Cracking China

Will China succeed in what some call its grand strategy of displacing American power? Whichever scenario emerges also depends on the strategy the US chooses in response.

Many Chinese elites saw the Great Recession of 2008 as a sign of American decline. Leaders abandoned Deng Xiaoping's strategy of hiding capacity and biding their time and became more assertive in ways ranging from building artificial islands in the South China Sea to economic coercion of Australia to abrogating guarantees to Hong Kong. On the trade front, China tilted the playing field with subsidies to state-owned enterprises, coercive intellectual property transfer and cyber theft. Donald Trump responded clumsily with a tariff war that included penalties on allies as well as on China, but he was correct to defend against companies like Huawei, whose plans to build 5G telecommunications networks pose a security threat. Some people in Washington began to talk about a general "decoupling" and a "new Cold War," but it is mistaken to think the US can completely decouple its economy from China without enormous economic costs.

All historical metaphors are imperfect. While the Cold War metaphor can help mobilize publics for a prolonged competition, it can also mislead policy makers about the nature of the strategic challenge China poses. In the real Cold War, the Soviet Union was a direct military and ideological threat, and there was almost no economic or social interdependence in the relationship. Containment was a feasible objective. With China today, the US has half a trillion dollars in trade and millions of social interchanges. Moreover, with its "market-Leninist" political system, China has learned how to harness the creativity of markets to authoritarian Communist party control in a way the Soviets never mastered. China cannot be contained in the same manner as the relatively weak Soviet economy. More countries have China as their major trade partner than they do the US. While many countries welcome an US security guarantee against Chinese military domination, they are not willing to curtail their economic relations with China as Cold War allies did with the Soviet Union....