On the surface, the US and China appear to be in a new Cold War. The coronavirus pandemic has exacerbated existing ideological, political, and economic tensions between the two countries, who face the most contentious moment in their relationship since they established diplomatic relations in 1979.
But digging deeper, US-China tensions today are fundamentally different to the standoff between the US and the Soviet Union, the original Cold War.
China’s rise has challenged the US’s status as the sole global superpower since the fall of the Soviet Union in 1991. China’s GDP has risen from 20 percent of the US in 1991 to 120 percent this year. China’s economic prowess is also global in nature: Beijing is the world’s largest exporter, second-largest importer, and top regional trading partner in East Asia (notably including US regional allies). Nine of the twenty largest information technology companies are Chinese. Only 25 years ago, China’s defense budget was one-25th that of the US; today, it is one third and rising.
This rise has led the US to label China a “revisionist power” and major strategic rival in the 2017 National Security Strategy. The rivalry has resulted in a series of tit-for-tat measures, most recently involving Chinese sanctions on US senators and US orders to close the Chinese consulate in Houston.
Yet the Cold War analogy crucially misses the level of economic interdependence between China and the US today – one that was virtually nonexistent in US-Soviet relations.
This interdependence is clear in the data. At the end of the Cold War, the US was importing approximately $200 million worth of goods from the Soviet Union. Just two years ago, US imports from China were more than $700 billion. This year, even with two years of US tariffs on Chinese imports and pandemic-induced global commerce disruption, bilateral trade in goods is projected to be around $450-$500 billion – not to mention the fact that China holds over $1 trillion in US Treasury securities.
These realities highlight the faulty nature of the Cold War analogy, and ignore the fact that Washington and Beijing are bound together by complex supply chains that make strategic decoupling an unrealistic path to pursue. Assuming it is feasible, complete decoupling – defined as ending the flow of trade and technology set to boost growth potential – between the two largest global economies will entail significant ramifications to long-term growth prospects. Bloomberg Economics estimates that the impact would be much larger on China than on the US, thereby dragging the country’s potential growth rate down to 1.6 percent in 2030 from the current forecast of 4.5 percent.
Beyond economic interdependence, the very nature of the transnational challenges of this century – like global macroeconomic stability, pandemic management, and climate change mitigation – mean that Sino-American engagement and sustained cooperation is imperative. Unless Washington and Beijing have the sudden and unexpected urge to turn their back on these challenges, which it is in their interest to solve, or find a spare $15 trillion to build independent supply chains, bilateral engagement will persist. These realities render the Cold War analogy at best reductionist, and at worst a faulty template that may exacerbate Sino-American tensions if used as a guide to the present and future.
The relationship between China and the US will undoubtedly evolve. Possible scenarios include tense cohabitation and wary engagement. As Washington and Beijing navigate a delicate balance between competition and cooperation, policy makers in both countries must avoid acting on partisan tendencies and acknowledge the importance of their relations to global economic and geopolitical stability.
There is, however, one lesson from the Cold War that can help Washington and Beijing navigate their current state of affairs. Despite being nuclear-armed adversaries, the US and the Soviet Union developed significant military-to-military contacts towards the latter end of the Cold War — military diplomacy evidently played a central role in preventing the Cold War from going hot. These contacts came in the form of confidence-building measures (CBMs) such as the 1972 Incidents at Sea Agreement and the 1989 Prevention of Dangerous Military Incidents Agreement.
The Sino-American rivalry would benefit from developing similar measures that help prevent escalation and establish a robust military relationship. Effective diplomacy is central to that relationship: both nations should keep the lines of strategic communication open, cooperating where strategic objectives align (i.e. supply chain resilience, climate change). This cooperation must exhibit a genuine desire for win-win outcomes, but will require significant diplomatic efforts, time, patience, and nimble strategy from both Washington and Beijing.
Sultan Althari is a Masters Candidate in Middle Eastern Studies at Harvard University’s Center for Middle Eastern Studies and Student-Affiliate at the Kennedy School's Middle East Initiative.