Why the U.S.-China duo is the most significant, and perilous, bilateral relationship in history

The US and China represent the most significant – and potentially dangerous – bilateral relationship in human history. Faced with this reality, neither side is handling their mounting tensions with adequate skills or persistent strategy.

This is how Stephen Heintz of the Rockefeller Brothers Fund put it in a conversation with me a few days ago. It is also the subtext of conversations I had with world leaders this week at the IMF and World Bank meetings in Washington DC.

Relations between the US and the Soviet Union shaped the Cold War, with both sides using their unprecedented nuclear ability to annihilate each other and much more. Before that, Anglo-American relations were crucial, from intense US-British competition in the 19th century to an alliance that prevented fascist victory during World War II in the 20th century.

Still, Heintz’s argument is persuasive that the American-Chinese relationship has a historically unique meaning because of its multidimensional nature, which affects almost every aspect of global affairs now and in the foreseeable future.

Regardless of whether you are concerned with the world war, the global economy, climate change, human rights, the struggle between democracy and authoritarianism, the future of space or the ever-increasing race for the dominant heights of technology. Never before has so much in the world relied so heavily on the ability of two countries to manage their relationships across a dizzying variety of domains.

The accuracy of data on China’s economy, which has been the greatest engine of global growth for many years, was the focus of this week’s meetings between the IMF and the World Bank. The controversy centered on allegations that IMF executive director Kristalina Georgieva asked her colleagues to find a way to boost China’s standing in the World Bank’s 2018 flagship report.

Georgieva has denied any wrongdoing. The IMF Board of Directors, which met eight times to ponder their fate, concluded that its review of the allegations “inconsistently demonstrated that the executive director played an inappropriate role”. The board reiterated its confidence in Georgieva’s leadership, but the controversy is likely to continue.

The subtext is that every leader of international institutions must deal with the reality that China will increasingly act to influence, lead or replace the most important multilateral bodies in the world, in this case the lenders of last resort.

Meanwhile, senior DC government officials representing the world’s major economies had much to fear this week: a spreading energy crisis, rising inflation, slowing growth and mounting climate concerns ahead of the 2021 United Nations Climate Change Conference, or COP26, due to be held on Dec. October begins in Glasgow, Scotland.

A senior official from one of the US’s most prominent allies said anonymously that all of this was more difficult to manage because of the growing volatility in US-China relations caused by both their differences and internal realities.

China is teetering in a more authoritarian direction at home and toward more confrontational politics abroad as it flexes its regional and global muscles. In the midst of chaotic and polarizing US politics, after a poorly executed Afghan withdrawal and a lack of clarity about the US strategy towards Beijing, the partners wonder about the US’s commitment, competence and ability for a global common cause.

The senior allied official said his country’s greatest medium- and long-term economic risk is that mounting tensions between the US and China will turn into competition that is devouring his country. “Few of us can afford to choose between the US and China,” he said. “So don’t ask us about it.”

It is not that America’s allies are naive about President Xi Jinping’s unfortunate course for his country. But many of them have China as their number one trading partner – including the European Union as a whole, Germany, Japan, South Korea, Saudi Arabia and the United Arab Emirates. China accounted for nearly 30% of global growth between 2013 and 2018, twice as much as the US

Much of the recent analysis of China has centered on two immediate issues: growing signs of China’s economic fragility after decades of double-digit growth and increasing saber rattles and threats to Taiwan,

The two could be connected.

A growing chorus of analysts argue that it may be China’s weaknesses rather than its strengths that pose the greatest threats. The logic is that if President Xi’s economic troubles worsen, he could fuel nationalism by escalating confrontations with the United States, with Taiwan as the most tempting target. The most immediate source of economic concern, aside from recent electricity shortages, was the liquidation of Chinese real estate giant Evergrande amid missed bond payments and under the weight of $ 300 billion in loans.

“If China’s policymakers manage to make their economies more productive and dynamic, the risk for Washington is real,” writes a new Atlantic Council fellow Michael Schuman. “However, if China turns out to be more like Evergrande – a bright growth story with a lazy core – then Beijing’s ambitions as well as those of the real estate company will falter.”

Bonny Lin and David Sacks argue in Foreign Affairs this week that “China’s increasingly aggressive behavior” towards Taiwan “makes a cross-strait emergency more likely. But the risk of crisis rests less on the possibility of an immediate Chinese invasion than on an accident or a fatal misjudgment – a midair collision between Chinese and Taiwanese jets. “

All of this feels like an uncertain era is about to begin, with a lack of established rules or behavioral patterns. The US is not used to such challenges in its role, and China is not used to dealing with global tensions.

It is worth remembering that from 1945 to 1962, American-Soviet relations were probably the most dangerous. In those 17 years after World War II, the two sides went through a series of crises, culminating in the 1962 Cuban Missile Crisis, before the relationship took on more predictable contours.

Two high-ranking officials of the Biden administration, the National Security Advisor Jake Sullivan and the top coordinator for Asia, Kurt Campbell, impressively presented their thoughts on dealing with US-Chinese relations in Foreign Affairs in 2019.

That was before they knew they would take up the challenge in the White House. They are now working towards a US-China virtual summit before the end of the year, and both sides have made progress on working-level talks on several key issues.

Under the heading Competition Without Disaster, Sullivan and Campbell wrote in 2019: “The starting point for the right US approach must be humility about the ability of decisions made in Washington to determine the direction of long-term developments in Beijing … (the US) should not achieve a final final state such as the final conclusion of the Cold War, but a stable state of coexistence with clear eyes on conditions favorable to US interests and values. “

The global future will determine whether they are successful.