8
My country’s development is still in a period of important strategic opportunities, but the domestic and international environment are undergoing profound and complex changes.
—Chinese President Xi Jinping1
On a crisp November evening in Wilmington, Delaware, Joe Biden jogged down the ramp to take the stage before an exhilarated crowd. Spontaneous celebrations had broken out in cities across the US in the hours preceding his speech. Major media outlets had just declared that the 77-year-old had won what was a deeply polarising presidential election. The country, Biden told the gathering, stood at an ‘inflection point’.2 He called for healing and promised to ‘restore the soul of America’. ‘Tonight, the whole world is watching America,’ he said, adding, ‘I believe at our best America is a beacon for the globe. And we lead not by the example of our power, but by the power of our example.’
It had been an unusual contest to say the least. The COVID-19 pandemic continued to rage through the US. As people lined up to cast their ballot, daily case-counts were hitting record highs. In October, Biden’s rival, President Donald Trump, had himself spent three nights in hospital after testing positive. Despite all this, voter turnout had been among the highest in 100 years. The pandemic had also strengthened the trend of voter preference for mail-in ballots,3 with well over 100 million people using the option. This, in turn, meant that counting votes was a long-drawn process, which led to dramatic twists and turns through the week after election day. The polls had closed on 3 November, with early counting in the key battleground states of Wisconsin, Michigan, Pennsylvania and Georgia favouring Trump. But the trend turned gradually blue as postal ballots were counted. Bit by bit, the Democrat chipped away at his rival’s lead. Still, it was only on 7 November that media outlets felt comfortable in the shift and the Biden campaign felt confident in its lead to be able to formally declare victory.
In the interim, Trump refused to concede, alleging fraud and initiating a series of litigations. From the White House, he accused his rivals of stealing the election through ‘illegal votes’.4 Social media outlets flagged his posts as ‘potentially misleading’,5 while several major TV networks cut away from the President’s live remarks, terming them baseless and false.6 For all the cacophony, Trump would eventually have to depart from the White House. But his politics and the grievances he tapped into are not likely to disappear. Even in defeat, Trump had garnered nearly 47 percent of the total votes cast, that is, well over 74 million votes. This number meant that he had not only added significantly to his 2016 tally but also surpassed Barack Obama’s record for popular vote set in 2008. As The Atlantic’s Tom McTague argued, the closeness of the race
leaves a nagging fear that the world has not seen the last of Trump. Like an allegorical monster, he remains wounded but out there, lurking, ready to wreak his revenge. Even if he does not reemerge from the bushes himself to claim victory in the courts or, indeed, to try again in 2024, his dogma remains.7
Across the Pacific, people in China watched intently, with some nodding in agreement. Officially, Beijing maintained silence for a while. Even 48 hours after Biden’s victory speech, Xi Jinping had not sent a congratulatory message. This was unlike several other world leaders. On 9 November, the foreign ministry did note that Biden had declared victory, but it added that China would await the result being ‘determined following US laws and procedures’.8 A formal acknowledgement of Biden’s win would eventually come from the foreign ministry on 13 November.9 Regardless, in Chinese cyberspace and across Party-state media, free discussions were permitted. There were some voices talking about how the result had displayed the self-correcting nature of democratic systems. Others such as CGTN’s popular anchor Liu Xin urged Biden to apply his message of healing to the Sino-US relationship. Renmin University’s Jin Canrong talked about the possibility of a ‘buffering period’ to stem the worsening of the relationship, while Fudan University’s Xin Qiang cautioned that it would take time to rebuild mutual trust.10 Mei Xinyu, a researcher at China’s commerce ministry, warned that Biden’s win was not a win for China. ‘Calm down, observe, and think,’ he told his followers on WeChat.11 Apart from these, there was another strand of commentaries in the media—one that blended bemusement, mockery and even schadenfreude. CCTV gave primetime coverage to Trump’s claims and protests, claiming that ‘multiple spots in the US have fallen into chaos’.12 The Global Times claimed that the elections had provided ‘entertainment’ to Chinese internet users and offered ‘a sneak-peek into the US and its chaotic society’.13 The paper’s editor, Hu Xijin, would argue that the American political system was in a state of ‘degradation’.14 On Twitter, the People’s Daily re-tweeted Trump’s claim of winning the election with a laugh. On Weibo, the Party’s flagship daily talked about how American voters were deeply divided.15 Caixin reported that the hashtag ‘U.S. presidential election’ had racked up 7 billion views on Weibo as of 5 November. Many of these discussions postulated the possibility of civil war in the US and about the need to reform a ‘stale and aging’ political system.16 Shen Yi, an international politics professor at Fudan University, wondered about the disappointment that America’s founding fathers would likely have felt if they were able to witness the current state of the system.17 Writing for Xinhua’s China Comment magazine, researcher Wang Pengquan argued, ‘The vast majority of Chinese can see through the reality of US political division, economic stagnation and social turmoil.’18
This, for state media and commentators, offered a stark contrast to the events that had been unfolding in China. Data following the Golden Week holiday in early October had shown that the economy was well and truly on the path to recovery. At the end of the month, the top leadership of the Communist Party had concluded the fifth plenary session of the 19th Central Committee in Beijing. The meeting had yielded a set of proposals that would shape the 14th Five Year Plan (2021–2025) and a vision for long-term growth. These were made public on the eve of elections in the US. Hailing the ‘decisive success’ that had been achieved during the 13th Five Year Plan, the leadership was promising a doubling of China’s GDP and per capita income by 2035.19 The pathway to achieving this would be ensuring continued support for the Party with Xi Jinping as the ‘core navigator and helmsman’,20 completing military modernisation by 2027, prioritising economic growth by boosting domestic consumption and maintaining self-reliance in innovation and technology independence as a ‘strategic pillar’ of development.21 In a note issued by Xi along with the proposals, he talked about China being in a period of strategic opportunity despite the profound changes that were underway around the world. He highlighted the challenges brought by ‘predictable and unpredictable risk factors’ and the threat of unilateralism and de-globalisation.22 This, for him, meant that the Party ‘must persist in coordinating development and security’, establishing ‘bottom-line thinking’, ‘plugging loopholes’ and ‘strengthening weaknesses’. At the same time, he called on the cadre to ‘resolutely safeguard’ state power and the socialist system and ideology by working to ‘strictly prevent and crack down on the infiltration, sabotage, subversion and separatist activities of hostile forces’.
Cold War Mentality
What Xi was basically telling the Party was that from his perspective, it was clear that political change in Washington was unlikely to alter the competitive trajectory of Sino-American relations. This dynamic had become far more acute in the four years of the Trump administration. What is more, tensions during the pandemic had accelerated the pace of competition, with confrontation becoming more likely than at any time since the Taiwan Strait crisis of 1996. The Trump administration had adopted an aggressive ‘whole of government’ strategy to deal with China.23 This entailed imposing tariffs on Chinese imports, restricting export of sensitive technologies, vetting and reviewing Chinese investments, investigating economic espionage and theft of research, reviewing and restricting educational funding and collaboration, requiring state media operating in the US to register as foreign agents, sanctioning Chinese officials and corporations for human rights violations and working with partners under the Indo-Pacific framework.
These dimensions of contestation were captured in speeches delivered by key administration officials through the summer of 2020. In late April, Secretary of State Mike Pompeo launched the Clean Path Initiative with the aim of ‘safeguarding the nation’s assets including citizens’ privacy and companies’ most sensitive information from aggressive intrusions by malign actors, such as the Chinese Communist Party’.24 A few days later, speaking in Mandarin on the anniversary of the 4 May 1919 movement, US Deputy National Security Advisor Matt Pottinger argued that CCP rule had denied the ‘democratic aspirations’ of the youth that had marched in Beijing over a century ago. Highlighting the case of Dr Li Wenliang and activists and journalists who had been silenced, he asked: ‘Will its (the movement’s) core ideas be deleted or distorted through official censorship and disinformation?’25 A month later, National Security Advisor Robert O’Brien argued that not paying attention to the CCP’s emphasis on ideology had resulted in the ‘greatest failure of American foreign policy since the 1930s’, that is, accommodating China’s rise with the hope that as it ‘grew richer and stronger ... the Chinese Communist Party would liberalize to meet the rising democratic aspirations of its people’.26 In early July, Director Christopher Wray of the Federal Bureau of Investigation (FBI) claimed that the CCP ‘believes it is in a generational fight to surpass our country in economic and technological leadership’.27 In pursuit of the goal to ‘become the world’s only superpower by any means necessary’, the Party, he explained, was exploiting America’s open society and engaging in economic espionage, ‘clandestine’ influence activities and technological and research theft. Wray said,
We’ve now reached the point where the FBI is opening a new China-related counterintelligence case about every 10 hours. Of the nearly 5,000 active FBI counterintelligence cases currently underway across the country, almost half are related to China.
That was followed by US Attorney General William Barr arguing that the CCP ‘leverage(s) the immense power, productivity, and ingenuity of the Chinese people to overthrow the rule-based international system and to make the world safe for dictatorship’.28 He also hit out at Chinese economic and public diplomacy. Criticising China’s economic policies, he said that Beijing had systematically discriminated against American companies and engaged in IP theft and counterfeiting, while subsidising domestic firms. In addition, Barr lashed out at Hollywood and American firms for ‘kowtowing’ to Beijing for ‘short-term rewards’, allowing ‘themselves to become pawns of Chinese influence’. To counter this, he argued that the ‘free world will need its own version of the whole-of-society approach’.
The second half of July witnessed unprecedented scenes of Chinese officials at the consulate in Houston burning documents. The US administration had ordered the consulate’s closure, accusing diplomats of aiding economic espionage and the attempted theft of scientific research. American officials said the consulate had a history of engaging in ‘subversive behavior’.29 Interestingly, 40 years ago, the consulate in Houston had been symbolic of the thaw in Sino-American ties. It was the first Chinese mission to open in the US after Deng Xiaoping’s 1979 visit. Beijing termed the Trump administration’s move as ‘political provocation’ that ‘violates international law’30 and reciprocated by shuttering the US consulate in Chengdu.31 The same week Pompeo was in Europe arguing that the US could no longer ignore the ideological threat that the CCP presented and rallying support for ‘a complex new challenge’ that required a countervailing force in the form of a ‘new grouping of like-minded nations, a new alliance of democracies’.32
The Chinese response and debate to all of this was rather intriguing. At one level, Trump’s policies had seemingly confirmed deep-seated perceptions of innate American hostility towards the Chinese system. Veteran diplomat Fu Ying opined,
From the Chinese perspective, the U.S. has never given up its intent to overthrow the socialist system led by the Communist Party of China. Lately, the China rhetoric from U.S. authorities has even sought to separate the CPC from the Chinese people and pit them against each other and to challenge the basic legitimacy of the CPC and the Chinese political system. The Chinese side has no choice but to fight that.33
What is more, there seemed to be a bipartisan consensus about this increasingly confrontational American approach. Surveys had shown that negative views of China among both Democrats and Republicans were at an all-time high.34 In fact, in public and elite imagination, China had comfortably surpassed Russia as the biggest challenge to the US.35 There was also significant bipartisan, and in some cases unanimous,36 support for bills that sanctioned Chinese officials and actors for human rights abuses and technology theft.37 In fact, assessments showed that there were 360 bills related to China introduced in the 116th Congress, with a dozen of them clearing with overwhelming bipartisan support.38
Considering these dynamics, by and large, Chinese scholars and analysts also believed that the fundamental trajectory of Sino-American competition would remain unchanged, irrespective of the election. America, to them, was still the dominant global power and would remain so even after the pandemic was history. Yet they saw US power as rapidly waning, with Trump accelerating this trend.39 His America First philosophy had resulted in a retreat from multilateral institutions and damaged traditional US alliances,40 while his mishandling of the pandemic had eroded faith in Washington’s credibility and competence to the point that it was signalling the ‘end of the American century’.41 In contrast, China was on the rise. Consequently, deepening Sino-US competition was not simply a product of the political prejudices of a certain group of American politicians; rather, it was the natural outcome of structural geo-economic and geopolitical changes that were underway. Peking University’s Yao Yang wrote that there was a ‘great possibility’ that a new Cold War would ensue. Although he did not rule out cooperation in specific areas, he was clear that it was important to ‘admit that the US–China relation is currently in a state of competition in terms of ideology, geopolitics and science and technology, and we must respond to this competition’.42 Shi Yinhong from Renmin University, on the other hand, argued that the two sides were currently undergoing a phase of ‘decoupling’ and had ‘begun to enter a new Cold War’.43 Jiang Shigong, Yao’s colleague at Peking University, was categorical in stating that the ‘Sino-US relationship cannot return to its former state’.44 He described the period between 1993 and 2009 as the ‘golden years of relative political détente and close economic cooperation’. But this bonhomie had faded between 2008 and 2018 as the ‘US decided that its policy of engagement with China had been a failure’. From Jiang’s Marxist prism, this reflected American frustration in having failed to get China on its side in the project to construct a ‘new Roman Empire’.45 Jie Dalei, from Peking University’s School of International Studies, postulated that there now exists a deeper security dilemma in the ideological arena between China and the US, which was resulting in a vicious circle of escalation.46 Yuan Peng, President of the China Institutes of Contemporary International Relations (CICIR)—a think tank linked to the powerful Ministry of State Security—said that instead of being a ‘relief valve’ in the China–US relationship, the pandemic had become ‘a pressure cooker intensifying the competition’.47 Although he dismissed the notion of a Cold War given the fluidity of equations between different powers and the interwoven nature of economic interests, his prognosis for the future of Sino-US ties was that they would remain hostile and adversarial.
Nevertheless, in public, Chinese state media and officials repeatedly attributed the deterioration in ties to the actions of a select group of American politicians and officials. For instance, media commentaries criticised the ‘evil intentions’ of ‘some American officials’ who were promoting the ‘China Threat theory’ while being ‘reluctant to face the situation’ of their own governance failures.48 Others talked about Washington under Trump pursuing a ‘strategy to comprehensively suppress China’, which was evident in the trade war, actions to target Chinese technology companies and efforts to undermine China’s core interests while cobbling up a coalition of those willing.49 In an interview to Xinhua in early August, Foreign Minister Wang Yi said that China–US relations had indeed been ‘severely disrupted’ due to the bias and hostility of ‘some American politicians’.50 He dismissed the feasibility of a ‘new Cold War’ between the two sides, calling for ‘peaceful coexistence and cooperation’. At the same time, Yang Jiechi, Director of the Central Foreign Affairs Commission and China’s top diplomat, issued a lengthy article to weigh in on the bilateral relationship. For him too, the blame rested entirely at Washington’s door. The US, he argued, had ‘chosen unilaterally to be provocative’ in its approach to China, with ‘some US politicians, out of self-serving interests’ resorting to ‘coercive means to force other countries to take sides’. For Yang, this was a deviation from the premise of mutual interests, which had led to the normalisation of China–US ties in the 1970s. Yang argued:
From the outset of the normalization process, China–US relations have always been based on the common understanding that both sides recognize and respect each other’s different social system. Some US politicians claim that in engaging and entering into diplomatic relations with China, the original US purpose was to change China, and that US policy of engagement with China has become a total failure. They portray China as having tried over all these years to fool and deceive the US. Their allegations are fanfare for ideological confrontation and the Cold War mentality. They are nothing short of discredit to the enormous efforts and contributions made throughout past decades by people across the two societies to promote the development of China–US relations.51
Talking about the need to return to an approach that prioritises peaceful coexistence, Yang then hinted at a desire to establish some sort of strategic understanding between the two sides via ‘a new model of major-country relations’.52
Of course, there were grains of truth in these arguments. Mike Pompeo’s diplomacy had been deeply troubling, and the Trump administration had indeed engaged in demonisation of Beijing with regard to COVID-19. But behind the bluster from Washington lay genuine misgivings about Chinese policies. And what was striking about the narrative from Chinese officials and state media was that there was not the slightest appreciation that China’s policies were contributing to the deterioration of ties. This also suggested that the Party leadership was seemingly hoping for the best while preparing for the worst by doubling down on its chosen path. This was reflected in a series of policy decisions through the year, which were accompanied by a tone of diplomacy that was evidently undiplomatic. First, the propaganda around the pandemic clearly presented China as a uniquely successful model, learning from whose wisdom and competence would benefit others. Second, the leadership took an abrasive and aggressive line on matters of sovereignty and territorial integrity. Despite protracted negotiations, Beijing remained unyielding in connection with its incursions into Eastern Ladakh, as PLA and Indian troops entered a bitter winter standoff. The PLA also ratched up its activities in the South and East China seas, while intensifying the frequency of jet sorties around Taiwan.53 At the same time, in a press conference with his German counterpart Heiko Maas in Berlin, Foreign Minister Wang Yi would lash out at the President of the Czech Senate, Milos Vystrcil, for having led a delegation to Taiwan. Wang warned that Vystrcil would ‘pay a heavy price’ for his ‘betrayal’.54 Third, the central leadership’s policies with regard to key ethnic minorities and the territory of Hong Kong quickened the pace at which their autonomy was being eroded. After imposing the national security law in Hong Kong, in September, and detaining protest leaders, Beijing cited the threat of COVID-19 to postpone the Legislative Council election by a year. This was followed by bestowing new powers for the city’s government to dismiss legislators deemed to be disloyal to China.55 Across the autonomous regions of Tibet, Xinjiang and Inner Mongolia, the Chinese leadership intensified its crackdown on political, religious and even linguistic autonomy. Beijing would also brook no criticism of its policies in this regard. When European leaders raised their concerns during a summit meeting, they were told that China did not need an ‘instructor’ on human rights.56 Australia, on the other hand, would face the worst of China’s economic coercion,57 for having ‘spoken and acted out of turn on issues concerning China’s core interests’, thereby having ‘poisoned the atmosphere of bilateral relations’.58 Fourth, Xi Jinping accelerated the trend of strengthening Party control over the economy. Characterising SoEs as the ‘economic and political foundation of China’s socialist system’, he committed to expand support and enhance their competitiveness.59 At the same time, he demanded that private enterprises fall in line with the Party’s objectives. This, Xi argued, was their patriotic duty.60 The State Council would eventually issue an official guideline demanding that entrepreneurs prioritise patriotism, while Xi would outline new objectives for the United Front Works Department to guide private enterprises and integrate the Party’s leadership into all aspects of corporate governance.61 Finally, from the perspective of deepening technological competition, Chinese diplomats continued to threaten states contemplating excluding Chinese telecom equipment vendors, while Chinese 5G network contracts were largely awarded to domestic firms. In addition, Beijing was crafting new plans, with estimated funding of anywhere between US$ 1.4 trillion to US$ 2.5 trillion through 2025, to boost technological advancement as part of the strategic imperative of achieving self-reliance.62
Of course, there was a broader set of motivations, other than the Sino-US dynamic, that drove each of these decisions. The paradox, however, was that in taking these steps, the CCP was confirming suspicions among key world powers that China’s rise going ahead would be anything but peaceful and promote win-win cooperation. In early May, an internal report by CICIR, in fact, had warned that global anti-China sentiment was at its highest since the 1989 Tiananmen Square crackdown.63 Scholars such as Yan Xuetong hinted at the need for reflection by calling on Beijing to avoid engaging in ideological disputes or positioning China’s success in containing COVID-19 as a systemic contest.64 Others such as Xiang Lanxin cautioned that ‘the most important thing to cultivate (for Chinese diplomats) is an international image of tolerance’. To him, arguments about the China model and China’s uniqueness were deeply problematic. ‘Strategically’, he argued, ‘any great power experiencing important changes in its international standing should abstain from talking about a “rise”.’65 Jiang Shigong advised ‘strategic restraint’, overcoming ‘cultural vanity’ and efforts to deepen international cooperation, particularly with neighbours.66 The Foreign Ministry–linked China Institute of International Studies’ Yuan Nansheng cautioned against fanning ‘populism and extreme nationalism’. For him, it was a ‘strategic misjudgment’ to regard the success in containing the pandemic compared to the West’s struggles as a ‘historic opportunity for China’s rise’.67
Yet, it did not seem like any of this advice was being taken onboard. There appeared to be little reflection among the Party leadership. It seemed that a decision had been made that the cost of such backlash was acceptable, with the priority being to project authority and gird for the challenges that lay ahead. The Chinese Foreign Ministry’s response to an unfavourable October 2020 Pew survey underscored this. The survey revealed that negative perceptions of China had hit a historic high in 14 countries. These included key Western powers and partners like Japan, South Korea and Australia.68 Foreign Ministry spokesperson Hua Chunying brushed the findings off, saying that they merely represented ‘Western countries’ perception of China, not the general view of the international community’.69
Disruption and Disequilibrium
The same survey had also found that perceptions of the US had taken a severe beating during the pandemic. In fact, Xi was generally viewed more positively than Trump, although the Chinese President’s favourability ratings were nothing to write home about. In essence, it was clear that both China and America would likely emerge from the pandemic with significant reputational damage. Yet both would continue to remain indispensable global powers in a world poised on the cusp of fresh disruptions and disequilibrium.
Dismissiveness aside, there was a grain of truth in Hua’s comments on the Pew survey. China has generally enjoyed high favourability in Africa and South America.70 And Beijing had ensured that it remained actively engaged in both regions through the pandemic. For instance, Xi Jinping personally interacted with leaders across South America, ensuring provision of health supplies and economic support.71 In Africa, China was prompt in responding to a potentially damaging racism scandal, while furthering mask diplomacy, digital investments and engaging in debt renegotiation.72 Additionally, Beijing’s clout in East Asia expanded through 2020. Over the years, repeated surveys of elite opinion across the region have documented China’s rising political and economic influence. The most recent of these was a June 2020 assessment by the Center for Strategic International Studies (CSIS), which found that Beijing was ‘holding slightly more political power and influence than the United States in Southeast Asia today’.73 It further found that ‘in terms of economic power and influence, the region views China as much more influential than the United States today, and this gap is expected to grow in the next 10 years’. China’s economic appeal was evident this year for the East Asian economies. For instance, China–ASEAN trade hit US$ 481 billion in the first three quarters of the year, surpassing China’s trade with the US and EU.74 The signing of the Regional Comprehensive Economic Partnership trade agreement in November further underscored China’s centrality in East Asia. In essence, Beijing has used its economic power effectively to cultivate greater strategic depth in different regions. This is where its strength continues to lie.
Most European states, as per the Pew survey cited earlier, believe that China has already emerged as the world’s leading economic power. Over the years, the Chinese economy has become the key driver of global growth. In October, the IMF projected China’s GDP growth in 2021 to accelerate to 8.2 percent.75 The Fund’s Chief Economist Gita Gopinath explained that without China, cumulative global growth for 2020 and 2021 would be negative. Moreover, estimates suggest that China’s contribution to global growth will increase from 26.8 percent in 2021 to 27.7 percent in 2025, far outstripping US’ contribution.76 China is also the EU’s biggest source of imports and its second biggest export market, with daily trade on average surpassing EUR 1 billion. A 2020 survey by the Mercator Institute for China Studies found that on average the Chinese market accounted for over 11 percent of the revenue of key European firms.77 The study also identified 103 product categories, including electronics, chemicals, minerals and medical products, in which the EU has a critical strategic dependence on imports from China.78 The PRC also remains a critical investment destination for foreign, particularly Western, businesses. Despite the pandemic, foreign direct investment (FDI) inflows into China remained at a healthy US$ 76 billion in the first half of 2020.79 This was higher than the US$ 67.9 billion FDI inflow during the same period in 2019.80 An AmCham China survey in September 2020 reported that American companies remained committed to the Chinese market, with 78.6 percent of them reporting no change in their investment allocations.81 A European Chamber of Commerce report, meanwhile, showed that only 11 percent of European companies in China were considering shifting their current or planned investments to other markets.82 All of this perhaps explains the EU’s desire to continue negotiating the Comprehensive Investment Agreement and establish new dialogues on issues of technology and data governance, regardless of the deep misgivings about the lack of reciprocity in market access, state subsidies and forced technology transfer along with ‘grave concerns’ over human rights issues.83 There is, of course, promise fatigue, a recognition of systemic differences, and even deep resentment among some of the elite across European capitals, but this has not necessarily eroded the incentives for deeper economic engagement.84
Yet the disruption caused by the pandemic to global supply chains and the geopolitical competition that followed the spread of the virus have undermined the philosophical foundations of economic and political globalisation, something that the Sino-US trade war had already rendered rather shaky. There is now growing realisation among states about the vulnerabilities of overdependence on any single market. This has resulted in increasing calls for shorter supply chains, diversification, resilience and even self-reliance, such as the US Congress’s move on new legislation committing billions of dollars to boost domestic semiconductor manufacturing.85 Another example is the Japanese government’s decision to allocate US$ 2.4 billion to diversify supply chains and bring some manufacturing back home.86 In fact, Xi Jinping’s calls for self-reliance in technology, desire to set international standards and focus on domestic consumption as the key driver of growth also reflect this anxiety. Noting these trends, the European Chamber of Commerce report mentioned earlier had also warned that while ‘a majority of European companies currently remain committed to the (Chinese) market, it would be unwise to take this for granted’.87 In addition, there has been a re-examination of the concept of national security to include a wider array of sectors. Supply chains across healthcare, pharmaceuticals, auto, information technology and rare earths are likely to undergo significant changes as China’s dominance in these is forcing rethinking from a national security perspective. Increasingly, it is becoming apparent that economic engagement in the future is likely to be far more subservient to the logic of politics and national security. None of these changes to the structure of the global economy, of course, are possible overnight. And neither does this imply that complete economic decoupling from China is either feasible or entirely desirable. What it does suggest is that the logic of politics and security will result in the creation of new alternatives. Global production hubs will likely be replaced by regional or local hubs. In addition, businesses are likely to invest far more in devising a China+1 strategy.88 In other words, companies are likely to try and remain in China largely for the Chinese market and to reap the benefits of transnational networks, labour productivity and ease of doing business in order to service markets where politics is favourable. Where this is not the case, one can expect diversification.
This approach to alternatives is also reflected in discussions about the creation of trust bubbles89 and cooperation among a D10 club of democratic partners on emerging technologies.90 In saying this, it is important to highlight that these conversations are at a fairly nascent stage, and the success of any of these efforts at a global scale will depend on a number of factors. Each state is likely to enter these discussions with a different set of objectives, cost calculations and threat perceptions. For instance, there is a significant difference in Britain, Germany and India’s threat perceptions when it comes to Chinese dominance of telecommunications supply chains and 5G standards. Moreover, to begin with, such conversations will need to ensure clarity of purpose. What is the objective of such groupings or bubbles? Is it to deny China technological supremacy? Is it to create supply chain resilience and security so that China cannot deny or coerce? Is it to foster innovation amid partners where there is base-level political trust? And based on that, is the aim to offer alternatives to Chinese technologies to compete in third markets too? The answers to each of these will determine the levels of political and financial commitment of states.
This makes give and take a complex endeavour. Consequently, what will be required is deeper American engagement with partners and allies. It is here that a Joe Biden administration could make a difference. Biden inherits a US government system that is already deeply suspicious of and antagonistic towards China. He also inherits Trump’s Indo-Pacific strategy, which deepened defense and diplomatic cooperation with states such as India, Australia and Japan in particular. In fact, the week of the US elections saw the navies of the four countries conducting their first quadrilateral drill in 13 years. With regard to Europe, in their final months in office, Pompeo and the EU’s Josep Borrell did manage to launch a joint dialogue on China.91 Borrell referred to the mechanism while welcoming Biden’s victory and expressing hope that the two sides could work to put together a ‘coherent and robust China stance’.92 Biden’s advisers have already suggested that they too view Sino-US ties from a prism of technology, military, economic, ideological and diplomatic competition, while adding that competition need not preclude cooperation in areas where interests converge.93 In order to compete effectively across these domains, Biden has indicated that he will be seeking to repair ties with allies and partners, replacing the Trump administration’s abrasive and unpredictable America First approach with greater multilateralism. While this sounds well and good, balancing interests of allies and partners jilted by the era of Trumpian politics, particularly amidst a toxic and polarised domestic political environment and serious public health and economic challenges, will not be easy to say the least.
Nevertheless, one can expect continued contestation between Washington and Beijing, even if it is not of the Cold War variety. In fact, the nature of the global economy and China’s centrality to it renders the mental model of the Cold War insufficient. Competition among states in the post-COVID world is not likely to result in the creation of neat power blocs; rather, there will be greater fluidity. Great powers will seek to compete by investing in domestic capacity and expanding global influence. Middle powers will eye capability enhancement, autonomy and bargaining power. Such a world is not necessarily fundamentally inimical to China’s rise. But it is indeed a failure of Chinese policy that such new models of segmented globalisation are being seriously contemplated. Given this, ensuring that a favourable external environment persists will require a reassessment in Beijing towards greater discretion and judiciousness in terms of its use of power, at home and abroad. Wisdom would entail respecting the logic of strategy. Alas, it does not appear that the Communist Party’s regime under Xi has fully grasped this contradiction.