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Foreign Policy

The Contest Between China and the US

Aug 24 , 2018
  • An Gang

    Senior Researcher at the Pangoal Institution

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It is a great pity that China-US relations have entered a phase of strategic rivalry and competition. This is the unfortunate reality.

US political and strategic communities have reached a consensus that China is engaging in strategic competition with the US, and their “strategic patience” towards China has shrunk sharply.

At present, US politicians and strategists believe that China wants to build a new world order which shuts the US out and divides the West. China is expected to overtake the US in terms of aggregate volume in the mid-21st century as the world’s largest economy, and they think China will make its own rules. They think China is competing for “spheres of influence” and aims to undermine the US’ geopolitical clout. They think China is reviving Marxist theories and exporting institutions and models with Chinese characteristics to the rest of the world.

This consensus manifests in two developments. First of all, the Trump administration released three guidance documents in a row since the end of 2017, the National Security Strategy, the National Defense Strategy, and the Nuclear Posture Review. These reports shift the focus of US foreign strategy from fighting terrorism back to traditional inter-state competition. They expressly brand China as the US’ “principal rival in strategic competition” and “a revisionist power” challenging the international order, and herald the adjustments to US policies towards China. Secondly, in February 2018 Congress passed the Taiwan Travel Act without any opposition. Hence the vote this time signals the strong anti-Chinese sentiment of both parties.

It is no coincidence that the National Defense Authorization Act (NDAA) for Fiscal Year 2019 passed the House by a vote of 351-66 on May 24th, 2018 and the Senate by a vote of 85-10 on June 18th — the act contains several tough terms concerning China, including disinviting China from participating in the Rim of the Pacific exercises. The 2018 China Military Power Report, which was recently released by the US Department of Defense, also takes the same stance. It states that “the People’s Liberation Army (PLA) has been developing strike capabilities to engage targets as far away from China as possible” and that “the PLA also is likely preparing for a contingency to unify Taiwan with China by force”. Some Chinese scholars believe that the US’ views on China’s military power have reached “a tipping point, transitioning from quantitative changes to qualitative changes”.

The economic race stands at the core of China-US competition. The US President Donald Trump has repeatedly overturned fundamental consensuses reached between the two sides at the working level, imposed new tariffs on goods imported to the US from China, and expanded the scope of the tariffs. All this shows that the situation is not simply a “trade war” nor described as “the largest trade friction ever”; rather, it is the beginning of and the fuse for US adjustments to its strategies towards China.

Chinese scholars are increasingly inclined to believe that Trump, formerly an experienced businessman, does understand that China’s countermeasures may cause damage to US industries and that the trade war may harm Chinese people’s rights to pursue a better life. Nevertheless, his trade policies have been dominated by hawks. As a result, he tends to accept what the Director of the White House National Trade Council Peter Navarro argued for in his books Death by China and The Coming China Wars. The lose-lose strategy is essentially an “institutional showdown”, aiming to halt the rapid growth of the Chinese economy and the expansion of the Chinese capital market, suppress China’s industrial competitiveness and technological innovation, and keep China in the middle- and low-end segments of the global industrial chain.

Some Chinese scholars also note that besides China, the trade war is also waged against US allies, including Canada, Mexico, South Korea, Japan, India, and some EU member states. It is known that the motive behind the trade war is to jack up the global prices of commodities and export inflationary pressures — yet people are wondering whether the US also plans to leverage the trade war to firstly “exit” and then “reconstruct” the global trade system: first of all, the country withdrew from the Trans-Pacific Partnership (TPP), renegotiated the North American Free Trade Agreement (NAFTA), shelved the negotiations on the Transatlantic Trade and Investment Partnership (TTIP), and completely abandoned the measures to construct a liberal international order which were practiced when Democrats held the presidency. Then Japan weighed in to save the TPP and struck a trade deal with Europe that cuts or eliminates tariffs on nearly all goods; finally, the US would step forward to put aside its trade disputes with Europe and reach a “high-level” consensus similar to the Japan-Europe one. This outlines the path of building a free trade zone together with other developed countries. People wonder whether the US wants to, by setting up such an “elite club”, sideline the World Trade Organization (WTO) which the country considers as ineffective and dominated by such developing countries as China, revise the international trade rules, and reconstruct a US-centric global trade landscape and economic order.

If the speculation is correct, a new NAFTA may be realized, what agreements are reached between US and India, whether the US will look for a way back into the TPP, and what “bullwhip” threats the country will launch against foreign energy businesses to mess up the Middle East, punish Iran, and control international oil prices.

Alongside the trade war waged by the US is its increasing military and political containment of China. This can be shown by the country’s so-called “Indo-Pacific” strategy, which, targeting China as an imaginary enemy, is designed to intensify collaboration of military forces in the western Pacific and eastern Indian Ocean as well as their neighboring areas and agitate for a US-Japan-India-Australia “democratic security diamond”. In terms of the South China Sea issue, the US continues to hype up China’s “militarization” and extends freedom of navigation operations from Nansha Islands to Xisha Islands. It has also repeatedly sounded out Beijing on its bottom line on the Taiwan issue, indicating that the US may intend to use Taiwan as a bargaining chip.

In the meanwhile, the US has moved from foreign security issues to domestic security issues. Because of the fear of China’s ideological expansion to the outside world and the misinterpretation of the policies of the CCP’s 19th National Congress, the US stirred up ideological competition in the world. The Republicans are experts at this. On the other hand, it labelled Chinese students in the US as spies and restricted their engagement with the country’s sensitive sectors. It also scrutinized the visits made by Changjiang Scholars and those from the Thousand Talents Program of China. 

The US’ measures have sharply changed Chinese strategists’ view of China-US relations. Even though the “sharp change” is not exposed in public or remains under the cover of obsolete dialogues, there is little doubt that the ongoing competition between the two counties has already profoundly influenced China’s perception of the US.

Under such circumstances, will the two nations fall into a “new cold war” and confrontation? If so, China, without major-power competition experience in a modern sense, will suffer. But the US has never fought a cold war against such a unique and resilient for. The results, therefore, will be extremely unpredictable.

It is fair to say that in spite of the drastic change of American views of China, its China policy has yet to change. Above all, China-US relations today differ from US-Soviet Union relations. No matter how the Trump administration attempts to mess up the order and establish a new one, the fact that China and the US are both in the same global economic system cannot be changed. The high costs that the US imposes on China’s reform and opening-up will end up harming the West.

China-US relations have entered a conflict-prone period. Whether the downward trend can be constrained depends on multiple factors. The first is the direction of US politics. Specifically, will the liberals resist the establishment, and will the Democrats resist the Republicans? And will this affect Trump? The second factor is how China will respond. To what extent will the trade war expand to other sectors? And could China employ consultation, policy adjustment, and reform to play the game in a smart way? The third lies in the evolution of the international situation, i.e. whether the economic recovery of developed economies and the downward economic trend in developing countries will continue, and whether hotspot issues like those involving North Korea, Iran, and Syria will flare up.

This November will see the midterm congressional elections in the US. It is also around that month that the two countries’ leaders will use multi-lateral events to hold bilateral meetings. This autumn, therefore, is of paramount significance. However, Trump might not take the midterms so seriously. More and more signs show that no matter how hard he and the Republicans work, it is very unlikely to change the expected result: the Democrats will narrowly win the majority of the seats in the House and the Republicans will keep dominating the Senate. Trump is already seeking a second term as the US president. The major legislative agenda during his first term, tax reform, has already concluded. This suggests he will become more aggressive diplomatically to cater to his constituents in the next two years.

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