US Competitive Policy toward China and Transformation of China-US Relations

Wu Xinbo

The Trump administration, taking “strategic competition” as the guiding ideology in its relationship with China, has made major adjustments to the United States' China policy and China-US relations are therefore facing severe tests. Will there be a “decoupling” of China and the US? Will a “new Cold War” erupt? Are China-US relations falling into, or have they already fallen into, a “Thucydides' Trap”? An analysis of the Trump administration's China policy adjustment and its potential impacts is helpful in answering these questions and gaining a sense of the long-term direction of America's China strategy and China-US relations.

All-round Competition with China

In December 2017, the first US National Security Strategy released by the Trump administration defined China as a “rival” and a “revisionist state,” declaring that the US would engage in strategic competition with China and emphasizing the competitive nature of China-US relations. In January 2018, the US Department of Defense released a summary of the US National Defense Strategy, which was consistent with the National Security Strategy.1The White House, National Security Strategy of the United States of America, December 2017, https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf; US Department of Defense, Summary of the 2018 National Defense Strategy of the United States of America, p.9, https://www.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-Strategy-Summary.pdf.Strategic competition has become the guiding ideology of America's China policy. Matthew Pottinger, Senior Director on Asian Affairs at the White House National Security Council, bluntly claims that the Trump administration has put the concept of competition at the forefront of its China policy and at the top of its national security strategy.2Jeremy Goldkorn, “Trump Official Matt Pottinger Quotes Confucius, in Chinese, to Make Point about Language and Truth,” Supchina, October 1, 2018, https://supchina.com/2018/10/01/matt-pottinger-quotesconfucius-in-chinese.

In the post-Cold War era, the US policy toward China has always been one of “engagement” plus “precaution (or balancing),” and China-US relations have always involved the coexistence of cooperation and competition. Although the Obama administration promoted the Asia-Pacific rebalancing strategy and strengthened geopolitical and geo-economic competition with China in the region, US competition with China has always been concentrated in certain areas of the relationship before the Trump administration. It is the Trump administration, however, that has first launched all-round competition with China as the keynote of its policy. Politically, the US aims not only to prevent China from challenging the US-dominated international and regional order, but also aims to guard against any Chinese “infiltration” of American society. On the economic front, the US needs to address trade imbalance and access to the Chinese market, while at the same time attempting to retard China's progress in science and technology and force changes in China's industrial policy. In terms of security, it is not only aimed at dealing with the rise of China's military power, but also at restraining China's geostrategic expansion.3Wu Xinbo, “New Phase of the United States' China Policy under the Trump Administration,” China International Studies, No.4, 2018, pp.16-17.This all-round competition reflects major changes in the perception and policy of the United States toward China. In order to compete with China on all fronts, the Trump administration has designed and implemented a series of policy tools with different foci but related to one another, among which decoupling, restrictions, and the application of pressure are the most prominent.

First, the issue of decoupling. A key field for decoupling is the hightech industry. By preventing the flow of American high-tech to China and slowing down the pace of China's technological progress, the US can make it difficult for China to rapidly upgrade its industry or catch up with the Americans in the high-tech field. In order to promote the decoupling of China and the US in the high-tech field, the Trump administration has taken a series of measures, such as strengthening export control, opposing the so-called policies of forcing foreign enterprises to transfer technology, restricting Chinese investment in the US, and restricting China-US technological cooperation and exchanges. In July 2018, the US Congress enacted the Export Control Reform Act, which requires strengthened control of emerging and basic technologies beyond the export control list. In November of the same year, the Bureau of Industry and Security (BIS) of the US Department of Commerce published draft rules on regulatory assessment of specific emerging technologies in the Federal Register, listing 14 technological fields including biotechnology, artificial intelligence and machine learning technology, global positioning, navigation and timing technology, microprocessor technology and advanced computing technology. It is worth noting that these areas are strikingly similar to the technological areas covered by Made in China 2025 plan. The US has also made China's alleged “coercion” of foreign companies into transferring technology to local joint venture partners a focus of its trade talks with China. The Foreign Investment Risk Review Modernization Act signed by Trump, taking effect in August 2018 after signing by Trump, expands the power of the Committee on Foreign Investment in the United States (CFIUS). Particular attention is paid to foreign transactions with US companies involved in critical technologies, critical infrastructure, and the preservation or collection of personal information about US citizens. It also expands the category of “critical technologies” that are “essential to the national security of the United States” to include “emerging and foundational technologies.” Another focus of decoupling is in the defense industry. In order to reduce the risks brought by the dependence of the US defense industry on China, and to build a logistics system that can operate safely in a war-time environment, the US is promoting partial decoupling of Chinese and American defense industrial chains. In October 2018, the US Department of Defense released the reportAssessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States, arguing that the US defense industry relies heavily on foreign sources for more than 280 products in its supply chain, with high demand for Chinese rare earths and components in particular. According to the report, China already poses a significant and growing risk in the supply of materials and technologies that are deemed strategic and critical to US national security. In view of this, the US is actively looking for alternate sources of Chinese imports and suggesting that American defense contractors move their production bases out of China.

Second is the imposition of restrictions. The US is imposing more and increasingly stringent restrictions on the activities of Chinese institutions and individuals in the US. There are two main reasons given for this. One is the so-called risk of Chinese institutions and individuals engaging in political infiltration or espionage in the US. In recent years, anti-China forces in the US have incessantly hyped the so-called Chinese political infiltration or political influence on the American society in education, science and technology, and people-to-people exchanges, while American intelligence agencies have constantly played up the danger of “Chinese espionage activities” in the US. In a report entitledSharp Power: Rising Authoritarian Influenceby the US-based National Endowment for Democracy, China and Russia are accused of trying to “influence the target audience by manipulating or distorting information,” and even launching subversion and infiltration in order to suppress freedom of speech, expand their power and control ideology in other countries, thus influencing the understanding and decision-making of other countries and maximizing their own interests.4Hu Zexi, “Why is ‘China Threat Rhetoric' a Demon in the Heart of Washington?” Global Times, March 1, 2018, http://world.huanqiu.com/exclusive/2018-03/11631883.html.Christopher Wray, Director of the Federal Bureau of Investigation (FBI), argues that no other country poses a greater threat to the US than China through its pervasive and varied spying activities in the US.5Li Yong, Ren Zhong and Ni Hao, “Catching Chinese Spies Becomes FBI's No.1 Task,” Global Times, September 15, 2018, p.8.China's Influence and American Interests: Promoting Constructive Vigilance, a report jointly released by the Hoover Institution at Stanford University and the Asia Society's Center on US-China Relations, accuses China of trying to penetrate the Chinese-American community, international students from China studying in the US, US civil society organizations, academic institutions, think tanks, and the media, which serves to promote China's influence in the US, threaten America's core values, and undermine the democratic process in the US.6Larry Diamond and Orville Schell eds., China's Influence and American Interests: Promoting Constructive Vigilance, Stanford: Hoover Institution Press, 2018, https://www.hoover.org/sites/default/files/research/docs/00_diamond-schell-chinas-influence-and-american-interests.pdf.The other reason the US claims to justify restrictions is that the treatment of American institutions and individuals in China is not on a par with that of Chinese institutions and individuals in the US, so that the US ought to respond “tit for tat” and impose reciprocal restrictions on China. The US has responded with numerous restrictions aimed at China. The National Defense Authorization Act for Fiscal Year 2019, for example, prohibits the US Department of Defense from funding Chinese-language programs at universities with Confucius Institutes. Under such pressure, a growing number of American universities have announced the end of their joint programs with Confucius Institutes. In September 2018, the US Department of Justice required Xinhua News Agency and China Global Television Network (CGTN) branches in the US to register as “foreign agents” under the Foreign Agents Registration Act, which will further restrict their news reporting activities in the US. Washington has also tightened issuance of visas to Chinese scholars and students, including more stringent background checks, higher denial rates, and the elimination of 10-year visas for some scholars.

The third policy measure is exerting pressure on China. The US has exerted unprecedented pressure on China both directly and through multilateral channels in economic, security, diplomatic and other fields, aiming to “punish” China and force Beijing to change its policies. Economically, the US has announced tariffs on 250 billion dollars' worth of Chinese exports to the US (in addition to earlier tariffs on steel and aluminum imports from countries that include China). China was forced to fight back, announcing tariffs on 85% of US exports to China. Such a scale of trade frictions is unprecedented in the history of China-US relations and world economic history. Trump's trade measures against China serve multiple purposes. He not only wants to open up the Chinese market and solve the so-called trade imbalance, but also intends to force China to adjust its industrial policies and economic system. The US has also added a “poison pill” clause to the United States-Mexico-Canada Agreement (USMCA), which stipulates that when any party signs a free trade agreement with a non-market economy, it should allow the other parties to terminate the agreement after six months' prior notice and replace it with a bilateral agreement. Before that in October 2017, the US Department of Commerce had released a report that confirmed China's non-market economy status. Therefore, the inclusion of the “poison pill” provision in the agreement with other countries is undoubtedly aimed at putting pressure on China and forcing it to make major changes. The US is also trying to clamp down on ZTE and Huawei, China's two leading giants in the information industry. In particular, it is squeezing Huawei's potential global market in order to prevent China from gaining world dominance in the development and application of 5G technologies. On the security front, the US has stepped up pressure on China over Taiwan and the South China Sea issues. On Taiwan, Trump signed the Taiwan Travel Act in March 2018, opening the door for the promotion of US-Taiwan relations. The Trump administration has also recalled US ambassadors or charge d'affaires from El Salvador, the Dominican Republic and Panama after the three countries severed so-called “diplomatic ties” with Taiwan and established diplomatic relations with China. Military and security cooperation between the US and Taiwan has also been significantly upgraded, and the number of US warships passing through the Taiwan Strait has increased considerably. On the South China Sea issue, the US has increased the frequency of its Freedom of Navigation Operations, enhanced the projection of air strategic power in the South China Sea,7According to statistics, the US military conducted four Freedom of Navigation Operations in the South China Sea in 2017, and sent B-1B long-range bombers to fly over the region twice. In 2018, five Freedom of Navigation Operations were carried out, aircraft carriers cruised in the South China Sea twice, and B-52 bombers flew over the region for five times.and invited its allies like Japan, the United Kingdom, France and Australia to manifest their military presence in the region. The US military also cancelled its invitation to China to participate in Exercise RIMPAC 2018, citing China's “continued militarization activities” in the South China Sea. The US even imposed sanctions on the Equipment Development Department of China's Central Military Commission and its leader on the grounds of China-Russia military cooperation. In the diplomatic field, under the framework of its Indo-Pacific Strategy, the US has put forward the Indo-Pacific Economic Vision, and established a trilateral partnership with Japan and Australia on infrastructure investment in the region to compete with China's Belt and Road Initiative.

In general, the Trump administration's strategic competition with China has the following characteristics. First, it is a “whole-of-government” approach. The National Defense Authorization Act for Fiscal Year 2019 emphasizes that “long-term strategic competition with China is a principal priority for the United States that requires the integration of multiple elements of national power, including diplomatic, economic, intelligence, law enforcement, and military elements, to protect and strengthen national security.”8“John S. McCain National Defense Authorization Act for Fiscal Year 2019,” The 115th Congress, H.R. 5515, https://www.congress.gov/bill/115th-congress/house-bill/5515/text.A review of the practice of the Trump administration's China policy shows that the US departments dealing with the economy, foreign affairs, security and law enforcement cooperate closely and coordinate their actions, which is a rare occurrence for the Trump administration which is considered to have poor internal coordination generally. Second, it is a policy of strong action and rough behavior. Whether it is imposing massive tariffs, imposing sanctions on the Equipment Development Department of China's Central Military Commission and its leader, or canceling the invitation to the Chinese military to participate in the RIMPAC exercise, the US has been aggressive and reckless. Third, while a high priority has been placed on economic competition, the importance of diplomatic and security competition is rising. The Trump administration regards economic security as the core element of national security. And its competitive stance toward China begins with those trade frictions and focuses on the high-tech field. With the hawkish Mike Pompeo and John Bolton serving as Secretary of State and National Security Advisor respectively, the Trump administration has increased pressure on China in diplomatic and security fields. Security and economic measures are both tough and well coordinate with each other. Fourth, there is also the use of multilateral levers. While the Trump administration prefers unilateralism in diplomacy, it nevertheless attaches great importance to the role of allies and partners when it comes to dealing with China. For example, Canada, Mexico, the European Union, and Japan are called upon in economic and trade issues; Japan, the UK, France, and Australia have been mobilized on the South China Sea issue; and reliance is placed on India, Japan, and Australia to rein in the Belt and Road Initiative.

Impact on China-US Relations

Since the US adjusted its China policy, a series of important changes have taken place in China-US relations. Some of these may be short-term, but some will have long-term implications; some involve isolated problems, others are structural.

First, the atmosphere of China-US relations has deteriorated significantly. While the Trump administration has labeled China as a main strategic rival, some of Trump's people are also engaged in a massive smear campaign against Beijing. In particular, Vice President Mike Pence's speech in October 2018 seriously poisoned the public opinion in the US regarding China, creating an anti-China chorus in the country. The government and the Congress joined hands to attack China, Republicans and Democrats were united in getting tough with China, and the media and think tanks followed suit. For the first time in the post-Cold War era, the American political elites have shown an unprecedented degree of collective irrationality and hysteria over China.9Daniel W. Drezner, Professor at Tufts University, says that “There is one area of diplomacy that is rapidly reaching consensus that unites the Trump camp, Democrats, realists, liberals and virtually every foreign policy commentator: China.” See Daniel W. Drezner, “The China Gap,” The Washington Post, January 31, 2019, https://www.washingtonpost.com/outlook/2019/01/31/china-gap; Susan Shirk, an American expert on China, believes that Washington has unleashed a “political tsunami” against the “China threat.” Charissa Yong, “US Should Engage in Smart Competition with China,” The Straits Times, February 14, 2019, https://www.straitstimes.com/world/united-states/us-should-engage-in-smart-competition-with-china.

Second, the strategic mutual trust between China and the US has been severely damaged. From the National Security Strategy and the National Defense Strategy, which define China as a strategic rival of the US, to Pence's full-blown attack on China's domestic and foreign affairs; from the launch of unprecedented trade frictions, to imposing various restrictions and crackdowns on China, the US, in word and in deed, has raised serious suspicions in China that the Trump administration (or at least some of its hawks) intends to launch a “new Cold War” against Beijing in order to achieve its strategic intention of containing China's rise. In the process of trade negotiations, the US has damaged its credibility by breaking promises and contradicting itself. At the same time, the administration's random distortion and blackening of China's domestic and foreign affairs, to the point of resorting to conspiracy theories to explain China's strategic intentions, has also intensified the anxieties and fears about China among their political elites.

Third, structural problems become more serious between China and the US. The Trump administration views China as a strategic rival and plays up structural tensions between the two countries, including conflicts on their balance of power, namely the US seeks to maintain its hegemony and prevent being caught up and surpassed by China; conflicts on the distribution of interests, namely the US believes that China has gained huge benefits from the existing international economic system, and has unfairly taken advantage of the US; institutional conflicts, namely the two countries have very different political and economic systems; conflicts on ideology and values, namely the two countries have different ideologies and values, and the US realizes not only that it cannot change China in this respect, but also that China seems interested in promoting its own ideology and values abroad; and conflicts with regard to the shape of the international order, namely the US sees itself as the architect of the current international order, from which it is benefiting, while China is seen as intent on undermining and weakening the existing order in order to achieve one more beneficial to it. Although competition and differences long exist between China and the US, the intense negative and distorted propaganda against China under the Trump administration, out of its need to intensify competition with China, has served to aggravate the structural conflicts.

Fourth, the model of bilateral relations is transformed. In the post-Cold War era, coordination and cooperation have always coexisted together with frictions and competition in China-US relations. While the former promote the development of bilateral relations, the management of the latter has constantly tested the two countries' capacity. However, as the Trump administration's China policy turns into a predominately competitive one, the scope of cooperation is shrinking and the impetus for cooperation is declining, while the fields of competition are expanding and the intensity of competition is rising sharply. China-US relations have shifted from a model of coexistence of cooperation and competition to one characterized chiefly by competition. Competition is becoming the main theme of bilateral relations.

Fifth, China-US coordination mechanisms have been suspended. Among the four dialogue mechanisms agreed upon by the two sides after Trump took office, only the Diplomatic and Security Dialogue was held in 2018, while the Comprehensive Economic Dialogue, the Law Enforcement and Cybersecurity Dialogue, and the Social and People-to-People Dialogue have been suspended, and many other bilateral consultation mechanisms have failed to materialize. What needs to be emphasized is that the failure of dialogue mechanisms has a particularly profound negative impact on China-US relations. At the beginning of the 21st century, with the development of bilateral relations, more and more issues need to be dealt with between the two countries. The two sides have established numerous dialogue and consultation mechanisms, which “play an important role in communicating each other's concerns, promoting the settlement of differences, and expanding and deepening bilateral cooperation.”10Wu Xinbo, New Landscape in Sino-US Relations in the Early 21st Century, Fudan University Press, 2011, p.169.Given the importance and complexity of China-US relations, the institutionalization of bilateral ties and the effective operation of such dialogue mechanisms are an important means to support the development of bilateral relations. Some hawks within the Trump administration, however, want to reduce, rather than maintain, institutionalized, regular interactions between the two countries, touting confrontation and pressure as more effective than dialogue in dealing with China. This not only leads to the “de-institutionalization” of China-US interactions, but also replaces dialogue and consultation with frictions and confrontation as the dominant paradigm of the interactions.

Sixth, trade and people-to-people exchanges have dropped off significantly. Chinese investment in the US fell by 83% in 2018 to its lowest level since 2011 as the US toughened its policy restrictions.11China's direct investment in the United States peaked at US$45.63 billion in 2016, fell to $29 billion in 2017, and plunged to $4.8 billion in 2018, a drop of 83%, according to an analysis by Baker McKenzie. “Spanish Media: China's Investment Dropped Sharply in the US Last Year and Increased Sharply in Spain and Canada,” Cankao Xiaoxi, January 5, 2019, http://www.cankaoxiaoxi.com/finance/20190115/2368345.shtml.Bilateral trade in goods between the two countries increased by 8.5% in 2018. China's exports to the US increased by 11.3%, while imports rose 0.7%.12“Press Conference on China's Import and Export Situation in 2018,” Central People's Government of the People's Republic of China, January 14, 2019, http://www.gov.cn/xinwen/2019-01/14/content_5357666.htm.Although China's exports to the US increased significantly, this is mainly due to the advance covering measures taken by American importers in case of further escalation of China-US trade frictions in 2019, which means that if trade frictions do not end in 2019, the import volume of the US from China will decline significantly. When it comes to cultural and people-topeople exchanges, the US is putting on the brakes and even cutting back. Some cooperation programs with China have been terminated, and some American scholars, especially those of Chinese descent, have come under increasing pressure not to communicate with Chinese academics. Higher education and research institutions in the US are barring Chinese students and scholars on a selective basis. For a long time, economic and trade ties and people-to-people exchanges have been regarded as important foundations of China-US relations. The booming economic and trade ties have brought tangible benefits to the two countries despite their vastly different political systems and ideologies, serving the interest of both sides. People-to-people and cultural exchanges have strengthened communication and understanding between the two peoples, and provided a social foundation for the development of bilateral relations. Since the establishment of diplomatic ties and in spite of the ups and downs in bilateral political relations, both sides have been committed to encouraging and supporting the development of economic and cultural exchanges. That is why the economic ties and people-to-people bonds between China and the US have expanded to such a massive scale. Today, the Trump administration's policy of restricting China-US economic and trade relations and people-to-people exchanges is seriously weakening the important pillars of the bilateral relationship, which is tantamount to reversing the positive momentum of bilateral relations over the past four decades.

Seventh, differences and frictions between China and the US in multilateral institutions have intensified due to the spillover effect of US competitive strategy toward China. Representatives of the two sides faced off during the WTO's review of the two countries' respective trade policies. The US proposal to “re-examine China's WTO membership” was unanimously rejected by 70 members. With regard to WTO reform, the two countries are also wrestling with each other over its direction. At the 2018 APEC summit, China and the US argued fiercely about trade, investment and other issues. The US wanted to include its position on WTO reform in the Leaders' Declaration, while China strongly opposed it. As a result, for the first time in the APEC's history, the summit failed to issue a declaration because of the deep divisions. Besides, China and the US are competing in the G20 as well, with the US trying to draw in other members to put pressure on China, while China is steadfastly resisting and countering US trade protectionism and unilateralism.

Direction of China-US Relations

As a result of the turbulence taking place in China-US relations, the two major questions that the international community is concerned about are first, will China-US relations remain volatile or ease in the short term? And second, has the adjustment of US policy toward China and the changes in China-US relations set the tone for US strategy toward China and the direction of bilateral relations in the long term?

In the short term, the direction of China-US relations is mainly affected by three factors. First is the domestic political and economic situation in the US. Political pressure on President Trump has risen as the Democratic majority in the House of Representatives increases their stranglehold on him. On the economic front, the sharp fluctuations in the US stock market since October 2018 and the signs of slowing economic growth in 2019 mean that Trump's efforts to strengthen the economy will encounter greater challenges. Faced with an increasingly unfavorable domestic political and economic situation, Trump needs to strike a US-friendly trade deal with China in order to stabilize market confidence, and fend off Democratic pressure.

Second is the changes in the influence of various factions within the Trump administration on the China issue. The Trump administration is divided into four groups with varying views on China: the economic nationalists, represented by Trump himself, who are mainly concerned with the United States' economic interests and are particularly interested in solving the trade deficit with China; the economic realists, led by US Trade Representative Robert Lighthizer and Director of the White House National Trade Council Peter Navarro, who are mainly concerned about China overtaking the US in economic power, and are most eager to prevent China from gaining access to American high-tech; the economic liberals, led by Secretary of the Treasury Steven Mnuchin, who are eager to exploit the opening-up of China's market, especially its financial market; and there are national security hawks, led by Vice President Mike Pence and National Security Advisor John Bolton, who are trying to engage China in strategic competition and are intent on containing Beijing.13Ben Smith and Peter Harris, “Trump Needs to Make Up His Mind on China,” The National Interest, December 26, 2018, https://nationalinterest.org/feature/Trump-needs-make-his-mind-china-39842.These factions both compete and cooperate, and Trump, while lacking full control over policy making, wants to play them off against each other before making decisions based on his own political needs. For now, there is a growing consensus among the first three groups to negotiate in order to force China to address trade imbalance, protect intellectual property rights, stop forcing US companies to transfer technology, and open up the services market, so as to maximize US economic interests.

Third is the developments in China-US trade negotiations. America's “easy win” and “quick win” attitude has been disillusioned by China's resolute stance against the US in trade frictions. Following the leaders' meeting in Argentina on December 1, 2018, China and the US once resumed negotiations in a positive and pragmatic manner, before the US flip-flopped and increased tariffs on US$200 billion worth of Chinese goods from 10% to 25% in May 2019. In the leaders' meeting on the sidelines of the G20 Osaka summit in June, the two sides again agreed to restart economic and trade consultation on the basis of equality and mutual respect.14“Xi Jinping Meets with President Donald Trump of the United States,” Ministry of Foreign Affairs of China, June 29, 2019, https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1677632.shtml.Constructive trade talks were held in Shanghai in late July and the next round of bilateral negotiations is set to take place in the US in September.

Meanwhile, we should also be aware that even if a trade agreement is reached, China-US economic and trade frictions will still persist and be subject to occasional fluctuations. The US will not give up its restrictions and crackdown on China in the field of science and technology. It should be particularly noted that the security hawks in the Trump administration are likely to ratchet up pressure on China on diplomatic and security issues if trade frictions abate. For example, in order to keep the “Taiwan independence” forces in power, they may increase support for Taiwan. They may escalate provocations against China in order to “push back” its strategic deployment in the South China Sea. They may also continue to cause troubles for China on issues regarding Xinjiang, Tibet and Hong Kong. And the Trump administration's unpredictable and aggressive style adds to the risks. Therefore, in the important transition period of China-US relations, frictions, turbulence and conflicts are becoming more and more the new normal, and effective risk and crisis management has become an urgent need for both sides.

In the long run, the direction of US strategy toward China and China-US relations is still not clear. In terms of the US strategy toward China, there seems to be a general consensus to intensify competition with China and continue exerting pressure on it. However, the strong sentiment against China in the US government and Trump's ruling philosophy and style may not have a lasting policy impact. The design of a more effective strategy in the face of a more confident, powerful and proactive China is still being explored and debated in the US.15Orville Schell and Susan L. Shirk, Course Correction: Toward an Effective and Sustainable China Policy, Asia Society Task Force Report, February 2019, https://asiasociety.org/sites/default/files/inlinefiles/CourseCorrection_FINAL_2.7.19_0.pdf; Andrew S. Ericson, “Competitive Coexistence: An American Concept for Managing US-China Relations,” The National Interest, January 30, 2019, https://nationalinterest.org/feature/competitive-coexistence-american-concept-managing-us-china-relations-42852.No consensus has been reached on how the US should view China's development, what should be the ultimate goal and what measures the US should adopt in its relations with China, and what price the US is prepared to pay to reach that goal.16James Dobbins and Ali Wyne, “The US Can't ‘Out-China' China,” The Hill, December 30, 2018, https://thehill.com/opinion/international/423225-the-us-cant-out-china-china.The debate of the different parties on the China issue in the US is not only a matter of their understanding and preferences, but also a matter of satisfying distinct interests. Most importantly, the political and economic situation of the US will largely determine the direction of its foreign policy (including its China strategy), and how this will evolve in the future is still uncertain.17These uncertainties include: the medium- and long-term prospects of US economic growth, the trend of US political polarization and partisanship, and whether the inward-looking or outward-looking approach will prevail in US diplomacy.

In the post-Cold War era, economic and trade relations have always been an important basis for the development of China-US relations, and the pursuit of economic interests is the main driving force for the development of bilateral relations. Against the background of numerous political and security differences between China and the US, the direction of economic ties, as both a stabilizer and an adhesive, will to a large extent determine the future of bilateral relations. Based on the present economic thinking in America, there are at least three different economic policies that could be adopted toward Beijing, each having wholly different consequences for bilateral relations as a whole. The first option is adopting economic nationalism, which seeks to maximize economic interests and advocates unilateralism and protectionism. Under such circumstances, China-US economic and trade relations will experience ups and downs and constant frictions, which will make it difficult for the two countries to build mutual trust in political and security fields. The second option is to adopt a policy of economic realism, which would utilize economic and trade ties to ensure that economic exchanges will not enhance a rival's vital capabilities (especially their technological capabilities), and would be geared to prevent a rival from gaining enough strength to narrow the technological gap. In this scenario, the US would pursue relative rather than absolute gains in economic and trade relations. Such an economic and trade policy with China would shrink the sphere of bilateral economic ties, and its spillover effect would also generate frictions in the political and security arena, thereby increasing the risk of conflict. A third alternative would be to adopt a policy of economic liberalism, which views foreign economic exchanges from the perspective of globalization and advocates competition and cooperation in accordance with multilateral rules in order to achieve win-win results. Under such circumstances, China-US economic and trade relations will continue to develop in the midst of complementarity and competition, and their political and security relations would also be characterized by the intertwining of cooperation and competition.

In addition, China's influence is also crucial in the US strategy toward China and China-US relations, and is mainly situated in the three dimensions of power, interests and perception. First, China's economic development and the enhancement of its national strength are a basic reality that the US has to face in shaping its corresponding strategy, and represents an important element in the evolution of bilateral relations. In general, the shift in the balance of power between the two countries will continue in China's favor, and the US must adapt to this new reality. Second, with the development and growing strength of China, the realization of US national interests depends more and more on the state of its relationship with China. China and the US are bound to reconstruct the pattern of their relationship in terms of each country's interests. In a sense, such restructuring has already begun. In this process, competition of interests will intensify, but the coordination and exchange of interests will play a crucial role. Although the US is paying increasing attention to short-term and relative gains, which tends to increase the intensity and difficulty in the interplay of Chinese and American interests, China's way of thinking, which focuses more on the long-term and broader picture, can provide greater operational space for coordinating the two sides' interests. Third, the US is developing an increasingly negative understanding of China and the role of bilateral relations, but that understanding is not carved in stone. Through effective action and communication, China might persuade the US that there is a real need and a great potential for bilateral cooperation in economy and trade, as well as in regional and international affairs, and that China is not only a strategic rival but also an important partner of the US. Facing the trend where the two countries are drifting away from each other in terms of values, China should stress its determination to accelerate reform and open wider to the outside world, play down differences in values and political systems, and adroitly manage ideological differences.18Wang Jisi, “Consolidating Common Interests and Managing Differences in Values,” World Affairs, No.1, 2019, pp.13-14.As the US increasingly views bilateral relations in a zero-sum and competitive way, China should stress the importance of setting a tone of “stability, coordination and cooperation” in bilateral relations,19For example, when China's State Councilor and Foreign Minister Wang Yi said of China-US relations at a press conference on the sidelines of the second session of the 13th National People's Congress in 2019, he said, “We have a clear sense on our future path: the two countries will work together to build a relationship based on coordination, cooperation and stability. This is an important understanding reached by our presidents. It should be what unites both nations and what the two sides work together to accomplish.” See “State Councilor and Foreign Minister Wang Yi Meets the Press,” Ministry of Foreign Affairs of China, March 8, 2019, https://www.fmprc.gov.cn/web/zyxw/t1644074.shtml.and continue to advocate that the two countries seek to build a new type of major-country relationship in line with the trend of the 21st century.

Conclusion

In the context of shift in relative strength between China and the United States and the adjustment of the two countries' strategies and policies, the door to strategic competition between China and the US has opened. In the post-Cold War era, such intense and wide-ranging frictions have not been seen before. The adjustment of the Trump administration's strategy, policy and tactics toward China has created a rather grim picture for China-US relations in the short run. However, in the long run, we should not be too pessimistic about the bilateral relations. On the one hand, the relations depend on the state of interplay between the various parties in the US. On the other hand, and more importantly, they also depend on China's influence and response. To shape a bilateral relationship that promotes pragmatic cooperation and constructive competition, effectively manages risks and prevents major conflicts remains the basic direction of China's diplomatic approach toward the United States.