The Widening Rift Between the US and China

If you ignore the headlines, you’d think the United States and China were the best of partners. Americans continue to rely on Chinese-made products in their homes, at their offices, and in their pockets. If you live near a university, you can still bump into one of the 340,000 Chinese studying in the US. You can still take a Beijing-sponsored Chinese-language class at any of the 104 Confucius Institutes in 46 states.

Even if you’re not among the 114,000 Americans who work in the 2,400 Chinese-owned companies in this country, your livelihood still depends on China. As America’s largest trading partner and the largest foreign holder of US debt, China keeps the American economy afloat. Economically, the two nations are joined at the hip.

But in virtually every other way, China and the United States are drifting apart, and this growing rift could have catastrophic consequences.

“We are at war with China on at least two fronts: technology and trade,” says Michael Klare, a military analyst and defense correspondent for The Nation. “This is not peacetime in the way we once understood it. So the questions are when, and how, and if this war will enter new realms.”

Washington and Beijing are currently battling over who will build the world’s next generation of digital infrastructure, with the United States trying to freeze out Chinese telecom giants like Huawei. The United States is afraid that if allies use Chinese technology, it could pose a security risk. Meanwhile, a trade war of escalating tariffs between the world’s two largest economies threatens to send global markets into a tailspin.

And in a significant departure from its predecessor’s version, the Trump administration’s National Security Strategy portrays China as a “revisionist” power that wants to “shape a world antithetical to US values and interests.” This document “suggests that wherever China is active, the United States should push back,” explains Melanie Hart, a China expert at the Center for American Progress. “Wherever China is developing cooperation with other nations, that adds up to a threat to the United States. The National Security Strategy paints that in dire terms.”

Similarly, the foreign-policy elite in the United States has shifted away from compromise. Whereas a lively debate among China watchers once pitted those who favor engagement against those who champion containment—the “panda huggers” versus the “dragon slayers”—the consensus has now moved in a more combative direction.

This change in elite consensus, which extends to Congress as well, has been extraordinary in its pace and impact. Although it precedes the divisive efforts of the current administration, the more uncompromising stance on China of the expert class has ensured that Trump’s China initiatives have not generated the kind of pushback associated with the president’s withdrawal from the Iran nuclear deal or his cozier relationship with Saudi Arabia.

As in the early stages of a divorce discussion, the two sides are trading accusations across every facet of the relationship: trade, security, human rights, technology. Both sides also recognize how costly this conflict could be. So, for the time being, they have settled into a tense cohabitation punctuated by raised voices and intemperate threats.

Divorce is not inevitable. But with China expected to overtake the United States in total economic output in the next decade—and with bilateral competition sharpening over markets, resources, and geopolitical advantage—Beijing and Washington may yet succumb to irreconcilable differences.

Even if the conflict doesn’t devolve into a shooting war, a sharp downturn in US-China relations could mean a global economic crisis, the unraveling of the multilateral order, the failure of the last best effort to stop climate change—or a perfect storm of all three. The two largest economies in the world, with by far the two largest carbon footprints, have different views on how the world should be structured. If they can’t reach agreement on trade, the environment, and the global rules of the road, the divorce will tear apart what remains of the international community.

The Trump Effect

The initial warming in US-China relations had a very public starting point: the visit by a team of American ping-pong players to China in April 1971, followed by President Richard Nixon’s groundbreaking trip the following February. For the next several decades, the United States applied two principles to its relations with Beijing. The US government, the business community, and the NGO sector made various pacific overtures to China. At the same time, the Pentagon consistently attempted to contain China’s reach and influence.

The decline of this “congagement” approach is more difficult to pinpoint. The Obama administration certainly attempted to tweak the model with its “Pacific pivot,” an effort to refocus the Pentagon away from the Middle East to East Asia. However, the war in Syria and the rise of ISIS largely prevented this military reorientation. The economic component of the pivot gained greater traction: Obama brokered a free-trade agreement for the region, the Trans-Pacific Partnership (TPP), that pointedly excluded China.

After Donald Trump unexpectedly won the 2016 election, he adopted a far more aggressive approach toward China, beginning with his staff. Former top adviser Steve Bannon urged preparations for a coming war between the United States and an “expansionist” China in the South China Sea. “The kinds of people that have taken senior positions on trade and national security are China hawks more eager to confront China,” says Dennis Wilder, who served as the National Security Council’s director for China from 2004 to 2005.

On trade, Trump complained about an undervalued yuan, barriers to entry into Chinese markets, and the theft of intellectual-property rights. But on the third day of his presidency, Trump withdrew from the TPP. Whatever the pluses and minuses of this agreement, US withdrawal provided China an opportunity to further deepen its economic ties in the region.

More often than not, Trump’s obsession with destroying agreements brokered by the Obama administration has brought Washington into conflict with Beijing—over the Iran nuclear deal, for instance, or on climate change. Nonetheless, Trump’s actions on China have elicited a surprising amount of praise from people who don’t ordinarily have anything nice to say about the president. As Thea Lee, the president of the progressive Economic Policy Institute, acknowledges, “The one thing that the tariff actions have shown: Leverage works. They’ve gotten the attention of the Chinese government.” (Though it should be acknowledged that Lee’s recommendations for how to use that leverage—to advocate for stronger labor rights in China to build a middle class—are not exactly the Trump administration’s priorities.)

“Trump is a madman, but I want to give him and his administration their due,” admits Orville Schell, a journalist who has covered China for decades and now directs the Center on US-China Relations at the Asia Society. “We can’t keep playing on an unlevel playing field and take promises that are never delivered on. It’s really China’s turn to respond, and it’s long overdue.”

Trump is presiding over Washington’s most assertive challenge to China in decades, and it’s a bipartisan confrontation. But what the United States says and does is only part of the story.

The Xi Effect

Until relatively recently, China was outwardly content with being a junior partner—or, occasionally, a junior adversary—of the United States. In the 2000s, Chinese officials spoke of the country’s “peaceful rise,” as if it were interested only in getting along by going along.

That has changed with Xi Jinping. The first Chinese president born after the 1949 revolution, Xi has steered the country in a different direction since he took over in 2012. After using an anti-corruption campaign to eliminate his rivals, Xi embarked on a set of reforms that consolidated his power, modernized the military, and reemphasized state control of the economy. In so doing, he has remade the very concept of leadership—his own in China, and his country’s in the world.

“In terms of the direction that Xi has taken the Chinese government, it is a change—and a pretty dramatic one—from the Deng Xiaoping reform and opening-up policies,” Wilder observes. “And not just reform and opening up, but also keeping the low profile of Deng’s two successors, Hu Jintao and Jiang Zemin. Xi is a different kind of leader: He is more autocratic, and he believes in the reassertion of the [Communist] Party into all aspects of Chinese society and life.”

The most striking departure from that previous “low-profile approach” has been China’s greater assertiveness in the South China Sea. Beijing has declared ownership over just about everything that lies beyond the territorial waters of the surrounding countries. This is no minor waterway: One-third of global shipping passes through the South China Sea.

Under Xi, China has begun to build artificial islands there, essentially creating 3,000 new acres of Chinese territory to cement its claims. Other countries have pushed back, particularly the Philippines, which brought suit against China in an international maritime court. In 2016, the UN-created court ruled against China, a decision that Beijing roundly criticized as “destined to come to naught.”

“More than anything, what shifted, at least in terms of expert opinion, was China’s build-out of artificial islands in the South China Sea and the flouting of the permanent court of arbitration about that,” observes Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States.

Then too, at the 19th Communist Party Congress in 2017, Xi “took a highly nationalist approach, essentially defining Western influences as the enemy,” says J. Stapleton Roy, a former US ambassador to China. Xi instructed the party “to look into and provide guidance on everything—politics, economics, math, philosophy, think tanks. All of these and more have to have Chinese characteristics.”

Actually, Xi may be even more ambitious: If successful, his efforts would ensure that the whole of the Asia Pacific region has Chinese characteristics. His Belt and Road Initiative is a grand infrastructure program that aspires to reconnect China with the Middle East and Europe via a new Silk Road, along with a maritime program that builds up the capacities of Beijing’s littoral neighbors. The project involves some 70 countries and as much as $1 trillion in funding (though it may not reach that figure for another few years). Xi has also created economic structures, like the Asian Infrastructure Investment Bank, to finance regional growth. These structures could one day serve as the center of an alternative global economy. After all, Chinese development loans already rival those of the World Bank.

At the same time, China’s economic miracle, which has pulled an unprecedented number of people out of poverty, is slowing. The country’s economic growth has dropped to a low of between 6 and 6.6 percent this year—and it could fall even further. “There’s a huge private and public debt of around $34 trillion,” points out sociologist Walden Bello, a human-rights activist and former member of the Philippine Congress. Among other things, the Belt and Road Initiative is a huge gamble aimed at priming the region’s economic pump and reinflating Chinese growth.

Xi’s greater assertiveness—his “China dream” of a “great rejuvenation of the Chinese nation”—has generated a reciprocal response from a number of other countries, but particularly the United States, with Trump’s own dream of a national resurgence. In what is perhaps the best-case scenario, two increasingly nationalistic superpowers with immense militaries and overextended economies might be content to maintain their own spheres of influence. But China wants to expand its sphere, and the United States is reluctant to give up either its Pacific presence or its global ambitions.

There is another source of conflict. The United States doesn’t just want to box in China; it also wants to change China from within.

Mistaken Assumptions

During the “congagement” years, a basic assumption lurked behind many US analyses of Chinese behavior: By introducing market capitalism and gradually liberalizing its politics and culture, China would become more Western. During the debate over China’s accession to the World Trade Organization, then-President Bill Clinton argued that the agreement “will move China in the right direction. It will advance the goals America has worked for in China for the past three decades…. By joining the WTO, China is not simply agreeing to import more of our products; it is agreeing to import one of democracy’s most cherished values: economic freedom.”

As Kurt Campbell, a former assistant secretary of state for East Asian and Pacific affairs, and Ely Ratner, a former State Department official, put it in an influential essay in Foreign Affairs last year: “The assumption that deepening commercial, diplomatic, and cultural ties would transform China’s internal development and external behavior has been a bedrock of U.S. strategy. Even those in U.S. policy circles who were skeptical of China’s intentions still shared the underlying belief that U.S. power and hegemony could readily mold China to the United States’ liking.” When China proved to be not quite so pliable, American observers started to question the virtues of engagement.

CHINA’S SOUTH CHINA SEA CLAIMS

The Chinese, too, held certain basic assumptions about the stability and coherence of US policy, and Trump’s erratic conduct has thrown them for a loop. But even before Trump or Xi, the global financial crisis of 2008 was a wake-up call. “They were true believers that we were the masters of the financial universe,” Roy says. “They were disillusioned by the international financial crisis.”

As Jian Yong, director of the Center for Economic Security Studies of the China Institutes of Contemporary International Relations, wrote at the time: “The worsening US subprime crisis puts China’s enormous US dollar assets and its opening financial market at tremendous risk. It also makes more Chinese people think about ways to prevent financial crises from spreading across the world amid globalization.”

For the Chinese economy to continue growing, in other words, Beijing could no longer safely assume a well-functioning global system. It could no longer sit comfortably in the passenger seat and expect a smooth ride. With its Belt and Road Initiative, its alternative financing structures, its environmental initiatives, and its efforts to become a global leader in technology, China has seized the wheel. More to the point, Beijing is using its newfound power to change the rules of the road.

This emerging Chinese economic alternative, with its emphasis on the role of the state, “is positive as a sort of counterweight to the neoliberal institutions, with all their conditionalities about how countries should develop along Western market lines,” Bello says. “However, these institutions and Chinese lending have also had drawbacks of their own.”

One of those drawbacks are the high rates on some of China’s loans, as Sri Lanka recently discovered. At the end of 2017, unable to repay its various debts, the Sri Lankan government gave Beijing a 99-year lease to the Hambantota port, which was built with Chinese financing. It’s a commercial port, but it could be used for military purposes with Sri Lanka’s consent.

China: Meaner and Greener?

In the security realm, China increased its military spending by double digits for many years, though it has fallen to 7.5 percent for 2019. “Clearly, the Chinese leadership intends for China to be a great power, to command respect, to bury the century of humiliation that they’re still quite sensitive to,” says historian Andrew Bacevich. “But does it follow that they want to take over the world and create a global empire?”

Lyle Goldstein, who teaches at the US Naval War College, challenges the notion of “Chinese aggression.” He says that China might push around smaller countries, but it has generally showed considerable restraint. “If there’s one thing that China has done that’s so horrible over the last 10 years, that has shocked people in the national-security realm, it would be its behavior in the South China Sea,” Goldstein says. “I don’t think it’s so threatening to the United States. I don’t think it’s that threatening to countries like the Philippines and Vietnam. What does it show? Chinese engineering prowess. A concern about their sea lanes. They haven’t killed anyone, resorting for the most part to deploying coast-guard cutters with water cannons. That’s a decent record of moderation for a great power.”

The one area where China has unquestionably become a leader is on the environment, especially given the steps backward that the Trump administration has taken. “China is becoming much more of a truly global player,” Turner says. “Ten or 15 years ago, at a lot of these environmental conferences, they just said no. At the fisheries conference, they said, ‘No, we need to fish.’ What China wants to do these days is set the norms.”

US vs. China GDP

Barbara Finamore, Asia senior strategic director at the Natural Resources Defense Council, acknowledges that China still has a ways to go to wean itself off dirty energy and “green” its overseas development projects. But China has largely kept to the clean-energy path, she argues, “because it’s in its own self-interest to do so. The reason for its transformation from a climate foot-dragger to an advocate of global climate governance is because it sees action on clean energy and the environment as fundamental to succeeding economically and putting its economy on a sustainable path moving forward.”

Unwilling to wait for the “invisible hand” of the market to allocate resources to clean energy, the Chinese government has, for instance, invested huge sums in solar- and wind-power production. As a result, Chinese companies have cornered the global market on solar-cell production, and China has more wind-power capacity than anywhere else in the world.

In other realms of global governance, China’s impatience with the rules of the liberal world order has less salutary implications. “If you look deeply at Xi’s calls for China to lead reform of the global system, what they are saying is terrifying,” argues Hart of the Center for American Progress. “They want to make the world system more authoritarian so that China can integrate without facing political concerns.”

Hart points to China’s preference for states to define Internet freedom within their own borders. Similarly, Beijing wants to define what human rights mean inside China and rewrite rather than accede to global laws and regulations. Beijing is largely deaf to the global outcry over the situation in Xinjiang, where authorities have placed as many as 1.5 million Muslim Uighurs in “reeducation camps” and expanded an intrusive household-surveillance system. “Tibet has served as a brutal testing ground for social control for decades,” says Marin Ping, co-founder of Re:Public, a progressive foreign-policy collective, “and the concentration camps in Xinjiang may constitute the single greatest crime against humanity currently being orchestrated and executed by state actors.”

China is not alone in its insistence on a rather 19th-century understanding of sovereignty, especially in terms of human rights. Donald Trump in the United States, Viktor Orbán in Hungary, Recep Tayyip Erdogan in Turkey, Rodrigo Duterte in the Philippines, and Vladimir Putin in Russia are all dismissive of the international community’s “interference.” “China is beginning to feel and act in a way that reflects a sense that things are blowing its way when it comes to this area of human rights,” Bello concludes.

How Should Washington Respond?

The United States is no longer the world’s sole superpower. The anxiety that accompanies Americans’ realization of the relative decline of US global influence has produced a number of symptoms: the election of Trump, a preoccupation with borders and immigration, bipartisan support in Congress for greater military spending—and a fixation on China’s growing power.

“As liberal-minded Americans despair at what is happening to their own country and its political system, China’s rise under Xi’s authoritarian grip induces a fear and anxiety that is as much about the United States as it is about China,” John Delury, a historian of modern China at Yonsei University, points out by e-mail.

Susan Shirk, former deputy assistant secretary of state during the Clinton administration, warns against inflating these fears and imposing self-defeating restrictions on Chinese people and businesses coming to the United States. “It could lead to an anti-Chinese version of the Red Scare,” she notes.

Meanwhile, the United States has launched a potentially budget-busting effort to maintain military supremacy over China (and everyone else on the planet). The Trump administration wants to increase the Pentagon’s budget to $750 billion a year, with much of that focused on China: the nearly 5 percent increase in the Navy’s budget, the modernization of the US nuclear force, the resurrection of fighter-jet production. As acting Secretary of Defense Patrick Shanahan reminded Pentagon staffers on his first day on the job: “China, China, China.”

That way lies insolvency, Klare argues: “Overmatching ISIS will never bankrupt us. Overmatching Russia and China will.”

Given this new reality, there are two kinds of options for a progressive rethinking of US-China relations. The minimum approach, which acknowledges that the US government and the foreign-policy community have become leery of large-scale engagement, offers only case-by-case cooperation. “Our policy should be cooperative partnership that engages China on every level as we seek to work with China to solve problems,” argues the US Naval War College’s Goldstein. “They are a status-quo power that we can work with on various fronts: North Korea, Myanmar, pandemics, Belt and Road, climate change.”

That engagement can even extend to difficult issues like human rights. “You do stand on your principles on questions of human rights, but you realize your limitations, since it’s not possible for outside states to engineer the situation inside China,” says Rajan Menon, who teaches at the City University of New York. “It’s a delicate balance between standing up for what progressives believe in, but also guarding against those issues being used for confrontation against China.”

This minimum approach falls somewhere between the “congagement” strategy of the past and the creation of distinct spheres of influence. It’s neither a divorce nor a renewal of the wedding vows; it’s more like the Chinese adage of “same bed, different dreams.” There’s room for cooperation, but also for considerable conflict.

The maximum approach, meanwhile, would be a heavier lift. It requires the United States and China to discuss the underlying tension in their relationship over two different views of global governance. A similar debate took place in 1945 between the capitalist and communist worlds, and it produced the compromises of the United Nations and the Universal Declaration of Human Rights. Today, the discussion would cover the balance of state and market in economic development, the tension between national sovereignty and universal human rights, and the restructuring of international institutions to better reflect the new balance of global power. The People’s Republic of China, which didn’t exist in 1945 but has now graduated to superpower status, expects to play the same role in reshaping the international system that the United States did after World War II.

Instead of engaging China in a conversation about such a transformation—or even just cooperating with it on an ad-hoc basis, as the Obama administration did—the Trump administration is simultaneously challenging Beijing and shrugging off the burdens of global leadership. Such a mixed message is straining the marriage of convenience between Washington and Beijing that has dominated the world order since the end of the Cold War.

Since it touches on the global economy, the environment, military conflict, and the latest technologies, the US-China relationship should be at the front and center of public debate. Yet no one in Washington or among the 2020 presidential candidates is discussing new ways to engage with China. The stakes, however, couldn’t be higher: If this marriage dissolves, we can say goodbye to a world order that has come to depend on a measure of US-Chinese amity.

The Nation, April 23, 2019


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