This report describes the potential role of central bank digital currencies (CBDCs) in strategic competition. Understanding the national security implications of both international CBDC developments and a potential U.S. CBDC is a central component of President Biden's March 2022 Executive Order 14067 on "Ensuring Responsible Development of Digital Assets." This executive order mandated an assessment of foreign CBDCs and their potential effect on U.S. finance, as well as effects on national security and financial crime — concerns that are overshadowed by the relatively advanced stage of China's CBDC. This report contributes to the discourse that has emerged from that executive order by describing whether and how the more advanced stage of China's CBDC project might advantage China, how decisions regarding the international governance of CBDCs might affect U.S. national power, and how the design choices of a U.S. CBDC might affect its capabilities as an instrument of national power.

The authors identify tasks that the People's Liberation Army (PLA) would likely be assigned by Chinese leaders to achieve strategic goals both in peacetime competition with the United States and in a hypothetical low-intensity conflict. The authors then analyze potential vulnerabilities in the PLA's execution of those tasks and how the United States could leverage those vulnerabilities to disrupt China's strategic goals, focusing on the potential for peacetime competition to erupt into a broader low-intensity conflict featuring smaller, indirect, or hybrid confrontations that span the world. The authors expand on a comprehensive list of potential PLA missions developed in prior research and explore vulnerabilities in the PLA's execution of the specific tasks required to achieve Beijing's strategic objectives. Across these missions and tasks, they identify five sets of vulnerabilities that, if disrupted, could affect Beijing's ability to achieve its goals: fears of domestic instability after PLA actions, risk of escalating conflict, harm to China's reputation, the PLA's limited ability to support partner states, and the PLA's limited ability to project power. These vulnerabilities provide a sense of the potential pressure points that the PLA could face in accomplishing its objectives. Options for the United States to leverage these pressure points include deterring harmful PLA actions by shaping perceptions of how those actions might affect China's interests, exploiting the consequences of PLA actions to deter Beijing from repeating similar actions, and exploiting PLA weaknesses in power projection and partner support to weaken confidence in the PLA and discourage similar operations.