High Time For A US-China Reset

The irruption of China some 20 years ago in the international system ushered not so much a change as a revolution of the global order. Whatever the power and global ambitions of the Soviet Union, its model or its end products never represented an existential threat to the United States and its allies.

Conversely, China is in a different league. First, there is size: 1.4 billion people in a country covering some 9.6 million square kilometers (3,7000,000 square miles) cannot be ignored.

Second, there is history: the country has an incredibly strong cultural identity that befits an empire that lived by its own rules and for which all foreigners were considered barbarians.

Third, there is governance: the country is ruled by a system in which the state apparatus and the economy are ultimately subject to the authority of one ruling party.

Thus, when a foreign entity enters into a relationship with a Chinese one, even if the latter is not legally state-owned, it enters, for all practical purposes, into a relationship with the Chinese Imperial State, not to say the entity which controls the state, namely the Chinese Communist party.

Fourth, there is economic weight: In 2024, China had a trade surplus of close to one trillion dollars, a performance that reflects the resiliency of its economy. These fundamental realities are a given that cannot be sidestepped. But they were, and the world is now paying the price.

China's decision to open its economy to the outside world was predicated on the fact that its internal market was simply not prosperous enough to ensure the nation's development.

Thus, for the Chinese Communist Party, the opening up of China was not an end in itself. It was a means for the ruling class to stay in power by providing its population with the prosperity it aspired to.

At the other end of the spectrum, and more specifically for the United States, integrating China in the world economy provided one major benefit: access to a relatively cheap and good quality manufacturing capacity.

In parallel, a significant segment of the American political establishment also believed that becoming part of the world economy would also erode the Chinese Communist Party's power and bring about“regime change.”

The end result was that the same phenomenon, namely the opening of China, when viewed through American eyes, meant one thing while it meant another when viewed through Chinese eyes.

American hegemony is currently unquestionable. It has the world's strongest armed forces; its currency, the dollar, reigns supreme; its language, English, is the world's lingua franca; and it has fashioned the international system, from the United Nations to the global economic order, to serve its interests.

Granted not all of its undertakings met with success. The Vietnam and Afghanistan wars were abject failures. But in relation to the international supremacy of the United States, they were of little consequence. But China's challenge to American supremacy today is of potential consequence.

China's challenge to American supremacy is substantiated by three veracities. The first is size. The second is environment.

Unlike relations between the United States and the Soviet Union, which operated two parallel orders which largely did not overlap during the Cold War, China is part of the global production system and its economic convulsions are liable to have an impact that extends far beyond its borders.

The third is existentialist. China is a latecomer to the international system, which has been fashioned by the United States essentially to serve its own interests. As a latecomer, China had no alternative but to abide, or to pretend to abide, by the prevailing system. This raises two other questions.

The first is that, from a Chinese perspective, the system was alien, not to say a foreign imposition in the structuring of which China had not participated. This, in turn, raised another question, namely, how can a state-run economy coexist with a private-sector economy?

The answer to these queries, if there is one, hinges on one historical consideration that applies to both parties. Compromise, power-sharing and dealing with an equal is not in their DNA.

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The Chinese empire traditionally dealt with“barbarians.” The American empire was the leader of a coalition in which its power was so overwhelming that it could essentially do as it pleased. These days are now over.

China is no longer surrounded by“barbarians.” The United States, while still reigning supreme, cannot impose its power at will. Both will have to learn how to compromise.

Assuming that the political will to do so exists, this would require that the two sides embark on a negotiating process with the intent of getting the best deal that would suit them both.

This should entail raising a number of basic questions, including how the two systems can operate in parallel without coming into conflict with each other.

One example is the car industry. Twenty years ago, China was not a player. Today, it produces the world's best electric cars at a cost that, if unregulated, would risk wiping out the Western and Japanese car industries.

From the perspective of the Western car user, this might not be a bad proposition except that the collapse of the Western car production sector would have social consequences that Western governments are not politically willing to entertain.

While there is no ready-made answer to this conundrum, the issues it raises should be the subject of discussions between both parties extending far beyond tariffs or quotas.

A thorough reevaluation of the overall relations between the United States and China should best be undertaken outside the political limelight by an American foundation working with a credible but discreet Chinese counterpart.

Not only should it be practical and concrete, but, above all, it should be based on a genuine effort at mutual understanding – which makes it imperative that it be kept well away from the political and confrontational process that currently bedevils the two superpowers' relations.

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