China and the US struggle to bridge ‘great power’ gap

‘Healthy competition’ turns into the complete opposite in the diplomatic game between Beijing and Washington

US Treasury Secretary Janet Yellen wrapped up a trip to China last month. In Beijing, she discussed trade tensions between the two countries with senior Chinese officials and expressed hope for finding common ground to enhance bilateral cooperation.

She also stressed that the United States does not perceive China through the lens of a great power struggle and emphasized that Washington wants to engage in “healthy competition” with Beijing.

Yellen is not the first government official to call for such a move.

In 2021, Chinese policymakers and scholars seized the opportunity of former president Donald Trump’s departure from the White House to advocate for healthy competition. It was made in the hope of easing China’s strained relations with the US.

There will be difficulties in doing this. Washington demands Beijing address the lopsided bilateral trade volume by purchasing more US imports and adopting market reforms. Still, the majority of US companies no longer perceive China as an attractive investment destination. 

One factor accounting for this trend is the increasingly unfair playing field for American firms in the world’s second-largest economy.

China has reacted lethargically to these terms. Beijing has yet to establish credible commitments toward increasing the purchase of American imports after failing to honor the Phrase One Trade Deal. 

State intervention

This is unsurprising given domestic demand for American goods has declined, partly due to the Chinese government’s patriotic education that fuels economic nationalism and anti-US sentiment.

It remains uncertain whether China can adequately address perceived unfair business practices, especially preferential treatment for state-owned enterprises or SOEs.

These are linked to the legitimacy of the government, and Beijing relies on state intervention to ensure foreign competition does not erode its competitiveness. 

Considering China’s tied hands in fulfilling these demands, the odds for healthy competition are slim.

Gridlock arising from tit-for-tat accusations of “unhealthy competition” is another limiting factor. China associates this with strategic containment aimed at suppressing its development. 

China is locked in a chip stand-off with the US. Photo: Courtesy China Daily

Beijing regards Washington’s high-tech sanctions, such as the microchips ban and export limits that deliberately restrict China’s modernization, as the hallmark of unhealthy competition.

But the US views this through the framework of free market principles. State intervention in the economy is permitted only in dire situations. 

The US perceives China’s state interventions as a move to obtain advantages over American companies. It believes technological sanctions are purely defensive countermeasures to safeguard Washington’s interests abroad.

With both countries accusing the other of unhealthy competition, there are bound to be increasing suspicions. 

Each side is jostling to portray the other as the instigator of regional tensions. 

Given the unwillingness of the US and China to take a step back and the strong insistence that the other side must first remedy its “misguided policies”, it will be difficult to engage in healthy competition.

Formal ties

Obstacles transcend the economic sphere. It is essential to recall the events leading up to the United States’ rapprochement with China in 1972

Initially, it fostered goodwill and brought about the establishment of formal ties between Washington and Beijing. Yet success did not materialize from the mere exchanges of diplomatic pleasantries. 

US-China rapprochement showed that both countries must build confidence gradually and move towards a shared goal.

There is a current shared vision to engage in healthy competition. But neither Washington nor Beijing has robustly engaged in confidence-building measures. 

The deteriorating relationship continues to be contaminated by deep political and ideological divides such as China’s human rights issues and the United States’ indifference to Beijing’s “red lines” in Taiwan, Hong Kong, Xinjiang and Tibet. 

Relations between Joe Biden and Xi Jinping have soured. Image: Social media

Those problems render the hope of confidence-building untenable.

Healthy competition is commonly understood as the responsibility of both countries to ensure they will not compromise their cooperation on global issues, such as climate change. 

The Biden administration has made clear that it will simultaneously confront and compete with China while seeking cooperation in areas of common interest.

China rejects this dual-track framework

Beijing makes the case that Washington can not expect its cooperation on issues like climate change while being challenged elsewhere.

China halted climate change negotiations with the US when House Speaker Nancy Pelosi visited Taiwan last year. 

International community

Despite resuming discussions after a meeting between US President Joe Biden and Chinese Leader Xi Jinping at the G20 in 2022, this shows Beijing’s tendency to weaponize cooperation for national security purposes, rendering healthy competition invalid.

Since then, relations between the United States and China remain murky.

The absence of healthy competition is extremely worrying for the international community, as both Washington and Beijing may sleepwalk into direct confrontation. The consequences of that would be too drastic for the international community to bear.

Anthony Toh Han Yang is a Ph.D. student at the College of Humanities, Arts, and Social Sciences at the Nanyang Technological University in Singapore.

This article is republished from East Asia Forum under a Creative Commons license. Read the original article here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.