Is the world facing a cold war between China and the US? A ‘hot’ can’t be ruled out either

When US President Joe Biden and his Chinese counterpart Xi Jinping met in Bali last November, they agreed to hold summits to determine the frequency of Sino-US rivalry. US Secretary of State Anthony Blinken was scheduled to visit Beijing last month to kick off the process. But when China sent a spy balloon (visible to the naked eye) over US territory, the US blew up Blinken’s arrival even faster than the balloon itself.

While this is not the first time China has deployed such a balloon, the poor timing is notable. Still, it might have been better if Blinken had continued his visit.

Yes, China said it was a faulty weather balloon, but covering up spying activities is not just for China. Last month’s incident was reminiscent of the 1960 meeting between US President Dwight Eisenhower and Soviet Premier Nikita Khrushchev to establish Cold War security boundaries. But then the Soviets shot down an American spy plane, and Eisenhower initially tried a diversion. Weather plane. The summit was canceled and it was only after the 1962 Cuban Missile Crisis that security borders were discussed.

Cold War

Some analysts compare the current relationship between the US and China to the Cold War. That comparison may be wrong. During the Cold War, there was no trade or consultation between the United States and the Soviet Union, nor was there any common interest in issues such as climate change or epidemics. For China, the situation is almost the opposite: any American effort to contain rival China is less likely because that country is a far more important trading partner than the United States.

So the strategy compared to the Cold War is counterintuitive. However, this does not rule out the possibility of a new Cold War. We can still accidentally go down that path. But the historical parallel in this context is not 1945, but 1914, when the Great Powers expected that a short Third Balkan War would eventually culminate in the First World War.

The political leaders of the first decade of the last century did not pay enough attention to the growing power of nationalism. Today, policymakers would do well not to repeat that mistake. They must be wary of the consequences of rising nationalism in China, populist nationalism in the United States, and the dangerous nexus between these two forces. Given the clumsiness of China’s diplomacy and the long history of impasses and incidents surrounding Taiwan, the prospect of an accidental escalation should worry us all.

Double prevention

China considers Taiwan a renegade province. Since U.S. President Richard Nixon’s visit to China in 1971, U.S. policy has been to discourage Taiwan’s declaration of independence and prevent China from using force to push for reunification. Some analysts argue that this policy of dual deterrence is obsolete because China’s growing military may be tempted to attack when the opportunity presents itself.

Other analysts warn that a US security guarantee to Taiwan could prompt China to take action rather than deter it, and they fear visits by senior officials to the island contradict the “one China policy” the US has proclaimed since the 1970s.

If China refrains from invading and tries to force Taiwan into submission through a blockade or capture of an offshore island, a single collision with ships or aircraft can quickly lead to a wider escalation. For example, the US should respond by freezing or sequestering Chinese assets‘Trading with Enemy Law’ (a law that allows the U.S. president to embargo trade), the two countries could soon slide into a true Cold War — or even a hot one.

A recent analysis by the Center for Strategic and International Studies in Washington DC suggests that the US could win that war, but at a high cost to both sides and the global economy. Therefore, the best solution to the Taiwan problem is to extend the status quo.

Bonus

Former Australian Prime Minister Kevin Rudd has argued that the West should not aim for total victory over China. The smartest strategy is to manage competition with the country, not demonize China. If China gets better in the long run, it will be a bonus at a time of traditional and economic and environmental dependence.

A good strategy is based on correct estimates: underestimation leads to complacency, overestimation leads to fear. China has become the second largest national economy in the world. But while its GDP looks set to one day surpass that of the US, its per capita income is less than a quarter that of the US and the country faces economic, demographic and political problems.

China’s labor force already peaked in 2015, economic output growth has slowed and the country has few solid political allies. The United States, Japan, and Europe, united, will lead the world economy and determine the international order. This way they can steer China’s rise in the right direction.

If Sino-US relations were a card game, you could say we behaved well. But even with a good hand you can lose if you play badly. In the historical context of 1914, the recent balloon incident should remind us why we so badly need clear agreements on mutual relations.

© Project Syndicate, 2023