Introduction
In 2008, when the recession struck Americans, China injected millions of dollars into the market. Xi Jinping began peddling the narrative of “dong shen xi jiang” — the rise of the East and the fall of the West. In contrast to Deng Xiaoping’s dictum “keep a low profile and bide your time,” Xi told the annual legislative sessions in Beijing that “China can already look at the world on an equal level.” In many sectors, China’s economy has already surpassed the U.S., fulfilling Deng’s prioritization of economic development. The Chinese Communist Party is now turning to political and military expansions that have thus far taken a back seat. To counter itself against the democratic United States, China is primed to adopt an increasingly authoritarian regime. The trade war may very well be the first of many more conflicts to come.
The impression that China is now the foremost adversary of the U.S. has become so prevailing that talks of a new Cold War reverberate in the media. In fact, the powerful image of a U.S.-China showdown as a replica of Cold War rivalry has compelled major leaders to reject the analogy to quell fears. President Biden insisted to world leaders at the 76th session of the United Nations General Assembly that “we are not seeking a new Cold War.” President Xi Jinping, too, as chair of the 14th BRICS Summit, stated that countries should relinquish the Cold War outlook, with the Ministry of Foreign Affairs accusing the United States of worsening tensions by using the Cold War analogy. While European leaders have not formally addressed the rhetoric, two-thirds of Europeans believe that a new Cold War is indeed brewing between China and the United States.
Proponents turn to this analogy to describe China’s recent military developments and the ideological rivalry between the two countries. Record numbers of Chinese airplanes are revving their engines into Taiwan’s air zone. The People’s Liberation Army is testing hypersonic missiles that can orbit the Earth. The number of Chinese nuclear warheads is predicted to grow to 1,000 by 2030. One can’t help but ask: who is the next Cuba?
We rely on historical comparisons because they help us wrest control from the unknown of the present. Yet when an analogy is not applied correctly, the past is likely to misguide us. Using the Cold War as an analogy for current U.S.-China relations harms U.S. foreign policy decision making. The economic interdependence between America and China, in contrast to the isolationist Soviet Union, necessitates an approach to China that is markedly different from Cold War policies.
A Look at History
The Cold War occurred because it was in the United States’ interests to curb the Soviet Union’s expanding ideological and military influence. In his famous “Long Telegram” in 1946 and a subsequent article in “Foreign Affairs” in 1947, the diplomat George F. Kennan recommended the U.S. pursue a “long-term, patient but firm and vigilant containment of Russian expansive tendencies.” In the 1947 Truman Doctrine, President Harry Truman certified containment as U.S. policy. In 1948, the U.S. provided economic aid to Western Europe under the Marshall Plan for fear that communism would gain popularity following post-war poverty and unemployment. In 1949, the North Atlantic Treaty Organization was established as a defense pact and bloc against the Soviet Union. In the 50s and 60s, the Soviet Union seemed to possess great potential in replacing America as the leading world power. Yet decades of American containment, in addition to revolutions in Eastern Europe and poor Soviet economic policy, disintegrated the Iron Curtain into molten disarray.
Unlike U.S.-Soviet relations, economics played a central role in U.S.-China relations after the end of World War II. As the Harvard Kennedy School Professor Emeritus Joseph S. Nye Jr. wrote in a Security Times article outlining his views for the Munich Security Conference, while the U.S. was involved in a “regular two-dimensional chess game” with the Soviets, “with China, the U.S. is involved in a three-dimensional game with different power distribution at each level,” including military, economics, and transnational relations (such as climate change and epidemics). Bob Davis, former senior editor at The Wall Street Journal and co-author of “Superpower Showdown,” further describes in an interview with the HPR that economics “became the glue that held this relationship together.”
Economic interests have driven peace between the U.S. and China. “The objective of the strategy of engagement,” Aaron Friedberg, professor of politics and international affairs at Princeton University, said in an interview with the HPR, “was to encourage the liberalization of China’s economic system and the eventual liberalization of its political system.” The Shanghai Communiqué, produced out of President Richard Nixon’s historic meeting with Chairman Mao Zedong in 1972, reads that both sides “agree to facilitate the progressive development of trade between their two countries.” In 2000, President Bill Clinton signed the U.S.-China Relations Act, paving the way for China to join the World Trade Organization in 2001. Historically, engaging with China economically eased, rather than heightened, American fears of its ideological and military expansions.
Ironically, America’s attempt to recruit China as an economic ally instead of viewing it as an existential enemy like the USSR contributed to China’s rapidly sustained growth. During the Brezhnev era, the Soviet Union suffered from stagnation from an economy favoring central planning and state ownership, structures that failed to keep up with the increasing complexity of the economy. In contrast, Deng Xiaoping, the de facto leader of China in the 80s, advocated for promoting non-intervention by the state and opening up to foreign expertise, allowing China to align more closely with the West’s free-market economy.
In the words of Lingling Wei, Chief China Correspondent of The Wall Street Journal, in an interview with the HPR, “China’s miraculous economic growth over the past 40 years is really not a result of state control [but] a result of the opposite, meaning government staying out of the way and letting private market forces really prosper.” From its abject poverty following Mao’s disastrous Great Leap Forward in 1958, “socialism with Chinese characteristics,” defined however the Party desires, has propelled China’s GDP to $17.73 trillion in 2021. China, the economic powerhouse that it is, has soared to a level which the Soviet Union was never able to attain. A total containment of China is simply impossible.
The Trade War
While the U.S. recognizes the growing threat of China, American dependency on the Chinese market hinders its efforts to limit Chinese economic growth. China is America’s third largest exporter, following Canada and Mexico. In 2020, it imported $350 billion worth of chips, the majority of which came from the U.S. American companies also generated $40 billion from products sold to Chinese consumers through Alibaba; 40% of Apple’s net sales came from China. At the same time, China is America’s largest importer and represents 27% of U.S. manufacturing GDP, the dependency equivalent of Third World countries and their former colonial powers. China occupies a central role in global supply chains, including textiles, electronics, and basic metals; it also produces 70% of the world’s pharmaceuticals and half of its masks. During the Cold War, the U.S. delivered only 1.5% of its exports and obtained 2% of its imports from the USSR; the United States today is much more reliant on its purported geopolitical adversary.
Due to the two economies’ interconnectedness, U.S. punitive tariffs on China have inevitably hurt the American public. With the launch of the trade war in 2018, the Trump administration introduced the greatest tariffs since the 1930s, imposing duties averaging 19.3% on 66%, or $360 billion, of American imports from China. China retaliated with tariffs averaging 21.2% on 58% of its imports from the U.S. While China suffered three times the GDP loss of the U.S., industries such as BMW have relocated their production to China as a result. As the Biden administration largely kept in place Trump’s China policies, business groups have protested that tariffs increase costs for domestic manufacturing and render exports “less competitive abroad.” Secretary of the Treasury Janet Yellen stated that tariffs “hurt U.S. consumers” and contribute to at least 1 percent of inflation. An open war with China has thus far resulted in at best a draw and at worst a loss for America.
The U.S. isn’t the only economy dependent on China. Globalization means that a war, in whichever form, between the U.S. and China would reverberate across the world; but are allies as eager to pick sides as they did during the Cold War? For the European Union, China is its largest trading partner, ahead of even the United States. The EU is strategically dependent on 43% of its current imports from China, and it predominantly imports 19 out of the 30 raw materials classified as critical, many vital for the technology and microchip sector. For instance, Germany and China developed strong economic ties under former Chancellor Angela Merkel; China is Volkswagen’s largest single market. Declaring war on China would incapacitate European economies.
2022 finds Western economies in a particularly weak position to weather a scaled-up version of its sanctions on Russia following the Ukraine war. While Russia’s GDP is expected to contract by 10% at the end of this year, Western democracies have arguably suffered just as considerably from their own measures. The price of natural gas increased by 60% in just two weeks in Europe, and consumer prices rose by a record 8.1% in May. Inflation woes strike consumers daily, from gas stations to grocery stores. If Europe’s trade with Russia does not constitute even half of the amount of its trade with China, the U.S. cannot reasonably expect its European allies to take on multiple times the economic damage by warring with China.
Although the success of the trade war is thus murky, the U.S. could still enact measures that limit China’s economy and the CCP’s influence. The telecommunications company Huawei, for example, maintains close ties with the Party and has been accused of stealing intellectual property as well as spying on Western nations. Following Trump’s executive order assigning it on the U.S. Department of Commerce’s Bureau of Industry and Security Entity List in 2019, Huawei reports declining revenue in 2020 in every country except for China. In terms of the Phase One Deal, Wei explained that while China toughened up data security law, compelling companies to store data within China, it also granted more licenses to foreign banks and insurance firms. In response to China’s increased use of protectionist subsidies and unfair joint ventures policies, the U.S. simply needs to develop a unified and comprehensive approach that is currently absent.
Implications
Experts hold divergent opinions regarding the correct U.S. strategy toward an increasingly hostile China. As Friedberg says, “we acknowledge that we’ve got a medical problem, and we’ve converged on the diagnosis of that problem, but we haven’t yet fully agreed on the prescription.” In his book “Getting China Wrong”, Friedberg suggests a combination of accelerating U.S. domestic technological growth while slowing down China’s. Ryan Hass, Senior Fellow at the Brookings Institution, said in an interview with the HPR that imminent legislation to authorize funding for domestic production of semiconductor chips would be a good direction. On the other hand, Davis suggested that trade could actually be “a way forward” in the two countries’ relationship because, despite the trade war, the Phase One Deal was “at least a truce”: the first thing that the two countries could agree on, and the first thing that could work to both of their advantages.
“My view is that the United States should do what is in America’s best interests,” said Hass. His statement sounds intuitive enough, yet it runs contrary to the current political climate of Washington, where Democrats and Republicans alike are competing for the title of being “tough on China.” Perpetually reacting “reflexively against China” lets China – not America – dictate the next step of American policy. The U.S. must not choose between an either aggressive or accommodating stance. Actions to both increase defense capability in the Indo-Pacific and collaborate with China to address climate goals advance U.S. interests. Competitive interdependence necessitates that neither the competition nor the cooperation facet of the relationship precedes the other. Simply being tough on China works against U.S. interests.
The United States and China are joined in a deadlock. The likelihood of a conflict over Taiwan, as escalated by recent Chinese aircraft encroachment into Taiwan’s Air Defense Identification Zone, or of a miscalculation in the South China Sea, is unprecedented. Wei concluded, “keep in mind that at least it’s a cold war and not a hot war.”
As of right now, Hass advises, America’s most effective tool against China is strengthening itself.
Image by Brian Matangelo is licensed under the Unsplash License.
