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High stakes demand restraint from China and the US
- Confrontation between the two powers may seem inevitable but a peace formula can still be pursued
The US and China remain on a collision course. The new Cold War between them may eventually turn hot over the issue of Taiwan. The ‘Thucydides Trap,’ in which a rising power seems destined to clash with an incumbent hegemon, looms ominously. But an escalation of Sino-American tensions, let alone a war, can still be avoided, sparing the world its consequences.
There will always be at least some tensions when a rising power challenges the prevailing global power. But China is facing off against the US at a moment when America’s relative power may be weakening and it is resisting its decline. Both sides are thus becoming increasingly paranoid about the other’s intentions, and confrontation has mostly supplanted healthy competition and cooperation. Both sides are partly to blame.
Under President Xi Jinping, China has become more authoritarian and moved further toward state capitalism, rather than adhering to Deng Xiaoping’s opening up. Moreover, Deng’s maxim, “hide your strength and bide your time,” has given way to military assertiveness. Territorial disputes between it and several Asian neighbours have worsened. China has sought to control the East and South China Seas, and it has become increasingly impatient to “reunify” with Taiwan. But Xi has accused the US of pursuing its own aggressive strategy of “comprehensive containment, encirclement and suppression.” On the other hand, many in the US fear that China may challenge US hegemony in Asia.
Chinese leaders also fear that America is no longer committed to the ‘One China’ principle that underpinned Sino-American relations for half a century. Not only has America become less ‘strategically ambiguous’ on whether it would defend Taiwan; it has also fanned Chinese fears of containment by reinforcing its Indo-Pacific alliances through the Aukus pact, the Quad, and an Asian pivot by Nato.
A first step to prevent a collision is recognizing that some of the reigning concerns are excessive. For example, US anxiety about China’s economic rise is reminiscent of its attitude toward the rise of Japan decades ago. After all, China has significant economic problems that could cut its potential growth to only 3-4% per year, far below the 10% annual growth rate that it achieved over the past few decades. China has an ageing population and high youth unemployment; high debt levels in both the private and public sectors; falling private investment as a result of intimidation by the ruling party; and a commitment to state capitalism that hampers total factor productivity growth.
Chinese domestic consumption has weakened, owing to uncertainty and the lack of a broad social safety net. With deflation setting in, China now must worry about Japanification: a long period of lost growth. Like so many emerging markets, it could end up in a “middle-income trap,” rather than reaching No.1 status.
While the US may have overestimated China’s potential rise, it also may have underestimated its own lead in fields like artificial intelligence, machine learning, semiconductors, quantum computing, robotics and automation, and new energy sources such as nuclear fusion. China has invested in some of these areas under its ‘Made in China 2025’ programme, but its goal of achieving near-term dominance in 10 industries of the future seems far-fetched.
American fears about China dominating Asia are also excessive. China is surrounded by almost 20 countries, many of which are strategic rivals or ‘frenemies’ ; most of the few allies it does have, like North Korea, are a drain on its resources. While its Belt and Road Initiative was supposed to make new friends and create new dependencies, it faces many challenges, including massive failed projects that are leading to debt defaults. As much as China wants to dominate the Global South and ‘swing states’, many middle powers are resisting this ambition.
The US has imposed sanctions to keep key technologies out of the Chinese military’s hands and frustrate China’s quest for dominance. But it must limit this to de-risking rather than decoupling. As it determines which sectors to include in its ‘small yard and high fence,’ it must avoid going too far. The trade sanctions that Donald Trump imposed on China should be mostly phased out. On Taiwan, the US and China should try to reach a new understanding to defuse tension. The US should reaffirm ‘One China’ and revert to ‘strategic ambiguity.’ It should sell Taiwan the weapons it needs to defend itself, but not at a pace or scale that could provoke China to invade the island. America should also state that it opposes any Taiwanese move toward formal independence, and it should avoid high-level visits with Taiwanese leaders.
China should stop its air and naval incursions near Taiwan and state that eventual reunification will be peaceful and mutually agreed; it should take new steps to improve cross-strait relations; and it should defuse territorial tensions with other neighbours.
China and America both need policies that will reduce economic and geopolitical tensions and foster healthy cooperation on global issues like climate change and AI regulation. If they fail to achieve a new understanding on the issues driving their confrontation, they will collide. That could lead to a military confrontation that would destroy the world economy and may even escalate to an unconventional nuclear conflict. The high stakes demand strategic restraint from both sides. ©2023/ project syndicate
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First Published:5 Sep 2023, 09:14 PM IST
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