China and the US: competition or conflict?

This is an audio transcript of the Rachman Review podcast episode: China and the US: competition or conflict?

Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator of the Financial Times. This week, we’re looking at US-China relations after the first summit discussions between Joe Biden and Xi Jinping. President Biden has made China the main focus of US foreign policy. Since coming to office he signed a new security treaty with Australia and Britain called Aukus, which is widely seen as a move aimed at countering China. And Biden’s also held a summit of the leaders of the Quad: India, Australia, the US and Japan, all countries that have an interest in containing China’s power. And there is no doubt that Chinese military power is expanding. The Chinese navy is now bigger than the American navy, and it’s all concentrated in the Pacific. Beijing’s recently tested a hypersonic missile and it plans to quadruple its stockpile of nuclear weapons over the next decade. To analyse all this and more, I’m joined this week by Evan Medeiros, who worked as director of China Policy in the Obama White House, and he’s now professor of Asian studies at Georgetown University in Washington. So where is the confrontation between America and China heading? The Covid-19 pandemic ensured that when the presidents of China and the US finally spoke to each other, it was a virtual meeting, not face to face encounter. President Biden opened the summit by arguing that America and China need ways to manage their competition, guardrails as he called them.

Audio clip of Joe Biden
As I’ve said before, it seems to me our responsibility as leaders of China and the United States is to ensure that the competition between our countries does not “veer into conflict”, whether intended or unintended, just simple, straightforward competition. And it seems to me we need to establish some common sense “guardrails” to be clear and honest, where we disagree and work together where interests intersect, especially on vital global issues like climate change.

Gideon Rachman
For his part, President Xi also made conciliatory opening remarks. But other meetings between US and Chinese officials during the Biden administration have been openly confrontational. In Alaska, in March, the US secretary of state Antony Blinken took China to task.

Audio clip of Antony Blinken
Today, we’ll have an opportunity to discuss key priorities, both domestic and global. We’ll also discuss our deep concerns with actions by China, including in Xinjiang, Hong Kong, Taiwan, cyber attacks on the United States.

Gideon Rachman
And that prompted a very sharp response from Yang Jiechi, China’s senior diplomat.

Audio clip of Yang Jiechi, with English interpreter
On cyber attacks. Let me say that whether it’s the ability to launch cyber attacks or the technologies that could be deployed, the United States is the champion in this regard.

Gideon Rachman
So does the relatively civil tone of the more recent discussions between Biden and Xi, the two leaders, mean that relations between America and China are now improving? That was the question that I put to Evan Medeiros.

Evan Medeiros
I don’t think the meeting between Biden and Xi has really changed anything, I think at best you can say that it stopped the deterioration, so it sort of led to a plateau in what was a relationship otherwise characterised by rising tensions, diverging interests, you know, increasing military activities on both sides. The way I see it Gideon is, fundamentally the tension is between cyclical changes in the relationship and structural, and cyclically we’re entering into a period of warming, sort of you know detente to use the Cold War terminology. But I think that’s largely because the Chinese have a lot of domestic challenges that they have to deal with: the Olympics, of course, the coming party Congress in the fall. So it’s to Xi’s advantage to sort of eliminate volatility and problems in the US-China relationship that could be a distraction. It could be a political vulnerability for Xi. The question is is whether or not this cyclical warming will turn into something longer and more extended based on dialogues and agreements between both sides, or whether or not the very substantial structural pressures for greater competition will persist.

Gideon Rachman
And those structural pressures, if you have to describe them from both sides, what are they?

Evan Medeiros
Well, first and foremost, it’s the competition is expanding, intensifying, and it’s diversifying. Simply put, we’re now in a relationship characterised by divergence on issues of security, on economics, technology and increasingly even ideology. And unlike the Cold War, all four of those are blurring together. And that’s very problematic. Security issues of an economic dimension. Ideological issues have a technological dimension. So disaggregating them is gonna be hard. A second factor to keep in mind is that both sides have a far greater tolerance for risk and friction in the relationship. They’re adopting far more confrontational strategies, probing the other in a variety of ways. And then thirdly, many of the traditional stabilisers and buffers in the relationship are declining, and many of them are inoperative.

Gideon Rachman
Those being what, business ties or personal ties?

Evan Medeiros
That’s part of it. So economic ties and the role of the business communities in both sides, people to people ties. Because there are a whole variety of civil society groups, the media, even universities become increasingly concerned about their interactions with China. Frustrated by growing Chinese restrictions on US NGOs in China, the role of leaders at the top. Historically, the leaders at the very top of the relationship, whether it’s Deng Xiaoping and George Bush, Jiang Zemin and Bill Clinton, have stopped deterioration and put the relationship on a better track. You have things like extended dialogues and confidence-building measures that don’t really exist right now, and I think the Chinese have shown they’re not really that interested in those kinds of mechanisms. So many of the traditional forces and tools at the heart of the relationship, I think, are really declining in irrelevance. And then you have issues like nuclear weapons, which used to be in the background of the relationship, very rapidly coming to the foreground.

Gideon Rachman
Yeah. So let’s talk about those military issues because obviously an economic deterioration is one thing. But now people are talking about at least the risk of military conflict more seriously. Do you think that something has changed on the Chinese side? I mean, obviously when you were in the Obama administration, you have to contend with this building of military bases across the South China Sea in the last couple of years. The pressure seems to have increased over Taiwan now, as you say, that the nuclear programme is expanding. So how alarmed should we be by what’s happening on the Chinese side?

Evan Medeiros
I mean, we should be concerned. I mean, they are clearly making significant strides in their military modernisation. But let’s be clear, this is not a crash military modernisation programme. I mean, I can remember working at the Rand Corporation in the mid 2000s, and we saw very, very clearly that the Chinese understood that if they went to war over Taiwan, that they were going to have to deter US involvement. So this is a programme that’s been 20 years in the making. Now, I think a lot of American policymakers took their eye off the ball in large part because of Iraq and Afghanistan, the focus on counterinsurgency and Islamic extremism. But nonetheless, we are where we are, which is we face a very substantial military challenge in the western Pacific, in which the Chinese not only have a very sophisticated collection of conventional weapons, they can threaten the US Air Force, the US Navy. But now, according to the Pentagon, the Chinese plan is to quadruple the size of their nuclear arsenal by the end of the decade, which raises the question: are they seeking parity with the US on nuclear weapons? Now the US under Start has about fifteen hundred fifty weapons. That is the Start-mandated cap of deployed nuclear weapons. And so the question is how much bigger do the Chinese wanna go and what exactly are they seeking with that size of a nuclear arsenal.

Gideon Rachman
Now FT readers will have noticed that you know, the FT’s been running a lot on a story. We broke about this hypersonic test that the Chinese did, which I think Mark Milley, the head of the Joint Chiefs, said was a “Sputnik moment” for America. In other words, comparing it to the launch of Sputnik by the Soviet Union. Why is this significant? Do you think it is?

Evan Medeiros
I do think it’s significant and significant in a number of ways. Number one is the fact that the Chinese have such a diverse and sophisticated hypersonic programme, not just this hypersonic fractional orbital bombardment system. It’s sort of a mouthful, but there’s many other dimensions of hypersonics. Now, of course, the Soviets had a similar type of fractional orbital bombardment system, but it was intercontinental ballistic missile-based, and as a result, it posed less of a challenge to the United States, in particular because this system means that the Chinese could attack us with a nuclear-armed hypersonic with very, very little early warning and basically no protection from a missile defence system. So, in a crisis the principal issue is vulnerability and vulnerability to an attack without warning, and this hypersonic Fobs programme, is that in spades.

Gideon Rachman
And you said that way back when you were working there at Rand 20 years ago, the conclusion was that China wants to get to the point where it can deter the United States from intervening to defend Taiwan. So let’s just talk a little bit about that Taiwan issue. I remember a leading American military, managing Admiral Phil Davidson said that he was concerned that within a few years, China could prevail over Taiwan. Joe Biden said recently that America would defend Taiwan, although they sort of then rode that back a bit because it seemed to be a hardening of America’s commitment on Taiwan. But where do you think we are with that, both with our assessments of Chinese intentions on Taiwan and how America might respond?

Evan Medeiros
I mean, the Taiwan issue has always been the central political and security challenge at the heart of the US-China relationship. And that challenge has intensified in recent years as the Chinese military has modernised. But it’s important to keep in mind the Taiwan issue is fundamentally a political issue for China, not a military one in the sense that it’s a political issue that has a military expression, and the PLA has been very focused on giving the leadership capabilities so they have options if they want to solve the Taiwan issue militarily. In terms of timeframe, it’s very difficult to specify timeframe because the Taiwan issue is more of a political issue than a military one for the Chinese leadership. And I think that the factor that we have to keep an eye on is, does the Chinese leadership see the window of opportunity to influence Taiwan closing? In other words, is a window closing where Taiwan becomes independent in perpetuity? And I think if they believe that a window is closing either because of shifts on the mainland and or shifts in the US involvement and connection with Taiwan, then I think they’re gonna begin to contemplate military options. I would note in the Chinese official public readout of the call between Biden and Xi Jinping, there was obviously a lot said about Taiwan, but there was one sentence in particular that may be an unprecedented formulation. Xi Jinping said specifically, we have patience and we’ll strive for the prospect of peaceful reunification with utmost sincerity and efforts. And so that’s interesting. And of course, he’s reaffirming the prospect of peaceful reunification, and there’s been some debate whether or not Xi Jinping is moving away from that. But nonetheless, a statement like that by Xi Jinping shouldn’t be ignored. And I think that what that tells you is the Chinese are anxious and the Chinese are concerned about trends in Taiwan, trends in US-Taiwan relations. But I also think it means that we’re not on the brink of war, but nonetheless we have to pay very careful attention to the accumulating military capabilities and advantages on the part of the PLA. And I hope the Biden Pentagon is doing that.

Gideon Rachman
You hope it is. But as you said, the Chinese do seem concerned or to seem to believe, at least according to their rhetoric, that America is quietly, inch by inch, changing the status quo on Taiwan. Do you think America is in fact doing that?

Evan Medeiros
No, I don’t think the United States is changing the status quo on Taiwan. I think what the administration is doing is responding to the fact that there is a growing Chinese coercion of Taiwan. Of course, military coercion. With all these Air Force flights in the Taiwan Air Defence Identification Zone, the growing use of disinformation operations. And so from the US perspective, the US approach to Taiwan, as captured in the Taiwan Relations Act, is about ensuring that Taiwan is free from coercion and the mainland is deterred from using aggression to bring about some kind of change in the future. And to do that, you need a Taiwan that feels secure, a Taiwan that is more diverse in terms of its economic partners, a Taiwan that is more resilient, so it’s less vulnerable to coercion and predation from the mainland. And I think that’s what US strategy is all about is making sure Taiwan feels sufficiently secure in itself, that it’s making the necessary investments, and there’s a lot more that the Taiwan military needs to do. They’ve been slow to sort of implement this new defence concept that the current president of Taiwan, President Tsai and some of her military leaders, have articulated. So I think that’s what the US is doing, is responding to changes in PRC behaviour. A final point on this, Gideon, is that President Tsai Ing-wen is not like her predecessor, Chen Shui-bian. Predecessor, in terms of the last DPP president, right? She’s not a bomb thrower. She’s not sort of looking to push the envelope on cross-Strait issues. I think she’s really focused on consolidating Taiwan as a democracy. I think she’s very focused on laying the foundations for enduring economic prosperity, which she believes are critical to a strong democracy. And I think she just sort of wants to park the cross-Strait issue, put it to the side, and the mainland just simply doesn’t trust her. And that’s what’s been driving their multi-dimensional coercion effort.

Gideon Rachman
Let’s take a step back and look at the sort of overall way that both the US and China are framing the relationship now. There’s long been talk in Washington that Biden himself, or maybe one of the national security adviser, Jake Sullivan or Blinken, will give a big speech setting out America’s approach to China. Do you think that they’ve yet decided what that strategy is?

Evan Medeiros
I think the strategy has been evolving. I mean, clearly in the first, let’s call it, 10 months, the strategy was based on the principle of sequencing. In other words, before we engage in sort of an extended dialogue and interaction with the mainland, America first needs to sort of rebuild itself at home and rebuild itself abroad. And I think that makes sense because, you know, people forget how much the US was in disarray after Donald Trump, you know. So it was about getting a handle on Covid, re-energising the US economy, rebuilding the US internationally. I mean, remember, we had left the WHO. We were sort of trying to strangle the WTO. So I think the Biden team felt like, look, we’re really not in a position to start engaging in this comprehensive strategic competition with China until we fix many of the problems the previous administration has created. So it was about sequencing. It was sort of doing things methodically. And I think one of the most important dimensions of the Biden call with Xi was sort of signalling, OK, we feel that we’ve stabilised at home and rebuilt abroad, including generating some consensus among Asian allies, like with the Quad, European allies, about the fact that collectively we need to work together to address the myriad challenges posed by a rising China. And I think that’s where we are today.

Gideon Rachman
And China? I mean, it’s harder and harder it seems to me to get a read on what they’re doing, partly because they’re so cut off from the outside world because of the pandemic. Xi I think hasn’t left China for getting on for two years now, but how do you think they are seeing this? I mean, you said earlier that China wants a year of quiet ahead of the party Congress, but more broadly, as Xi looks forward 10 years, what do you think their view of their relationship with the United States is?

Evan Medeiros
Well, when I think about Chinese foreign policy, it’s always been a dynamic mix of both insecurity and confidence slash ambition. And I think that the tension between those two has become even more acute in recent years. And I think in particular, the sense of sort of confidence and ambition, even evolving to the point of indignation, is what we hear a lot from the Chinese today. This sense that their political and economic governance choices at home are just as legitimate. And then, in their view, more effective than Western democracy and capitalism. And that’s a very common narrative, not just among hard core Communist Party members in China, but also among, you know, Chinese middle class friends of mine that I’ve known for a long time. People not involved in politics. And so I think that at some level, Chinese leaders believe that sort of now is their time, and the Chinese leadership now talks much more about, you know, the China option. This idea that Xi Jinping originally articulated in 2017 and has sort of grown and evolved, and they now talk about a Chinese version of democracy sort of adopting, you know, Western terms and talking about how their form of democracy may in fact be a much more effective and efficient one. So I think that’s part of where they are, is this sense of Western capitalism led to populism led to dysfunction and perhaps their choices, while not directly applicable to any country in particular, is certainly just as legitimate. The thing that surprises me about China’s external behaviour is the inability to recognise the antibodies that they’re generating, right? The fact that their sanctions on EU parliamentarians and European scholars, their use of “wolf warrior” diplomacy against Sweden, right? I mean, of all European countries, really, you’re going to pick a fight and bully the Swedes? And a lack of appreciation, how that has generated support for things like the Quad, things like greater US-EU co-ordination on China. And you know, one wonders if, as Xi Jinping has consolidated power, centralised decision making, whether he is not really isolated himself in a way that has made it difficult for the top Chinese leadership to appreciate how much they’re alienating key regions of the world, key economies with this more coercive, predatory behaviour.

Gideon Rachman
So let’s finish by looking at the economics and the business ties, which obviously of interest to many FT readers and to the world. I mean, this is now the first and second largest economies in the world, the crucial trading relationship. A lot of people are talking about a new Cold War, but a difference with the Cold War is that these economies are so deeply entangled. Do you think that we are going to see, to use the fashionable phrase, more of a decoupling of the US and Chinese economies? And how practical is that?

Evan Medeiros
So I think that is probably one of the most difficult issues at the heart of this evolving strategic competition between the United States and China. And make no mistake, the interdependence between the US and China, it’s not just economic, it’s ecological. As Professor Jon Ive of Harvard has written, it’s technological. So in some sense, pulling apart these deeply intermingled countries would be incredibly difficult and costly. And I don’t think most Americans have really thought about the risks and costs associated with doing that. That said, as the security competition and the economic competition between the United States and China intensifies, and it will intensify, I think it’s going to force American policymakers and business leaders to have this very uncomfortable conversation. Look no further than Wall Street, right? When you look at Wall Street’s approach to China, people like Ray Dalio see China and managing the assets of Chinese citizens as this great wall of money and this incredible opportunity. But at the same time, you have concerns that American investment in China might directly or indirectly facilitate the rise of a company that would be a major technological competitor, a company, by the way, that probably benefits from lots of Chinese government subsidies or could end up worse finding a company that actually helps the PLA develop hypersonic weapons or some AI-enabled military tool. And as the national security competition intensifies, especially as weapons like hypersonic and nuclear weapons become more important to the military competition, I think it’s gonna force the US to have some very difficult conversations about the risks and cost. So I do think there will be some selective decoupling. I think the other part of it is you’re gonna see the rise in the technology sector. You’re already really seeing it in parallel supply chains developing. It’s already happening in semiconductors as a variety of ancient semiconductor companies start to look at building chip fabrication facilities in the United States because they know that if they wanna sell to the US government and to the US consumer, they’re probably gonna have to build those chips in the United States, not in factories that also supply chips to China. We’re in the very, very early stages of this whole decoupling debate, and I think it will be targeted. It will be selective, but I also think it’s gonna be when it comes to questions of investment, especially portfolio investment, I think it’s gonna be a very difficult, complicated conversation because it’s gonna force the national security specialists to deal with the investment community. And I think that that’s gonna be a very challenging conversation for the country.

[MUSIC PLAYING]

Gideon Rachman
That was Professor Evan Medeiros of Georgetown University ending this edition of the Rachman Review. Thanks for joining me, and I hope you’ll be able to join me again next week.

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