What lies ahead for China-US relations? This is surely a question that the world has to confront and address. Dr Henry Kissinger recently issued the sternest warning to date, twice, regarding China-US relations, at the gala dinner of the National Committee on US-China Relations in New York City and the New Economy Forum organised by Bloomberg in Beijing. Kissinger emphasised two interrelated points. First, that the US and China are in the foothills of a Cold War. Second, the outcome of a conflict between China and the US could be worse than the two World Wars that ruined European civilisation.
Coincidentally, the New York Times published an article by Niall Ferguson saying that the Cold War between China and the US has begun in 2019. Having coined the term “Chimerica” several years ago, Ferguson has used the concept to describe the symbiotic economic relationship between China and the US, which implies that conflict between the two countries is not possible. However, he soon made an about-turn and repeatedly expressed a pessimism that is prevalent in the US and the West. While many in China share the same pessimistic view, few articulate it for various reasons.
The three traps in China-US relations
A pessimistic view is not groundless, and is largely based on experience and observation. The popular belief in the academic and policy circles is that three traps in China-US relations have surfaced since the trade war. The first is the Thucydides Trap, in which war between the two countries is inevitable as an emergent China will challenge the US for global supremacy and cause the US to fear being replaced by China.
Although China has always emphasised that it will never seek hegemony, the fear of China in the US has become increasingly apparent. While few believe that the US today has the ability to contain China, China is apprehensive of this. The interaction between the two superpowers seems to have degenerated into a vicious cycle, from which there appears no possibility of escape from the eventual, inevitable conflict.
The second is the Tacitus Trap, referring to the fundamental lack of trust between officials and the public in the US and China, which has led to toxic interaction between these superpowers. Without trust, many solvable problems in the trade war remain simply unresolved. To make matters worse, the bureaucracies on both sides are emotional and irrational when dealing with an increasing number of issues. This situation obstructs meaningful communication, if at all they communicate. Mutual trust has become non-existent.
The third is the Kindleberger Trap, in which the two superpowers are unable to cooperate in the provision of international public goods to maintain world order. Some scholars think that the US and its allies are no longer capable of providing the necessary international public goods, but China has neither the will nor capacity to take over this role from the US yet. Indeed, neither China nor the US, or any one country alone, can provide the necessary international public goods to maintain world order in today’s complex global context. The non-cooperation between the two largest global economies will surely result in a deficient in international public goods.
In truth, on the contrary, China possesses a strong will and significant capacity to do so. However, China’s efforts in the Belt and Road Initiative and the Asian Infrastructure Investment Bank, for instance, are regarded as threats to the existing world order by the US and the West.
On the one hand, the US wants China to provide international public goods according to the US’s definition and in the manner deemed acceptable by the US’s power structure. On the other hand, China has its interpretation of international public goods and their provision. The discrepancies hinder their cooperation to maintain world order and result in conflict, underlining the fundamental lack of trust.
These traps point to deteriorating China-US relations overall. The trade war will rapidly escalate and extend to other domains such as technology, military, and ideology.
The US’s criticism, attack and demonisation of China have reached unprecedented levels on all fronts, including the issues of Hong Kong and Xinjiang. It is conceivable that the US will create new problems on other issues, such as Taiwan and the South China Sea, and up the ante by requiring its allies to stand together to confront China. Some claim that the North Atlantic Treaty Organisation (NATO), among other international organisations, has found a new focus because of China.
US officials have already emphasised that dealing with China must be a "whole-of-government" and "whole-of-society" effort. In addition, through its alliance, the US intends to deal with China on a global level. Indeed, since the end of the Cold War between the US and the Soviet Union, the US and its allies have lost direction because a common enemy no longer exists. By the US’s portrayal of China as a common enemy to strengthen ties with its allies, the West risks slipping towards the logic of the World Wars once again.
Key factors that will shape China-US relations
In the event of a China-US conflict, the globally-devastating outcome will be worse than those of the World Wars, as Kissinger suggested. While the World Wars originated and took place mainly in Europe, the impact of a China-US conflict will undoubtedly be worldwide as both countries have significant global influence. In fact, although the trade war has yet to become full-blown, many countries have already been deeply affected by it.
Regardless of how China-US relations evolve, the following three points are clear. First, the externalisation by the US and the West of their internal problems will only exacerbate them. The claim by those in the US with an ideological bias, that Western liberal democracy is threatened by authoritarian systems the likes of China, is not backed by many Americans. It merely means that the US has lost confidence because of its many serious domestic problems.
The threat to Western liberal democracy comes from within. Economically, it is an inevitable product of a capitalist market economy. The industrial economy of the Ford factory era has helped the US transform its working class to a huge middle class, which is the result brought about by the stability of the American democracy. The knowledge economy, symbolised by the Apple iPhone, has caused vastly unequal income distribution and social differentiation within the US, resulting in the loss of fundamental social justice on which society depends. With the shrinkage of the middle class, populism has emerged.
Changes in the economic and social structures due to the shrinking middle class have profoundly affected the bipartisan American politics by robbing it of its stable social foundation. Prior to this, the interests of the large middle class were the common ground for both parties regardless of the party in power. When the middle class currently constitutes less than half of the society, the common ground between the two parties has diminished due to increased social differentiation. The opposition party opposes for the sake of opposing, effectively becoming a veto party. With fragmented public opinion, populism in various forms naturally emerges.
A direct result of the political struggles is an ineffective government, but an effective government is critical when the society is confronted with severe socio-economic problems. The government cannot fail during market failure that causes imbalances in the socio-economic structure. The double failure of the market and government means that the domestic situations in the US and the West will continue to deteriorate.
Nobody believes that the US can solve its internal social, economic, and political problems by externalising them. Historically, Western countries have often transferred internal problems to the international community, but the result has invariably been war, destruction and rebuilding. It is plausible that the US may follow this path. However, if this logic undermines its relations with other countries, then the cost of rebuilding is simply too great.
In the ‘one person, one vote’ democracy, votes form the basis of power and legitimacy. Politicians dare not offend social groups or influential groups with vested interests. Unable to implement reforms to solve internal problems, politicians may resort to exporting them to other countries. This has become increasingly tricky due to the high degree of interdependence between countries in a globalised world. More often than not, doing so means harming others without benefiting oneself.
...China's modernisation is not dependent on the US or the West.
Although the US hardliners continuously badger China, no one questions their rationale, their ultimate objective and, more importantly, whether this approach will solve the problems in the US.
Second, while the US acts to dampen China's modernisation, the modernisation process cannot be obstructed or halted. Simply put, the internal rationale for China's emergence will not be changed by external circumstances. China has developed in a globalised world and reaped huge benefits in the process, driven by the country’s economic reforms and its people’s efforts. This means that China's modernisation is not dependent on the US or the West.
Even in the event of a Cold War between China and the US, China's modernisation will continue.
While technology transfer to China from the US and the West has aided China's economic development, the technology providers have also reaped huge benefits. As long as China’s market remains open, capital and technology from the West will not abandon it because capital from the Western capitalist countries will continue to flow across borders. Despite the US hardliners’ efforts to restrict capital flows by administrative, political and ideological means, it will be costly and, ultimately, ineffective.
Even in the event of a Cold War between China and the US, China's modernisation will continue. China has established its own civilisation-based political and economic systems with tremendous vitality, although there is room for improvement. Moreover, the main driver of China's economic growth is domestic demand. China is already one of the world's largest markets now, and is rapidly expanding its market with the progressive implementation of the Belt and Road Initiative.
In its early stages, a developing economy will inevitably rely on technology transfer from developed economies but it will soon turn to innovation and producing original technologies. China has similarly followed this path, and investments in research and development by state-owned and private enterprises are on the increase. This process will accelerate due to pressures brought about by external changes, chiefly the China-US trade war.
Third, China today is no longer an incompetent and ignorant country at the mercy of others. It is capable of preventing itself from being getting dragged by the US or the West into a Cold War. The rest of the world was unavoidably affected by both the World Wars, which originated in Europe. But if US hardliners were to deliberately wage a Cold War against China today, will China be able to avoid being drawn into it?
What is clear is that China has neither the intention to initiate nor the wish to be drawn into a Cold War. Its leadership has clearly and firmly articulated the policy objectives to "never seek hegemony", to pursue a “peaceful rise” and "new superpower relations", and to avoid the Thucydides Trap. In addition, China has sufficient capabilities to defend itself and its national interests.
Today, the oppression and aggression suffered by China at the hands of the imperialists in the late Qing Dynasty are no longer conceivable. Being an integral part of the global family and capable of playing an increasingly important role in the international arena, China can avoid the “tragedy of great power politics” or endless pursuit of power and hegemony talked about in political scientist John Mearsheimer’s theory of offensive realism.
As many countries are becoming stakeholders in China’s open economy, the US and the West will be unable to isolate China and can no longer afford to be uncompromising in its approach. By the US “abandoning” issues of interest, it simply means “ceding” or transferring its Chinese interests to other Western countries. Of course, this approach is only advocated by the US hardliners driven only by administrative and political logic. It is certainly not the logic behind Wall Street's capital flows.
In summary, as long as China calmly and rationally deals with the uncertainties of the relations between the two countries and the potential threat of a Cold War, China-US relations will not go the way of the US hardliners.