finding: Australian exports are not as vulnerable as assumed

9. Trade
Volume
(Billions,
USD)
Threat Index Value
Finding: Australian imports, however, are very vulnerable

10. Trade
Volume
(Billions,
USD)
Broadcasting Equipment: U.S. & Vietnam
Refined Petroleum: South Korea & Singapore
Threat Index Value
What are alternative trading partners for vulnerable imports?

11. KEY QUOTE – TARUN CHHABRA, NATIONAL SECURITY COUNCIL
Feedback on the Threat Index and Diversification Playbook
was positive
“A playbook to counter Chinese economic coercion is desperately needed and
welcome.”
“Having a playbook from the past instances of coercive measures used by China on
both nations and private industries [would be useful] to understand how to best
counter each instance.”
KEY QUOTE – MATT TURPIN, HOOVER INSTITUTION
KEY QUOTE – CONDOLEEZZA RICE, HOOVER INSTITUTION
“Telecommunications [broadcasting] equipment is the most important item of
import from China to Australia.” Secretary Rice’s intuition validated our threat index.

12. “The efficacy of their economic policies would make a bell-shaped curve if you plot
it, and we’re on the way down right now.”
But some experts were not convinced about the problem or
the solution
“How do you diversify? Are you going to tell companies not to take a 100 million
dollar Chinese contract? Easy for strategic analysts to say you should sell it to
someone else, but you can’t direct a private business not to sell something to
China.”
KEY QUOTE – DAVID BREWSTER, AUSTRALIAN STRATEGIC POLICY INSTITUTE
KEY QUOTE – THOMAS FINGAR, FREEMAN SPOGLI INSTITUTE

13. What are potential next steps?
1. There is a bipartisan bill that proposes a joint interagency taskforce to
understand and counter Chinese economic coercion. Our solution can nest into
the proposed taskforce.
2. Analysis of our solution relied on interviews with experts with mostly positive
feedback.
3. A logical next step would be to analyze other potentially more exposed
countries to construct threat analyses and prepare diversification solutions,
potentially even automating the entire process.

14. Questions?

15. Appendix A1 – Interviewees
Keith Hennessey John Cogan Aubrey Strobel David Lawant Julianne Brands
David Sacks David Becker Carl Thayer Morgan O’Brien Ketian Zhang
Larry Diamond Martjin Rasser Thomas Fingar Gloria Xiong Vivek Viswanathan

16. Appendix A2 – Interviewees
Glenn Tiffert Matt Turpin
Derek Scissors
Patrick Johnson Matthew Goodman Jean Oi
Alex McCauley Amy Zegart
Andrew Chubb David Brewster
Condoleezza Rice

17. Iron Ore 66.40% 16.30% 4.23% 2.22% 1.55% 90.70%
Petroleum Gas 24.70% 16.30% 15.90% 5.38% 4.35% 66.63%
Gold 23.10% 19.80% 19.50% 14.80% 12.00% 89.20%
Coal Briquettes 49.40% 16.30% 15.80% 11.40% 3.42% 96.32%
18% 16% 14% 12% 10% 70%
Diversification Index
Iron Ore 0.234 0.000 0.010 0.010 0.007 2.605
Petroleum
Gas
0.004 0.000 0.000 0.004 0.003 0.124
Gold 0.003 0.001 0.003 0.001 0.000 0.083
Coal
Briquettes
0.099 0.000 0.000 0.000 0.004 1.033
Dependence Index
Iron Ore 9.486
Petroleum Gas 3.529
Gold 3.300
Coal Briquettes 7.057
Appendix B1 – Australia’s Exports to China (China’s Perspective)

18. Iron Ore 81.70% 7.69% 6.43% 2.04% 0.71% 98.57%
Petroleum Gas 43.00% 34.70% 9.79% 5.41% 2.26% 95.16%
Gold 37.70% 32.90% 13.10% 5.27% 4.39% 93.36%
Coal Briquettes 24.60% 23.50% 18.20% 9.88% 6.91% 83.09%
18% 16% 14% 12% 10% 70%
Diversification Index
Iron Ore 0.406 0.007 0.006 0.010 0.009 4.370
Petroleum
Gas
0.063 0.035 0.002 0.004 0.006 1.096
Gold 0.039 0.029 0.000 0.005 0.003 0.751
Coal
Briquettes
0.004 0.006 0.002 0.000 0.001 0.131
Dependence Index
Iron Ore 11.671
Petroleum Gas 4.957
Gold 5.386
Coal Briquettes 2.600
Threat Index (0-15)
Iron Ore 5.22
Petroleum Gas 6.43
Gold 7.09
Coal Briquettes 0.54
Note: Non-linear scale, 5 is
average, not much threat,
above 6 should be
considered a reasonable
threat and above 8 is not
good.
Appendix B2 – Australia’s Exports to China (Australia’s Perspective)

19. Broadcasting Equipment 24.30% 18.10% 5.59% 4.24% 3.56% 55.79%
Computers 29.50% 9.48% 7.39% 7.17% 6.18% 59.72%
Refined Petroleum 22.70% 18.40% 9.34% 6.74% 4.33% 61.51%
Semiconductor Devices 23.00% 7.00% 6.30% 5.67% 5.24% 47.21%
18% 16% 14% 12% 10% 70%
Diversification Index
Broadcasting Equipment 0.004 0.000 0.007 0.006 0.004 0.217
Computers 0.013 0.004 0.004 0.002 0.001 0.256
Refined Petroleum 0.002 0.001 0.002 0.003 0.003 0.109
Semiconductor Devices 0.003 0.008 0.006 0.004 0.002 0.228
Dependence Index
Broadcasting Equipment 0.000
Computers 0.000
Refined Petroleum 0.619
Semiconductor Devices 0.000
Appendix B3 – Australia’s Imports from China (China’s Perspective)

20. Appendix B4 – Australia’s Imports from China (Australia’s Perspective)
Broadcasting Equipment 60.30% 14.30% 9.64% 2.88% 2.30% 89.42%
Computers 70.70% 7.41% 7.11% 3.85% 1.86% 90.93%
Refined Petroleum 27.60% 18.20% 17.80% 13.90% 7.54% 85.04%
Semiconductor Devices 86.20% 4.69% 1.80% 1.37% 1.02% 95.08%
18% 16% 14% 12% 10% 70%
Diversification Index
Broadcasting Equipment 0.179 0.000 0.002 0.008 0.006 1.954
Computers 0.278 0.007 0.005 0.007 0.007 3.031
Refined Petroleum 0.009 0.000 0.001 0.000 0.001 0.121
Semiconductor Devices 0.465 0.013 0.015 0.011 0.008 5.122
Dependence Index
Broadcasting Equipment 8.614
Computers 1.059
Refined Petroleum 3.943
Semiconductor Devices 0.257
Threat Index (0-15)
Broadcasting Equipment 13.61
Computers 6.06
Refined Petroleum 8.32
Semiconductor Devices 5.26
Note: Non-linear scale, 5 is
average, not much threat,
above 6 should be
considered a reasonable
threat and above 8 is not
good.