China v America

A new kind of cold war

The United States and China are contesting every domain, from semiconductors to
submarines and from blockbuster films to lunar exploration. It is a new kind of cold war
that could leave no winners at all.

America complains that China is cheating its way to the top by stealing technology, and
that by muscling into the South China Sea and bullying democracies like Canada and
Sweden it is becoming a threat to global peace. China is caught between the dream of
regaining its rightful place in Asia and the fear that tired, jealous America will block its
rise because it cannot accept its own decline.

Even if China and America stop short of conflict, the world will bear the cost as growth
slows and problems are left to fester for lack of co-operation.

Both sides need to feel more secure, but also to learn to live together in a low-trust world.
Nobody should think that achieving this will be easy or quick.

The temptation is to shut China out, as America successfully shut out the Soviet Union—
not just Huawei, which supplies 5g telecoms kit and was this week blocked by a pair of
orders, but almost all Chinese technology.

Global supply chains can be made to bypass China, but only at huge cost.

In nominal terms Soviet-American trade in the late 1980s was $2bn a

The economies of America’s allies in Asia and Europe depend on trade with China. Only
an unambiguous threat could persuade them to cut their links with it.

It would be just as unwise for America to sit back. No law of physics says that quantum
computing, artificial intelligence and other technologies must be cracked by scientists
who are free to vote. Even if dictatorships tend to be more brittle than democracies,
President Xi Jinping has reasserted party control and begun to project Chinese power
around the world. Partly because of this, one of the very few beliefs which unite
Republicans and Democrats is that America must act against China.But how?

For a start America needs to stop undermining its own strengths and build on them
instead. Given that migrants are vital to innovation, the Trump administration’s hurdles
to legal immigration are self-defeating.
Team Trump has rubbished norms instead of buttressing institutions and attacked the
European Union and Japan over trade rather than working with them to press China to
change. Rather than cast doubt on the rule of law at home and bargain over the
extradition of a Huawei executive from Canada, he should be pointing to the surveillance
state China has erected against the Uighur minority in the western province of Xinjiang.

As well as focusing on its strengths, America needs to shore up its defences.

Dealing with China also means finding ways to create trust. Actions that America intends
as defensive may appear to Chinese eyes as aggression that is designed to contain it. If
China feels that it must fight back, a naval collision in the South China Sea could escalate.
Or war might follow an invasion of Taiwan by an angry, hypernationalist China.

China and America do not have to agree for them to conclude it is in their interest to live
within norms. There is no shortage of projects to work on together, including North
Korea, rules for space and cyberwar and, if Mr Trump faced up to it, climate change.

Mr Trump sneers at the global good, and his base is tired of America acting
as the world’s policeman. China, meanwhile, has a president who wants to
harness the dream of national greatness as a way to justify the Communist
Party’s total control.

China and America desperately need to create rules to help manage the rapidly evolving
era of superpower competition. Just now, both see rules as things to break.

China and America

Trade can no longer anchor America’s

The financial crash of 2008 revealed a dangerous co-dependency between America the
importer of cheap goods and China the thrifty exporter. New terms tried to capture this
symbiosis: “Chimerica”, or “the g2”.

China analysts obsess over the “Thucydides trap” that supposedly dooms upstart nations
to fighting incumbent powers.
China’s rise was always going to cause turbulence. The same country is America’s most
daunting strategic rival, its biggest economic challenger and a giant trade partner. That is
new. The Japan shock of the 1970s and 1980s triggered demands from politicians for
protectionist barriers, as America’s trade deficit in goods with Japan rose 25-fold in a
decade. But it was a lopsided political fight: Japan was a dependent military ally. As for
the Soviet Union, it was an ideological but not a commercial rival: in 1987 bilateral trade
was worth $2bn a year, or less than 0.25% of America’s total trade with the world. In 2018
two-way trade between America and China hit $2bn a day, or 13% of America’s world
trade.

America’s shock is made worse by trade in technologies that blur the lines between
commerce and national security. The Trump administration’s opposition to letting
Huawei, a Chinese technology firm, build 5gtelecommunications networks for America or
its allies is a taste of that future.

China’s growing tech prowess is putting new strains on globalisation, beyond old
arguments about stolen jobs.

In this world, trade relations cannot be quarantined from hard questions about whether
countries are partners, rivals or foes.

China has been slow to open its economy since joining the World Trade
Organization in 2001, “the American business community has turned from
advocate to skeptic and even opponent of past us policies toward China”. Bosses
do not seek a tariff war, he said, but do want a “more confrontational approach”.
Businesses are getting that from the Trump administration.

The American president is as much a symptom as a cause of a change in the way that
America thinks about its openness to the world. Voters elected a might-makes-right
leader who scorns alliances, who is cynical about the rule of law and universal values and
who believes that national interests always come first. Amid espionage fears, visa rules for
Chinese students of science and technology have tightened. fbi agents have quizzed
scholars visiting from Chinese state-backed think-tanks about government links, and
cancelled the visas of some. Rather than China becoming more Western, America is
becoming more Chinese.

Meanwhile, officials in Beijing see a sore loser of a superpower, bent on keeping them
down. They scoff at the idea that rich, spoiled America really feels threatened, seeing a
ploy to extract better terms for American firms to make money. This misses how many
people in Washington believe that the China threat is real and matters more than profits
or free-market purity. Indeed, officials accuse firms of keeping quiet when Chinese spies
steal intellectual property, to preserve face and access to Chinese markets.
Although China lacks the formal alliances that made the Soviet Union a global threat, its
rise dominates Pentagon debates about the future of war. Since the 1980s America has
pursued a “forward presence” doctrine, meaning that its forces were confident about
operating close to enemy defences. China’s growing strength confronts Pentagon
planners with their hardest decision in years: to find new ways to make combat in the
Western Pacific viable, or pull back and force adversaries to fight far from home.