How has the U.S.-China relationship changed over the past forty years? 

Douglas H. Paal: The relationship has changed structurally. China has returned to great power status, but the United States has so far been unable to reconceptualize how it interacts with Beijing. This could prove to be costly, but the two countries should be able to navigate around each other while protecting their vital interests. The question is how they do that.

Douglas H. Paal
Paal previously served as vice chairman of JPMorgan Chase International and as unofficial U.S. representative to Taiwan as director of the American Institute in Taiwan.
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How does history influence how Washington and Beijing see each other?

Paal: China is burdened by competing versions of history with many resentments. Meanwhile, Americans are remarkably forgetful and inventive about their past. Just look at Vice President Mike Pence’s fanciful version of the United States’ history with China in his October 2018 speech at the Hudson Institute. Conflicting approaches to history often afflict neighboring countries so, in this respect, the geographical distance between Beijing and Washington is a useful buffer.

What are the most important issues in the relationship today?

Paal: The most important issues relate to the countries’ deep differences. Most observers can see plainly that China’s return to authoritarianism is a dead end and that the U.S. political system is not functioning as designed.

Great nations fail, in their own mythologies, because of things done by great rivals, rather than their own mistakes. The United States and China are setting each other up to be rival bogeymen. This is not a good direction, yet corrective forces like businesses and universities, which traditionally have supported engagement, do not seem able to stop it.

What might happen in the next forty years?

Paal: The rigid international system of the Cold War is gone, and a new type of balance of power politics is emerging. As the mistakes that led to World War I showed, managing that sort of power balance requires effective leaders who are well-trained, experienced, judicious, and modest. 

Failing that, things could get rough. But with the past as a guide, the two nations should be able to steer clear of collisions and stumble along on their own paths. 

How has the U.S.-China security relationship evolved over the past forty years?

Tong Zhao: The two countries’ security relationship has never been straightforward. Compared with traditionally positive aspects of the relationship, such as trade and economic cooperation, security ties are driven more by deep-seated distrust. Even during a brief honeymoon in the 1980s, soon after the official relationship was established, Washington and Beijing maintained deep security concerns about each other due to mutual suspicion.

Tong Zhao
Tong Zhao is a senior fellow in Carnegie’s Nuclear Policy Program.

As trade ties have worsened and the overall relationship has become more securitized, the security relationship is taking an increasingly competitive turn. Leaders on both sides of the Pacific seem to have little clue about how to manage this escalation or how to contain its consequences.

How have the United States’ and China’s security roles changed in the Asia Pacific?

Zhao: For decades, the two countries have failed to find a reconcilable vision of their respective regional security roles, including in regions with rising maritime tensions such as the South China Sea.

China dismisses the U.S. narrative of international law and a rules-based regional order as a hypocritical excuse for its strategy to contain China. Beijing also believes it has every right to use naval and air power to defend its territorial sovereignty.

Washington fears that it is gradually losing its military capabilities to push back against perceived Chinese expansion.

If the two countries cannot address this huge perceptions gap, they will continue talking past each other. Their military competition in the region is likely to persist, and could even escalate further.

How important are nuclear issues in the U.S.-China relationship?

Zhao: China believes that its nuclear deterrent has helped prevent major military conflicts with the United States. In that sense, a stable nuclear relationship is the bedrock of a stable U.S.-China security relationship.

That bedrock, however, is being eroded by new non-nuclear strategic military technologies, such as missile defense and long-range conventional precision-strike weapons. Chinese experts fear that Washington could use such new technologies to threaten Beijing’s nuclear retaliation capability.

With no existing arms control mechanisms, or even official dialogues, there is no guarantee that the United States and China will be able to maintain a stable nuclear relationship.

What are the security flashpoints between the two countries?

Zhao: The Taiwan Strait, the South China Sea, and the East China Sea are the most likely places for potential military confrontations. Taiwan is especially concerning. The breakaway island depends on U.S. security assurances. Its people are developing their own sense of national identity, and the island is moving closer to achieving de facto independence.

However, leaders in the White House and Zhongnanhai both still have every reason to avoid war, unless they were to face unprecedented domestic crises that directly threatened their grip on power at home. In the long run, the intensifying arms competition presents a greater challenge to regional peace and stability.

Will the security relationship improve?

Zhao: The two countries have opposite views on so many basic matters that it is hard for them to overcome their ideological disagreements and develop shared principles, norms, and visions for the region’s future security landscape. There seems no immediate cure for this fundamental problem.

Washington and Beijing should focus on realistic goals like containing the intensity, scope, and consequences of an arms race as well as mitigating the risk of inadvertent military conflict.

How have U.S.-China economic and trade ties changed over the past forty years?

Chen Qi: China’s accession to the World Trade Organization in 2001 marked a new stage for China’s opening up to the outside world. Trade and investment between China and the United States grew quickly, and the two economies became deeply integrated.

Chen Qi
Chen Qi was a resident scholar at the Carnegie-Tsinghua Center until June 2020.
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In 2017, U.S.-China bilateral trade in goods amounted to $583.7 billion. China has become an important export market for American aircraft, automobiles, soybeans, and electrical devices and equipment.

How do Washington and Beijing view each other’s approach to trade and economics?

Chen: Both countries have been slow to make structural economic adjustments, causing severe economic disparities and political polarization. Chinese private companies and market mechanisms need a boost. And in the United States, new technology and the outsourcing of manufacturing jobs have exacerbated wealth imbalances. The result has been economic decline in the Rust Belt and a richer Wall Street.

Faced with China’s rapid economic rise, President Donald Trump and his administration have increasingly adopted zero-sum thinking on trade, equating Chinese gains with U.S. losses.

For its part, China wants to keep its designation as a developing country in the WTO, which gives it preferential treatment. Beijing argues that deep-seated conflicts in U.S.-China economic and trade relations can be settled through negotiations. This is the reason for the intense tit-for-tat competition and gradual escalation of U.S.-China tariffs in 2018.

How can the United States and China recalibrate their economic and trade relationship?

Chen: The two countries must decide where their interests align, coordinate policies, and take part in rules-based negotiations. They should pursue domestic structural reforms to make sure that development benefits everyone and that their economic relationship is well-balanced.

Finally, they will need to try to understand each other’s way of doing things, be patient about regulatory changes, and make genuine adjustments.

Why has technology become such a big source of competition in the relationship?

Chen: Despite their differences, China and the United States face the same pressure to create innovative technologies and meet market demand.

Effective technological competition, scientific research exchanges between the two countries, and industrial specialization are good news for everyone. Technological blockades will damage both countries.

What are the major lessons from the past forty years?

Paul Haenle: The U.S.-China relationship and the process of China’s reform and opening up— the mixture of market and socialist policies Beijing began adopting in 1978—are deeply intertwined. As China’s ambassador to the United States put it, “Reform and opening-up provided the impetus and vitality for our diplomatic relationship, which in turn fostered important external conditions for the reform and opening-up.”

Paul Haenle
Paul Haenle holds the Maurice R. Greenberg Director’s Chair at the Carnegie Endowment for International Peace and is a visiting senior research fellow at the East Asian Institute, National University of Singapore. He served as the White House China director on the National Security Council staffs of former presidents George W. Bush and Barack Obama.
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China’s economic relationship with the United States helped the two countries work through some of their thorniest problems. These include the accidental bombing of the Chinese embassy in Belgrade in 1999, the 1995­–1996 Third Taiwan Strait Crisis, and the 2001 EP-3 surveillance plane incident.

Today, the United States and China are in a difficult period. China is seeking to resolve economic imbalances created by forty years of rapid growth. Beijing is also adapting to the forces of globalization, new technology, and its own greater global influence. How China decides to proceed on further economic and political reforms will have a big impact not just on China’s future growth but also on its relationship with the United States.

What is China getting right and wrong about U.S. foreign policy goals?

Haenle: When the trade war started, some in Beijing said it was about Trump playing to his political base. Others said it was part of a U.S. plan to contain China, undermine its rise, and change its political system. Many Chinese observers assert that the United States is shifting the blame for its domestic issues onto China, rather than better managing its own affairs.

Yet these interpretations don’t acknowledge the role China might have played. Beijing did not really take seriously the proposition that the United States was responding to legitimate grievances about China’s economic policies and lack of economic reform. But other countries also share these concerns.

Today, Beijing recognizes that China’s trade and economic practices and its more assertive foreign policy have alienated many who once welcomed the country’s rise and helped it along. The question now is whether Beijing has the will to address these concerns.

On which issues could the United States and China work together?

Haenle: During the Third Plenum meeting in 2013, Chinese President Xi Jinping laid out the next steps for reform and opening up. The plan was to allow market forces to be the decisive factor in allocating resources, lessen government intervention, and promote a strong private sector. If China were to do more along these lines, that would help its own economy and address the complaints of the Trump administration and U.S. businesses.

The question will be whether the next round of reforms is broad enough, deep enough, and soon enough. If new reforms move ahead with enough momentum, they could help resolve the current trade crisis and stop the U.S.-China relationship from getting worse.

Are U.S. and Chinese interests fundamentally incompatible?

Haenle: The short answer is no. More competition will no doubt lead to clashes. But nations clash all the time, allies and adversaries alike.

The problem is that neither country is prepared to manage the competitive aspects of the relationship. They need an updated framework that reduces the risk of confrontation and that allows China and the United States to work together in ways that benefit both sides.

This is a critical juncture. Now is the time to look to the next stage of the relationship and ask whether it needs to be redefined. If it does, how so? Can the two countries devise mechanisms to manage this competition?

Emotions on both sides of the Pacific are running high. But answering these questions now will help Washington and Beijing seize the immense future potential of the relationship.