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Foreign Policy

Will China and the US Enter a “Cold War”?

Jul 03 , 2018
  • He Yafei

    Former Vice Minister, Ministry of Foreign Affairs

Forty years of reform and opening has not only brought earth-shaking changes to China, culminating in Xi Jinping’s “New Era of socialism with Chinese characteristics”, but have also witnessed tremendous changes in China’s relationship with the rest of the world and transformed world order, promoting gradual formulation of a new world order.

In the past 40 years, the world saw global order evolve from “bi-polar” to “uni-polar” during the Cold War and the US emerged as the sole superpower who once thought international competition between political systems had ended. And then there has been multi-polarization and globalization. Meanwhile, global governance has also been evolving from a Western undertaking into one featuring increasing East-West collaboration. Chinese President Xi Jinping recently stated that, as a socialist developing nation, China will “resolutely safeguard national sovereignty, security, development interests, actively participate in and lead global governance reform, [and] forge a more complete global network of partnership”, making a great contribution to the New Era. At the same time, as a rising power, China also faces unusual difficulties and resistance.

Though cooperation has been the mainstream in the relationship constantly marred by friction in the nearly four decades of China-US diplomatic relationship, the US’ China strategy has gradually changed from “strategic ambiguity” (not viewing China as a friend, nor an enemy) to one of “strategic clarity”. Donald Trump has identified China as a main strategic rival, demonstrating an increasingly obvious intention to contain China on such issues as trade, the South China Sea, and Taiwan.

The shift in China-US ties coincides with the new phase of “great development, great change, and great adjustment” in the global context, with the international environment getting more complicated and uncertainties growing.

First, wrangling over globalization escalates, populism thrives in the US and the entire West, as do political extremism, xenophobia, isolationism, protectionism, and trade friction will follow. Such developments seriously affect global economic connectivity and coordinated development, restrict the resolution of global challenges, and make global governance more difficult in all areas.

Widening wealth gaps between and within countries as well as continuous imbalance between market efficiency and social fairness have become a main driver of “anti-globalization”.

Second, divergences over international rules worsen, the relatively balanced international system is broken, and “disorder” and “fragmentation” are increasingly undermining global governance. With “America First” as its policy benchmark, the Trump administration is unwilling to continue providing global public goods, and is re-making international rules to preserve US hegemony and resorting to every possible means to contain any potential perceived challenger. The US has become a “revisionist” for the current world order, and the biggest variable in international relations.

Third, geopolitics gets ever more complex and sensitive, major-country relations are tense, competition rises, and willingness for cooperation ebbs.

The growing US-Russia confrontation has brought the two into a “New Cold War”; turbulence persists in the Middle East, world energy supplies fluctuate, terrorism spreads; Trump scraped the Iran nuclear deal, the latter re-started uranium enrichment, US-Iran contradictions deteriorate, those between Iran-led Shiites and Saudi-led Sunnis continue worsening; summit meetings between Kim Jong-un and Moon Jae-in and Trump opened the peace process on the Korean Peninsula, yet the future is full of uncertainties; gaming over such “new frontiers” as cyberspace, polar regions, and seabed has begun.

Warnings abound about the “Thucydides Trap” that China and US as rising and incumbent powers are destined to go to war. The recent outbreak of the China-US trade war forebodes a new stage in major power wrangling.

Four, the world faces the difficult choice between conflict or integration of different civilizations, the US-led West believes in a conflict of civilizations, with Western civilization’s inherent sense of superiority, as well as the subsequent belief that their ideologies and systems are the best on earth. They are tirelessly promoting designs of liberal Western democracies and attributing all contradictions to “conflict of civilizations”. This is the ultimate root of various geopolitical problems.

The China-US trade war is the tip of the iceberg, and the beginning of major country competition.

The outbreak of the China-US trade war was against China’s will. It derived from the isolationism, protectionism, and populism based on “American exceptionalism” and the core intentions of “America First”.

Trump’s trade protectionism has deep political, economic and social roots at home.

Quantitative loosening following the 2008 financial crisis resulted in dramatic rises in asset prices, continuously widening wealth gaps and sharp domestic contradictions. With US deficits in trade with China accounting for 46% of that of the latter’s overall foreign trade, China becomes the main scapegoat for the US’s own domestic woes.

Chinese GDP now accounts for 15% of the world’s, the achievements of four decades of reform and opening up, as well as “Made in China 2025” demonstrate the vigor and dynamism of the Chinese economy. From 2013 to March 2018, 237 “unicorn companies” emerged worldwide, with 118 (49.78%) in the US and 62 (26.16%) in China. The rise of Chinese military strength and the country’s political stability inspired the return of Cold War thinking in the US and the attempt to contain the rising power.

 Former Trump adviser Steve Bannon once said the Communist Party of China’s 19th National Congress report was actually a plan for global dominance in the next few years, warning that “Made in China 2025” will enable China to control global manufacturing in the century, that the Belt and Road initiative is geopolitical expansionism, Chinese 5G aspirations will lead to its dominance in technology, and the broader use of the Reminbi will deprive the US dollar of its status as a reserve currency. Such remarks reveal serious American hegemony and Cold War zero-sum game thinking, making it impossible to make sensible judgments about Chinese orientations.

US trade war with China originated directly from an imbalance in bilateral trade, but the real reason, however, is to repeat the successful strategy of the trade war against Japan and contain Chinese economic and technological development. Trade war can’t resolve such in-depth systematic, structural contradictions regarding Chinese and US economic structures as well as the division of labor in the global value chain. No matter if China is dragged into a trade war, or if it refrains from tit-for-tat retaliation, the US trade war against China is inescapable. Choosing the latter may be read as Chinese weakness.

Trade war is the first step of geopolitical containment, it ultimately boils down to the gaming between the incumbent hegemon and a rising power over world order and international rules that covers conflicts between development modes, ideologies, cultures and civilizations. It is thus unrealistic to assume everything will be fine when trade deficits are addressed.

There were six trade wars between the US and Japan, involving textile, steel, home appliances, automobiles, telecommunications, and semi-conductors. Japan tried hard to meet US demands, yet failed to satisfy the core ones. It appears clear now that the US’ true goal was to make Japan completely follow its global economic strategy and become its geopolitical pawn.

Some thoughts on the strategic orientation of China-US relations

Despite repeated consultations and Chinese restraint, the US is pressing ahead with a trade war and expanding it to bilateral investments, intellectual property, strategic industries, particularly high and new technologies, and with a tinge of geopolitics involving the Belt and Road, South China Sea, Taiwan, and internationalization of the Renminbi. Why?

It is necessary to analyze the orientation of US-China policies from the strategic level and historical context. As Laotzu said, the future has come before the past is gone. The changing China-US relationship amid the transition of the international order will be accompanied by various uncertainties and risks.

Will China-US friction evolve from a trade war into a “New Cold War” featuring all-round confrontation? Such concern is not totally groundless. While striving for the best outcomes, China should ready itself for the worst, refrain from under- or overestimating the possibility of another “Cold War”, take a serious look at the severe domestic and international challenges in the face of both countries, and engage in active communication and in-depth consultation. The “unknown” and “uncertain” have actually provided opportunity and room for exploring the two countries’ common ground. While adhering to their own development orientation and strategic goals, they can make proper adjustments to their own policies, so as to create a “win-win”, rather than “lose-lose”, scenario.

If the US insists on containing China, the likelihood of the two parties sinking into the “Thucydides Trap” will increase. The US knows this very well. Then why is it adamantly pushing bilateral ties toward confrontation? It is mainly because the US finds China’s strategic orientation doesn’t conform to its expectations. Quite a few Trump confidants, including Steve Bannon and Peter Navarro, have made explicit statements about this.

For the past few decades, the US supported China in its reform and opening, joining the WTO, and participation in globalization, in the hope of making China gradually embrace Western values economically and politically. US leaders had anticipated reform and opening would facilitate a market-oriented economy and political openness, and finally make China accept US ideas and systems of “democracy” and “freedom”.

That China has blazed a different trail and succeeded has proven the failure of that wishful thinking, resulting in a profound sense of frustration on the US’ part, and the realization that it has overestimated its own capability for leading Chinese strategic orientation. China has neither become “another US”, or “another Japan” under “Pax Americana”. Success of the “Chinese model” offers developing nations an option different from the US one of economic neo-liberalism and the “Washington consensus”. Yet through the prism of US hegemony, the Chinese contribution becomes “evidence” of Chinese attempts to grab global dominance from the US and overthrow the US-led international system.

The National Interest magazine article “America vs. Russia and China: Welcome to Cold War II” analyzed the possibility of a “Second Cold War” from the perspectives of politics, diplomacy, military, economy, reflecting the opinions of many American elites.

In recent years, “New Cold War” had been used to describe worsening US-Russia relations, now it is also applied to China-US ties. It takes patient, cool-headed observation to find out what this means for the two countries and the world.

The US faces difficult choices at home and abroad, as many people in the US believe their country will pay a tremendous price for all-out confrontation with China, not to mention the strategy may not necessarily succeed, and may not be endorsed by its allies.

According to Price Waterhouse Coopers’ estimate, in terms of purchasing power parity, by 2050, Chinese GDP will reach $58.5 trillion, and the US’ will be $34.1 trillion. It is impossible and unrealistic to exclude China.

With proper communication a China-US “Cold War” is avoidable. After all today’s world is a “global village”, where economic interdependence has formed a community of shared interests, and there is no winner in confrontation.

The US needs to forsake its Cold War era approach and try to construct the geopolitical model of peaceful co-existence the philosopher John Gray proposed in dealing with major power relations, especially China-US relations. The US need not worry that the “Washington consensus” may be replaced by a “Beijing consensus” or that the US model will give way to a Chinese model. As countries build a community of shared interests, economic globalization, multi-polarity, and pluralism will be the trend.

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