U.S. Treasury Secretary Janet Yellen arrived in China last week for a four-day tour during which she met with Premier Li Qiang. Following Secretary of State Antony Blinken, she was the latest high-ranking Biden administration official to visit China in recent weeks. There are expectations that the U.S. and China will seize the opportunity presented by the recent high-level meeting to take a more pragmatic view of their competitive yet collaborative relationship. It is crucial for the two countries to clearly mark the boundaries of where both competition and collaboration begin and end, to prevent further “decoupling” and “supply chain disruptions.” The ultimate aim should be to arrest the deterioration of Sino-U.S. relations.
In recent years, competition and cooperation have become buzzwords in U.S.-China relations. The U.S. side refers to competition more frequently than the Chinese side. Last April, Yellen delivered a policy speech on U.S.-China relations in which she stated: “We do not seek to ‘decouple’ the American economy from China.”
At the same time, she noted: “When a sports team consistently faces top competitors, they perform at a higher level.” Interestingly, Foreign Minister Qin Gang had also, at a press conference during the Two Sessions, likened the situation to a track and field race, noting, “One party is not looking to perform their best, but is always trying to trip up the other.” He referred to the situation not as a fair competition but as a malicious confrontation, a foul. From this, it’s clear that China does not shy away from competition, but opposes confrontation under the pretext of competition.
Indeed, both U.S. and Chinese officials are using terms such as competition, rules, and fairness, but their understanding of these terms is not the same. Take competition. Influenced by the traditional cultural value of harmony, as well as some of the U.S.’ foul actions in the past, many Chinese people feel uneasy about mentioning U.S.-China competition, even avoiding the term altogether. U.S. Former Assistant Secretary of State Daniel Russel did not reciprocate the sentiment when he recently asserted that competition is not a dirty word. “Competition can bring out the best in both parties, which is where the difference lies between ‘competition’ and ‘rivalry,’” he said.
If each side ignores how the other understand certain words differently, they will have a hard time avoiding misunderstandings and misjudgments. While the U.S. advocates competing in competitive domains and cooperating in collaborative ones, China tends to view U.S.-China relations more holistically. The U.S. hopes that climate change cooperation can be an “oasis” in U.S.-China relations. However, China believes that if the oasis is surrounded by a desert, it will eventually dry up and disappear. This highlights the differences between how each side thinks and how each side behaves. Under these circumstances, it is clear that one feasible approach would be to protect the oasis and manage the desert.
International competition is inevitable. The key is whether the competition is fair. As the world’s two largest economies, the U.S. and China need to compete fairly and manage differences on the basis of universally accepted international rules, and they need to strive even harder to promote cooperation.
Premier Li Qiang stated last month at the World Economic Forum’s Annual Meeting of the New Champions in Tianjin that no country can remain unscathed in the face of major crises. A series of global challenges lie ahead, including slowing growth, debt risks, climate change and wealth disparity.
Earlier, Yellen suggested that potential areas of cooperation between the U.S. and China include global issues such as climate change, debt relief, and macroeconomic stability. From this, it is clear that there is plenty of overlap between what both sides see as major challenges. There has been progress in some areas. At the end of last month, official creditors, including China and France, reached an agreement with the Zambian government on the restructuring of its $6.3 billion debt. Debt relief for developing countries has been the most closely watched issue in trade discussions between China, the U.S., and other Paris Club members over the past six months.
Furthermore, China and the U.S. have in the past cooperated effectively on addressing global climate change. Reports suggest that U.S. Special Presidential Envoy for Climate John Kerry will soon visit China, which is another encouraging sign.
As the global economy struggles to recover from the pandemic, it is more urgent than ever for countries to strengthen macroeconomic policy coordination. Looking back at 2008, following the outbreak of the global financial crisis, major central banks coordinated closely to effectively respond to the crisis. The response remains vivid to this day. However, in recent years, China-U.S. coordination on macroeconomic policy has markedly diminished due to their strained relations.
At present, with the U.S. dealing with inflation and China needing to bolster economic vitality, there is a pressing need for enhanced macroeconomic policy coordination. Both China and the U.S. should play leadership roles in global macroeconomic policy coordination, as it benefits not just the two nations, but the world at large.
In U.S.-China dealings, it’s especially important to avoid the indiscriminate broadening of the concept of national security. Doing so makes the concept “healthy competition” impossible and endangers all areas of cooperation. In recent years, the U.S. has frequently imposed restrictions on materials exported to China, most notably in the field of chip technology, where it has unabashedly sought to “choke off” China’s access, often under the pretext that China could use these technologies and materials for military purposes.
No country can disregard its own security. However, overextending the concept of national security to the point of seeing threats in every shadow will ultimately only damage that nation’s security.
There are now numerous visible and invisible barriers between the two nations. Both sides can start to remove obstacles and pave the way for better relations by focusing on areas where there is less controversy. This may involve increasing the number of flights between China and the U.S., further easing visa restrictions for students, and restoring cultural exchanges and academic discussions. These measures would significantly improve the perception of each country among their citizens, thus fostering a more constructive environment for future competition and cooperation.
The differences between China and the U.S. are multidimensional and deeply ingrained. No one expects a few high-level official visits to put the relationship back on track immediately, but maintaining contact and enhancing communication can at least prevent the situation from spiraling out of control. U.S.-China relations constitute the most significant relationship between two countries in the world. If that relationship breaks down, there can be potent spillover effects. Whether the two countries can compete fairly and foster cooperation has implications for the fate of humanity. In fact, which side can cooperate more actively and proactively is in itself part of the competition, as other countries will use it to judge which is the more responsible power.
Contact editor Michael Bellart (michaelbellart@caixin.com)
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