Initiative for U.S.-China Dialogue on Global Issues

However, if this comparison is to be continued, it is crucial to note two fundamental differences between the U.S.-Soviet relationship and today’s U.S.-China relationship. First, competition between China and the United States is limited by the economic interdependence caused by their participation in the global economy. Second, the Cold War of today’s world will be waged in the technological realm over dominance in digital and information technology, spilling over to enable dominance in economic, political, and security-related realms. These core elements reshaping the modern world will also shape the way that competition between China and the United States develops. Whether this competition will manifest itself in a Cold War-style arms race and proxy wars, or take on a completely different route towards constructive competition and global technological advancement, is the next important question for analysts and policy-makers to ask.

Economic interdependence is the most glaring difference between today’s U.S.-China relationship and the Cold War with the Soviet Union. Political and ideological differences aside, China has been integrating itself into the capitalist world economy since the 1980s and has agreed to international trade norms since its accession to the WTO in 2001. China and the United States are each other’s largest trading partners, with China taking up 15.6 percent of U.S. total trade and exports to the United States taking up 19.2 percent of total Chinese exports in 2018. While the United States and the Soviet Union sought to divide the world into two blocs, one capitalist and the other communist, China’s and the U.S.’s agreement over global economic and financial norms has built a mutually dependent economic relationship that precludes the simplicity of a clean divide.

Another difference is that any Cold War in today’s world will likely not be fought over territorial or military expansion, but over technological dominance and the resulting gains in hard and soft power. Technology defines the playing field on which world powers compete today, shaping both the industries in which research is pursued for competitive advantage and the channels used to spread influence around the world. While the United States still holds global dominance in military might (and spending) and financial centrality, China has announced its “Made in China 2025” strategy to lead the world in AI, robotics, aerospace, and other industries. From launching 11 BeiDou satellites in 2018 to compete with the American GPS system, to investing $31.5 billion in a National Integrated Circuit Industry Investment Fund to reduce reliance on foreign semiconductor technology, China continues to channel its economic surplus into building its technological capabilities.

The real opportunity for China to get ahead, however, lies in the technological “arms race” of 5G development and the Internet of Things (IoT). On this front, China’s state-led approach gives it an advantage over the U.S.’ divided political landscape and weak public spending on technological research and development. For example, “Industrial IoT” is one focus of China’s Belt and Road Initiative, which has launched the China Telecom IoT Open Platform in 2017 to help enterprises manage and deliver infrastructure on a global scale. 5G and IoT technology promise to fuel future economic growth in the Fourth Industrial Revolution, as technological breakthroughs boost the efficiency of production and communication. With competition between China and the U.S. increasingly focusing on technological advancement, the Cold War comparison grows less and less relevant. After all, when you have the world’s two largest and interdependent economies racing to develop faster global connectivity rather than nuclear warheads, does it still make sense to fret over the threat of mutually assured destruction?