Cooperation and Confrontation in US-China Relations

The United States realizes that it is impossible to change China through totally frontal antagonism. Instead, the relationship between the world’s major economic powers must be based on a combination of cooperation and confrontation on key issues. During an OMFIF panel on February 10, U.S. experts agreed that President Joe Biden’s administration must first identify policies that can work and then step up efforts, including interacting with foreign allies, to succeed.

OMFIF US President Mark Sobel spoke to Kurt Tong, Partner of The Asia Group, Wendy Cutler, Vice President of the Asia Society Policy Institute, and Bob Dohner, Former Deputy Under Secretary of the Treasury American. Each panelist, very experienced in US-China relations, brought to the discussion different perspectives from their careers in government agencies.

Panelists agreed that President Donald Trump had taken Barack Obamas’ stance on China and dramatically stepped up. They pointed out that China under President Xi Jinping is increasingly authoritarian.

By identifying China as a geostrategic competitor and a threat, Trump has put Sino-U.S. Affairs at the top of the U.S. agenda. Trump has used tariffs as leverage against Chinese interests in a way that has yet to be attempted. While the panel agreed his administration was right to focus on China as a geostrategic challenge, it was seriously wrong.

His one-sided and belligerent approach was mired in serious miscalculations, especially early in his administration. China has responded to tariff threats by doubling down on its industrial and technological policies, areas that have provoked further US objections and, in many ways, harmed US interests. Cutler noted: This escalated into retaliation affecting hundreds of billions of dollars in imports and exports.

The bellicose negotiating style prevails over the public and largely on Twitter, things complicated and undermined his team. Priorities changed day by day and opportunities were wasted. In phase one of the trade deal reached in early 2020, the administration opted for a sub-optimal transaction deal rather than structural reforms.

As Cutler pointed out, not only [Trump] not work with allies and partners on China’s strategy, but it has alienated them through other measures. This sentiment was echoed by Tong and Dohner. Working with rather than against American allies to try to achieve common goals on China will mark a big change in the policies of the new administrations.

Bidens ‘efforts to coordinate with the allies will not be easy, given the damage done to the Americas’ global reputation. The panelists recommended that the United States should approach its allies with humility, ready to listen, not to preach.

Biden inherited tariffs on Chinese imports of goods worth around $ 370 billion. The panel agreed that these would not be lifted anytime soon and certainly not all at the same time. Cutler recommended that the administration individually look at the problem behind each tariff and then determine the most effective way to resolve it, including identifying allies to help find solutions.

Dohner observed that financial sanctions have inexorably increased in scope and extent to include secondary sanctions, when an institution faces restrictions because it is dealing with a directly sanctioned entity. Sanctioning a major Chinese bank, cutting it off from the US financial system would be a huge and potentially financially destabilizing step, which I think Treasury Yellen would be seriously concerned about and weigh heavily.

Tong divided the key issues into those of confrontation and cooperation. In terms of confrontation, he identified the highest priorities such as technology, military affairs, and governance and human rights issues. Congress will be watching Biden’s team closely for any signs of weakness in China and is likely to take action to correct Biden’s perceived shortcomings.

Areas in which the United States and China can cooperate include responding to Covid-19, nuclear proliferation in North Korea, and climate change. Tong predicted, Well see a combination of confrontation on some issues, outright cooperation on some if possible, and then a lot of negotiation on some of the difficult issues between the two.

Trump’s belligerent approach has coincided with dramatic changes in Chinese policy. It has become more confrontational with the West, more authoritarian internally and more aggressive at the regional level. Dohner noted that this has created a hardening of positions on both sides which is very difficult to reverse and creates a difficult situation for the Biden administration.

The United States does not have the power to change the way China governs or acts globally. It is impossible to control Chinese influence (especially in economic matters) on small nations. Instead, the United States and other like-minded countries should show these countries that they have options for transparent, market-based development policies so that they are not trapped in exclusive relations with China.

Panelists pointed out that at the end of the Trump administration, communication between U.S. and Chinese officials was almost non-existent, especially at technical levels where progress could have been made. This will have to change if the two countries are to work together on common interests and specific issues.

Communication with allies and partners is more important than communication with China. Tong stressed that, to be truly effective, the United States will need to form coalitions of will with other key countries. Cutler and Dohner observed that the makeup of coalitions may need to vary, question by question.

Biden has 35 years of congressional experience that gives him the ability to effectively digest issues and provide direction. In the complex relationship between the United States and China, Bidens’ record, including his vice-presidency under Obama, will be a huge advantage. But it will take much more to achieve lasting success.

Sarah Moloney is an assistant editor at OMFIF.