US-China
relations at a pivotal point
By Dr Hani K Findakly
On
January 8, 2021, the US Senate passed a $250 billion legislation described as
one of the largest industrial bills in US history in a bipartisan effort to
ensure that the US remains competitive with China.
This
measure is a part of intensifying debate among pundits, policy makers, and the
media of all political persuasions over China’s foreign policy. This debate has
increased in intensity and frequency in recent years and its decibel level
conjures up memories of the Cold War.
Alarmed
by China’s rising power, the focus has shifted to its ambitious economic plan
embodied in the Belt and Road Initiative (BRI), and its political assertiveness
in the South China Sea and over Taiwan, and its handling of internal dissent in
Hong Kong and Xingang. Such is the state of the global order that G7, which met
in the UK this month as the group of the seven largest world economies, meets
to discuss, of all things, such weighty issues as the global economy, COVID-19,
and China, among other issues.
The
irony of excluding the world second largest economy from such meetings and from
the Group’s membership altogether cannot be lost on China, whose economy nearly
equals that of the collective economies of six members of the G7, save for the
United States.
Yet,
the rhetoric over China lacks the kind of coherent strategy that George Kennan
articulated in his 1946 “long telegram” and his Mr X article in Foreign Affairs
regarding Russia. China is not the Soviet Union, and a defeat of China,
isolating it or its breakup are not realistic endgames. Instead, a
well-articulated strategy that aims to keep the US-China relations at a
competitive level, while avoiding a slide into a Thucydides trap, is critical
at the stage.
Formulating
such a strategy must include an understanding of Chinese history and its and
Taoist Confucian cultures, which inform China’s motives, particularly its
century of humiliation at the hands of foreign powers.
It
took China nearly a century and a half to reclaim the Hong Kong territory ceded
to Great Britain in the two Opium wars. No Chinese leader will ever want to
preside over the repeat of such humiliation. The debate over China further
ignores its proud history in which it dominated the global economy for two
millennia until the onset of the industrial revolution. Historians may well
conclude that the past century was a historical aberration, and that China is only
reclaiming its past status.
Finally,
often overlooked are the constraints China faces in assuming its proportional
role in governance of the rules based institutions, such as the Bretton Woods
organizations and the regional development banks. Until recently, China had a
smaller voting power at the International Monetary Fund (IMF) and the World
Bank, for example, than that of Italy or Saudi Arabia. Even today, China still
lags Japan, whose economy is nearly a third of China’s, in voting power at the
IMF, the World Bank, and other regional development banks. At the World Trade
Organization (WTO), where China has lost most of the cases brought against it,
it was the US that sidelined the WTO by blocking judicial appellate
appointments and by imposing unilateral tariffs.
Today,
even the composition of the G-7, that is meant to represent the largest global
economies, is a relic of the past, whose combined economies, except for the US,
barely equals that of China. Such factors are important drivers for China’s
promotions of its own sponsored financial “clubs”, which are often viewed with
skepticism. A recent Council on Foreign Relations report has echoed the
widespread belief in concluding that the BRI’s risks to the US and recipient
countries “considerably outweigh its benefits”. Nonetheless, such initiatives
have grown in size and scope to be dismissed as merely political ploys.
The
US-China tension centers around four areas of conflict, namely, security,
economics, technology, and ideology. While these issues are legitimate areas of
concern, they do not help identify a tangible endgame. Ironically, the 1972
Nixon approach to China was designed to drive a wedge between China and the
Soviet Union.
Today,
the current policy has succeeded in reversing that policy by bringing Russia
and China closer together. China will always be China and its economic and
technological gains are nearly irreversible. It already has an estimated over
70% of the world’s 5G base stations and 5G smartphone users, and its advances
in Artificial Intelligence and supercomputing, etc. assure its sustainability.
Although its past growth has been augmented by alleged intellectual property
violations, a recent report by World Intellectual Property Organization shows
that China has recently surpassed the US in trademark and patent applications.
Though
China has no record of proselytizing, it pursues its own national interest
through a foreign policy that is heavily grounded in economic programs with
three implicit goals: access to energy and raw materials; markets for its
products and companies; and strategic spheres of influence. Still, its muscular
foreign policy has contributed to the anti-China rhetoric, which has bifurcated
into political (Taiwan, South China Sea, ideology, and human rights), and
security (technology, cyberattacks, trade, and military) issues that threaten
to create a “one-world, two systems” by adopting competing standards of
technology and changing supply chains. While this strategy has the benefits of
creating competition and mitigating the risks of an adversarial confrontation,
it is costly, has an uncertain outcome, and it may be already late.
Nonetheless, the model of competing technologies, along with the continuity of
strategic ambiguity over the One China policy, may offer a practical interim
solution, which game theory describes as the Nash Equilibrium, in which both
sides behave within pre-determined norms from which neither side would deviate.
In other words, it is a form of competitive coexistence.
A
recent Economist magazine labeling of Taiwan as “The Most Dangerous Place on
Earth” is a sobering reminder of the inherent risks in global tensions. It is
also a stark reminder of Norman Angell’s seminal 1909 book “The Great
Illusion”, on the eve of WWI, where the British Parliamentarian argued against
the possibility of war because the economic cost of war was so great and the
economic interdependence among countries would be “the real guarantor of good
behavior”. Angell was both right and wrong. Let us hope that this time is
different.