America v China: a new kind of cold war

America and China are fighting over far more than trade. If this growing rivalry is managed badly, everybody will lose.

The dispute between the United States and China is about much more than trade. For everything from blockbuster films to lunar exploration. From semiconductors to submarines.

In every domain, they’re now rivals. Superpower relations have soured. America thinks that China is stealing secrets, stealing its way to dominance. And then it looks at Chinese behaviour in the South China sea and bullying countries like Canada and Sweden and it thinks that China’s beginning to challenge global norms.

But it looks very different from Beijing. From its point of view America is trying to block its entirely justified rise.

For everyone else it seems like the beginnings of a new kind of cold war. A cold war that everybody could lose. Of course America has fought a cold war before with the Soviet Union and it won. So why not just do the same thing again and cut China off? Isolate it economically.

Well it’s a bit more complicated than that. In the late 1980s the United States and the Soviet Union did about $2bn-worth of trade a year. Today China and the United States do $2bn-worth of trade a day. And then there are the allies who helped America in the first cold war with the Soviet Union. Well they do a lot of business with China. They want to be able to trade with it. It would cost them a lot to stop.

So to persuade them that they must choose security over their own prosperity would be very hard indeed.

The first thing is that the United States needs to build on its strengths. These are often institutions and alliances. The institutions that the United States built after the second world war. The second thing the United States needs to do is to shore up its defences. And that means defending itself militarily through cyber and space but also defending its technology. But the third thing is that the United States and China
need to learn how to live together in a low-trust world. China and America don’t have to agree about everything in order to agree that they should live by some global norms. So you need to find ways to build trust, over North Korea say, over rules for cyberwar or space war.

China is challenging America in every domain. Business and a profit motive are no longer enough to keep this relationship together. What the relationship desperately needs is the building of trust and the building of rules. Unfortunately just now both sides see rules as something to break.