The US and China represent the most important – and possibly most dangerous – bilateral relationship in human history. Given that reality, neither side manages their rising tensions with sufficient skills or a sustainable strategy.
That’s what Stephen Heintz of the Rockefeller Brothers Fund said in a conversation with me a few days ago. It’s also the subtext of conversations I’ve had with world leaders who visited Washington, DC this week for the IMF and World Bank meetings.
Relations between the US and the Soviet Union defined the Cold War, with both sides having the unprecedented nuclear ability to destroy each other, and much more. Before that, the Anglo-American relationship was decisive, from intense American-British competition in the 19e century into an alliance that won the fascist victory during World War II in the 20 . preventede century.
Yet Heintz’s argument is compelling that US-China relations have historically unique significance, based on their multidimensional nature that affects just about every aspect of global affairs now and for the foreseeable future.
That’s true whether you’re concerned about the world war, the global economy, climate change, human rights, the struggle between democracy and authoritarianism, the future of space, or the accelerating race to the impressive heights of technology. Never has so much around the world relied so heavily on the ability of two countries to manage their relationship across a staggering number of domains.
The accuracy of data related to the Chinese economy, which has been the biggest driver of global growth for many years, was the focus of this week’s meetings of the IMF and the World Bank. The controversy centered on allegations that IMF director Kristalina Georgieva had asked colleagues, when she was a top official at the World Bank, to find a way to boost China’s position in her flagship Doing Business report 2018.
Georgieva has denied all allegations. The IMF’s board of directors, which met eight times to consider her fate, concluded that the assessment of the allegations “did not conclusively show that the director played an inappropriate role”. The board reaffirmed its confidence in Georgieva’s leadership, but the controversy is likely to continue.
The subtext is that any leader of an international institution must deal with the reality that China will increasingly act to influence, direct or replace the world’s major multilateral bodies, in this case the world’s lender of last resort.
Meanwhile, senior DC government officials this week, representing the world’s major economies, had plenty else to worry about: an unfolding energy crisis, soaring inflation, slowing growth and mounting climate concerns ahead of the climate change conference. the United Nations in 2021, or COP26, which begins October 31 in Glasgow, Scotland.
A senior official of one of the US’s main allies, speaking anonymously, said all of this has been made more difficult to manage by the growing volatility in US-China relations, caused by both their differences and their domestic realities.
China is swinging in a more authoritarian direction at home and towards more confrontational policies abroad, while tightening its regional and global muscles. Amid messy and polarizing US politics, following a poorly executed Afghan withdrawal and lacking clarity on US strategy towards Beijing, partners question US commitment, competence and capacity for a global common cause .
The senior ally said the biggest medium- and long-term economic risk to his country is that rising tensions between the US and China culminate in a battle engulfing his country. “Few of us can afford to make a decision between the US and China,” he said. “So please don’t ask us to do this.”
It’s not that America’s allies are naive about President Xi Jinping’s unfortunate course for his country. However, a large number of them have China as their main trading partner – including the European Union as a whole, Germany, Japan, South Korea, Saudi Arabia and the United Arab Emirates. China accounted for nearly 30% of global growth between 2013 and 2018, double that of the US
Much of the most recent analysis on China has centered on two immediate issues: increasing signs of China’s economic fragility after decades of double-digit growth, and increased saber clanging and threats against Taiwan.
The two could be linked.
A growing chorus of analysts argues that China’s weaknesses rather than strengths may pose the greatest dangers. The logic is that, if his economic difficulties worsen, President Xi might choose to fuel nationalism through escalating clashes with the United States, with Taiwan being the most tempting target. The most immediate source of economic concern, other than new power shortages, has been the unraveling of Chinese real estate giant Evergrande amid missed bond payments and under the weight of $300 billion in loans.
“If Chinese policymakers succeed in transforming their economy into a more productive and dynamic economy, Washington will face a real risk,” writes Michael Schuman, a new Atlantic Council colleague. However, if China turns out to be more like Evergrande — a shiny growth story with a rotten core — Beijing’s ambitions will fall apart, as will the real estate company’s.
Bonny Lin and David Sacks argue in the Foreign Office this week that “China’s increasingly aggressive behavior” toward Taiwan “makes an emergency across the strait 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 mid-air collision between Chinese and Taiwanese jets.”
All this has the sense of the perilous beginnings of an uncertain era in which fixed rules or patterns of behavior are lacking. The US is not used to such challenges in its role, and China is not used to managing global tensions.
It is worth remembering that the relationship between the US and the Soviet Union was probably at its most dangerous from 1945-1962. In the 17 years since World War II, the two sides endured a series of crises, culminating in the Cuban Missile Crisis of 1962, before the relationship developed into more predictable contours.
Two top officials in the Biden administration, National Security Adviser Jake Sullivan and top coordinator for Asia, Kurt Campbell, impressively laid out their thinking in 2019 in Foreign Affairs on how to navigate US-China relations.
That was before they knew they would own the challenge in the White House. They are now working towards a virtual US-China summit before the end of the year, and the two sides have made progress towards working-level talks on several key issues.
Underneath the head Competition without catastrophe, Sullivan and Campbell wrote in 2019: “The starting point for the right US approach should be humility about the ability of decisions made in Washington to set the direction of long-term developments in Beijing … (the US) should strive to achieve of no definitive end state akin to the ultimate Cold War conclusion, but a stable state of clairvoyant coexistence under conditions favorable to US interests and values.”
Whether they succeed will determine the global future.
Frederick Kempe is the President and Chief Executive Officer of the Atlantic Council.