US-China Relations: An Interview with Graham Allison

Graham Allison was interviewed about U.S.-China relations for Goldman Sachs' "Top of Mind" by Allison Nathan, Senior Strategist in Global Macro Research.

Top of Mind: How would you describe US-China relations today?

Graham Allison: In one word, bad. In many words, very bad. Unfortunately, the relationship has deteriorated to its worst state since Henry Kissinger and Zhou Enlai began their conversations to reestablish relations between the two countries over fifty years ago.

Top of Mind: How did we end up here?

Graham Allison: My book Destined for War, which was published just as President Trump entered office, predicted this rise in hostility. So, I have been jokingly accused of perpetrating a self-fulfilling prophecy. But I say: blame Thucydides. As we saw when Athens challenged Sparta in Ancient Greece and have seen repeatedly in the centuries since, when a rapidly rising power threatens to displace a major ruling power, both become increasingly hostile towards the other. The last 500 years have seen 16 cases in which a rising power threatened to displace a ruling power. In 12 of those cases, the outcome was war. Nobody can deny that China is a meteoric rising power. Who was the world’s manufacturing workshop when China entered the WTO in 2001? The US. Who is it today? China. Who was everyone’s main trading partner in 2000? The US. Who is it today? China. Who has the largest GDP? In 2000, China’s GDP was roughly a quarter of the US’ in purchasing power parity terms, and today it is slightly larger than the US’. And nobody can deny that the US is a colossal ruling power that has been the architect and protector of the international order that has given us over seven decades without great power war. So, this is a classic Thucydidean rivalry. But this rivalry is only ~75% of the answer to why hostilities have risen. The other 25% owes to the identity of the two rivals. Americans have become so accustomed to being at the top of the pecking order for a century—what we call the “American century”—that it is now part of the American psyche. So, as we’ve seen in the case of other ruling powers, which I describe as the “ruling power syndrome,” Americans are shocked by the idea that China is not taking the place that the US has assigned it in the American-led international order. On the other hand, anybody that knows anything about China knows that China's view of its role in the world is as the center of the universe. In Mandarin, the word China means Middle Kingdom, which is the connection between the earth and heaven. It is the sun around which all others revolve. From the Chinese POV, they occupied their legitimate position at the center of the universe for thousands of years until Westerners showed up with new technology and displaced them, imposing what they call the “century of humiliation.” But as China has regained its strength, pursuing what President Xi calls the “great rejuvenation of the great Chinese people,” China is returning to what it sees as its natural place of global power. And, as China becomes more powerful, it, like other rising powers in history, has what I describe as “rising power syndrome,” demanding and gaining more say and sway in the world. These storylines that have been repeated over the course of history are now on display in the views and actions of both the US and China. So, as I wrote in 2016: expect things to get worse before they get worse.

Top of Mind: What do the US and China most misunderstand about each other?

Graham Allison: They both seem to misunderstand the realities of domestic politics that shape policy in the other country. A vivid example was each side’s lack of understanding around the balloon incident earlier this year. The Chinese could not seem to comprehend how President Biden could allow the incident to so disrupt American politics that they had to cancel Secretary of State Blinken’s meeting with Xi in China, which destroyed three months of hard work by both sides to prepare for the opening of a new chapter in US-China relations. And the Americans couldn’t understand how Xi could send a spy balloon to the US just before this crucial meeting was set to take place. I tried to explain to people in Beijing and Washington that these perspectives were equally naive. The idea that Xi knew about this spy balloon is nuts. Remember what happened during the Cuban Missile Crisis. On the most dangerous day of the crisis, when President Kennedy was making decisions that he thought might lead to the deaths of 100 million people, an expert from the CIA informed him that a US U2 spy craft had strayed over the Soviet Union and was on course to fly over Soviet missile fields, which could appear to be a last-minute check on targets before a nuclear first strike. In a moment of gallows humor, JFK said: “there's always some son of a bitch who doesn’t get the word.” Kennedy had no idea what that plane was doing. And I’m confident the same was true for Xi vis-à-vis the balloon. Similarly, if you put a big spy eye over the US where citizens can see it and TV cameras can track it and think that won’t set off political fireworks, you have no understanding of US politics.

Top of Mind: What have we learned from China’s response to the Russia-Ukraine conflict?

Graham Allison: China's support for Russia in the war with Ukraine has revealed an uncomfortable truth that most US observers are still unwilling to recognize: Xi has built with Russia the most consequential undeclared alliance in the world. Xi’s achievement is all the more impressive because these two nations have so many reasons to be adversaries. They share a long border with territorial disputes. On Chinese maps, Vladivostok, Russia’s most significant naval base in the Pacific, is labeled with its Chinese name because the Chinese view it as territory to be recovered at some later stage. China is a massive country with few natural resources, while across the border in Siberia, Russian land east of the Ural Mountains is full of natural resources but has few people. So, China and Russia are natural adversaries. But Xi has defied expectations in building a thick relationship with Putin, and China’s response to the Ukraine war should be a wake-up call to the world that Xi is not walking away from him. So, the US—and the world—needs to factor in this alliance as it contemplates its statecraft.

Top of Mind: Are US-China relations poised to deteriorate into a new Cold War?

Graham Allison: Many Americans, and even some US government officials, seem to believe China is the new Soviet Union in what will be a new Cold War. But it is important to remember that the Soviet Union was an expansive revolutionary power that was pursuing global transformation. It believed its mission was to bring Communist governments to power in every country. But China has no aspiration for other governments to be ruled by the CCP. As Kissinger noted, the Chinese have such a superiority complex that they can’t imagine other societies could be good enough to imitate their form of government. Moreover, a key feature of the Cold War was an economic iron curtain that essentially cut the Soviet Union off from the global economy. Today, China is the second backbone of the global economy and, as the Trump Administration discovered, most nations refuse to choose between a US that is essential for their security and a China that is essential for their continued prosperity. So, simplistically applied, the Cold War analogy misleads more than it clarifies. Conversely, China has made clear that it aspires to displace the US as the predominant power in Asia. It aims to achieve this not by attacking or occupying territory, but in the Chinese style that is more like the game of Go, where the strategy is to surround people until they yield because they have no good alternatives. This puts the US and Mainland China directly at odds in the South China Sea, Taiwan, and the broader Asia- Pacific. The US believes strongly in its role in the region and in its alliances with Japan, South Korea, and Australia, as well as the Quad and AUKUS security alliances. So, the US is not walking away from Asia. That said, the best way to understand the competition in the near term isn’t in terms of the Cold War and the Soviet Union’s global aspirations, but as a classic Thucydidean rivalry in which East Asia is today the most dangerous arena.

Top of Mind: What about a hot war, which the Thucydidean pattern suggests is the most likely outcome?

Graham Allison: I do not believe for a moment that a hot war between the US and China is inevitable. It’s true that in Thucydidean rivalries, the outcome is normally war. And if all policymakers can manage in US-China relations is diplomacy as usual, then we should expect history as usual. Destined for War was not written to offer a fatalistic prediction, though, but as a call for strategic imagination. Again, in four of the 16 Thucydidean rivalries in the past 500 years, extraordinary strategic imagination produced extraordinary results. Many people claimed that the inevitable outcome of the Cold War between the US and the Soviet Union would be a hot war. But it never occurred because policymakers developed a coherent strategy and patterns of behavior that managed to contain the competition and prevent crises from escalating to real war. The US-China rivalry presents a new challenge for strategic imagination to stretch our minds beyond history as usual.

Top of Mind: But given the negativity around the relationship today, can such extraordinary efforts prevail?

Graham Allison: The politics, populism, and nationalism in Washington and Beijing make achieving this outcome harder than was the case for Athens and Sparta. But not impossible. Biden and Xi are sane, experienced political leaders. Each understands that war between the US and China would be catastrophic for his own country. So, the question is whether Xi and Biden can find their way to a relationship that's robust enough to manage their domestic political demons. This will be an extreme, but not insurmountable, challenge for both leaders.

Top of Mind: So, what’s your advice for policymakers?

Graham Allison: When I speak privately to policymakers on both sides, I pose a question: Which should rational leaders in Beijing and Washington find more compelling: the incentives to compete, or the incentives to cooperate? I suggest they write down a list of each. The US and China are fiercely competing for predominance in Asia. They are competing to be the global leader in IT, AI, quantum computing, and other significant technologies. Each aspires to be an “indispensable” economy so that when others take actions they oppose, they can squeeze them, as China did when it cut off Japan from rare earth metals or the US is doing in prohibiting exports of advanced semiconductors to China. So, incentives to compete are compelling. But incentives to cooperate are also compelling. We live in an era of nuclear “MAD:” mutual assured destruction. Both the US and China have nuclear arsenals that if used against the other would lead to retaliation and, ultimately, the destruction of both countries. Thus, as certainly as it did during the most dangerous days of the Cold War, President Reagan’s insistence that “a nuclear war cannot be won and therefore must never be fought” remains a foundational truth in US-China relations. MAD also applies to climate. Greenhouse gas emissions have the potential to destroy the shared biosphere, so each country has an incentive to cooperate to constrain emissions. The global financial system creates a similar interdependence. If the financial system is so integrated that a major recession in one country could become a global depression absent cooperation on stimulus—as in 2008—the incentive to cooperate for the sake of each country’s own economy is strong. Based on these two lists, it’s clear that the US and China are locked in conditions defined by two contradictory imperatives: to compete in the greatest rivalry of all time, and to cooperate for each to ensure its own survival. So, they must find their way to a strategic concept that combines competition and cooperation. One possibility is a “rivalry partnership,” in which they are both fierce rivals and intense partners. This concept often occurs in business. Apple and Samsung are fierce competitors in smartphone markets, but Samsung is the biggest supplier of parts for Apple. That’s an uncomfortable situation, but who said life should be comfortable? Learning how to compete in some spaces and cooperate in others is a difficult but necessary aspect of today’s complex world.