At the beginning of this year, the U.S. and China had a brief moment of stability after they signed an interim agreement to pause the trade war. Although they continued to jostle on other contentious issues, such as American sanctions against Huawei and China’s efforts to seek leadership positions in international organizations, there were no indications that bilateral relations would deteriorate further, or rapidly, in this American election year.
But the coronavirus pandemic has changed everything. If neither government takes immediate steps to arrest the downward spiral, the devastation wrought by the viral outbreak will not only severely damage the U.S. and Chinese economies but also drive the countries further toward an accelerated strategic conflict. The new cold war between the U.S. and China could become a reality much sooner than even the most pessimistic observers have feared.
This tragedy could have been avoided. But, sadly, leaders in neither country were disciplined or sensitive enough to refrain from a war of words that may have hopelessly poisoned the diplomatic atmosphere. In the Chinese case, Foreign Ministry voices have been criticizing Washington for its stingy assistance and deliberate use of the phrase “Chinese virus” or “Wuhan virus” to stigmatize China.
Senior U.S. officials were incensed by reports of China’s initial mishandling of the outbreak, in particular the muzzling of the press and healthcare workers. The widespread consensus in Washington was that China should bear the responsibility for this global calamity because it botched its response to the outbreak during the most critical early stage.
While this acrimonious blame game dominates news headlines, its impact on the future of U.S.-China relations will likely depend on other outcomes linked with the coronavirus pandemic. Broadly speaking, three factors could determine whether the coronavirus crisis will push the two countries deeper and even more irreversibly into the new cold war, or provide a momentary pause for cooperation and a precious opportunity to avert a looming geopolitical catastrophe.
The foremost factor is whether presidents Xi Jinping and Donald Trump can order an immediate cease-fire in their war of words and cooperate to lead a global fight against the coronavirus. Should the exchange of diplomatic insults continue or escalate, such cooperation would become impossible. However, if cooler heads prevail and both sides signal their willingness to cooperate, we could see an immediate and even dramatic de-escalation of tensions.
This rosy scenario is no fantasy. Xi and Trump may lead their nations in a zero-sum contest for power, but their immediate political interests are perfectly aligned. Xi needs to refocus his attention on reviving the virus-wracked economy, a goal impossible to achieve if the U.S., one of China’s largest export markets, is also devastated. As for Trump, his re-election odds will be significantly improved if his administration contains the virus quickly and avoids a deep recession.
There are many practical steps both sides can take to cooperate in the immediate term. For example, China can break the diplomatic ice by donating a large quantity of medical supplies to the U.S. as a gesture of goodwill. Beijing can also share its experience in containing the virus and treating its victims. Both countries can join efforts in developing a vaccine and pledge to make it freely available to the world.
But the window of cooperation is fast closing. Goodwill gestures and a diplomatic cease-fire must happen within two to three weeks. Otherwise, they will be too little, too late.
The second factor for averting geopolitical catastrophe is the acceleration of economic decoupling. The coronavirus outbreak has revealed the fragility and risks of globalization. In the U.S., it has greatly boosted the case for decoupling from China. In particular, China hawks have seized upon the fact that the U.S. depends excessively on China for supplies of the basic chemical ingredients needed for medicines and other critical medical supplies (such as masks and protective gear), and they’re pushing for decoupling. Such efforts will likely be met with greater support in Washington once the epidemic abates and the attention of the political class turns toward the future.
Decoupling would also be accelerated by market forces. The double-whammy of the U.S.-China trade war and the coronavirus outbreak will tilt the economic calculus of multinational corporations further in favor of reducing dependence on China-based supply chains. China will also reassess its dependence on overseas markets and supply chains. The result of such adjustments could be a dramatic net decrease in commercial ties between China and the U.S.
Such a negative development would make it harder to fulfill the terms of the interim trade deal signed in January because China would not have the means or the need to purchase $200 billion worth of additional American products in the 2020-21 period. The trade war would likely reignite in 2022 and perhaps sooner.
Accelerated decoupling would guarantee that U.S.-China trade relations are much less valuable for both countries in the long term as well. Tragically, a more decoupled world is a more dangerous one. If you think Sino-American relations are ugly today, just imagine how much uglier and more hostile they would become if commercial ties were severed altogether, which is what hawks in both countries have been rooting for.
The third factor is the overall geopolitical fallout from the coronavirus crisis, or how this crisis resets relations among major powers. This outcome critically depends on the behavior of the U.S. and China during the crisis. If they are perceived as responsible actors who contribute to global efforts to mitigate the crisis, they will gain durable support. But if their actions are seen as petty, selfish and harmful, they will lose support.
The stance of third-party players is critical to the strategic calculations of the two countries. The success of their long-term geopolitical contest depends not just on each one’s resources and capabilities but on their ability to recruit allies or prevent their adversary from forming a broad coalition.
When we examine the conduct of Beijing and Washington during the crisis, the picture is mixed. China’s poor handling of the viral outbreak in early January has done damage to its image in the international community, but its quick progress in containing the outbreak, subsequent donation of medical supplies and dispatching of medical personnel to countries hit hard by the virus have earned it goodwill.
Washington’s inaction during the crucial month of February and its lack of concern and consultation with its allies (especially the sudden announcement of a ban on the entry of Europeans into the U.S. made by President Trump on March 11) have disappointed those allies. But there is still time for the U.S. to abandon its “America first” approach and resume its traditional role as a global leader in fighting the virus.
The glimmer of hope in U.S.-China cooperation is real but fleeting. To avoid a further escalation of their strategic conflict in the post-coronavirus world, both the U.S. and China should seize this opportunity and pull back from the brink.