Economics Makes Strange Bedfellows

"Room for Debate" Roundtable

The U.S. is in relative decline, not absolute decline. Indeed, its demographic outlook, its progress on major trade initiatives like the Trans-Pacific Partnership, and its breakthroughs in fields like natural gas and big data — among other factors — suggest that it may be poised for a renaissance.

U.S. revitalization and Chinese ascendance are not mutually exclusive; nor must they become so. Beyond absorbing a fifth of Chinese exports, the U.S. largely underpins the maritime commons through which vital commodities flow to China; China holds almost 8 percent of total U.S. debt and is America’s third-largest export market. Even if the U.S. and China were not so interdependent, the size of their collective footprint would require them to cooperate on the world’s most pressing challenges. Together, they are home to nearly a quarter of humanity and account for a third of gross world product.

Despite such realities, their strategic preferences render them competitors: while the U.S. and China appreciate the imperative of avoiding conflict, each is accustomed to preeminence, not cohabitation and coevolution with a near equal. The U.S. has had the largest economy for well over a century and the largest defense budget for roughly 70 years. China, meanwhile, was once the “Middle Kingdom” in the Asia-Pacific, long the focal region of geopolitics. It regards the past 250 years or so of Western predominance as a deviation from historical patterns.

U.S.-China competition is most apparent in the Asia-Pacific, where China is drawing its neighbors into its economic orbit and constraining the U.S. Navy’s ability to operate within the second “island chain” (connecting the Aleutian Islands, Guam and Papua New Guinea). It is also increasing in sub-Saharan Africa and Latin America, two regions that appear to have calculated that they can better sustain their rapid growth by playing the two giants off of one another rather than “picking” one.

As it approaches strategic parity with the U.S., China will likely become more assertive in shaping the norms, rules and institutions of the international system, with important consequences for humanitarian intervention and conflict resolution.