Dr. Kenneth Lieberthal at 2019 Forecast

A Rocky Road Ahead for US-China Relations

The relationship is likely to be as or more contentious a year from now, especially if the leadership continues to misunderstand each, said China expert Dr. Kenneth Lieberthal at the Council’s annual Forecast event held in January.

“The uncertainties about the coming year in US-China relations are more numerous, wide-ranging, and serious than at almost any time in the last 40 years.” He said the year began with relations already in a downward spiral in virtually every significant sphere. Then he ticked of the list which included investments and trade; military doctrines, policies, and deployments; intelligence assessments and related arrests and sanctions; religious persecution; Taiwan policy; educational access and culture; cyber activities and technology transfer; and others.

He said the current situation did not start with President Xi Jinping and President Donald Trump, and there is ample blame to be assigned to both sides. Factors making things worse “Relatively larger-than-life leaders determined to have big impacts domestically and internationally; caricature-like rewriting of US-China relations history since normalization and of the assumptions about the degree of coordination, discipline, and strategic thinking in the other country; both countries’ leadership’s lack of understanding of the political dynamics of the other country.”

“The reality is that US policy toward China over the years has never had the degree of coordination, nuance, and strategic discipline that the Chinese have assumed, and Chinese policy under Xi Jinping does not have the degree of coordination, nuance, and strategic discipline that the US currently assumes.”

Major risks this year

One is a major crisis that is poorly managed.   Lieberthal said neither side is well prepared in terms of crisis management, and there are significant domestic and international crises that could trigger a spike in tensions and dangers of misinterpreted signals. North Korea, the South China Sea, a China-Japan incident in the East China Sea, or Taiwan could be potentially serious international flashpoints.

Additional trouble could lurk if the US-China trade war escalates. Competition in 5G, quantum computing, AI, virtual and enhanced reality, and the Internet of things have the potential to disrupt relations. “Governments cannot regulate, control, or even understand this adequately – but these new realities will increase distrust in both directions.”

Tensions are rising over Asia framework issues without either US or China seriously understanding how to manage it.  The US alliance system could weaken further or unravel (with China’s encouragement) including US-ROK, US-Japan, and US-Philippines relations--with China now in wide-ranging alignment with Russia. The worst possible outcome for the US is if China joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the United States remains outside. As it stands, other countries in the region view both the United States and China (for different reasons) generally far more negative than in the past.

He said: “While both sides are taking actions that warrant deep concern on the other side, caricature and assumptions about nefarious goals, capabilities, and activities are putting mutual perceptions in more dangerous territory in both Washington and Beijing. United States-China normalization has been a necessary condition for the 40 years of economic growth in Asia and no major war in the region over those decades.”  

Even if there is a trade deal, the odds of overall more adversarial US-China relations a year from now are high for four reasons. First, the relationship is under deep stress in both countries’ domestic politics and foreign policy. Second, the leaders of the two countries are very different, but each in his own way has reduced the quality of the information he accesses, reduced debate about and prioritization of policy options, and disrupted the previous policy making process.

Third, in each country, laws, regulations, and major policy documents are cementing tough restrictions in a way that will not change easily. And fourth, the ongoing cyber technological revolution is in many ways a game changer that nobody can fully anticipate, adequately regulate, or even understand, such as in Artificial Intelligence.  It almost inevitably will dramatically reduce mutual trust.

In evaluating the above, we should recognize the realities that China will always be there in Asia and the digital revolution is inevitably making “decoupling” an oxymoron. The issue is how to manage competition rather than how to wall off the other side and most of the most dangerous threats we face (terrorism, cyber war, climate change, etc.) are inherently transnational and at best manageable but not solvable.  

He said virtually all such issues become more manageable when the US and China are working either cooperatively or along parallel lines on the issue and far less tractable when working directly at cross purposes.

He added that the past 40 years make clear that we do best with China when our domestic system is functioning well and addressing the issues critical for our future; and the Chinese are doing relatively well (as major Chinese failure would be unmanageable, and outstanding Chinese success as against an underperforming US would likely produce Chinese overreach). 

What should the US do?

Specifically, he said, the US should move from caricature to realism in our discourse on and policies regarding China. Then, when possible, the US should focus on developing global norms and standards regarding cyber; join the CPTPP (formerly the Trans Pacific Partnership); reopen US-China BIT negotiations; conditionally engage (along with Japan) in Belt and Road Initiative projects on the basis of transparency and other conditionality; support the Paris Agreement on the condition of serious verification of GHG commitments.

Lastly, we should get our own domestic house in order, which will have a larger impact on Chinese plans and behavior than any other single development. “Overall, we should try to move from caricature to realism in our discourse on and policies regarding China.  That does not mean being soft; it means being smart.”