Business News/ Opinion / Views/ US-China ties: Competitive collaboration can help stabilize the world
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Chinese President Xi Jinping’s recent meeting with US President Joe Biden was critical from a geopolitical standpoint. It mustn’t be viewed as just a bilateral discussion on cooperation in high-level military communication, as it was an important step in ensuring how the two great powers can agree to pursue ‘collaborative competition’ without being in perpetual conflict in a multipolar and war-affected world.
Chinese President Xi Jinping’s recent meeting with US President Joe Biden was critical from a geopolitical standpoint. It mustn’t be viewed as just a bilateral discussion on cooperation in high-level military communication, as it was an important step in ensuring how the two great powers can agree to pursue ‘collaborative competition’ without being in perpetual conflict in a multipolar and war-affected world.
Some scholars see the emergence of Cold War 2.0 in the fraught US-China relationship, but it can also be recognized as a race to achieve ‘collaborative competitiveness.’ During the Cold War, the US had no economic interdependence with the Soviet Union, whereas with China, US trade is worth over half a trillion dollars.
Some scholars see the emergence of Cold War 2.0 in the fraught US-China relationship, but it can also be recognized as a race to achieve ‘collaborative competitiveness.’ During the Cold War, the US had no economic interdependence with the Soviet Union, whereas with China, US trade is worth over half a trillion dollars.
Since the covid pandemic, the Chinese economy has weakened, with a large volume of investment pulling out amid a partial decoupling between the US and China. American firms would rather reinvest in nations like Vietnam, Bangladesh and India.
A complete economic de-coupling from China would seem like a chimera to Western countries, given the Asian giant’s low-cost competitive advantage and role as a transit point for trade with the rest of Asia (particularly for the US and EU). Also, there are other aspects of interdependence, ranging from climate change to global financial coordination, that will not allow a snapping of ties. As Joseph Nye observes, for better or worse, the US and China are locked in “co-operative rivalry" which isn’t like what we see in the Cold War era, when containment of the geopolitical rival was the operative principle.
The essence of President Biden’s foreign policy has been to lay a new foundation of American strength, so that the country is best positioned to shape the 21st century in a way that protects its interests and values, and advances the common good. The US’s own future, according to Nye, will be determined by two things: “Whether it can sustain its core advantages in geopolitical competition and whether it can rally the world to address transnational challenges from climate change and global health to food security and inclusive economic growth." At a fundamental level, this requires changing the way that America thinks about power and global competition.
The Biden administration came to office believing that international power depends on a strong domestic economy and that its strength is measured not just by its size or efficiency, but also by the degree to which it works for all Americans and is free of dangerous dependencies.
President Xi’s efforts to court America’s business elite during the recent bilateral summit reflects how China’s economic downturn—with low growth, weakening private investment and sagging exports—and a long-term demographic challenge have made Beijing soften its ‘wolf warrior’ stance of diplomacy that had defined pandemic-time confrontations between the two. The US’s economic growth prospects and high levels of consumption make it attractive for Chinese exporters. To what extent Xi’s efforts will translate into more American investment in China, however, remains unclear. Big investors may want to wait and see how the upcoming US presidential election turns out, given the possibility of Donald Trump’s return to power, which could further complicate an already complex relationship.
A future Trump administration (which is probable) could discard the alliances and international institutions that the Biden administration has sought to (re)build. Trump could also severely restrict immigration, which has helped the US attract global talent and make economic gains.
Cooperation where possible and marshalling assets to influence China’s external behaviour—in which relations with countries like India have a role—would be critical to the US, irrespective of which administration comes in. Initiatives like the Quad, India-Middle East-Europe Economic Corridor and others can also aid the US to strengthen its own ‘democratic’ alliances, while keeping China in check.
There are other factors too that work in the US’s favour as it pursues collaborative competitiveness with China. Geographically, while the US has two oceans and friendly neighbours around it, China has territorial conflicts with India, Indonesia, Japan, Malaysia, the Philippines and Vietnam, most of which have good relations with the US. In the energy sector, America’s shale oil and gas revolution has made it a net exporter, while China is still highly dependent on energy imports passing through the Gulf and Indian Ocean (where the US has strengthened its relationships).
Demographically, while China’s population is ageing, the US has a workforce that is likely to grow over the next decade, provided it follows an appropriate mix of domestic and foreign policies.
Further, for any major world power to enhance its global influence, it must not only foster institutional cooperation and help indebted nations resolve their debt-burden problems, it must also work actively towards opening up avenues for climate finance to aid the energy transitions of developing nations short of resources.
If the US and China, despite their complex strategic relationship and histories, can find a way to compete collaboratively without threatening each other, there is more good than harm that can consequentially be achieved for the larger benefit of today’s multilateral world order and the planet.
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