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Foreign Policy

New Duality, New Dilemmas

Aug 13, 2023
  • Wang Honggang

    Deputy Directorof Institute of American Studies, China Institutes of Contemporary International Relations

Several high-ranking officials of the U.S. administration visited China recently, releasing some new signals and proposing some new concepts. How should we assess this momentum and accurately evaluate their purpose or read their behavior?

America’s China strategy has generally shown obvious dual characteristics. Comparing this with the traditional duality of its China strategy over past decades, we can accurately call it a new duality. The old duality features engagement plus precautions, while the new duality highlights competition plus competition management.

Ever since China and the United States established diplomatic relations, a typical characteristic of America’s China strategy had been the twin tactics of engagement and precaution — that is, on one hand actively luring China into the international system and expanding cooperation with it, while on the other hand quietly promoting infiltration and containment of China.

While the engagement aspect dominated, the precaution side was never insignificant. It was precisely the simultaneous implementation of dual tactics that determined the highly complex nature of the bilateral relationship — so complicated over past decades that despite the ostensible increase in areas of bilateral dialogue and cooperation, neither side has been completely honest with the other.

Collaboration in important fields is far from irreversible, let alone built on the basis of sufficient strategic mutual confidence. This was an important characteristic both parties were well aware of but left unspoken.

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As great centenary changes continue to expand and accelerate, major country competition has become the main theme of international politics, and China-U.S. relations have embarked on a new track. Starting from the Trump presidency and extending through to President Joe Biden, a new China strategy is gradually taking shape and displaying a new duality. It features the dual tactic of competition plus competition management. This new duality has become especially obvious lately. 

Competition has been the mainstay of America’s new China strategy. It includes decoupling and a supply chain reshuffle at the economic level, clique-forming at the political level, deterrence and siege tactics at the security level, smearing and denigration at the public opinion level and constraints at the rules and norms level. Both the Trump and Biden administrations have been merciless in continuously escalating tensions. More ferocious moves may be on the way as the competition unfolds.

Meanwhile, competition management has been evident, and brooks no neglect in any proper evaluation of America’s current China strategy. If the essence of competition is containing China, then competition management is a hedge against such suppression. The outcome was imaginable when the reckless Trump administration attempted to score a swift win in its game against China. One significant adjustment the Biden team has made to the Trump approach was giving up on swift triumph and focusing on long-term suppression.

Recent remarks by Jake Sullivan, Antony Blinken and Kurt Campbell have all revealed one point — that competition with China will be a process that will last decades and so it must be managed. Such concepts as “guardrails,” “baselines” and “indices” — all of which the Biden administration has repeatedly mentioned since taking office — along with the more recent notion of de-risking, instead of decoupling and the White House’s repeated oral commitment to the “five Nos” could all be considered as parts of competition management. We must be clear-eyed that the competition is strategic and that competition management is a tactic that serves to launch competition. 

Why “new duality”? 

The objective cause is the highly complex structure the two countries have established over time. In-depth mutual dependence, high-end strategic competition and assured mutual destruction have formed the objective reality of bilateral relations over the past decades. No matter how fierce the current game becomes, as two countries of super scale and having the greatest significance worldwide, China-U.S. interests have been deeply intertwined — a fact that American strategic decision-makers must take seriously.

The new duality may have several goals:

First is to send mixed signals to make it more difficult for a rival to make clear judgments. Another is providing diverse arguments, a tactic that was common during the Cold War.

Second is to pacify the rival and prevent it from overreacting by displaying self-restraint — something that has not exactly been rare in past centuries of major power games.

Third is to expand channels of influence and strive for the rival’s limited collaboration be leaving open “windows for dialogue” in advance.

Once we put the current round of China-U.S. interactions in the context of rising domestic financial risks in the United States, a prolonged Russia-Ukraine conflict and mounting pressure on global climate governance, we will have a clearer understanding of the motivation behind America’s new duality — the competition management aspect in particular. 

Does “new duality” work? 

Let’s first take a look at the overall domestic rating of the Biden administration’s China strategy in the past two and a half years. Judging from such public information as think tank analyses and media reports — and with the exception of Republican extremists, who have been doing everything in their power to find fault with the administration — U.S. strategic circles seem to believe that America’s China strategy has been rather successful, as has its Russia strategy. Biden has effectively applied the dual tactic of sustaining the war plus managing the war. In this way, he has continuously exhausted Russia, prevented the war from getting out of control and so far avoided fierce Russian retaliation against the West by controlling and adjusting the provision of weapons to Ukraine. 

Yet things are far from simple. Both the China-U.S. and Russia-U.S. games are long-term, all-around, multi-round and interactive. Even if the U.S. strategy works for a while, it doesn’t mean it will work in the long run. Even if it succeeds tactically, it doesn’t mean it will succeed strategically. Even if it succeeds regionally, it doesn’t mean it will succeed generally. The China-U.S. strategic game has just begun, the road ahead is long, and the influencing factors are many.

The China-U.S. game will also be a two-way process. American policymakers and strategic circles must not underestimate China’s ability to cope with their dual tactics. In particular, whether America’s China strategy proves successful, and whether the U.S. can “outcompete” China hinge ultimately on some deeper, more fundamental factors, rather than on just how the two parties interact. This in turn touches upon another issue: the inherent predicament America faces with its China strategy — a new dilemma. 

New dilemma for U.S. 

The old duality was reflected in the fact that although the U.S. was conscious that China would one day become its No. 1 competitor, it didn’t take it as a pressing imperative (1990s), or was too preoccupied to take care of it (first two decades of the 21st century). Perceived imperatives such as terrorism and the alleged Russia threat had always outweighed significant concerns such as coping with China. Now the U.S. is beginning to adopt a fresh China strategy, but the strategy faces a huge logical paradox and practical dilemma, which lie in the following four aspects:

• Continuity or transformation. This is from the perspective of the rule of thirds in the Biden administration’s China strategy. Its basic components are investment, alliance and competition. “Investment” emphasizes that the U.S. must first invest in itself, promote investment and industry flow-back, accelerate its domestic economic transformation and strengthen domestic economic governance. Since the Obama administration proposed that “economic security is national security,” decision-makers and those in strategic circles have increasingly come to understand that the U.S. won’t be able to preserve its global leadership if it fails to put its own house in order, even if it makes China collapse. Therefore, domestic affairs are the priority.

In the past few years, the U.S. has adopted a series of economic stimulus measures akin to industrial policy — the Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the Inflation Reduction Act — in a bid to leverage more private funds with public investment to promote industrial upgrades and transformations at home, coordinate economic and social progress, create more quality jobs and increase the U.S. economy’s international competitiveness.

From the perspective of U.S. domestic governance, this certainly is a good idea, but it’s another thing to put it into practice. To judge whether the U.S. as a hegemon can maneuver a successful domestic economic transformation, one must proceed from history and the long-term. Britain’s failed transformation during its time as a hegemon amid great global changes may be a good reference when we observe today’s U.S. economy.

When such late-developing nations as the U.S. and Germany engaged in all-around industrial upgrading and established new economic models based on the extensive use of internal-combustion engines and electric power, Britain saw its own economic competitiveness dwindle and its national strength wither. It also faced a dilemma then: Should it sustain its own production model powered by coal and steam engines, or resolutely embrace electric power and internal-combustion engines to comprehensively renew industrial infrastructure at home so as to raise national competitiveness? Not that Britain didn’t try, but so much had been invested in the existing infrastructure at home at the time that resistance from vested interests and path dependence determined that it could only partially embrace the new technologies and business models of the time. This resulted in the country’s lagging behind in economic competitiveness.

The U.S. inevitably is facing a similar problem: Democrats want to promote clean energy to establish new economic and business models; Republicans claim that anti-oil policies are suicidal. With a Democratic administration in office, the U.S. has proceeded well with clean energy. If a Republican government takes over, policy reversals would be unavoidable.  In this sense, the 2024 election is worthy of attention because it may determine whether or not the implementation of this round of U.S. industrial policy can reach a deeper level.

• Clique-forming or unity? Of course, the U.S. has a longstanding network of allies and partners. At its core is the transatlantic alliance — which is focused on Europe in the form of NATO, and which targets the previous Soviet Union and present-day Russia. But it entails greater sophistication to answer whether the U.S. has a network of allies and partners targeting China. The traditional U.S. network of allies and partners may be functional in containing China, but it’s obviously inadequate for coping with China, which is much stronger than the Soviet Union and located in Asia.

The U.S. must also rebuild its alliance system, move NATO’s center of gravity toward the Asia-Pacific and simultaneously entice more countries in the region into its camp against China. But will that be easy? Nowadays all countries value strategic autonomy and desire independence, and few are willing to take sides. The U.S. is attempting to form an exclusive small circle that is not based on expanding interests, because the it basically has little to offer to allies and partners. Instead it wants to take advantage of other people’s resources. Its approach is based on a fabricated threat from the country who has contributed the most to global economic prosperity. In this circumstance, the U.S. doesn’t know how reluctant its allies and partners feel when they have to work with it.

Those who get on board are a minority after all. Those who are excluded from such circles will certainly be dissatisfied with the U.S.. We have seen the majority of Global South nations refuse to take sides in sanctioning Russia, along with the West, which irks the U.S. It will inevitably offend the absolute majority to form small circles to engage in pseudo-multilateralism. And such small circles will ultimately find themselves powerless, thanks to contradictory interests within the group.

• Forward or inward? The U.S. has gone too far down the road of global expansion over the past three decades or so. Both fiscal and public opinion support have declined at home, while noises of “America first” have run rampant. This is why strategic adjustments are being made — withdrawing from the war on terror, reducing input in the Middle East and concentrating on the Indo-Pacific region and domestic affairs. From the perspective of history, these are actually signs of the hegemon’s strategic shrink, they’re refocusing, cost control and re-drawing of boundaries of interests the hegemon has to do after it felt a strategic overdraft, the limelight is on controlling the cost of overseas activities.

However, the U.S. is still bent on playing a major power game and is carrying out a whole-government, all-realm, full-time global strategic competition with China, which it identifies as the only country with both the capability and intent to challenge U.S. hegemony. This requires the U.S. to increase its input in every region of the world, and compete with China in every realm, including global infrastructure construction, leaving no stone unturned. It also requires the U.S. to boost overseas spending and take a proactive approach in global strategy.

This again introduces a major dilemma. To enhance economic and investment transformation at home while maintaining a proactive posture globally, the U.S. will have to violate its own fiscal discipline. Ruining fiscal discipline will in turn threaten financial hegemony, which is the lifeline of U.S. hegemony. It will no doubt be a very difficult choice for American policy-makers and strategic thinkers, and the difficulty will likely escalate if a financial crisis breaks out.

• Coupling or decoupling? The benefits are obvious when U.S. economic activities are coupled with China. Serious stagflation occurred in the U.S. in the 1960 and 70s. Why did it disappear? On one hand, it was because the neoliberal reforms of Ronald Regan channeled excess capital into the big pool of the financial market. On the other hand, with China joining the international economic system on its own initiative at the end of the 1970s and a flock of former Soviet states passively joining it in the early 1990s, the scale of the world market was dramatically expanded. This was important background for the Clinton administration’s Engagement and Enlargement Strategy and National Trade Strategy, as well as its achievement of a domestic balanced budget in the 1990s. In this sense, the benefits of America’s expanded economic cooperation with late-developing and periphery countries was demonstrated.

Of course there were negative impacts on the U.S. In history, every round of globalization has led to a round of multi-polarization. Late-developing nations grow after being incorporated into the international economic regime. Like other hegemons in history, the U.S. is now concerned about the rise of late-developing nations and thus has chosen to decouple so that such nations don’t get a free ride.

But decoupling will prove costly. It may stimulate some nations to accelerate their efforts toward independence, but at the same time the U.S. will lose the super-large market of late-developing countries, thus further worsening the hegemon’s own economic troubles. 

What should China do? 

The above difficulties create deep logical dilemmas for America’s China strategy. They are important yardsticks for gauging success or failure, as well as important areas worthy of careful study. History has taught U.S. that overt plans and exposed cards have always been a very limited part of overall strategies in major power games. Following are some tentative suggestions regarding China’s options.

• First, manage our own affairs well. A country must first strengthen itself before plunging into a major-country game. We must make proper investments in ourselves, including building better economic, political, societal and civilizational patterns under the meta concept of Chinese-style modernization. These are important fundamental jobs and will be challenging. They demand fine top-level design as well as concentration and endurance. 

• Second, do things well that are worth doing. This means fulfilling the due obligations of China as the most important late-developing nation on the basis of accurate judgments about international conditions. At the same time China must define well the boundaries of its international responsibilities and the characteristics of its international behavior. It must coordinate its sovereignty, security and development interests with those of the majority of countries, as well as coordinate the twin goals of building a community with a shared future for mankind and achieving national rejuvenation.

• Third, prepare for a head-on collision. Great centenary changes are accelerating, and major-country games are destined to escalate. In this sense, while maintaining strategic poise and strategic confidence, we must proceed with worst-case scenarios in mind, and get ready for dramatic ultimate tests.

• Fourth, lay sound strategic plans. The main part of the Chinese grand strategy is to lead the world in a good direction based on its own growing capabilities. For a long time to come, as domestic contradictions accumulate in the U.S. and its international status becomes shaky, it will inevitably encounter more dilemmas and conundrums, which will result in global crises, turbulence and change. We must be fully prepared for the dawn of such a situation. 

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