On January 15th, 2020, President Donald Trump and Vice Premier Liu He signed a trade deal in an attempt to relax the tensions between China and the USA that had escalated due to the trade war of the last two years. The trade deal aimed to reduce tariffs, whilst committing the Chinese government to buying an additional $200 billion worth of American goods over the next two years, signalling hope that the world’s two largest superpowers may avoid what International Relations theorists describe as the ‘Thucydides’ Trap’: the situation whereby conflict arises after a rising power supersedes the incumbent hegemon.
The US-China relationship presents somewhat of a conundrum for foreign policy experts across the globe. On the one hand, American foreign policy decision makers have fostered a policy of engagement: a strategy espoused by the apostles of liberal internationalism such as John G. Ikenberry as a process of socializing China into the liberal world order through multilateral engagement and economic interdependence. On the other hand, most notably under the Trump administration, the United States has attempted a policy of containment: first articulated under Barack Obama’s ‘pivot to Asia’ and ramped up under Donald Trump’s trade war against the Chinese government.
Fundamentally, neither policy has been successful in securing US interests. China has both been a prophet of free market capitalism and globalization, crafting multilateral institutions such as the Asian Infrastructure Investment Bank (AIIB) which boasts members such as the UK, Germany, France and South Korea (much to the chagrin of the USA). Yet, at the same time, has failed to conform to the rule of law, particularly with regards to its human rights abuses against the Uyghurs and the people of Hong Kong. China now also boasts the world’s largest economy (in terms of Purchasing Power Parity, considered by economists to be the most accurate metric of economic strength) and is engaging in a policy of ‘geoeconomic diplomacy’ through its Belt and Road Initiative (BRI) whereby it plans to invest over $1 trillion across six international economic corridors, increasing the level of economic interdependence between China and the rest of the globe and shifting the international order in its favour.
On July 23rd, 2020, Secretary of State Mike Pompeo declared that the era of engagement with China is officially over, and he called upon democracies worldwide to press Beijing in supporting the rules-based international order. Pursuant to this denunciation of engagement the USA has sought to exit various multilateral institutions such as the Paris Climate Accord, UNESCO, The UN Human Rights Council, and the UN Convention on the Rights of the Child (to name just a few). In 2020 this policy was most apparent when Trump promised to freeze America’s funding to the World Health Organisation after he argued it had been too lenient towards China with regards to the Coronavirus Pandemic. However, as former US ambassador to the United Nations Samantha Power has argued, such policies are self-defeating as a refusal to commit to multilateral engagement provides China with an opportunity to take a leading role on the international stage, conferring it the legitimacy to claim status as the world’s greatest superpower.
In 2021, if the Biden presidency aims to follow a successful strategy with regards to China, it must look beyond the simple Containment vs. Engagement matrix that has defined US-China relations since rapprochement in 1972. To achieve this, eminent historian Niall Ferguson has argued that Biden should pursue a policy of détente: a term defined by Henry Kissinger as “both deterrence and coexistence, both containment and an effort to relax tensions”.
Détente entails a middle ground between containment and engagement. As such, in 2021 Biden will be expected to relax only some of the tensions with China. For example, Biden has promised that he will end the weaponization of the dollar and trade bullying that became a paradigmatic feature of the foreign policy of the Trump administration. The financial warfare conducted by Trump such as the use of economic sanctions and exclusion from the US owned global financial infrastructure, such as the clearing house known as CHIPS and the cross-border messaging system known as SWIFT (which process nearly all cross-border financial transactions), had motivated states to begin trading in the Yuan rather than the dollar, prompting the former governor of the Bank of England Mark Carney to declare that the era of US financial hegemony is officially over. Biden’s promise to end such practices will be greeted with open arms by the comity of states and will perhaps prevent China from acquiring a preponderant economic influence over the international system.
However, Biden has declared that he is not going to make any immediate moves to dissolve the protectionist tariffs that had been imposed against Chinese goods by Donald Trump. He claims that these tariffs provide the USA with some diplomatic leverage against China, providing America with the opportunity to push China to further reduce greenhouse gas emissions, particularly as Biden hopes to increase the USA’s environmental commitments by re-entering the Paris Climate Accord within his first 100 days in office.
In 2021, perhaps the biggest issue between the USA and China will be over technology. Biden has been calling for the USA to retain supremacy over China on the technological front, particularly in the fields of artificial intelligence and quantum computing in which he aims to increase funding. Given China’s backwardness in this regard, and the supremacy of the Taiwanese semiconductor company TSMC, China may be motivated to initiate an attempted seizure of control of the island which would not only bring Taiwan back under Beijing’s jurisdiction, but will also provide China with a helping hand in its technological competition with the United States. Over the course of the next year Biden may therefore be pushed to enhance America’s already preponderant military capacity as a deterrence to any potential crisis in the Taiwan Strait.
When Biden announced his cabinet late last year, he proclaimed that ‘America is back’. After four years of protectionism and scepticism of multilateral institutions it could be argued that America’s place in the international system has suffered a relative decline compared to that of China. How Biden handles the relationship with China will therefore be an issue of fundamental importance in his first year in office.
“The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.”