How America can both challenge and coexist with China
By Kurt M. Campbell & Jake Sullivan
The United States is in the midst of the most consequential rethinking of its foreign policy since the end of the Cold War. Although Washington remains bitterly divided on most issues, there is a growing consensus that the era of engagement with China has come to an unceremonious close. The debate now is over what comes next. Like many debates throughout the history of U.S. foreign policy, this one has elements of both productive innovation and destructive demagoguery.
Most observers can agree that, as the Trump administration’s National Security Strategy put it in 2018, “strategic competition” should animate the United States’ approach to Beijing going forward. But foreign policy frameworks beginning with the word “strategic” often raise more questions than they answer. “Strategic patience” reflects uncertainty about what to do and when. “Strategic ambiguity” reflects uncertainty about what to signal. And in this case, “strategic competition” reflects uncertainty about what that competition is over and what it means to win.
The rapid coalescence of a new consensus has left these essential questions about U.S.-Chinese competition unanswered. What, exactly, is the United States competing for? And what might a plausible desired outcome of this competition look like? A failure to connect competitive means to clear ends will allow U.S. policy to drift toward competition for competition’s sake and then fall into a dangerous cycle of confrontation. U.S. policymakers and analysts have mostly, and rightly, discarded some of the more optimistic assumptions that underpinned the four-decade-long strategy of diplomatic and economic engagement with China (which one of us, Kurt Campbell, detailed in these pages last year, writing with Ely Ratner). But in the rush to embrace competition, policymakers may be substituting a new variety of wishful thinking for the old.
The basic mistake of engagement was to assume that it could bring about fundamental changes to China’s political system, economy, and foreign policy. Washington risks making a similar mistake today, by assuming that competition can succeed in transforming China where engagement failed this time forcing capitulation or even collapse. Despite the many divides between the two countries, each will need to be prepared to live with the other as a major power. The starting point for the right U.S. approach must be humility about the capacity of decisions made in Washington to determine the direction of long-term developments in Beijing. Rather than relying on assumptions about China’s trajectory, American strategy should be durable whatever the future brings for the Chinese system. It should seek to achieve not a definitive end state akin to the Cold War’s ultimate conclusion but a steady state of clear-eyed coexistence on terms favorable to U.S. interests and values.
Such coexistence would involve elements of competition and cooperation, with the United States’ competitive efforts geared toward securing those favorable terms. This might mean considerable friction in the near term as U.S. policy moves beyond engagement whereas in the past, the avoidance of friction, in the service of positive ties, was an objective unto itself. Going forward, China policy must be about more than the kind of relationship the United States wants to have; it must also be about the kinds of interests the United States wants to secure. The steady state Washington should pursue is rightly about both: a set of conditions necessary for preventing a dangerous escalatory spiral, even as competition continues.
U.S. policymakers should not dismiss this objective as out of reach. It is true, of course, that China will have a say in whether this outcome is possible. Vigilance will thus need to remain a watchword in U.S.-Chinese relations in the period ahead. Although coexistence offers the best chance to protect U.S. interests and prevent inevitable tension from turning into outright confrontation, it does not mean the end of competition or surrender on issues of fundamental importance. Instead, coexistence means accepting competition as a condition to be managed rather than a problem to be solved.
Cold war lessons, not cold war logic
Given the current hazy discourse on competition, there is an understandable temptation to reach back to the only great-power competition Americans remember to make sense of the present one: the Cold War. The analogy has intuitive appeal. Like the Soviet Union, China is a continent-sized competitor with a repressive political system and big ambitions. The challenge it poses is global and lasting, and meeting that challenge will require the kind of domestic mobilization that the United States pursued in the 1950s and 1960s.
But the analogy is ill fitting. China today is a peer competitor that is more formidable economically, more sophisticated diplomatically, and more flexible ideologically than the Soviet Union ever was. And unlike the Soviet Union, China is deeply integrated into the world and intertwined with the U.S. economy. The Cold War truly was an existential struggle. The U.S. strategy of containment was built on the prediction that the Soviet Union would one day crumble under its own weight that it contained “the seeds of its own decay,” as George Kennan, the diplomat who first laid out the strategy, declared with conviction.
No such prediction holds today; it would be misguided to build a neo-containment policy on the premise that the current Chinese state will eventually collapse, or with that as the objective. Despite China’s many demographic, economic, and environmental challenges, the Chinese Communist Party has displayed a remarkable ability to adapt to circumstances, often brutally so. Its fusion of mass surveillance and artificial intelligence, meanwhile, is enabling a more effective digital authoritarianism one that makes the collective action necessary for reform or revolution hard to contemplate, let alone organize. China may well encounter serious internal problems, but an expectation of collapse cannot form the basis of a prudent strategy. Even if the state does collapse, it is likely to be the result of internal dynamics rather than U.S. pressure.
The Cold War analogy at once exaggerates the existential threat posed by China and discounts the strengths Beijing brings to long-term competition with the United States. Although the risk of conflict in Asia’s hot spots is serious, it is by no means as high, nor is the threat of nuclear escalation as great, as it was in Cold War Europe. The kind of nuclear brinkmanship that took place over Berlin and Cuba has no corollary in U.S.-Chinese ties. Nor has U.S.-Chinese competition plunged the world into proxy wars or created rival blocs of ideologically aligned states preparing for armed struggle.
Despite the diminished danger, however, China represents a far more challenging competitor. In the last century, no other U.S. adversary, including the Soviet Union, ever reached 60 percent of U.S. GDP. China passed that threshold in 2014; in purchasing-power terms, its GDP is already 25 percent greater than that of the United States. China is the emerging global leader in several economic sectors, and its economy is more diversified, flexible, and sophisticated than the Soviet Union’s ever was. Beijing is also better at converting its country’s economic heft into strategic influence. Whereas the Soviet Union was hamstrung by a closed economy, China has embraced globalization to become the top trading partner for more than two-thirds of the world’s nations. The kinds of economic, people-to-people, and technological linkages that were lacking in the militarized U.S.-Soviet conflict define China’s relationship with the United States and the wider world.
As a global economic actor, China is central to the prosperity of American allies and partners; its students and tourists flow through global universities and cities; its factories are the forge for much of the world’s advanced technology. This thick web of ties makes it difficult to even start to determine which countries are aligned with the United States and which are aligned with China. Ecuador and Ethiopia might look to Beijing for investment or for surveillance technologies, but they hardly see these purchases as part of a conscious turn away from the United States.
Even as China emerges as a more formidable competitor than the Soviet Union, it has also become an essential U.S. partner. Global problems that are difficult enough to solve even when the United States and China work together will be impossible to solve if they fail to do soclimate change foremost among them, given that the United States and China are the two biggest polluters. A host of other transnational challenges economic crises, nuclear proliferation, global pandemics also demand some degree of joint effort. This imperative for cooperation has little parallel in the Cold War.
While the notion of a new Cold War has brought calls for an updated version of containment, resistance to such thinking has come from advocates of an accommodative “grand bargain” with China. Such a bargain would go well beyond the terms of U.S.-Soviet détente: in this scenario, the United States would effectively concede to China a sphere of influence in Asia. Proponents defend this concession as necessary given the United States’ domestic headwinds and relative decline.
This position is sold as realistic, but it is no more tenable than containment. Ceding the world’s most dynamic region to China would do long-term harm to American workers and businesses. It would damage American allies and values by turning sovereign partners into bargaining chips. A grand bargain would also require stark and permanent U.S. concessions, such as the abrogation of U.S. alliances or even of the right to operate in the western Pacific, for speculative promises. Not only are these costs unacceptable; a grand bargain would also be unenforceable. A rising China would likely violate the agreement when its preferences and power changed.
Advocates of neo-containment tend to see any call for managed coexistence as an argument for a version of the grand bargain; advocates of a grand bargain tend to see any suggestion of sustained competition as a case for a version of containment. That divide obscures a course between these extremes one that is not premised on Chinese capitulation or on U.S.-Chinese condominium.
Instead, the goal should be to establish favorable terms of coexistence with Beijing in four key competitive domains military, economic, political, and global governance thereby securing U.S. interests without triggering the kind of threat perceptions that characterized the U.S.-Soviet rivalry. Washington should heed the lessons of the Cold War while rejecting the idea that its logic still applies.
Toward sustainable deterrence
In contrast to the military competition of the Cold War, which was a truly global struggle, the dangers for Washington and Beijing are likely to be confined to the Indo-Pacific. Even so, the region features at least four potential hot spots: the South China Sea, the East China Sea, the Taiwan Strait, and the Korean Peninsula. Neither side wishes for conflict, but tensions are rising as both invest in offensive capabilities, boost their military presence in the region, and operate in ever-closer proximity.
Washington fears that China is trying to push U.S. forces out of the western Pacific, and Beijing fears that the United States is trying to hem it in. Given China’s harassment of U.S. aircraft and naval vessels, minor incidents risk escalating into major military confrontations; Admiral Wu Shengli, the former naval commander of the People’s Liberation Army, has warned that any such incident “could spark war.”
But coexistence in the Indo-Pacific by both militaries should not be dismissed as impossible. The United States must accept that military primacy will be difficult to restore, given the reach of China’s weapons, and instead focus on deterring China from interfering with its freedom of maneuver and from physically coercing U.S. allies and partners. Beijing will have to accept that the United States will remain a resident power in the region, with a major military presence, naval operations in its major waterways, and a network of alliances and partnerships.
Taiwan and the South China Sea are likely to present the most significant challenges to this overall approach. A military provocation or misunderstanding in either case could easily trigger a larger conflagration, with devastating consequences, and this risk must increasingly animate the thinking of senior leaders in both Washington and Beijing.
On Taiwan, a tacit commitment not to unilaterally alter the status quo is perhaps the best that can be hoped for given the historical complexities involved. Yet Taiwan is not only a potential flash point; it is also the greatest unclaimed success in the history of U.S.-Chinese relations. The island has grown, prospered, and democratized in the ambiguous space between the United States and China as a result of the flexible and nuanced approach generally adopted by both sides.
In this way, the diplomacy surrounding Taiwan could serve as a model for the increasingly challenging diplomacy between Washington and Beijing on a variety of other issues, which are similarly likely to include intense engagement, mutual vigilance and a degree of distrust, and a measure of patience and necessary restraint. Meanwhile, in the South China Sea, Beijing’s understanding that threats to freedom of navigation could have devastating consequences for China’s own economy might help when combined with U.S. deterrence modulate its more nationalist sentiments.
To achieve such coexistence, Washington will need to enhance both U.S.-Chinese crisis management and its own capacity for deterrence. Even as Cold War adversaries, the United States and the Soviet Union worked concertedly to reduce the risk that an accidental collision would escalate to nuclear war; they set up military hot lines, established codes of conduct, and signed arms control agreements. The United States and China lack similar instruments to manage crises at a time when new domains of potential conflict, such as space and cyberspace, have increased the risk of escalation.
In every military domain, the two countries need agreements that are at least as formal and detailed as the U.S.-Soviet Incidents at Sea Agreement, a 1972 deal that established a set of specific rules aimed at avoiding maritime misunderstandings. The United States and China also need more communication channels and mechanisms to avoid conflict especially in the South China Sea to allow each side to quickly clarify the other’s intentions during an incident.
The bilateral military relationship should no longer be held hostage to political disagreements, and senior military officials on both sides should engage in more frequent and substantive discussions to build personal ties as well as understandings of each side’s operations. Historically, progress on some of these efforts, especially crisis communication, has proved difficult: Chinese leaders fear that crisis communication could embolden the United States to act with impunity and would require devolving too much authority to senior military officers in the field. But these worries may be easing, given China’s growing power and military reforms.
Effective U.S. strategy in this domain requires not just reducing the risk of unintentional conflict but also deterring intentional conflict. Beijing cannot be allowed to use the threat of force to pursue a fait accompli in territorial disputes. Yet managing this risk does not require U.S. military primacy within the region. As the former Trump administration defense official Elbridge Colby has argued, “deterrence without dominance even against a very great and fearsome opponent is possible.”
To ensure deterrence in the Indo-Pacific, Washington should reorient its investments away from expensive and vulnerable platforms, such as aircraft carriers, and toward cheaper asymmetric capabilities designed to discourage Chinese adventurism without spending vast sums. This calls for taking a page from Beijing’s own play book. Just as China has relied on relatively cheap antiship cruise and ballistic missiles, the United States should embrace long-range unmanned carrier-based strike aircraft, unmanned underwater vehicles, guided missile submarines, and high-speed strike weapons.
All these weapons could protect U.S. and allied interests, even as they dent China’s confidence that its offensive operations will succeed and reduce the risk of collision and miscalculation. The United States should also diversify some of its military presence toward Southeast Asia and the Indian Ocean, making use of access agreements rather than permanent basing when necessary. This would place some U.S. forces beyond China’s precision-strike complex, preserving their ability to promptly address crises. It would also preposition them to address a wide range of contingencies beyond conflicts involving China, including humanitarian assistance, disaster relief, and antipiracy missions.
Unlike the Soviet Union, which focused its resources on military power, China views geo-economics as the primary arena of competition. With an eye toward the future, it has invested heavily in emerging industries and technologies, including artificial intelligence, robotics, advanced manufacturing, and biotechnology. China seeks dominance in these fields in part by denying Western companies reciprocal treatment.
The United States granted China permanent normal trade relations, supported its entry into the World Trade Organization, and has generally maintained one of the world’s most open markets. But through a combination of industrial policy, protectionism, and outright theft, China has put in place a range of formal and informal barriers to its markets and has exploited American openness.
This structural imbalance has eroded support for stable U.S.-Chinese economic ties, and the relationship faces a heightened risk of rupture even if Xi and U.S. President Donald Trump are able to reach a near-term trade truce. Many in the American business community are no longer willing to tolerate China’s unfair practices, which include employing state hackers to steal intellectual property, forcing foreign companies to localize their operations and engage in joint ventures, subsidizing state champions, and otherwise discriminating against foreign companies.
Alleviating these growing frictions while protecting American workers and innovation will require making China’s full access to major markets around the world contingent on its willingness to adopt economic reforms at home. Washington, for its part, will have to invest in the core sources of American economic strength, build a united front of like-minded partners to help establish reciprocity, and safeguard its technological leadership while avoiding self-inflicted wounds.
The most decisive factor in the economic competition with China is U.S. domestic policy. The notion of a new “Sputnik moment”one that galvanizes public research as powerfully as seeing the Soviet Union launch the world’s first satellite did may be overstating the point, but government does have a role to play in advancing American economic and technological leadership.
Yet the United States has turned away from precisely the kinds of ambitious public investments it made during that period such as the Interstate Highway System championed by President Dwight Eisenhower and the basic research initiatives pushed by the scientist Vannevar Busheven as it faces a more challenging economic competitor. Washington must dramatically increase funds for basic science research and invest in clean energy, biotechnology, artificial intelligence, and computing power.
At the same time, the federal government should scale up its investments in education at all levels and in infrastructure, and it should adopt immigration policies that continue to enhance the United States’ demographic and skills advantage. Calling for a tougher line on China while starving public investments is self-defeating; describing these investments as “socialist,” given the competition, is especially ironic. Indeed, such strange ideological bedfellows as Senator Elizabeth Warren, Democrat of Massachusetts, and Senator Marco Rubio, Republican of Florida, are making a convincing case for a new U.S. industrial policy.
On top of this domestic foundation, Washington should work with like-minded nations to define a new set of standards on issues that the World Trade Organization does not currently address, from state-owned enterprises to indigenous innovation policies to digital trade. Ideally, these standards would connect Asia and Europe. To this end, the United States should consider starting a rules-setting initiative of market democracies layered over the WTO system, which would fill these gaps. The logic is straightforward.
If China hopes to enjoy equal access to this new economic community, its own economic and regulatory frameworks must meet the same standards. The combined gravitational pull of this community would present China with a choice: either curb its free-riding and start complying with trade rules, or accept less favorable terms from more than half of the global economy. If Beijing chooses to hold to the line that the necessary reforms amount to economic regime change, it can certainly do so, but the world would be well within its rights to offer China reciprocal treatment. In some cases, Washington may still need to impose reciprocal measures on China unilaterally, by treating its exports and investments the same way Beijing handles U.S. exports and investments. These efforts will be challenging and costly, which is precisely why the Trump administration’s decision to pick trade fights with U.S. allies rather than rally them to a common position vis-à-vis China is such a waste of American leverage.
The United States will also have to safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors. Doing so will require some enhanced restrictions on the flow of technology investment and trade in both directions, but these efforts should be pursued selectively rather than wholesale, imposing curbs on technologies that are critical to national security and human rights and allowing regular trade and investment to continue for those that are not.
Even these targeted restrictions must be undertaken in consultation with industry and other governments; failing to do so could Balkanize the global technology ecosystem by impeding flows of knowledge and talent. Such a development would neutralize a key U.S. competitive advantage relative to China: an open economy that can source the best global talent and synthesize the biggest breakthroughs from around the world. Meanwhile, overreach on technology restrictions could drive other countries toward China, especially since China is already the largest trading partner for most.
In this respect, the Trump administration’s loud and largely unilateral campaign against the participation of the Chinese company Huawei in the development of 5G infrastructure may provide a cautionary lesson. Had the administration coordinated with allies and partners in advance and tried some creative policy making for example, establishing a multilateral lending initiative to subsidize the purchase of alternatives to Huawei’s equipment it might have had more success in convincing states to consider other vendors.
It then might have been able to make the most of the two-year delay Huawei now faces in rolling out 5G following its placement on the U.S. Department of Commerce’s list of entities that cannot be supplied with American technology. Future efforts to restrict trade with China in the technology sector will require careful deliberation, advance planning, and multilateral support if they are to be successful; otherwise, they will risk undermining U.S. innovation.
Pro-democracy, not anti-China
U.S.-Chinese economic and technological competition suggests an emerging contest of models. But unlike the Cold War, with its sharp ideological divide between two rival blocs, the lines of demarcation are fuzzier here. Although neither Washington nor Beijing is engaging in the kind of proselytizing characteristic of the Cold War, China may ultimately present a stronger ideological challenge than the Soviet Union did, even if it does not explicitly seek to export its system.
If the international order is a reflection of its most powerful states, then China’s rise to superpower status will exert a pull toward autocracy. China’s fusion of authoritarian capitalism and digital surveillance may prove more durable and attractive than Marxism, and its support for autocrats and democratic backsliders will challenge American values and provide China cover for its own egregious practices, including the detention of more than one million ethnic Uighurs in northwestern China.
Some may question whether the erosion of democratic governance across the world matters for U.S. interests; it does. Democratic governments are more likely to align with American values, pursue good governance, treat their people well, and respect other open societies, and all of this tends to make them more trustworthy and transparent and, in turn, better economic and security partners. Washington can best establish favorable terms of coexistence with China in the political realm by focusing on advancing the appeal of these values for their own sake, not to score points in the context of U.S.-Chinese competition. As China’s presence around the world grows, the United States should avoid a tendency that was all too common during the Cold War: to see third countries only in terms of their relationship to a rival government.
Some of the Trump administration’s policies such as invoking the Monroe Doctrine in Latin America and delivering an address on Africa that is largely about countering China echo this old approach. A tack that intentionally engages states on their own terms would do more to advance American interests and values than knee-jerk responses to Chinese initiatives that leave states feeling that Washington cares about them only as battlegrounds in its competition with Beijing.
China’s Belt and Road Initiative offers the most obvious opportunity to apply this principle in practice. Rather than fight China at every turnon every port, bridge, and rail linethe United States and its partners should make their own affirmative pitch to countries about the kinds of high-quality, high-standard investments that will best serve progress. Supporting investments not because they are anti-Chinese but because they are pro-growth, pro-sustainability, and pro-freedom will be much more effective over the long term especially because China’s state-led investments have provoked a degree of backlash in countries over cost overruns, no-bid contracts, corruption, environmental degradation, and poor working conditions.
In this light, the best defense of democracy is to stress the values that are essential to good governance, especially transparency and accountability, and to support civil society, independent media, and the free flow of information. Together, these steps could lower the risk of democratic backsliding, improve lives in the developing world, and reduce Chinese influence. This course of action will require an injection of multilateral funding from the United States and its allies and partners that can give countries genuine alternatives. But it will require something more fundamental, too: the United States needs to have greater confidence in the belief that investing in human capital and good governance will work out better over the long run than China’s extractive approach.
Focusing on principles rather than score keeping will also be essential for setting norms for new technologies that raise hard questions about human ethics. From artificial intelligence to biotechnology, autonomous weapons to gene-edited humans, there will be a crucial struggle in the years ahead to define appropriate conduct and then pressure laggards to get in line. Washington should start shaping the parameters of these debates without further delay.
Finally, coexistence with China does not, and cannot, preclude the United States from speaking out against China’s egregious and inhumane treatment of its own citizens and the arbitrary detention of foreign non-governmental organization workers. The West’s relative silence on Beijing’s internment of Uighurs has left a moral stain, and so the United States and its partners should mobilize international pressure to demand neutral third-party access to those who are detained and the sanctioning of the individuals and companies that are complicit in the detention. China may well threaten that such pressure will destabilize ties. Yet Washington should make speaking out on human rights abuses a predictable and routine part of the relationship.
Sequencing competition and cooperation
It is often taken as an article of faith that as the U.S.-Chinese relationship becomes more competitive, the space for cooperation will shrink, if not disappear. But even as adversaries, the United States and the Soviet Union found ways to cooperate on a number of issues, including space exploration, contagious diseases, the environment, and the global commons. The need for cooperation between Washington and Beijing is far more acute, given the nature of contemporary challenges. Leaders in both countries should consider cooperation on such transnational challenges not as a concession by one party but as an essential need for both.
To get the balance between cooperation and competition right, Washington has to consider the sequencing of each. The United States has historically sought to cooperate first and compete second with China. Beijing, meanwhile, has become quite comfortable competing first and cooperating second, linking either explicitly or implicitly offers of cooperation to U.S. concessions in areas of strategic interest. Going forward, Washington should avoid becoming an eager suitor on transnational challenges. Eagerness can actually limit the scope for cooperation by making it a bargaining chip.
Although it may seem counterintuitive, competition is likely essential to effective cooperation with Beijing. In the zero-sum strategic mind set of many Chinese officials, perceptions of U.S. power and resolve matter enormously, and the Chinese bureaucracy has long focused on shifts in both. Given this sensitivity, it can be as important for Washington to demonstrate an ability to stand firm, and even to impose costs, as it is for it to speak earnestly about finding common cause. The best approach, then, will be to lead with competition, follow with offers of cooperation, and refuse to negotiate any linkages between Chinese assistance on global challenges and concessions on U.S. Interests.
Beyond the bilateral
There is one other lesson of the Cold War that U.S. policymakers should keep top of mind: that one of the United States’ greatest strengths in its competition with China has less to do with the two countries than with everyone else. The combined weight of U.S. allies and partners can shape China’s choices across all domains but only if Washington deepens all those relationships and works to tie them together. Although much of the discussion on U.S.-Chinese competition focuses on its bilateral dimension, the United States will ultimately need to embed its China strategy in a dense network of relationships and institutions in Asia and the rest of the world.
This is a lesson that the Trump administration would do well to remember. Instead of harnessing these enduring advantages, it has alienated many of the United States’ traditional friends with tariffs, demands of payment for military bases, and much more and abandoned or undermined key institutions and agreements. Many international organizations, from the UN and the World Bank to the World Trade Organization, are institutions that the United States helped design and lead and that have established widely accepted rules of the road on such issues as freedom of navigation, transparency, dispute resolution, and trade.
Retreating from these institutions provides short-term leeway and flexibility at the cost of long-term U.S. influence and allows Beijing to reshape norms and expand its own influence within those organizations. The United States needs to get back to seeing alliances as assets to be invested in rather than costs to be cut. In the absence of any meaningful capacity to build its own network of capable allies, Beijing would like nothing more than for the United States to squander this long-term advantage. Establishing clear-eyed coexistence with China will be challenging under any conditions, but it will be virtually impossible without help. If the United States is to strengthen deterrence, establish a fairer and more reciprocal trading system, defend universal values, and solve global challenges, it simply cannot go it alone. It is remarkable that it must be said, but so it must: to be effective, any strategy of the United States must start with its allies.
KURT M. CAMPBELL is Chair and CEO of the Asia Group. He is 201819 Kissinger Fellow at the McCain Institute and was U.S. Assistant Secretary of State for East Asian and Pacific Affairs from 2009 to 2013.
JAKE SULLIVAN is a Nonresident Senior Fellow at the Carnegie Endowment for International Peace. He served as National Security Adviser to the U.S. Vice President in 201314 and as Director of Policy Planning at the U.S. Department of State in 2011 to 13.