Deteriorating US-China Relations: A Burden the World Can Ill Afford

While interactions between China and the United States have been on the increase recently, there have also been an endless stream of U.S. plans and initiatives to unite with its allies to contain China. The most recent Group of Seven summit produced the Partnership for Global Infrastructure and Investment as a counterbalance and hedge against China’s “Belt and Road” initiative; and NATO issued a Strategic Concept at its summit in Madrid, asserting that China poses a systemic challenge to NATO and that NATO members will work together to address that challenge.

The United States ignores the salient fact that a deterioration in relations between it and China would be unbearable for both countries and for the world; but a prudent, rational, and rapid deescalation of hostilities between them would be important for world peace and security, as well as for development and prosperity.

The Unendurable Pain of Deteriorating US-China Relations

In the decades since China and the United States established diplomatic relations, the economies of the two countries have become deeply intertwined and embedded in each other, creating close ties between the nations. In terms of single countries, the United States is currently China’s largest trading partner, with bilateral trade reaching more than $750 billion last year and 70,000 U.S.-owned companies in China with annual sales of more than $800 billion. American companies need China’s industrial support capabilities, large market size and abundant human capital. According to the 2022 China Business Climate Survey Report released by the American Chamber of Commerce in China and PricewaterhouseCoopers, almost 60% of U.S. companies in China made a profit here in 2021, and nearly two-thirds ranked China between being the No. 1 investment destination in the world and being among the top three.

The United States and China inhabit the same planet. Both are nuclear-armed superpowers, emit greenhouse gases into the same restricted biosphere, and have the power to destroy each other – or the world. This writer agrees with the view of American scholar Graham Allison, who says in handling the U.S.-China relationship, the bottom line is that no matter how intense the rivalry or how much the hostilities fester, the end result may be that “neither side can kill the other without simultaneously committing suicide.” If either country wants to realize its national interests, it must look to the other for ways to coexist, even if it has no choice. This is the status quo of U.S.-China relations, determined by the fact that the competitive relationship between the United States and China must not move toward a Cold War. The Cold War was an iron curtain in the economic sense, and one that divided the world.

Former U.S. Secretary of State Henry Kissinger argued that a deescalation of hostilities in the relationship between the United States and China would be important to overall world peace, because it is normal for there to be a certain amount of tit for tat between the world’s two largest economies. However, to involve China or the United States in any global conflict would be dangerous indeed, because if either country were to confront the other, disaster for humanity would outweigh World War I or World War II.

Most Countries in the World Are Reluctant To Pick a Side

President Joe Biden regards China as America’s most important strategic rival, while Secretary of State Antony Blinken has said that China is the most serious long-term strategic competitor. In this light, whether it is the Indo-Pacific Economic Framework, the Quad mechanism, the U.S.-British-Australian AUKUS mechanism, or an alliance of democratic values pushing NATO to challenge China, this series of actions is forcing some countries to choose between China and the United States in an effort to de-Sinicize the worldwide industrial, supply, and value chains that are intrinsically linked and mutually supporting.

But from the U.S.- China trade war in the Donald Trump to the Biden administration’s current spate of policies to encircle China, with only a few exceptions, the vast majority of countries have expressed a clear and common tendency specifically to refrain from taking sides. The most representative example is Singapore’s Prime Minister Lee Hsien Loong, who has repeatedly stated that the more small countries are forced to take sides, the more worrying the situation will become if conflicts between major powers lead to uncertainty or instability in the world.

This reflects a global trend whereby the majority of countries that do not choose sides are forming a middle ground and counterweight to the two camps or systems in a way they were unable to do during the Cold War as the competition between the great powers intensifies. This new Cold War between the major powers lacks the basis in international relations of the original Cold War, and the whole world has become an inseparable global economic structure in the 77 years since World War II. Although economic globalization has recently hit a countercurrent, it is still an objective requirement for productivity development and an irresistible historical trend, and it is impossible to exclude China from the world. In other words, a world that excludes China is incomplete and unsuccessful in any respect.

The U.S.-China Relationship Is the Biggest Variable Affecting the Global Landscape

The United States and China are the world’s largest and second-largest economies, accounting for 40% of global gross domestic product and 40% of manufacturing output. Together, their respective world currencies account for 55.7% of the International Monetary Fund’s Special Drawing Rights basket of reserve currencies.

The United States is still the world’s economic, technological, cyber and military powerhouse right now. If it were able to manage its relations with the major powers – especially with China – and if it were capable of resolving its domestic conflicts and problems, the American power cycle would continue unabated. Unfortunately, the United States is unswervingly committed to the opposite path.

When a large country with a population of 1.4 billion people advances on a path unlike that of any hegemonic power in history, all while managing its national affairs and adopting a peaceful and broadminded developmental approach that benefits people around the world, it deserves understanding and support from every country and from the United States in particular. Instead, it is met with suspicion, intimidation, and containment by hegemonic powers.

The United States sees China as its biggest – or, increasingly, its most important – strategic competitor and is pressing back hard at every stage. The Biden administration has not only inherited the political liabilities of Trump’s trade war with China, but also rapidly extended them to technology, supply chains, ideology, etc., interfering more deeply in China’s internal affairs, trying hard to stoke internal rifts within China, and attempting to provoke conflict between China and other countries. The United States is reshaping the system of global alliances, restructuring its ideology-based industrial supply chain system, and launching its Indo-Pacific Economic Framework, all of which are aimed squarely at China.

The United States is pushing other countries and regions to decouple from China’s economy, and if this were to happen, it would inevitably tear the highly interconnected world apart. If the world were to split into two systems or camps, not only would both China and the United States lose, but it would be tantamount to destroying the structure in place for over the 70 years since World War II, and would eventually shatter globalization in the wake of any confrontation between the two major powers.

Both China and the United States are great nations, and it is difficult for each to shake, replace or overcome the individual position and influence of the other. Cooperation between the two produces a multiplier effect, whereas confrontation inevitably results in a negative multiplier effect. As nuclear powers and permanent members of the United Nations Security Council, China and the United States play a critical role internationally. Theirs is more than a bilateral relationship having spilled over globally. How the countries handle their relationship and the direction that relationship takes will be the biggest variables in the evolution of the global landscape will .

If the United States insists on continuing down the wrong path, forcing its allies and other countries to pick a side while it does its utmost to provoke China and challenge our bottom line, even at the risk of sparking a war, the result will be no mere “Saigon moment” or “Kabul moment.” The United States can decide how to begin, but it cannot decide how and when to end. And that may well become the most dangerous choice the United States could make on a path to self-destruction.

China is not wrong to seek peaceful development; it is not wrong to serve the vast majority of its own people and those of the world and to lift them out of poverty; nor is it wrong to seek and create development opportunities for more countries through cooperation with the Belt and Road Initiative. China is building roads and bridges to promote global interconnectedness and peaceful coexistence among nations, while the United States is building walls and closing circles, inciting wars, and striking or destroying one country after another that conflicts with its interests. The world has long suffered at the hands of the United States, a country that would be better served by changing its ways and reconnecting with a China that has risen peacefully and is creating increasingly positive spillover effects in the world. The United States should recognize that destroying a country with thousands of years of accumulated history and culture is a dead-end that neither the U.S. nor any other country can achieve; and further, the U.S. should recognize the importance to both countries and to the world of an America that properly manages its relationship with an inclusive and broad-minded China.

The United States should set an example globally by leading people to a renewed recognition of and goodwill toward China, something that will lead to greater understanding, respect and rewards from China, and greater benefit to the United States through cooperation. Let’s hope that the United States opts for a wise and correct strategy, so it may ease the decline the country faces and once more be a great and respected nation. Both countries should cherish the decades of economic ties and people-to-people exchanges since China and the U.S. established diplomatic relations, and work together to build a better and more peaceful world.

The author is chief economist at the China Center for International Economic Exchanges, Beijing.