The U.S. and China represent the most significant – and potentially most perilous – bilateral relationship in human history. Given that reality, neither side is managing their rising tensions with adequate skill or durable strategy.
That’s the way Stephen Heintz of the Rockefeller Brothers Fund put it in a conversation with me a couple of days ago. It is also the subtext of conversations I’ve had with world leaders visiting Washington, D.C. this week for the IMF and World Bank meetings.
U.S.-Soviet relations defined the Cold War, with both sides fielding the unprecedented nuclear capability to devastate each other, and much more. Before that, the Anglo-American relationship was decisive, from intense U.S.-British competition in the 19th century to an alliance that prevented fascist victory during World War II in the 20th century.
Yet Heintz’s argument is compelling that U.S.-Chinese relations have a historically unique significance, based on their multi-dimensional nature that touches on just about every aspect of global affairs now and into the foreseeable future.
That’s true whether you’re concerned about world war, the global economy, climate change, human rights, the contest between democracy and authoritarianism, the future of space, or the accelerating race for technology’s commanding heights. Never has so much across the world rested so heavily on two countries’ ability to manage their relationship across a dizzying array of domains.
The accuracy of data related to China’s economy, which for many years has been the biggest driver of global growth, took center stage at this week’s IMF and World Bank meetings. The controversy focused on allegations that IMF Managing Director Kristalina Georgieva asked colleagues to find a way to boost China’s standing in the World Bank’s flagship 2018 Doing Business report.
Georgieva has denied any wrongdoing. The IMF board, which convened eight times to consider her fate, concluded that its review of the allegations “did not conclusively demonstrate that the managing director played an improper role.” The board reaffirmed its confidence in Georgieva’s leadership, but the controversy is likely to continue.
The subtext is that any international institution leader must manage the reality that China will increasingly act to influence, lead or replace the world’s most significant multilateral bodies, in this case, the world’s lender of last resort.
Meanwhile, senior government officials in D.C. this week, representing the world’s most important economies, had plenty else to worry about: an unfolding energy crisis, rising inflation, slowing growth, and increasing climate concerns ahead of the 2021 United Nations Climate Change Conference, or COP26, that begins Oct. 31 in Glasgow, Scotland.
A senior official from one of the most significant U.S. allies, speaking anonymously, said all of this has been made more difficult to manage due to the growing volatility in U.S.-Chinese relations, generated by both their differences and their domestic realities.
China is lurching in a more authoritarian direction at home and toward more confrontational policies abroad as it flexes its regional and global muscles. Amid messy and polarizing U.S. politics, following a badly executed Afghan withdrawal, and lacking clarity about U.S. strategy toward Beijing, partners wonder about U.S. commitment, competence and capability for global common cause.
The senior allied official said his country’s greatest medium-term and longer-term economic risk was that rising tensions between the U.S. and China boil over into a contest that engulfs his country. “Few of us can afford to make a decision between the U.S. and China,” he said. “So please don’t ask us to do so.”
It isn’t that America’s allies are naive about the unfortunate course President Xi Jinping is setting for his country. It’s just that a great many of them have China as their number one trading partner – including the European Union as a whole, Germany, Japan, South Korea, Saudi Arabia, and the United Arab Emirates. China represented nearly 30% of global growth between 2013 and 2018, double that of the U.S.
Much of the most recent analysis regarding China has circled around two immediate issues: growing signs of China’s economic fragility, after decades of double-digit growth, and increased saber-rattling and threats concerning Taiwan,
The two could be connected.
A growing chorus of analysts argues it could be Chinese weaknesses rather than its strengths that pose the greatest dangers. The logic goes that President Xi, if his economic difficulties grow, might choose to stoke up nationalism through escalating confrontations with the United States with Taiwan as the most tempting target. The most immediate source of economic concern, aside from new power shortages, has been the unraveling of Chinese property giant Evergrande amid missed bond payments and under the weight of $300 billion in loans.
“If China’s policymakers can successfully pivot their economy to be a more productive and dynamic one, the risk to Washington is real,” writes a new Atlantic Council fellow Michael Schuman. “If, however, it turns out that China is more like Evergrande – a glossy growth story with a rotten core – then Beijing’s ambitions will unravel, much like the property company’s.”
Bonny Lin and David Sacks argue this week in Foreign Affairs that “China’s increasingly aggressive behavior” toward Taiwan “makes a cross-strait emergency more likely. But the risk of a crisis stems less from the possibility of an immediate Chinese invasion than from an accident or a miscalculation that turns deadly – a midair collision between Chinese and Taiwanese jets.”
This all has the feel of the perilous beginning of an uncertain era that lacks established rules or patterns of behavior. The U.S. is unaccustomed to such challenges to its role, and China is unpracticed at managing global tensions.
It’s worth remembering that the U.S.-Soviet relationship was probably most dangerous from 1945-1962. In those 17 years after World War II, the two sides navigated a series of crises, culminating in the 1962 Cuban missile crisis, before the relationship evolved into more predictable contours.
Two top Biden administration officials, National Security Advisor Jake Sullivan and top Asia coordinator Kurt Campbell, impressively laid out their thinking in 2019 in Foreign Affairs on how to navigate U.S.-Chinese relations.
That was before they knew they would own the challenge inside the White House. They now are working toward a virtual U.S.-Chinese summit before the year’s end, and the two sides have made progress toward working-level talks on several key issues.
Under the headline Competition without Catastrophe, Sullivan and Campbell wrote in 2019, “The starting point for the right U.S. approach must be humility about the capacity of decisions made in Washington to determine the direction of long-term developments in Beijing … (the U.S.) should seek to achieve not a definitive end state akin to the Cold War’s ultimate conclusion but a steady state of clear-eyed coexistence on terms favorable to U.S. interests and values.”
Whether they succeed will shape the global future.