In recent years the international community has witnessed the increased confrontation, yet also cooperation between the United States and China, mainly as the latter gained a larger market share in the global economy and developed its military capacity. Looking forward, pundits and analysts have vigorously pontificated in support of one of the two alternatives for the future of this relationship. I beg to differ.
The sheer size of these two countries, especially their economic weight, makes them unignorable. Associated with their healthy appetite for successful economic growth are their political ambitions and considerations, often in competition or in conflict with one another. Consequently, it is most probable that confrontation and cooperation will not be mutually exclusive but rather come hand in hand with respect to these two giants.
The confrontation between major powers frequently brings into play other global or regional players. Today, Asia is witnessing an arms race bigger than anything it has seen, involving not only the United States and China but also direct and indirect allies such as Japan, South and North Korea as well as Russia. This has included inter alia military activities in the East China Sea, the launch of ballistic missiles by several parties, the expansion of nuclear arsenals in the region, doubling of military budgets, upgrading of military capabilities, new mobile anti-ship missiles and plans for new US Marine deployment. Each of these acts is met by consternation and anxiety from others in the region.
Japanese and Chinese vessels have been manoeuvring in contiguous zones. Russian warships joined Chinese ships and planes for live-fire exercises in the East China Sea. China held unprecedented military drills around the Island and across the median line. And the USA has approved a growing list of military sales to Taiwan. In parallel to all this, North Korea has affirmed plans for a significant increase in nuclear capacity and delivery systems , some envisage that this would put them ahead of French or British capacity, which has generated prospects for increased military capacity as well by South Korea and more substantial security commitments from the United States for its allies in the region. This includes the presence of a major US aircraft carrier in North Korea's backyard, which is perceived as a threat to China. All of this directly feeds the anxiety and expectations Chinese American confrontation is inevitable.
Escalation of military and security paradigms no doubt raises the potential for confrontation, as does hyperventilation regarding the threat perceptions towards the other side, increasing risks of actual physical engagement. An exacerbating factor is that this is often further reflected in aggressive tones in the political discussions amongst practitioners and national security doctrines. It is reasonably well documented that the US now sees China as a strategic existential threat well ahead of Russia.
Dealing with Ukraine!
China and the USA are major powers with a keen eye on international events. The Ukraine crisis is one example. China walked a fine line in this respect. On the one hand, it was clearly uncomfortable with an increasingly assertive footprint of western political dominance. Still, it was also uncomfortable with the Russian undertaking of outright military operations into Ukraine territory. China thus talked of the need for new world order. However, it was careful not to be drawn into providing military support for Russia, and it is understood to have urged Putin to talk privately about the importance of ending operations. Then with Chancellor Schultz of Germany and US president Biden, it publicly cautioned against the threat or use of nuclear weapons and strongly affirmed that a nuclear war should never be fought. They took this position publicly despite Biden speaking increasingly aggressively regarding Taiwan before the administration quickly clarified that it had not changed its One-China position.
At the same time, it is a foregone conclusion China has carefully followed the political, military and economic operations associated with the Ukraine crisis. Russia’s performance and, thus, its value as a partner is one angle to pursue. Another and more important one is the West’s significant capacity to support Ukraine both militarily, by way of hardware and intelligence, as well as economically. It will nevertheless not go unnoticed that the provision of ground troops or active military personnel in theatres of operation has generally not been an option.
Western steps to apply sanctions against Russia and cripple or at least choke its economy by making financial assets unavailable will also not go unnoticed . All of this will factor into calculations of potential US and western responses in Asia . This will underline the importance to China of hardwiring the economy against sanctions by strengthening the renminbi's international position and increasing the currency's share of global foreign exchange reserves.
Therefore, I assert that the considerable potential exists for premeditated or inadvertent confrontation between the United States and China; this is especially so with respect to the Taiwan situation and reunification with mainland China.
Cooperation of Superpowers?
On the other hand, and despite increasingly assertive competition in the economic domain, there remains much interaction and interdependence between the two countries, which word augur for cooperation or, at the very least, contained if aggressive, mutually beneficial economic competition between China and the USA. The value of US imports from China has increased 500% over the last two decades reaching $500 billion in 2021. The United States is China’s second-largest trading partner at $759.4, second only to the EU at $847.3. China is the US's largest goods trading partner, reaching $559.2 in total goods trade in 2020. Exports to China create nearly 900,000 US jobs, and Chinese companies in the United States employ 160,000 workers.
In fact, trade and investment data continue to point stubbornly toward deep interdependence between USA and China. Both will continue to have disproportionate weight in the international system moving forward. They both have vital technology sectors, deep capital pools, data abundance and highly competitive innovation ecosystems. Roughly half of the 4,500 artificial intelligence firms globally operate in the USA, and a third in China. Bilateral friction has seen an increase, but decades of interdependence have yet to be undone, albeit with both now taking steps to curtail the influence of the other. China has been regulating where their companies access foreign capital. The USA has been highly sensitive and keen to limit Chinese access to its technology sector; hence microchip access has been a significant concern, not encouraging US companies to invest in China.
Even so, major American investment firms have increased their presence in China. Estimates are that US investors held $1.1 trillion in equities issued by Chinese companies, and there were $3.3 trillion in US-China two-way equity and bond holdings at the end of 2020. An important area of US-China interdependence is knowledge production, with companies creating research centres.
In the near term, with a tense geopolitical environment, acerbic diatribes and reciprocal countermeasures are bound to slow the pace of socioeconomic cooperation between the two countries. President Biden, for one, has already repeatedly sharpened his rhetoric and actions in this regard. Major near-term improvement in Chinese -American relations is unlikely. For the time being, relations will be tense. However, both will control hostile impulses, with the relationship in a hardening competition that recognizes that both sides will be impacted positively or negatively by their capacity to address the challenges of our times.
USA and China relations can witness military confrontation, albeit most probably of contained nature. However, it is more probable to be a relationship characterized by confrontational cooperation in the immediate future and until the dust settles on a new world order. This will require sustained and careful assessment by other international players, who will be best served by open and diverse relations, with these two major powers with an unwavering commitment not to fall into the trap of over-dependence on one another.
