By Peter Bergman (MoneyAmped.com)
The United States and China are currently on a path to a potential collision. The possible escalation of tensions between the involved parties in the ongoing geopolitical landscape may lead to a heightened risk of armed conflict, particularly concerning the matter of Taiwan.
The phenomenon commonly referred to as the “Thucydides trap” entails a scenario wherein a burgeoning power appears inevitably headed towards a collision with an established hegemonic force, presenting a foreboding specter. However, it is possible to prevent a significant intensification of Sino-American tensions and even a war, thereby mitigating the catastrophic ramifications that would inevitably ensue.
This Collision Was Hard to Avoid
Invariably, the emergence of a rising power contesting the existing global power structure engenders inherent tensions. China and the United States find themselves in a situation where America’s relative strength may be experiencing a decline, coinciding with its determination to avert strategic deterioration.
Both parties are experiencing a growing sense of apprehension regarding the motives of the opposing side, leading to a predominance of confrontational dynamics that have overshadowed the once-prominent principles of constructive competition and collaboration. Both parties involved share a certain degree of responsibility.
Under the leadership of Xi Jinping, China has witnessed a discernible shift towards a more authoritarian governance structure, accompanied by a notable departure from Deng Xiaoping’s ideology of “reform and opening up.”
A growing emphasis on state capitalism within the country has characterized this transition. Furthermore, the previously upheld principle coined by Deng, which advocates for the concealment of one’s capabilities and the patient waiting for opportune moments, has gradually been supplanted by a more assertive approach in military affairs.
The escalation of China’s foreign policy has deteriorated territorial disputes with multiple Asian neighbors. China has demonstrated a persistent desire to dominate the East and South China Seas while displaying a growing sense of urgency in its pursuit of “reunification” with Taiwan, employing any necessary means.
Will China Challenge U.S. Dominance?
Xi has made allegations against the United States, asserting that it is actively pursuing an assertive approach characterized by comprehensive containment, encirclement, and suppression. However, concerns have been raised within the United States regarding the potential for China to challenge the established strategic dominance of the U.S. in the Asian region. This dominance has played a crucial role in maintaining relative peace, prosperity, and advancement since the conclusion of the Second World War.
Chinese leaders have expressed concerns regarding the perceived lack of commitment from the United States towards the longstanding “One China” principle, which has served as a foundational element in Sino-American relations over the past fifty years. The United States has undergone a notable shift in its approach toward defending Taiwan, moving away from a stance of strategic ambiguity.
This shift, coupled with the establishment of the Aukus pact (comprising Australia, the United Kingdom, and the United States), the Quad alliance (including Australia, India, Japan, and the United States), and NATO’s increased focus on the Asian region, has inadvertently heightened Chinese concerns regarding containment.
The initial measure in mitigating the risk of a collision entails acknowledging that specific prevailing concerns may be unduly exaggerated. The situation within the United States regarding China’s economic ascendance resembles the historical approach adopted towards the emergence of Germany and Japan in previous decades.
China’s current economic landscape presents notable challenges that may result in a 3% -4 % growth rate per annum. This projection must catch up to the remarkable 10% annual growth rate that China has consistently attained in recent decades. China faces challenges related to an aging population and significant youth unemployment.
Additionally, there are concerns regarding high debt levels in both the private and public sectors. The country is also experiencing a decline in private investment, which can be attributed to factors such as intimidation by the ruling party. Furthermore, China’s commitment to state capitalism has been identified as a hindrance to total factor productivity growth.
Additionally, it is worth noting that Chinese domestic consumption has experienced a decline, primarily attributed to the ongoing economic uncertainty and the absence of a comprehensive social safety net. The current financial condition of deflation in China has raised concerns regarding the potential occurrence of Japanification, which refers to an extended period characterized by stagnant growth.
Similar to numerous developing economies, there exists the potential for this particular market to succumb to the “middle-income trap,” wherein it fails to ascend to a high-income level and secure its position as the global leader in terms of economic magnitude.
The United States, in its assessment of China’s potential ascent, may have erred by overestimating it. Conversely, it may have failed to fully recognize its advantageous position in numerous sectors and cutting-edge technologies that hold promise for the future.
These include artificial intelligence, machine learning, semiconductors, quantum computing, robotics, automation, and novel energy sources like nuclear fusion. China has substantially invested in various sectors in its “Made in China 2025” initiative. However, attaining imminent supremacy in ten prospective industries appears increasingly implausible.
Concerns regarding China’s potential dominance in the Asian region are often deemed to be disproportionately exaggerated by specific segments of the American populace. China is geographically encompassed by nearly 20 nations, many of which possess strategic rivalries or complex relationships characterized by ambivalence.
The limited number of allies China maintains, such as North Korea, tends to impose a burden on its resources. Despite its initial objective of fostering new alliances and interdependencies, the Belt and Road Initiative currently needs to overcome many obstacles.
These challenges notably encompass substantial project failures, commonly called “white elephants,” which have consequently precipitated instances of debt defaults. China’s aspiration to establish dominance over the global south and its international “swing states” is met with resistance and countermeasures from various middle powers.
The United States has appropriately implemented certain sanctions to prevent the acquisition of crucial technologies by the Chinese military and impede China’s pursuit of A.I. supremacy. It is imperative to exercise caution and ensure that the chosen approach primarily focuses on derisking rather than decoupling. This entails implementing necessary measures such as technological decoupling and imposing restrictions on direct investments in China and the U.S.
In determining the sectors to be encompassed within its “small yard and high fence” strategy, it is imperative to exercise caution and refrain from venturing excessively beyond reasonable boundaries. The trade sanctions former President Donald Trump implemented against China encompassed a wide array of consumer goods and are anticipated to undergo a gradual phase-out process.
It Is Not Too Late to Contain This Conflict
In light of the current escalation, the United States and China must engage in constructive dialogue to establish a new understanding of Taiwan. This approach is crucial to mitigate the potential risks of prevailing circumstances. It is recommended that Joe Biden undertake a comprehensive reaffirmation of the One China principle, ensuring that his public commitments and statements align with the direction of “strategic ambiguity.”
It is recommended that the United States consider providing Taiwan with the necessary weaponry to enhance its self-defense capabilities. However, caution must be exercised to ensure that the pace and scale of such provisions do not inadvertently incite China to undertake a military intervention on the island, particularly before Taiwan’s “porcupine” defense strategy has sufficiently matured.
It is recommended that the United States explicitly articulate its opposition to any potential endeavors by Taiwan toward achieving formal independence while concurrently refraining from engaging in high-level diplomatic exchanges with the leadership of the nation above.
On the other hand, China ought to cease its air and naval incursions close to Taiwan. The statement should unequivocally articulate the commitment to a peaceful and consensual reunification process while implementing novel measures to enhance cross-strait relations. It is also imperative to proactively mitigate tensions surrounding territorial disputes with neighboring entities.
Both China and the United States must adopt strategic measures to mitigate economic and geopolitical tensions while concurrently cultivating a conducive environment for robust collaboration on pressing global matters, including climate change and the regulation of artificial intelligence. If the parties involved cannot attain a fresh perspective regarding the underlying factors fueling their ongoing conflict, a collision between them will inevitably ensue.
The potential outcome of such a course of action would inevitably result in a military confrontation that can inflict severe damage upon the global economy, potentially escalating into an unconventional conflict involving nuclear capabilities. The current circumstances necessitate a level of strategic restraint from all parties involved.
