Rhetoric around U.S.-China relations in the past few years has frequently been framed as an unavoidable “New Cold War,” pitting the U.S. and its allies as the “democratic bloc” vs a China-led “autocratic bloc,” with Russia playing a supporting role for the latter.
However, it’s a term and a framework that both U.S. rhetoric and policy need to turn away from, as the Cold War is a poor point of comparison for today’s great power competition between the U.S. and China. Even the lowercase “cold war” understanding of bilateral competition will continue to be overshadowed by capitalized Cold War ghosts, especially considering that the term was coined to describe U.S.-Soviet relations specifically. If U.S. policymakers are trapped in an ill-fitting framework of historical memory, they will be more likely to recycle Cold War strategies, regardless of whether those strategies are the most effective means of promoting U.S. interests in the face of a rising China.
In the Cold War, the U.S. and the Soviet Union existed in almost entirely separate economic blocs, with little trade between them and certainly no economic interdependence. This left the two superpowers to focus their competition on military power and global spheres of influence. The U.S.-China situation looks very different, with a massive amount of economic interdependence between the two, despite efforts toward "decoupling." Aggressive military posturing will therefore have very different consequences in this new era of competition. In attempting to hurt one another economically, the U.S. and China ultimately face mutually assured economic destruction and both regimes should be proceeding with more caution.
China's President Xi Jinping seems to be cognizant of this reality. Despite ongoing tensions between the two countries, Xi met with U.S. business leaders on March 27th in Beijing to call for closer trade ties and emphasize the mutually beneficial economic relationship between the world’s two largest economies. Xi sought specifically to encourage American foreign investment, assuring reforms and encouraging confidence in the Chinese economy. Despite ongoing challenges to mutually beneficial economic cooperation, it seems that Xi recognizes that the interdependence of the world’s two largest economies binds the economic wellbeing of each to the other, for better or for worse.
In 2022, over 20% of Chinese GDP came from the export of goods and services, with about 16% of all Chinese exports going to the United States. Because the United States and Soviet Union were not economically interdependent, competition could more easily fit into a zero-sum game of wins and losses. With China, a policy pursuing a net Chinese loss is likely to have unforeseen economic consequences for the United States. The unintended costs could be higher than the U.S. was willing to pay. China finds itself in the same position. If the Chinese government is making an effort with American businessmen, then that is a positive sign that Beijing would be willing to work on issues directly with the U.S. government, to ease tensions and step back from “cold war” inevitability.
Such an economic dynamic was not at all present in the Soviet-US relationship. During much of the Cold War, only about 3% of Soviet GDP came from exports, with over half of that going to other Warsaw pact countries. U.S.-Soviet trade peaked in 1979, and even at that high point, it came to just one percent of all US trade. The U.S. certainly didn’t consume a substantial amount of Soviet exports, and the Soviets were never reliant on U.S. consumption the way that China is.
Furthermore, the entire global economy is more integrated today than it was during the Cold War, with the sum of exports and imports across all nations amounting to more than 50% of the value of total global output, as compared to about 30% in 1979. The overall increased level of integration of the global economy make for a situation where third party countries do not want to be forced to choose sides in a U.S.-China “Cold War” scenario.
In 2020, 15 countries in the region, including U.S. allies, signed the Regional Comprehensive Economic Partnership (RCEP), a trade agreement for the Asia Pacific that includes China, but was brokered by ASEAN. By pulling out of negotiations for the overlapping trade agreement, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was signed in 2018, the United States is entirely isolated from the economic benefits of RCEP. U.S. policy at the time focused more on isolating China rather than fully engaging the realities of the economic networks in Asia.
If the U.S. were to commit to the old Cold War play book of spheres of influence, it would be attempting to force Asia-Pacific countries into a global framework that contradicted their own security and economic interests. As a result, the U.S. would end up alienating itself in the region, an outcome that is against its own security and economic interests. Instead of trying to recycle a Chinese containment policy in Southeast Asia that was not even originally successful during the Cold War, U.S. policymakers should be attempting to learn from those mistakes and use that understanding to build better relationships in the Pacific.
Sabreena Croteau is a Research Associate at Defense Priorities.
