Conflicts and agreements between the U.S. and China: from theory to practice and forecasts

Keywords: U.S. - China conflict, U.S. - China agreements, U.S. - China.

1. The theoretical framework to predict the possibility of a conflict or agreement between the United States and China

In the book “Destined for war: Can America and China Escape Thucydides’s Trap?” Professor Graham Allison supposed that the probability of a war between China and the United States was enormous(1). According to Allison’s statistics, in the past 500 years, 12/16 cases showed a rapid change in the relative strength of a rising power country would threaten the position of an established power country and lead to war. Considering the remaining four cases avoiding a war, Allison proposed that the factors that could help maintain peace include variables such as the institutionalization of the international system, alliances, cultural similarity, economic dependence, and nuclear power. However, Allison was not able to quantify these variables to predict the likelihood of a war between major countries.

In a recent study derived from Allison’s ideas, researcher Oriana Mastro came up with an analytical framework consisting of seven variables that could affect the likelihood of agreement and conflict between the U.S. and China. These variables include degree of economic interdependence, degree of institutional constraints, domestic political system, nature of relevant alliances, nature of nuclear weapons programs, the sustainability of the rising power’s growth, and its level of dissatisfaction(2). According to Mastro, the possibility of agreement/peace and conflict between the two nations can be predicted based on the value of the variables (see Table 1).

2. The application of a theoretical concept in the U.S.-China relation practice

Though the U.S. - China relationship consists of complex variables, by applying Mastro’s analytical framework to the practice of U.S. - China relations, there are general conclusions as follows:

(i) Regarding the level of dissatisfaction of the rising power nation with the current order: This is the most important and decisive factor in the theory of a power shift. Up to now, China has been satisfied with much of the global status, but this country has become increasingly unhappy with the distribution of influence, especially in the region(3). Meanwhile, President Trump increasingly refers to China as a global “strategic opponent”.

(ii) Unlike the Cold War period, the economic dependence between the U.S. and China is significantly high, not only in trade with a total turnover of nearly 600 billion USD in 2018, but also in other fields such as finance and currency, investment, etc. This level of dependence contributes to limiting the possibility of confrontation and conflict between the two countries(4). However, some of the intrinsic aspects of the operating principles of the two economies are fundamentally contradictory, which might be a potential cause of conflict.

(iii) Regarding the constraints of international institutions: China used to be relatively compliant with international institutions in the past, but it has increasingly challenged many aspects of the current order. China was also taking so called “institutional balance” actions with the United States by establishing new international mechanisms(5). Notably, both the United States and China have a history of disregarding international institutions when they have enough power and resources.

(iv) Regarding domestic political systems: The domestic political culture of the United States and China are completely different and complicated. Currently, both China and the United States are witnessing various movements that can cause negative effects, increasing the possibility of conflict between the two countries. In the U.S, the conservative and populism tendency has increased, making foreign policy tougher, especially policies towards China. Meanwhile in China, the rise of nationalism is escalating and putting pressure on foreign policy, contributing to worsening the disagreements between the two nations.

(v) Regarding commitments among alliances: The United States’ commitments with countries in Asia are still ambiguous, conditional, and defensive (only the alliances with Japan are the strongest and most powerful). Moreover, the changing forces’ correlation is unfavorable to the United States; the country will try to minimize the likelihood of being drawn into a regional conflict. At the same time, though China has a pledge with North Korea, the country will not get involved into a military confrontation on the Korean peninsula against the United States and South Korea.

(vi) Regarding the possibility of deterrence with nuclear weapons (in other words, the ability to certainly destroy each other – Mutual Actual Destruction, MAD): Both the United States and China have the ability to deter each other with nuclear weapons, hence reducing the risk of direct war. If China gains its viability after a preemptive attack and then proceeds to retaliate against the United States, the risk of a hot war is even lower. However, this ability is still unclear for now (meaning that the possibility of war is still high)(6). Due to the asymmetric nature of the U.S. and Chinese nuclear capacities (not equal to those of the United States and the Soviet Union during the Cold War), MAD’s control of conflict is not high in the U.S. - China relation.

(vii) Regarding sustainable development: Even internal and external challenges are making it difficult for the rise of China. Currently, China is still able to manage the issues internally. In particular, Chinese leaders have remained politically stable, continuing to run macroeconomics to overcome the compound challenges of transforming the growth model into sustainable development and the trade war. At times, the U.S. seems to be confused by China’s enduring stamina. Therefore, the emerging of China is still an unpredictable variable. For the United States, though President Trump’s measures are bringing positive signs to the U.S. economy, there are still many difficult problems as well as the possibility of falling into a stagnant crisis. Therefore, it is not easy to predict the future of relative force between China and the U.S.

In general, the above variables show that the future of U.S. - China relations is increasingly competitive and less likely to achieve agreement. The only two variables that have a positive outlook are economic dependence and conditional commitment to allies. These two variables can contribute to reducing the likelihood of conflict, and thus increasing the possibility of agreement. However, the two variables are the dissatisfaction of the rising power and the domestic political situation that have the greatest and decisive effect on the relationship between the two countries. These two variables are complicated and evolving in a negative direction. The remaining factors (institutional constraints, nuclear weapons, and sustainable development) may have a positive role but the impact is not sufficient enough and unpredictable. The current reality shows that Pres. Trump’s current policies and the Chinese responses are eliminating the positive factors and increasing the negative factors, thus possibly worsening the U.S. - China relation, at least until the end of President Trump’s term. However, President Trump himself is also an uncertain element, as he might actively exchange and compromise to achieve short-term benefits.

3. Prospects for the U.S. - China relations

Though the U.S. and China keep their relationship in both a cooperative and competitive manner, in terms of theory and practice, the competition is increasing significantly. There is also an opinion that the U.S. - China relations have entered into a new Cold War. However, the nature of the U.S. - China relation is distinct from that of the Cold War between the U.S. and the Soviet Union.

The main competition ground between China and the U.S. today is the economy. While the political influence is less, the security and military element is becoming more and more pronounced, and the value factor (ideology) is not clear (but already appear). Notably, China has an explicit view of avoiding confrontation with the United States, while the U.S. desires to restrain the emergence of China but also not to confront China. This view is not only consistent with the U.S.’s interest but also with the country’s allies and other nations, especially in the Asia Pacific region. Currently, the United States, although it has not yet been determined which position is acceptable for China in the international order, is becoming increasingly tougher with China, because “whoever is tougher with China” has increasingly become a strategy for the U.S. election. Therefore, the competitive side will be more than the agreement in the U.S.-China relations soon. However, as mentioned above, with President Trump’s characteristics, though the current U.S. policy is being tough, it is possible to compromise in some issues at appropriate times.

Competition in scope of influence

Globally, although China currently accepts the United States as a leader, China does not conceal its ambition to become the leading global power(7). China does not appear to desire to take a leadership position in the world order, but the country’s strategies have shown that China is moving toward this goal (especially the Belt and Road Initiative). Now and later, China is attempting to push the United States out of the leading role rather than replacing the position.

On the regional level, Asia Pacific will witness the fiercest competition. To become the leading global power, China must first be a regional power, namely a leader in the Asia Pacific region, which means limiting the United State’s role in the region. In the meantime, the United States certainly has its national interest in the Asia Pacific and, more broadly, the Indo Pacific, covering the close interests of the United States and of its allies. Therefore, the United States is required to guarantee its right of presence and ability to operate here. Thus, in the Asia Pacific, the opposition and competition of the two sides for influence will increase, especially in hot spots.

Competition in several specific areas

It is clear that the United States and China are currently competing mainly on four aspects: security, economy, technology, and an increasing matter of value (ideology).

Regarding the economy, the relative power between the U.S. and China has changed the most drastically. This is also the first area where the U.S. wants to restrain China. Despite intense competition, due to the nature of strong interdependence, both suffered losses. Therefore, the U.S. and China may have a short-term economic agreement with measures such as the U.S. reduces tariffs, China agrees to increase the import of U.S. goods and allows U.S. businesses to access the Chinese financial market. This is because China is still weak in this trade war. The U.S. market is enormous and important for the Chinese economy; hence the tightening of U.S. imports will make Chinese consumers unhappy. The prolonged trade war would reveal weaknesses that Chinese leaders would be criticized for domestically. For example, the overconfidence of China, the strong ambition in its foreign goals, and misjudgment about President Trump’s strategy. Meanwhile, two “trump cards” of China, which are devaluating the Yuan and selling 1 billion USD of the U.S. Treasury bonds, were not feasible in practice and more harmful to China than the U.S.(8).

However, the agreements are probably short-term, restrained and breakable because: (i) the United States and China are still unable to resolve the fundamental differences in the economic model between which is better revealed through trade war; (ii) technology is the center of the competition and will continue to take place and the two sides will use non-tariff measures, such as restricting investment, enacting laws in sectors such as 5G and artificial intelligence (AI). These barriers will prevent the two countries from sharing their technological innovations and global supply chains would be broken; (iii) the short-term agreement is incapable of solving key issues, especially in the three new areas, such as how China defines the “critical information infrastructure” (CII), the limits of cross-border information transfer, and cloud services. China’s “pilot” or “freetrade area” initiatives will not satisfy U.S. requirements; (iv) the Trump administration’s policy towards China is currently in a bartering manner, including inconsistent measures, only aiming for specific objectives. This may create opportunities for China to both satisfy Trump and continue to pursue China’s strategic goals. In essence, China will not change its industrial policy because of U.S. pressure.

Hence, it is expected that the U.S. will continue to impose tariffs on China for the next 1-2 years. While China will improve the nominal business environment, it will continue to impose de facto restrictions on U.S./foreign companies. These small adjustments are unable to address the fundamental contrast in the two countries’ economic development model and strategy. However, both the United States and China would be in a “dilemma” situation if separated from each other, so the two sides will continue to maintain dialogue.

Regarding security, the U.S. - China competition takes place both in traditional areas such as Taiwan, the Korean peninsula, and the East Sea, as well as non-traditional areas such as cyberspace. At the same time, the competition also arose at international forums and on international issues such as laws, practices, and standards. At the global order level, China is trying to modify some aspects of the global system but without ambition and attempt to change the whole order. Although the ideological factor is increasing, it is not as much for the two countries to set two opposing visions for the whole world. Globally, the two countries still have interests in global governance cooperation to solve numbers of common challenges together like public health, climate change, and humanitarian aid. The U.S. has been promoting security and military collaboration with China towards specific benefits such as (i) building a substantive and sustainable dialogue channel; (ii) promoting risk reduction and risk management efforts that decrease the likelihood of misunderstandings or misjudgments; (iii) building solid and practical cooperation in areas of mutual benefit. In general, the links between the two countries’ militaries are factors to help stabilize the US - China relations.

The possibility of agreementon some hot spots

In the Korean peninsula: Although the possibility of compromise related to the Korean peninsula is little, it is not impossible. The Chinese government has proposed a “freeze-for-freeze” agreement. Accordingly, North Korea will stop testing missiles and the United States will stop or significantly adjust military exercises between the U.S. and South Korea. The U.S. has completely rejected this proposal of China and continued to be tough with the DPRK. However, in the event that the U.S.’s domestic political situation is hard and President Trump needs external success to fill the internal challenges, the U.S. then would adjust the military exercises with South Korea to a level that does not lead to core concessions. In return, the United States persuaded China to put pressure on the DPRK to accept the Chinese proposal.

In Taiwan: There is also a possibility of compromise from the U.S. since the U.S. has no official commitment to Taiwan as with other allies. According to some scholars, to reach a grand bargain with China, Taiwan is the issue that the U.S. can consider first. However, there are also many opinions against this view, because China increasingly takes the U.S.’s “Taiwanese card” for granted as they think that they have an advantage in the issue of Taiwan (China is becoming more and more willing to cope with a crisis, even a conflict in Taiwan). On the other hand, compromise in Taiwan will make the United States lose its advantage and prestige without exchanging any benefits from China. Moreover, this shows the weakness of the United States, weakens the confidence of allies, and makes China even more confident.

In the East Sea: Currently, in the U.S.’s view, China is taking clever and creative measures to silently gain an advantage in the East Sea. The U.S. then needs to take action to compensate for these losses by diplomatic and military measures (even “small-scale conflicts” are seen as an option)(9). However, it is possible that the United States and China will compromise for the common interest in keeping the maritime route in the East Sea open and smooth (because China is an export-oriented economy). China has always affirmed that they would not harm freedom of navigation in the East Sea.Therefore, if there is a compromise, the United States can consider China as a partner in the field of freedom of navigation. It should be noted that the U.S. has always affirmed its intention not to interfere with the sovereignty claims of countries in the region. Then, in order to reach an agreement with China in the East Sea, the United States could reduce the activities of freedom of navigation operations (FONOP) and not bring patrol vessels near China’s artificial islands. This is, in fact, also a form of compromise.

In short, with the emergence of China and the relative weakness of the United States, the U.S. - China relations have become the foremost important relationship in contemporary international relations. The complex cooperation and competition process between these two countries has a profound effect on the security and development of the world and especially the Indo-Pacific region. Therefore, countries in the region need to monitor and evaluate the possibility of conflict or agreement between the United States and China, because each possibility will affect the national interests of small and medium countries in the region. Based on the theory of international relations, there are a number of variables to assess the potential for conflict/agreement between the United States and China. However, in reality, these variables are all complicated, especially the changes in the correlation of power and complicated internal situation within the two countries. In general, the competition is increasing, but there is a possibility of agreements on some issues, especially in terms of the economy and in some hot spots in the region. Small and medium-sized countries should take initiative to minimize risks when the U.S. - China conflict or agreement occurs, in which the core is to implement the external policy of increasing autonomy and national independence, building and strengthening relations with major countries, especially with the U.S. and China. At the same time, it is necessary to strengthen the role of multilateral institutions, especially the central role of ASEAN in the Indo-Pacific region. This is also the strategy that Vietnam has persisted in implementing for years. However, in the coming time, especially with the role of 2020 ASEAN Chairmanship and non-permanent member of the UN Security Council 2020-2021, Vietnam needs to be more proactive and confident in taking a breakthrough in creating a position in bilateral relations with major countries, and at the same time promoting Vietnam’s role in the important regional and global multilateralinstitutions. That would help Vietnam optimize and strengthen the strategic position, minimizing the risk of the U.S.-China’s conflict or agreement.

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Endnotes:

(1) Allison, Graham T.: Destined for war: Can America and China escape Thucydides’s trap? Brunswick, Victoria:  Scribe Publications, 2017.

(2) Mastro, Oriana Skylar: In the Shadow of the Thucydides Trap: International Relations Theory and the Prospects for Peace in U.S. - China Relations, Journal of Chinese Political Science, 2019, 24:25-45.

(3) Huang Jing: Here Is What China Wants to See Happen in Asia (and America May Not Like It), The National Interest, 2017, https://nationalinterest.org.

(4) Sino-American interdependence has been a force for geopolitical stability, The Economist, 2018, https://www.economist.com.

(5) Feng, H., & He, K.: China’s Institutional Challenges to the International Order. Strategic Studies Quarterly, 11 (4), 23-49, 2017, http://www.jstor.org.

(6) Christensen, T.J: The meaning of nuclear evolution: China’s strategic modernization and U.S.- China security relations, Journal of Strategic Studies 25 (4): 447-487, 2012.

(7) The 19th Congress of the Communist Party of China in 2017 stated the 100-year goal of the People’s Republic of China (2049) to become the leading global power.

(8) Brad W. Setser: What Would Happen if China Started Selling Off Its Treasury Portfolio? Council on Foreign Relations, 2018, https://www.cfr.org.

(9) Robert Farley: Showdown: How a U.S. - China War Could Start in the South China Sea, The National Interest, 2019, https://nationalinterest.org.

Dr. Le Hai Binh

Deputy Head of the Steering Committee,

Central Commission for External Information