The US-China Cold War Has Already Started

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The US-China Cold War Has Already Started

The clashing geopolitical ambitions of the two states are fueling a rivalry that could be even more dangerous and consequential than the original Cold War.

The US-China Cold War Has Already Started

In this Sept. 16, 2018, file photo, American flags are displayed together with Chinese flags on top of a trishaw in Beijing.

Credit: AP Photo/Andy Wong

The rift between the United States and China threatens to become a chasm. Barely a day passes without some tit-for-tat exchange of barbs, accusations, or actions designed to make life difficult for the other country or to trumpet the superiority of their respective political systems.

The United States has castigated China for the forced sterilization of Uyghur women; lobbied Europe to ban Chinese security screening firm Nuctech; imposed visa restrictions on Chinese officials held responsible for Hong Kong’s new national security law; and placed 90-day limits on work visas for Chinese journalists.

In response, China’s Foreign Ministry branded U.S. criticism of its Uyghur policy as “baseless” while bluntly telling Washington to butt out of Hong Kong affairs. Beijing had earlier withdrawn the press credentials of journalists at three leading U.S. newspapers and threatened to put American companies on a list of proscribed foreign entities.

This rapid descent into conflict has taken many by surprise. For most of this century, Sino-U.S. competition was moderated by the need to work together on a range of global economic, financial, and geopolitical issues that mandated cooperation. But these cooperative impulses have almost entirely disappeared, exacerbated by recriminations over responsibility for the coronavirus pandemic, which has exposed the depth of their mutual mistrust.

Beijing thinks Washington is bent on containing China to prolong the declining power of the United States while denying China its rightful place in the sun. Americans increasingly believe that Beijing is threatening U.S. security interests, undermining its prosperity, interfering in its democracy, and challenging its values. Anti-China sentiment unites an otherwise divided and partisan Washington.

A common misperception is that mounting differences over trade and technology are primarily responsible for the spike in hostilities. But while important in themselves, the U.S.-China trade and tech wars are symptomatic of a deeper and more dangerous geopolitical divide rooted in their clashing strategic ambitions and contrasting political systems.

For U.S. President Donald Trump, the contest with China is about redressing perceived inequities by leveling the trade and tech playing fields and consolidating the U.S. position as the paramount global power. China’s Xi Jinping, too, wants to correct past injustices and grasp his carpe diem moment to return China to its “rightful” place as the dominant state in Asia and eventually the world. Time is running out for Xi to achieve this ambition and escape the middle-income trap because of demographic decline, falling productivity, and a mounting global pushback against his assertive foreign policy.

The shift from cooperation to strategic rivalry has triggered an intensifying debate about whether the world is on the precipice of a new Cold War. Skeptics refute this, but they are wrong.

There are six clear parallels with the Cold War. First, U.S.-China rivalry is between the world’s two most powerful states, one a liberal democracy and the other avowedly communist. Second, it is a system-wide contest for supremacy. Third, it is about values as well as power. Fourth, it will be a multidecade struggle for global ascendancy. Fifth, a second geopolitical bifurcation of the world is likely. Sixth, neither side wants a full-scale military confrontation. In short, it is not your run-of-the-mill great power conflict.

There are, of course, significant differences. China has supplanted Russia as the main threat. Strategic competition between the United States and the Soviet Union largely played out in the political and military domains; there was little trade between the two competing blocs. But the main contest between the U.S. and China is economic, which means that trade, investment, technology, and strategic industries are central to today’s rivalry.

At its high point, the GDP of the Soviet Union was only 40 percent of that of the United States’. But China’s is already at 65 percent and growing rapidly. Between them, the U.S. and China account for around 40 percent of global GDP. If either of these two titans sneezes, the rest of the world catches a cold — literally, in the case of China, as the impact of the coronavirus continues to lay waste to the health and prosperity of millions.

Although the new Cold War is playing out across the world, its geographic center of gravity is the Indo-Pacific, not Europe, because the epicenter of global commerce and trade has moved from the Atlantic to the Pacific, reflecting Asia’s rise and Europe’s decline. The United States and China are both Pacific powers, so their rivalry will be felt most keenly in the Indo-Pacific, particularly at sea, where their interests collide and there are several potential triggers for military confrontation.

North Korea and the East and South China Seas are the most likely candidates. But Taiwan and Hong Kong are potentially arenas for conflict too, and not just because of their political significance. Taiwan is a critical technology producer for the United States and China. Hong Kong is China’s financial portal to the world and the U.S. dollar, which remains the dominant currency for international trade.

Although a cold war is below the threshold of a major “hot” war, it could easily result in one unless carefully managed. Tensions between rising and incumbent powers often precede military conflict or an extended period of confrontation and instability. Without a circuit breaker, a ratcheting-up of Sino-U.S. tensions could worsen the emerging Cold War, foreshadowing an era of heightened strategic competition that would be enormously disruptive to international trade and world order.

The historical record suggests that although a hot war is not inevitable, it is a distinct possibility. More likely, however, is a festering but contained rivalry between the United States and China that remains below the threshold of major war but is regularly punctuated by proxy conflicts, especially in cyberspace. Although more corrosive than explosive, this would usher in an extended period of great power competition that could roll back the gains from more than 70 years of trade liberalization, disrupt global supply chains, Balkanize the internet, and divide the world into two mutually incompatible political systems.

The core problem in U.S.-China relations is their diametrically opposed political systems and associated values, compounded by their sense of exceptionalism. Since the 2008-9 financial crisis, China’s leaders have become far more critical of the perceived weaknesses of democracies and convinced of the superiority of their own authoritarian model, which privileges political stability and social order over the rights of the individual and freedom of expression.

The problem becomes more acute when both suspect their rival of wanting to impose undesirable elements of their own system on the other or to propagate them internationally. These perceptions are aggravating U.S.-China tensions, making them more difficult to resolve. China’s leaders have long chafed at what they see as unwarranted interference in their internal affairs and the propensity of Americans to lecture them about their behavior and political system. Now the boot is on the other foot as the Trump administration excoriates China for interfering in U.S. domestic politics, conducting political warfare, and attempting to export its authoritarian model to other countries.

Former President Barack Obama habitually underplayed the enormous residual power of the United States, perversely fueling the myth that China’s ascendancy is pre-ordained. Trump, however, has seized the psychological high ground, dominating the airwaves, forcing China onto the defensive and demonstrating that no other country can match the disruptive economic, financial, and military power at his disposal. The weakness of this approach is that American power is coming to be associated with punitive “beggar thy neighbor” policies that are alienating friends as well as adversaries and contributing to systemic instability.

A frank acknowledgement that the United States and China are now adversaries is a necessary precondition for a realistic strategic accommodation that constrains their rivalry and avoids worst case outcomes.

Fortunately, we are still in the foothills of a second Cold War rather than its frigid heights. There is still time to flatten the spiking hostility curve and reverse the momentum toward conflict. Those who argue that a democracy and an authoritarian state can never find the requisite accommodations ignore the lessons of history. Despite their differences and a few close calls, the United States and the Soviet Union found ways to work together and avoid a major war during their multidecade confrontation.

Dr. Alan Dupont is a Research Fellow at the Hinrich Foundation and CEO of the geopolitical risk consultancy the Cognoscenti Group. He has been an advisor to a number of Australian ministers of defense and foreign affairs.

This article draws from the Hinrich Foundation white paper, “The New Cold War: De-risking U.S.-China conflict.”