The United States vs. China. C. Fred Bergsten

of the widespread nationalist and anti-American attitudes in China. It would greatly accelerate the country’s desire to succeed globally, and to supersede the United States specifically. It would dramatically dust off all the specters of “foreign exploitation” and reinforce the image of the “century of humiliation.” It should also never be forgotten that the United States containment policy against Japan in the late 1930s, especially its trade embargoes, was a trigger for Pearl Harbor and the Second World War (Copeland 2015). To mix metaphors, it would be a “Sputnik moment” for China.

      It is hard to imagine a more futile and more costly strategy for the United States. President Biden instructed his Secretary of State, Antony Blinken, to emphasize in his first meeting with Chinese leaders in early 2021 that “Our goal is not to contain China, to hold it back, keep it down.” The Congressional ban on US cooperation with China in space, levied in 2011, illustrates the folly as China has become an independent space power and the United States cannot even obtain any of the specimens it will bring back from the moon.

A new approach is needed. It will have to contain three components: competition, cooperation, and conditionality. Competition between the two superpowers, and between their very different economic and political systems, will characterize much of their daily interaction through trade, investment, and financial exchanges – and through a variety of policy domains of which technology has moved to the forefront, and “discursive,” or narrative, power is increasingly important. Cooperation between them, as China moves up alongside the United States in terms of global economic capabilities, will be essential to provide a foundation for a stable and successful international economic order. Conditionality will be necessary if such competition is to occur without excessive friction and dislocation: both China and the United States will rightly insist that the other accept and faithfully implement agreed rules of the game to govern their interactions.

      The early Biden Administration appeared to be moving in this direction. It shared much of the Trumpian concern over China’s intentions and various of its initiatives but would adopt a very different approach in response. Its foreign policy leadership, already before taking office, had conceptualized their intended policy toward China as falling into three baskets: one of confrontation (primarily over values, such as human rights), one of cooperation (such as climate change and pandemic responses), and one of competition (Campbell and Sullivan 2019, echoed in their early official statements, and Doshi 2021). A central theme of this book is that international economic topics, particularly those that relate to systemic maintenance and preservation, should be included in the “cooperation” basket to the maximum possible extent. Competition will ensue, and is compatible with cooperation, but confrontation over economic issues should be minimized.

      It would be far superior, from both a US and global perspective, to decouple the economic issues from the inherently contentious security and values issues, rather than to decouple China and the United States in any comprehensive manner. The United States and much of the world will continue to abhor China’s disregard for some of the basic human rights of its people – as with the Uighurs and Hong Kong – and its repressive political regime more broadly, as well as some of its military activities. But the United States and the rest of the world will also have to deal extensively with the world’s largest (and arguably most powerful) economy. Hence a functional rather than geographic decoupling is much to be preferred.

Matthew Pottinger, the deputy national security advisor and key architect of President Trump’s China policy (Rogin 2021), acknowledges that even such a hawkish approach has “simultaneous elements of confrontation and conciliation” (Davis and Wei 2020). Rush Doshi, who became the China expert on the National Security Council staff of the incoming Biden Administration, and is extremely hawkish as well, argues in his meticulous study of China’s global ambitions that the United States “will need to delink (cooperation and competition) and hold fast to the rule that there will be two tracks” – especially to avoid China’s using US desires for cooperation as leverage on other issues (Doshi 2021). He concurs that “China is the necessary partner of the United States on virtually every transnational challenge,” noting that “such a principle [decoupling] may seem far-fetched” but that the United States and the Soviet Union maintained it on numerous issues throughout the Cold War.

      The mix between competition and cooperation, within the trilogy, might change over time. China clearly feels that it needs to compete aggressively with the United States in the current catchup phase of its evolution toward global economic leadership. Once it has established its place in the first ranks, and especially once its size advantage enables it to influence global norms much more extensively and thus enhances its self-confidence, it may become more prone to cooperation (Yu and Zhang 2020). This is yet another reason for the United States to find ways to accept China into a global position commensurate with its capabilities and aspirations, in an effort to blunt its aggressive export of its preferences and speed the day when cooperation will become reciprocal and hence effective. Alternatively, China’s economy may falter as its population ages and its politics prevent meaningful reform, so it may have to pare back its international ambitions.

      The United States and its allies should thus adopt a strategy of conditional competitive cooperation. Engagement encompassed the “cooperation” part of such an approach but never insisted on full reciprocity, making it unviable in US domestic politics. Engagement did not place sufficient priority on working with China systemically to forge new cooperative arrangements for global leadership, nor did it recognize China as an equal partner in exercising such leadership, making it unviable in Chinese domestic politics. The United States called on China to become a “responsible stakeholder” but in practice opposed its efforts to do so outside the US umbrella, as with the AIIB and BRI. Any new strategy that derived from the perspective of the competition for global economic leadership would have to rest on such an approach.

A G-2 would be a special, and extreme, case of conditional competitive competition. While maintaining the competitive and conditionality aspects of the broader concept, it would encompass active cooperation in managing the systemic components of global economic leadership. As developed in chapter 9, it would need to be informal, and even unannounced, to avoid antagonizing other important countries, whose supportive participation in systemic affairs would still be essential. It would rely heavily on consultation by the two superpowers with other key countries and would seek to strengthen, through their cooperative leadership, the existing international institutions, both formal (IMF, WTO) and informal (G-20, APEC). It would ideally operate via a series of concentric circles, radiating out from the G-2 through a G-3/4 that brought in Europe and Japan, and then the G-20 (and maybe G-7/8), and ultimately the formal international institutions (IMF, WTO). It could evolve over time through a period of more modest conditional competitive cooperation, through which trust could be rebuilt and confidence restored, before reaching the G-2 stage. But conditional competitive cooperation could proceed without a G-2.

      Acceptance by the United States of China’s legitimate leadership aspirations would have to be conditioned on fully reciprocal behavior by China. Provision of equal voting rights at the IMF, for example, would be contingent on Chinese commitments to binding constraints on currency manipulation and provision of fully transparent data. Extension of market economy status in the WTO could ensue only if China accepted binding disciplines on subsidies to SOEs, protection of intellectual property rights (IPR) and prohibition of forced technology transfers. US participation in such China-led ventures as the AIIB and BRI could be matched by Chinese participation in Western institutions such as the International Energy Agency (IEA) (and maybe the full OECD) and the Paris Club of creditor countries. Domestic political realities in both countries require that true systemic cooperation would have to be premised on resolution of America’s grievances over China’s economic policies, and of China’s grievances over its inadequate role in the global governance system.

The rough power equivalence between China and the United States, which is likely to prevail over the coming decades, suggests that both countries will be able to block initiatives of the other, but that neither country would be able to force the other to adopt policies that it does not deem in its national interest. China should thus join the United States to seek to preserve a relatively open