US-China rivalry: geopolitics is ruining the chance to shape a better globalisation
- While
great powers will protect their national interests, it should not be
for the express purpose of punishing the other side or weakening it in
the long run
- By
choosing confrontation, they have handed the keys to the global economy
to their national security establishments, jeopardising peace and
prosperity
11 Nov, 2022
At the Communist Party’s 20th National Congress last month, the country’s one-man rule under President Xi Jinping became fully entrenched. Xi’s centralisation of power does not bode well for how the country will deal with its mounting problems.
US President Joe Biden has added to these challenges by launching what Edward Luce of the Financial Times has called “a full-blown economic war on China”. Just before the party congress, the United States announced a vast array of new restrictions on the sale of advanced technologies to Chinese firms.
As Luce notes, Biden has gone much further than his predecessor Donald Trump, who targeted individual companies such as Huawei. The new measures are astounding in their ambition, aiming at nothing less than preventing China’s rise as a hi-tech power.
The US already controls some of the most critical nodes of the global semiconductor supply chain, including “chokepoints” such as advanced chip research and design. As Gregory C. Allen of the Centre for Strategic and International Studies puts it, the new measures entail “an unprecedented degree of US government intervention to not only preserve chokepoint control but also begin a new US policy of actively strangling large segments of the Chinese technology industry – strangling with an intent to kill.”
As Allen explains, the Biden strategy has four interrelated parts, targeting all levels of the supply chain. The goals are to deny the Chinese artificial intelligence industry’s access to high-end chips; prevent China from designing – and producing – AI chips at home by restricting access to US chip design software and US-built semiconductor manufacturing equipment; and block Chinese production of its own semiconductor manufacturing equipment by barring supplies of US components.
The approach is motivated by the Biden administration’s view, on which there is broad bipartisan agreement, that China poses a threat to the US. But a threat to what? Here is how Biden expresses it in the preface to his recently released national security strategy: “The People’s Republic of China harbours the intention and, increasingly, the capacity to reshape the international order in favour of one that tilts the global playing field to its benefit.”
To be clear, China is a threat not because it undermines fundamental US security interests but because it wants to exercise influence over the rules of the global political and economic order as it gets richer and more powerful. Meanwhile, “the United States remains committed to managing the competition between our countries responsibly”, which means the US wants to remain in control of shaping global rules in technology, cybersecurity, trade and economics.
By responding this way, the Biden administration is doubling down on US primacy instead of accommodating a post-unipolar world. As the new export controls make clear, the US no longer distinguishes between technologies that directly help the Chinese military – ones which could pose a threat to US allies – and commercial technologies which could produce economic benefits for China and others as well. Those arguing it is impossible to separate military from commercial applications have won.
Such a broad-brush approach raises significant dangers of its own, even if it can be justified by the intertwined nature of China’s commercial and military sectors. Viewing the new US restrictions as an escalation, China will find ways to retaliate, raising tensions and further heightening mutual fears.
Great powers look out for their interests and protect their national security, taking countermeasures against other powers as necessary. But as Stephen Walt and I have argued, a secure, prosperous and stable world order requires that these responses be well-calibrated.
That means they must be clearly linked to the damage inflicted by the other side’s policies and intended to mitigate those policies’ negative effects. Responses should not be pursued for the express purpose of punishing the other side or weakening it in the long run.
The new US approach towards China also creates other blind spots. The national security strategy emphasises “shared challenges” such as climate change and global public health where cooperation with China will be critical. But it does not acknowledge that pursuing an economic war against China undermines trust and the prospects of cooperation in those other areas.
It also distorts the domestic economic agenda by elevating the objective of outcompeting China over worthier goals. Investing in highly capital- and skill-intensive semiconductor supply chains is perhaps the costliest way of creating good jobs in the US economy for those who most need them.
To be sure, the Chinese government is not an innocent victim. It has become increasingly aggressive in projecting its economic and military power. Despite previous assurances, China has militarised artificial islands in the South China Sea. It imposed economic sanctions on Australia when that country called for an investigation into Covid-19’s origins. Its human rights violations at home certainly warrant condemnation by democratic countries.
The trouble with hyper-globalisation was that we let big banks and international corporations write the rules of the world economy. It is good that we are now moving away from that approach, given how damaging it was to our social fabric.
We have the opportunity to shape a better globalisation. Unfortunately, the great powers seem to have chosen a worse path. They are handing the keys to the global economy to their national security establishments, jeopardising peace and prosperity.
Dani Rodrik, professor of international political economy at Harvard Kennedy School, is president of the International Economic Association and the author of Straight Talk on Trade: Ideas for a Sane World Economy. Copyright: Project Syndicate