Are America and China Heading Toward a New Cold War?

The United States and China had already been sliding toward a new Cold War by the time the Coronavirus became a pandemic earlier this year. The pandemic and the disastrous economic effects of the lockdowns seem to have accelerated that process. International affairs observers and even senior US officials argue that the world is now in a period of renewed great power competition. Some say a US-China Cold War has already begun. But that assessment is highly contested.

What is clear is that America no longer enjoys total dominance of the global system. US officials identify China and Russia as “revisionist powers” — alleging that they want to upend the status quo and rewrite the rules of the international order, altering the balance of power in their favor. After roughly three decades, America’s status as the world’s sole superpower could be coming to an end.

The China Challenge Is Very Real and Comprehensive

China and Russia, however, represent distinct threats to US dominance. Russia has demonstrated an ability to interfere in US elections, spread disinformation among the American public, and challenge US influence in places like Syria and Libya — all of which is part of what Russian strategists call hybrid warfare. It also retains a formidable military arsenal. But the China challenge is far more vast, given the country’s economic heft, technological prowess, and sheer demographic size. China’s cumulative strengths mean that, unlike contemporary Russia, it has a chance to become a superpower. Its challenge to US hegemony is very real and far more comprehensive.

The China challenge extends across the military, economic, and technological domains — and perhaps even beyond. Some observers even allege that China aims to upend global norms and institutions and create an alternative global governance system of its own.

Militarily, the center of gravity right now is the South China Sea. China claims sovereignty over the strategically-located, energy-rich region contested by many other states. In recent years, to cement its control over the area, China has been constructing military outposts on artificial islands.

China has also been expanding its overseas military presence in other parts of the world. It has constructed and continues to expand its first overseas military base in the strategically-located country of Djibouti. And it has reportedly established small security posts in Tajikistan and perhaps even in Afghanistan. But when compared to America’s vast military presence, which includes hundreds of overseas bases, China’s foreign military presence is quite modest.

Nonetheless, successive US administrations have developed policies aimed at containing China’s rise as a potential military superpower. The Obama administration initiated what it termed the “Asia Pivot” — an attempt to remobilize US military forces and resources away from Middle Eastern conflict zones toward the Asia-Pacific region. And in its first year in office, the Trump administration launched a similar initiative called the Indo-Pacific strategy.

China’s military power, of course, build off of its gigantic economy. Today, China is the world’s second-largest economy and the top trading partner of over one hundred countries. It dominates the trade of goods, ranging from low-cost apparel to consumer electronics and heavy machinery.

China’s steady, rapid economic growth has lifted hundreds of millions of its own people out of poverty in just over a generation. But its rise has been propelled in part by unfair trade practices, for which local industries across the world in developed and developing countries alike have paid the price.

Under President Xi Jinping, China’s economic strategy has begun to reflect its growing geostrategic ambitions. In 2014, Beijing began an effort to lay the groundwork for the next phase of globalization with China at its center. Known as the Belt and Road Initiative, this is a trillion-dollar project to build highways, railroads, power plants, and industrial zones across Eurasia and the Indian and Pacific Ocean regions.

Containing China: From the Asia Pivot to the Indo-Pacific Strategy

America has sought to push back against China’s growing economic assertion. The Obama administration led an effort to secure a free trade agreement with Southeast Asian states known as the Trans-Pacific Partnership or TPP.

After coming into office, President Trump withdrew America from the deal. But his administration has also taken a more confrontational path with China, initiating a tariff war as part of a bid for a more fair trade relationship. The Trump administration has also adopted a critical posture toward the Belt and Road Initiative, alleging that China is pursuing a so-called “debt-trap diplomacy,” meaning that it aims to submerge poorly governed countries in debt and use that to extract strategic concessions, such as acquisitions or long-term access deals to ports and other critical infrastructure.

In response to the Belt and Road, the US has launched a more modest alternative initiative known as the Blue Dot Network. And at a broader level, both China and the United States are pursuing an effort to delink their economies through a process known as “decoupling.”

The impetus for decoupling has little to do with China’s exports of cheap socks and underwear. It’s ultimately about the battle over advanced next-generation technologies, like artificial intelligence, quantum computing, and 5G mobile telephony. These emerging technologies have consumer, business, and military applications. And they are fundamental to China’s plans for a so-called Digital Silk Road, which is tied to the Belt and Road and the “Made in China 2025” localization initiative.

In many ways, “decoupling” has already begun. China’s Internet is siloed off through its “Great Firewall.” And the United States is leading an effort to deny Huawei, the Chinese technology company, a strategic foothold in the west through developing 5G networks. But it remains to be seen how far that process can go.

The United States has led a campaign to counter China’s efforts to dominate emerging technologies, focusing in large part on Huawei, the Chinese technology company that is building 5G networks across the world. Washington, with partial success at best, has tried to convince allies not to grant 5G contracts to the company, which it alleges has links to the Chinese state. It has also pursued with greater vigilance corporate and technological espionage cases involving alleged Chinese operatives.

China’s Digital Silk Road program feeds concerns in the West that it aims to not just export its technologies, but also its ideology by promoting a successful model of “authoritarian capitalism.” China is seen as advancing methods of digital surveillance through safe city projects and social credit scoring systems. And many believe that Beijing is promoting its own development bodies, such as the Silk Road Fund, to serve as an alternative to Western-led development banks and play by Beijing’s rules.

While China has said it that pursues a policy of non-interference in the affairs of other countries, the so-called China model does appeal to elites in non-democratic countries who would like to find a way to hold on to power, enrich themselves, and perhaps develop their country, without devolving authority.

US-China Cold War? The Road Ahead

So this is the backdrop in which the Coronavirus hit the world. And while tensions between Washington and Beijing have grown in recent weeks alongside talk of a Cold War, it’s worth noting that Trump’s response to China’s role in the pandemic has been conflicted. Initially, he refrained from pinning blame on China as he didn’t want to jeopardize the bilateral trade deal. Trump’s restraint quickly wore off after a Chinese diplomatic spokesman promoted a conspiracy theory that the US military developed the Coronavirus. And in response, Trump began using the phrase “Chinese virus.”

As the death toll soars in the United States, and China seems to be adopting a more aggressive information, and perhaps even strategic posture, as America’s vulnerability is displayed for the world to see, Trump has stuck to a tough approach toward China. And that approach is likely to stick as he faces criticism from the Democrats, including his likely opponent this fall, Joe Biden, for being soft on China. China has, in fact, become an election issue in America as Trump blames China for the virus but also is pressured by Biden to get tough on Beijing.

So what does the road ahead look like?

In the short term, tensions between China and the United States will continue to brew, especially as China resorts to an assertive information war strategy. We’re already seeing China revoke much of Hong Kong’s autonomy. And it could pursue a more aggressive posture in the South China Sea and perhaps even with Taiwan. China’s behavior will likely affirm the consensus in Washington that Beijing is using the Coronavirus crisis to expand its dominance in the region.

So are we in the midst of a new US-China Cold War?

It sure does look like it. But some informed observers, including former Australian Prime Minister Kevin Rudd, say we’re close but not quite there.

We’re already seeing decoupling. China has its own Great Firewall. And there’s the US pressure on Huawei. But it’s really unclear how far decoupling can go given the mutual dependencies even in the technological space.

It is also worth noting that China’s rise as a superpower is not inevitable. Xi Jinping’s pet project, the Belt and Road, is extremely vulnerable. It’s grown too big and China has made massive investments in the world’s most economically and politically fragile countries — countries that are now asking for debt forgiveness. One could say that the Belt Road is actually a debt trap for China. And while US attempts to counter BRI may not succeed in the short term, America and its allies could end up benefitting as the project is scaled down or discarded.

China has a limited window to reach high-income status before its labor pool begins to shrink. The good old days of double-digit growth are over. And China’s population is aging fast. Some time in the next decade, its population will be actually older than America’s. With an ailing economy and an aging population, reaching high-income status becomes an even greater challenge. And a slowing economy also means an unhappy population. That could result in political and social unrest.

If a US-China Cold War does indeed emerge, we may see even greater resistance by countries to pick a side than in the previous one. Many states in China’s neighborhood, including American allies, fear its rise, but also seek a way to live with its gigantic neighbor. America’s efforts to create a Western bloc against the Belt and Road and the Digital Silk Road have also witnessed setbacks. Italy has joined the Belt and Road. Meanwhile, China has few genuine allies it can claim, aside from Pakistan.

In the end, the future may depend on how both countries handle the Coronavirus. How fast their economies rebound. Whether they prevent a second wave. And which country is the first to find a vaccine. What is clear is that we are at an inflection point. A global power shift is taking place — with heightened animosity and competition between the world’s two largest economies and most powerful militaries.

A new era has begun.