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July 12, 2019

Responding To: The Future of U.S.-China Relations: Friend or Foe?

Pessimism Doesn’t Help Address Divergent Interests between China and United States

Xiaogu Xu

The United States and China are going through a critical moment in their relationship. To predict the future of U.S.-China relations over the coming decade requires us to understand what shapes U.S.-China relations. In other words, we have to first review the history of U.S.-China relations.

During the Obama years, the United States and China initiated an annual Strategic and Economic Dialogue (S&ED). At that time, terms such as the “G2”, i.e., the United States and China together designing and directing a new world order, and “Chimerica” were commonly heard. Although the Obama administration turned more adversarial towards China in the security sphere in subsequent years, the S&ED continued, and the two countries developed collaborations in science and technology, healthcare, cybersecurity, climate change–and even national security, such as policy towards North Korea, and terrorism in Southeast Asia and Central Asia.

In year one of the Trump years, Chinese cooperation with U.S. initiatives focused on North Korean sanctions. The expectation was of rising security cooperation in other fields as well, such as the South China Sea, and a continuation of economic relations. This notion was further underlined by the “Four Pillars” relationship agreed between the Trump and Xi administrations in 2017, covering diplomatic and security issues, economic issues, law enforcement and cybersecurity, and, cultural and social issues.

Since late 2017, there has been a dramatic reversal. The relationship between the United States and China has changed from one of security cooperation and market-based economic competition to one of escalating security competition and rising economic confrontation. The Trump administration, in December 2017, named China as a ‘strategic competitor’ in its National Security Strategy document. A trade war, initiated by the United States in July 2018 and retaliated to by China, is in progress as of today. In October 2018, the United States named China as a reason for deciding to withdraw from the Intermediate Range Nuclear Forces Treaty with Russia.

We can see that there are three types of interaction through which to view relations: The first is cooperation, which occurs when the two sides forge joint approaches within the rules-based international order. The second is competition, which occurs when the two sides compete with each other for economic or strategic supremacy. This occurs within a rules-based system, such as the World Trade Organization or the United Nations Convention on the Law of the Sea. And the third is confrontation, which occurs when the two sides challenge each other for economic or strategic supremacy. This occurs when one or both sides takes actions outside the rules-based international order.

Currently, the era of strategic economic and security cooperation appears to be over. The relationship is driven by the tactical security protectionism by the United States, the tactical economic protectionism by the United States, and the strategic protectionism by the United States. To elaborate, U.S. competition and confrontation regarding BRI and ECS/SCS is a tactical response to the assertiveness of China under President Xi. The trade war reflects U.S. concerns about Chinese threats to its economy. The developments on trade and security are part of a long-term effort by the United States to control a rising China before it becomes truly competitive, namely the Thucydides Trap that “China will keep on growing, US will keep on worrying”.

While the current U.S.-China relations are at their lowest point since the late 1970s, and there is even a possibility of further deterioration, difficult issues can be addressed if we develop a portfolio approach of combining convergent and divergent interests. We have to identify our convergent interests (win-win) as well as divergent interests (win-lose), and then trade-off convergent and divergent interests through a portfolio approach, i.e., combining some convergent and some divergent interests and agreeing on implementing them as a group. For example, both sides negotiate security and economic concerns through win-loss adjustments. Multilateral and bilateral forums are also helpful.

The coming decade will continue to be an era of competition, cooperation and confrontation. We have to combine convergent and divergent interests to address difficult issues in the long-term. Pessimism doesn’t help.

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