International Trade

12.07.2021

Cooperation, Competition or Confrontation? An Era of Strategic Choice

QI, Ye

China and the US should explore every avenue to avoid a conflict which will lead to human tragedy.

By Professor QI Ye, Director of the Institute for Public Policy at HKUST

Cooperation in technological innovation is desperately needed to face the eminent challenge of the coronavirus pandemic and the deadly threat of global climate change. Yet it is easier to talk about cooperation than achieve it. Under certain circumstances, even advocating cooperation may also be seen as politically incorrect. Unfortunately, such a situation is occurring between the world’s superpowers today.

The US and Japan have been recently forming a partnership that excludes China from a semiconductor supply chain. A spokesman from the Chinese Foreign Ministry rebuked the attempt as damaging to all parties. Despite the inflammatory nature of the incident, this kind of international maneuvering hardly garners much attention after four years of conflict over trade, technology, public health, and strategic issues.

While the foreign ministers of the G7 were blasting China and Russia for bullying others lately, some ranking members of the US Congress were planning a Cold War. In April, the Strategic Competition Act (SCA) was introduced and approved by the Foreign Relations Committee of the US Senate. Seen as a rare form of bipartisan cooperation between the Republicans and the Democrats, the SCA is considered by some Washington think-tank veterans as a de facto declaration of a Cold War with China. All this happened when John KERRY, the US Special Envoy, was discussing cooperation on climate change with his Chinese counterpart in Shanghai. Kerry himself once served a long period as the Chairman of the Senate Foreign Relations Committee. The two opposing political parties of Washington elites seem to be united, determined, and even excited to wage a Cold War against an imagined enemy who they desperately need.

A new Cold War?

Secretary of State Anthony BLINKEN denied that the US is engaging a Cold War with China. The top US diplomat laid out three categories of issues and the corresponding actions: we would cooperate where we could, compete where should, and confront where we must. In dealing with China, cooperation and confrontation can go side by side. But the challenge is how to draw the boundaries between these categories. In a time of growing tension between the two superpowers with nuclear arsenals, and with inflammatory nationalism on both sides, placing a delicate issue in the wrong category or initiating a blurred boundary between categories may lead to a fatal, unintended consequences that even the most ardent populists on either side would hate to see.

The Chinese stance is clear and firm. At the first meeting with the new US administration, YANG Jiechi, the head of foreign affairs in China, told his American counterpart, that “in front of China, the US is not qualified to speak from a position of strength, even 20 or 30 years ago.” This unusual warning clearly shows China’s confidence if it comes to competition with the incumbent world leader. America is still the leader in many areas, especially in technology and the military, but the gap is closing fast, as China pours tremendous resources into indigenous innovation and modern infrastructure, anticipating and embracing a new technological and industrial revolution.

Graham ALLISON, founding Dean of the Kennedy School of Government at Harvard, observed that no incumbent leading country would sit idle when a challenger grows in power. He warns that historically, the majority of such cases have ended with a tragic war. Unfortunately, humans tend not to learn from history. In a long four years, a vigilant America under a stable genius adopted a strategy of extreme pressure by waging a trade war and suppressing major technology firms. The hostile (and obviously irrational) actions won widespread domestic support. Even today, some congressmen are still advocating a permanent ban on Huawei from entering America. These actions are not only against America’s interests, but are also inconsistent with America’s tradition of openness and big heartedness, and its instinct for embracing diverse peoples, cultures and technologies. Apparently, a deep anxiety has been growing within the minds and hearts of some who have not had adequate exposure to the realities of the world and its history. Deeply rooted insecurity also comes from dissatisfaction with the growing gaps of income and wealth due to economic globalization. But it is much more convenient to make others into scapegoats.

An optimistic China

The widespread anxiety in America is mirrored in the growing confidence and boundless optimism in the Chinese society. To many people in China, the rise of the nation is an inevitable trend, and China has already been leading the world in some of the most advanced technologies. Many commentators often cite favorite examples, such as cashless payment, online shopping and car-hailing, and the online ordering of take-out food. Some are proud of AI-based facial recognition which is seamlessly deployed to catch criminals and suspects. Many believe that China could easily blow the American finance system by cashing out its large holding of US Treasury bonds.

There are resentments about the America’s ban on exporting so-called bottle-neck technologies to China. These technologies are critical, but not yet available in China, and include some of the finest computer chips. Huawei and ZTE are among the best-known companies to be seized by the throat. Leaders from the Chinese Academy of Sciences and leading universities are now resetting their priorities and inspiring their staff and students to develop China’s own technology, as when the Soviets withdrew their engineers and ended technological cooperation in late 1950s. Despite the hardships and anticipated challenges, China seems to be confident, and determined to have a breakthrough in these technologies by means of indigenous innovation.

Pride and prejudice

The prejudice on one side can only be explained and echoed by the pride of the other. The truth may just be in the middle, a place where we spent decades. But can we go back to where we were? That is unlikely. The seemingly inevitable destiny of the two countries, and the world, shows “the solemnity of the remorseless working of things” (quoting from Whitehead). Graham Allison entitled his best-selling book Destined for War: Can America and China Escape Thucydides’s Trap?. Perhaps the answer should be “nothing is impossible”, especially when it is a matter of life and death. It is the only reasonable choice, and the two countries should do everything they can to avoid a tragic conflict. They should take the advantage of every possibility to work together.

Four years ago, in the first meeting of the two heads of state, the Chinese President told his American counterpart that there are a thousand reasons to make a good bilateral relation, and there is not one reason to make a bad one. Ironically, the SCA and some political elites have listed many reasons for confrontation. These elites always try to pass their anxiety to the public, and too often they succeed. Some business elites are those who have made a fortune from doing business in or with China in recent decades, but who find it is getting harder to make money as China itself becomes better market player and technology innovator. Some political elites are surprised to find that China is no longer as tame and low-profile as it used to be, and appears to be more assertive. Some still wholeheartedly believe that China is an errant lamb who needs to be brought back to the right path. But they are frustrated to find that China is growing more and more confident and self-assured. Such elites believe that China needs to be corrected.

These elites, regardless their beliefs, illusions, or frustrations, have little to do with the daily lives of the mass public. For decades, they collectively have failed the American public and now they tell the public that it is all China’s fault. Too many still choose to believe them. That is why we now see a clamoring in the political arena for the so-called strategic competition.

Wisdom and responsibility

Competition itself is not a bad thing at all. Business school students are familiar with their required reading, the Competitive Advantage of Nations, by the Harvard Professor Michael PORTER. Porter revised the classical Comparative Advantage theory by emphasizing competition among nations. According to Porter, each nation could enhance its competitive advantage through engaging in a global system of value chains and trade based on production factors, investment and innovation. In such a system, nations are interdependent of, and benefit from, each other. This has been working well for the US and China in recent decades. Both countries and the world have gained tremendously from the globalized, interdependent system. But now, this system is facing a rapid shift and deterioration, towards competition for dominating advantage.

My former colleague Ryan HASS, of the Brookings Institution, recently published a new book that immediately became a bestseller: Stronger: Adapting America’s China Strategy in an Age of Competitive Interdependence. Indeed, we are not just living in an era of strategic competition, we are in an age of interdependence. Cooperation, competition or confrontation? Our choice matters for present and future generations. Be wise and be responsible.

Reference

Graham Allison (2019), Destined for War: Can America and China Escape Thucydides’s Trap?.

Michael E. Porter 1998), Competitive Advantage of Nations.

Ryan Hass (2021), Stronger: Adapting America’s China Strategy in an Age of Competitive Interdependence.