US-China Watch
With the world in flux as never before, macroeconomic insight and analysis is always at risk of chasing a moving target. That is especially the case when it comes to the US-China conflict, driven by the oft unpredictable crosscurrents between the world’s two largest economies and their ambitious geostrategic aspirations. Through the combination of blogging and tracking the rapidly shifting news flow, the weekly updates below will attempt to keep you abreast of the latest developments on the US-China watch.
Beyond Diplomacy for Conflict Resolution
Call me a cynic, but I have my doubts about the motives behind the recent flurry of US diplomatic initiatives directed at China. Jake Sullivan’s late August mission to Beijing, a first in his official capacity as US National Security Advisor, was the highlight. It was sandwiched between a Treasury mission to Shanghai, John Podesta’s climate talks in Beijing, and an upcoming Tianjin trip by US Commerce officials. The icing on the cake is rumored to be an upcoming phone call between Joe Biden and Xi Jinping that could set the stage for an in-person meeting later this year.
Is it just a coincidence that US diplomatic outreach to China has gone into overdrive at the same time when the presidential election cycle has heated up? I wouldn’t bet on it. The US-China conflict remains a major flashpoint in the American political debate. There is broad bipartisan support in favor of a tough stance on China—a rare area of agreement for polarized Washington. Yet, notwithstanding recent diplomatic initiatives, the Biden Administration has continued to tighten the screws on China through another round of entity list actions, steep tariff hikes on Chinese green technology (i.e., electric vehicles, solar panels, and batteries), and a new round of sanctions on critical technologies (i.e., quantum computing and advanced chip-producing equipment). The cynic in me sees the recent diplomatic efforts as the “good cop” in a US-China conflict escalation cycle that has been dominated by the tariff-and sanctions-based actions of “bad cops” over the past seven years.
This cynical interpretation is not intended as criticism of well-intentioned diplomats. There are, of course, important examples of successful US-China diplomacy. Certainly, had it not been for the diplomatic breakthroughs of the early 1970s, there’s no telling where the US and China, to say nothing of the first Cold War, might be today. Subsequent diplomatic efforts led to the rapprochement between Deng Xiaoping and Jimmy Carter in 1979 that established full diplomatic relations between the two nations and finessed the Taiwan and Hong Kong problems. Diplomacy was also vital in addressing specific points of conflict such as the Tiananmen tragedy and Belgrade embassy bombing of 1989, the EP-3 spy plane collision over Hainan in 2001, and the surveillance balloon incident of 2023.
But diplomacy can’t do it all. Witness the failed Phase One trade deal of early 2020—billed at the time as an historic diplomatic breakthrough—that did next to nothing to arrest the ongoing corrosive impacts of the US-China trade war. That underscores one of the key pitfalls of diplomacy—it is ill-equipped to deal with broad complex problems like the current US-China conflict, which reflect the intersection of trade, geostrategic security, technology, and industrial policy concerns. Diplomacy is far better in aiming for goal-oriented objectives such as nuclear arms reduction. Metaphorically, the handshakes of diplomacy are better equipped to focus on the trees rather than on the forest.
Ultimately, diplomacy reflects the personalization of engagement. The modern US-China relationship is a direct outgrowth of a personalized diplomacy initially practiced by Mao Zedong, Richard Nixon, Zhou Enlai, and Henry Kissinger. While successful in the early 1970s, that was no guarantee of future success. Personalization can be both a strength and a weakness. Strength often comes from personal chemistry, strategic vision, and empathy. But weakness can stem from the fragility of egos, often reinforced by domestic political pressures.
The politicization of diplomacy is especially challenging to the United States and China today. Politics, of course, play out very differently in the two countries. That’s especially evident in the United States ahead of this year’s historically contentious presidential election. My take on the recent flurry of US diplomatic initiatives focused on China is that it is closely tied to this pivotal point in America’s political cycle. The immediate goal of the Biden-Harris Administration may simply be to do no harm — to stabilize a still precarious US-China relationship ahead of the November US presidential election. For the two candidates, Donald Trump and Kamala Harris, their longer-term strategic goals regarding China are less clear.
Nor is a one-party China without its own political cycle. From the onset of his leadership tenure in late 2012, Xi Jinping framed political power through the nationalistic lens of what he called “the Chinese Dream.” Over the ensuing years he has shifted the goals of China’s political leadership from economic development to national security. There was no threat to this political bargain when the Chinese economy was performing well. But with that no longer the case and with dissent now on the rise, China’s political cycle faces new and important challenges.
Diplomats, of course, are proxies for political leaders. That means shifting political cycles can bear critically on the important role that diplomats play as relationship managers in both the United States and China. With the two nations on an increasingly ominous trajectory of conflict escalation, shifting political risks inject a new and important source of instability into the relationship between the two superpowers. As political cycles amplify relationship tensions, diplomacy reflects that instability, rather than tempers it.
Largely for those reasons, I have reluctantly concluded that the current, diplomacy-intensive approach to managing the US-China relationship has failed. It has become far too easy for each country to blame the other than accept shared responsibility for repairing a dysfunctional relationship. Vulnerable leaders have opted for the low road of political expediency, rendering conflict all but inevitable. A new approach to relationship management is an urgent imperative.
Hence, my “secretariat proposal,” featured in Accidental Conflict. To be sure, I don’t view a new US-China Secretariat as the ultimate fix for a troubled relationship. I see it, instead, as a companion to diplomacy—in effect, adding an apolitical institutional pillar to relationship management. Unlike leader-to-leader driven diplomacy that occurs infrequently and often in response to crises, the Secretariat is envisioned as a permanent bilateral organization that operates on a full-time, 24×7 timeframe. Located in a neutral jurisdiction, the US-China Secretariat is intended to be staffed with equal complements of professional and technical experts from both nations.
The operational details of the Secretariat, as highlighted below, have been spelled out elsewhere. I would underscore the following: First and foremost, a US-China Secretariat is intended to be a flexible, action-oriented organization. The remit should be broad, covering all aspects of the relationship between the two superpowers—from economics and trade to technology and innovation to industrial policies and other state-subsidies to private and public enterprises to a broad array of shared global issues, ranging from climate change and health to Internet security, AI, and human rights. Under the purview of the Secretariat, these and other issues that may arise can be addressed through collaborative research and problem solving, with an aim toward consensus policy recommendations made to both governments.
In short, the purpose of a US-China Secretariat is to provide a bedrock of expertise and continuity to a conflict-prone relationship that a politically captured diplomacy cannot achieve on its own. There is a growing urgency to finding a new way to manage the world’s most important bilateral relationship. With both nations now fixating on national security, the possibilities of accidental conflict cannot be taken lightly. Frictions in the South China Sea, tensions in the Taiwan Strait, and US containment strategies directed at China pose very real risks in this regard. That’s true of China, where the political winds have shifted away from Deng Xiaoping’s low-profile “hide and bide” stance to Xi Jinping’s more muscular foreign policies. And that’s also the case in the United States, where Donald Trump has proposed a new round of sharp tariff increases on China while Kamala Harris inherits, at least for the moment, the “small yard, high fence” of Joe Biden.
Diplomacy has its time and place. Right now, it is captive to the hyper-politicization of an increasingly dangerous great power struggle. I have long viewed diplomacy as necessary, but not sufficient, for US-China conflict resolution. A secretariat would provide an important apolitical counterweight for a new architecture of US-China engagement. That is something both countries, and the world at large, desperately need.
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