Published daily by the Lowy Institute

US-China competition is all about us

Everybody else will be the objects of China-US competition, called upon to make choices in favour of one or the other.

Photo: Wikimedia Commons
Photo: Wikimedia Commons
Published 7 Dec 2018 

We are not entering a new Cold War, despite both Chinese President Xi and US Vice-President Pence finding the term a useful rhetorical tool. The Americans have decided to compete against China because they think the last two decades of cooperation has failed. The Trump Administration, though, is careful to say that competition does not mean conflict.

They don’t want to fight each other. Instead they are quarrelling over who leads the rest of the international system.

Cooperation is where two states work together for the common good. Conflict involves a clash between hostile entities. Competition is different to both. Competition is not between two alone but instead a contest between two states over a third party or object. A sporting analogy may help: athletes compete on a playing field to win a prize. They don’t fight each other directly as during conflict but instead seek to gain an external object while denying it to the other.

The prize America and China both seek is clear: global leadership. They don’t want to fight each other. Instead they are quarrelling over who leads the international system. Leadership, however, is something others grant; it cannot be achieved by edict or force.

China’s leadership strategy has some positives, including strategic partnerships, win-win economic proposals, trading access and comprehensive engagement across political, economic, cultural, and societal domains. There are negatives, including helping authoritarian leaders (such as Syria’s Assad) to repress their citizens, increasing assertiveness in the South China Sea, big infrastructure projects that create Chinese enclaves and loans that can trap and enfeeble poorer nations. While China may intend to do good, its methods can seem rapacious.  

Likewise, America's leadership strategy has pluses and minuses, and just like China, sometimes rhetoric and actions clash. America's alliance network allows it to act globally to address common concerns. America has a long history of working with others to create sizeable multilateral institutions that give smaller states both a say and a stake in an extensive rules-based international order.

The Trump Administration, though, is disrupting this. It is dismissive of its alliance network, willfully interferes in allies’ domestic politics, is dismantling global multilateral institutions, picks arguments with democratic states, praises authoritarian leaders, and is purposefully degrading America’s soft power. 

The Trump administration’s simultaneous embrace of disruption and competition is problematic for several interlocking reasons.

First, the Administration is focusing on winning at geo-economics, perceiving economic relationships in zero-sum terms: an American win means China loses and vice versa. China, however, is on track to becoming the world’s largest economy. The US is thus playing to China’s strengths and simply can’t win such a game by itself. 

To succeed it needs economic support from as many as possible, including the other large G7 economies. Trump’s “America First” approach is making such help not just less likely but instead encouraging pushback. Recently the EU, Mexico, Canada, and Norway joined China in a unique multiparty case against Washnigton's imposition of steel and aluminium tariffs. The US, to compete, needs to shift from its current embrace of unilateralism and return to leveraging off multilateralism, as it has done successfully in the past. 

Second: The Trump Administration is suggesting decoupling from China. Working in combination with the Administration’s other efforts to dismantle the global trading system, decoupling will disrupt the global economic and financial system. Such actions won’t make us richer, instead, all will be poorer, including the US and China.

The Trump Administration apparently believes this is an acceptable price for retaining America’s leadership role, albeit the rest of us haven’t been asked. Effectively, we will all have to pay a “levy” in lost income and reduced prosperity to keep America on board. There are echoes here of America’s revolutionary past: the colonists rejected an empire that provided for the common defence with the battle cry of “no taxation without representation", which suggests that if the Trump Administration wants to levy an implicit tax on its allies, partners, and friends, it will need their agreement. 

Lastly and paradoxically, China and the US will need to cooperate to sustain their competition. They will need to maintain the international system in order to compete within it. China and the US both regard international trade as critical to their prosperity, but increasingly they want it on their own terms. There is a danger that other states embrace autarkic policies as in the protectionist 1930s, sharply constraining international trade. The interwar period’s beggar-my-neighbour economic policies helped no one; instead strengthening the shift to conflict and ultimately global war.

China-US competition will remake the international system. For the two great powers, everybody else will be the objects of their strategies, continually called upon to make choices in favour of one or the other. In the end, the China-US competition is all about us.

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