By Kevin Rudd
In just a few short months, the U.S.-Chinese relationship seems to have returned to an earlier, more primal age. In China, Mao Zedong is once again celebrated for having boldly gone to war against the Americans in Korea, fighting them to a truce. In the United States, Richard Nixon is denounced for creating a global Frankenstein by introducing Communist China to the wider world. It is as if the previous half century of U.S.-Chinese relations never happened.
The saber rattling from both Beijing and Washington has become strident, uncompromising, and seemingly unending. The relationship lurches from crisis to crisis—from the closures of consulates to the most recent feats of Chinese “wolf warrior” diplomacy to calls by U.S. officials for the overthrow of the Chinese Communist Party (CCP). The speed and intensity of it all has desensitized even seasoned observers to the scale and significance of change in the high politics of the U.S.-Chinese relationship. Unmoored from the strategic assumptions of the previous 50 years but without the anchor of any mutually agreed framework to replace them, the world now finds itself at the most dangerous moment in the relationship since the Taiwan Strait crises of the 1950s.
The question now being asked, quietly but nervously, in capitals around the world is, where will this end? The once unthinkable outcome—actual armed conflict between the United States and China—now appears possible for the first time since the end of the Korean War. In other words, we are confronting the prospect of not just a new Cold War, but a hot one as well.
The risks will be especially high over the next few critical months between now and the November U.S. presidential election, as both U.S. President Donald Trump and Chinese President Xi Jinping confront, and exploit, the messy intersection of domestic politics, national security imperatives, and crisis management. Domestic political opinion in both countries has turned toxic. The list of friction points is long, from cyber-espionage and the weaponization of the dollar to Hong Kong and the South China Sea. The channels for high-level political and military dialogue have atrophied when they are needed most. And both presidents face internal political pressures that could tempt them to pull the nationalist lever.
In this environment, both Beijing and Washington should reflect on the admonition “be careful what you wish for.” If they fail to do so, the next three months could all too easily torpedo the prospects of international peace and stability for the next 30 years. Wars between great powers, including inadvertent ones, rarely end well—for anyone.
POWER SHIFTS
Multiple factors have brought the relationship to its current precarious state. Some are structural, others more immediate. The most fundamental is the changing balance of military and economic power between the United States and China. Thanks to the uneven pattern of U.S. military and economic growth, the United States’ sustained strategic distraction in the Middle East, and the cumulative effects of the 2008–9 financial crisis, Beijing has concluded it has much more freedom to maneuver in prosecuting its interests. This tendency has accelerated under Xi, who since coming to power in 2013 has shifted the politics and economics of his country to the left, pushed nationalism to the right, and adopted a much more assertive strategy abroad, both regionally and globally.
The United States has responded to this changing Chinese posture with increasing levels of aggression. Its declaratory policy has made plain that 35 years of strategic engagement are over and that a new, and as yet not fully defined, era of strategic competition has begun. Diplomatically, it has unleashed a human rights offensive over Hong Kong, Taiwan, and Xinjiang. It has launched a trade, technology, and talent war, and the beginnings of a finance war as well. And the two country’s armed forces have been engaged in an increasingly aggressive game of push and shove on the high seas, in the air, and in cyberspace.
While Xi’s strategy has been clear, Trump’s has been as chaotic as the rest of his presidency. But the net effect is a relationship stripped of the political, economic, and diplomatic insulation carefully nurtured over the last half century and reduced to its rawest form: an unconstrained struggle for bilateral, regional, and global dominance.
In the current political season, domestic pressures at work in both Beijing and Washington make crisis management even more difficult. In China, an already slowing economy, the ongoing impact of the trade war, and now the COVID-19 crisis have placed Xi’s leadership under its greatest internal pressure yet. Many in the CCP resent his brutal anticorruption campaign, which has been used in part to eliminate political enemies. His massive military reorganization has encountered resistance from the hundreds of thousands of veterans who lost out. The degree of opposition he faces is reflected in the large number of major personnel changes he has engineered in the party’s intelligence, security, and military hierarchies. And that was before the “party rectification campaign” that he launched in July to sideline opponents and further consolidate his power.
In the current political season, domestic pressures at work in both Beijing and Washington make crisis management even more difficult.
China’s political leadership has once again decamped to the coastal resort town of Beidaihe for the CCP’s annual August retreat. There, party veterans may well challenge Xi’s handling of the economy, foreign policy, and public health. Xi, however, is a master politician, steeped in the dark arts of his Machiavellian craft. Any significant challenge to his authority is likely to be met with preemptive force—hence the party rectification campaign. But under these circumstances, Xi will also be tempted to take an ever harder line abroad, particularly against the United States.
Domestic politics are driving U.S. policy, as well. With American voters heading to the polls in three months, China has become central to the race like never before. It now frames presidential politics across nearly all major campaign issues, including the origins of COVID-19 and the United States’ disastrous response, which, as of mid-2020, has left more than 150,000 Americans dead; an economic crisis marked by 14.7 percent unemployment, a 43.0 percent rise in bankruptcies, and eye-watering public debt; not to mention the future of American global leadership.
In its first three years, the Trump administration was divided over China, with Trump himself regularly intervening to frustrate the full implementation of the hard-line policy laid out by his former national security adviser H. R. McMaster and articulated in the National Security Strategy released in December 2017. But since March, prompted by collapsing support in national polls, Trump has blamed China for the full range of his domestic political, economic, and public health calamities. His heated rhetoric has been matched by actions on the ground: U.S. military forces, for example, have begun responding more forcefully to Chinese actions in the South China Sea and the Taiwan Strait. Meanwhile, Trump’s opponent, former Vice President Joe Biden, is determined not to be outflanked by Trump on China, making for a uniquely combustible political environment. That leaves little room for foreign policy nuance, let alone military compromise, should any crisis arise.
When added to the deeper changes underway in the relationship, all this makes for a dangerous political and strategic cocktail: a weakened Trump, an uncompromising Biden, and an under-pressure Xi ready to pull the nationalist lever. Both sides, therefore, should consider carefully the crises that could arise over the next several months (in particular over Hong Kong, Taiwan, and the South China Sea) and how any one of these could spiral into something much worse. Are Beijing and Washington seriously prepared to escalate in a crisis to protect their domestic positions, conscious of the political price in each system for being seen as weak? Or are they institutionally equipped and politically willing to de-escalate to avoid disaster?
ONE COUNTRY, ONE SYSTEM
On July 1, China implemented its draconian Hong Kong national security law, which criminalizes “secessionist,” “seditious,” and “terrorist” activity, as well as any collaboration in such activities with “foreign powers.” Using the 2019 Hong Kong Human Rights and Democracy Act, U.S. Secretary of State Mike Pompeo had already judged that Hong Kong no longer enjoyed a “high degree of autonomy” as provided under the “one country, two systems” principle. This determination was followed on July 14 by Trump signing the Hong Kong Autonomy Act. Over the next 12 months, the new law will result in “the imposition of sanctions on foreign persons who materially contribute to the undermining of Hong Kong’s autonomy by the Government of the People’s Republic of China, and foreign financial institutions who engage in significant transactions with such foreign persons.” For individuals, those sanctions will involve travel and transaction bans; for financial institutions dealing with listed individuals, a range of damaging punitive measures will follow, potentially risking their ability to operate within American jurisdictions.
It is not yet clear which Chinese officials will be listed under the law, but given that the decision on the national security law involved the Politburo Standing Committee, the top CCP decision-making body, all seven members (including Xi) are potentially vulnerable. Similarly, Chinese financial institutions that service Chinese leaders may be barred from operating in the United States or other cooperating jurisdictions. There is also a risk of institutions being barred from the dollar-denominated international trading system (although this continues to be debated between senior Treasury Department and White House officials). Chinese officials are now openly considering how to reduce their country’s vulnerability to a global financial system that remains overwhelmingly dependent on the greenback. They have begun highlighting to foreign interlocutors “financial red lines” that if crossed, could precipitate a major crisis.
If Hong Kong radically deteriorates in the months ahead, the United States is likely to respond with dramatic diplomatic and economic sanctions and push its allies to do the same.
If Hong Kong radically deteriorates in the months ahead—bringing the incarceration of democratic leaders such as Joshua Wong, the suppression of remaining free media, or even large-scale violence—the United States is likely to respond with dramatic diplomatic and economic sanctions and push its allies to do the same. But Hong Kong itself is unlikely to result in a full-blown crisis; the United Kingdom, not the United States, is the external treaty power on the question of Hong Kong’s political status, and so no matter how bad the situation becomes, there would be no international legal basis for any form of U.S. intervention. Still, a deterioration and a U.S. response would render the U.S.-Chinese relationship even more brittle than it currently is, making other crises in the bilateral relationship more difficult to manage, including in the security domain.
ONE CHINA—OR TWO?
Taiwan has long been the single-biggest challenge in the U.S.-Chinese relationship. From the CCP’s perspective, one grounded in both ideology and nationalism, the “return of Taiwan to the motherland’s tender embrace,” as party veterans would put it, would complete the revolution of 1949. But for Taiwan, the evolution of a separate identity over the last several hundred years, the progressive democratization of the island over the last 30, and the continued electoral success of the pro-independence Democratic Progressive Party (DPP) have made the prospects of a peaceful reunification increasingly remote.
Taiwanese President Tsai Ing-wen has continued to reject China’s version of what is called the “1992 consensus”—an agreement that there is only “one China,” even if both parties disagree about what the term “China” actually means. Beijing, in turn, holds that the DPP’s refusal to accept this consensus rules out any negotiation on the specific form of one country, two systems that could apply to Taiwan in the future. Already, China’s perceived trashing of the one country, two systems principle in Hong Kong played a major part in Tsai’s reelection last November. It has also contributed to the general hardening of Taiwanese sentiment to any form of reunification with the mainland; recent opinion polls indicate that a record 90 percent of people in Taiwan now self-identify as Taiwanese rather than as Chinese.
In the U.S.-Chinese relationship, the Taiwan issue has been managed under the terms of three communiqués negotiated between 1972 and 1982 over the course of the opening and normalization process, along with the Taiwan Relations Act of 1979. The TRA states that “the United States will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” It also states that the United States will “consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States.” And it requires Congress “to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan.” Although the TRA is not a mutual-defense treaty, successive U.S. administrations have relied on the “strategic ambiguity” embedded within it to deter any Chinese consideration of reunification by military means.
The Trump administration has increased the scale and frequency of arms sales to Taiwan, including expanding the island’s Patriot missile defense system and offering new offensive capabilities such as the F-16V aircraft. It has also begun changing the relationship’s formal nomenclature — for the first time referring officially to Tsai with the honorific “president”—and increasing public contact between U.S. and Taiwanese officials. And Washington has released provocative video footage of previously undeclared U.S.-Taiwanese military exercises.
Beijing argues that Washington is getting dangerously close to crossing Chinese red lines on Taiwan’s international status, thereby jeopardizing the basis for the entire U.S.-Chinese relationship.
Beijing argues that Washington is getting dangerously close to crossing Chinese red lines on Taiwan’s international status, thereby jeopardizing the basis for the entire U.S.-Chinese relationship. In turn, and reinforced by China’s general displeasure with the current Taiwanese leadership, Beijing has increased diplomatic, economic, and military pressure on Taipei. People’s Liberation Army exercises, maneuvers, and deployments around the island and its airspace have become both more intense and more intrusive. China also has begun reducing mainland tourism to Taiwan to increase pressure on the economy, in direct retaliation for Tsai’s policies.
It is increasingly plain from the impatience in Xi’s language that he wishes to see Taiwan return to Chinese sovereignty within his own political term. Whether he can do so or not is a separate question. If Xi were to succeed, he would match, and perhaps even surpass, Mao’s place in party and national history. (Of course, this raises the question of just how long Xi’s term will be: he reaches the two-term limit adhered to by his predecessors in 2022, but a decision at the 19th Party Congress in 2017 abolished term limits, and Xi currently appears poised to remain until the mid-2030s, when he would be in his early 80s.)
Although both Chinese and American war-gaming exercises suggest that China would prevail in any major conflict in the Taiwan Strait, Beijing remains cautious, seeking to avoid unnecessary political or strategic risk. After all, to fail in such an attempt, or to succeed at great cost, would potentially end Xi’s leadership and undermine the party’s legitimacy. Accordingly, any Chinese military push against Taiwan is more likely to come later in the 2020s, when Beijing thinks the military balance will have shifted even further in its favor—enough to effectively deter the United States and perhaps cause Taiwan to capitulate without a fight.
For now, all three parties—Beijing, Taipei, and Washington—have chosen to remain just within the broad parameters of permissible conduct. And while the DPP administration in Taipei is bold, it is not reckless. Still, in the current political environment, the Trump administration could choose to escalate—by, say, allowing a U.S. naval visit to a Taiwanese port. The incendiary effect of such an action would be politically impossible for the Chinese leadership to ignore. It is conceivable that China could retaliate by starting a “low-intensity” conflict centered on Taiwan’s offshore islands, such as the Dongsha Islands or Taiping Island (both in the South China Sea) or Wuqiu Island (just off the coast of the mainland).
NO MORE NINE-DASH LINE
The South China Sea presents a far greater risk of military mishap in the months immediately ahead. Seven countries claim various overlapping terrestrial and maritime segments of it: Brunei, China, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam. In 2016, the Permanent Court of Arbitration ruled on a case brought by the Philippines that comprehensively rejected the legal and historical basis of China’s sovereignty claim (the “nine-dash line”) over much of the South China Sea. Although it angrily rejected the ruling, Beijing simultaneously embarked on a political and economic charm offensive (particularly with the new Philippine government of Rodrigo Duterte) while sustaining naval, coast guard, and fishing activities in disputed areas. The sea has become a case study in China’s “grey zone” strategy: using coast guard and fisheries operations to establish de facto territorial and maritime claims while avoiding the direct deployment of naval assets unless absolutely necessary. China has thereby entrenched its claims over time without risking open military conflict with its neighbors.
Until 2016, the United States took negligible military action in response to China’s island reclamation projects in the South China Sea. (Beijing constructed seven artificial islands between 2013 and 2015 and subsequently militarized some of these outposts, contrary to Xi’s assurances to U.S. President Barack Obama.) Since then, the U.S. navy has ramped up its semiregular freedom-of-navigation operations in the area, going from two in 2015 to nine in 2019. The United States has also continued air reconnaissance flights along the Chinese coast and across the South China Sea.
As the coronavirus crisis unfolded in 2020, both Chinese and American postures in the South China Sea started to harden further. In April, China announced the establishment of two additional administrative units—consistent with its general strategy of combining grey zone paramilitary operations to assert de facto sovereignty claims with de jure assertions of legal and administrative control. More significantly, the tempo and intensity of U.S. naval and air reconnaissance missions increased markedly; Washington deployed two aircraft carriers to the South China Sea, and they were joined by allied naval units from both Australia and Japan. China, in turn, deployed an additional squadron of fighter-attack aircraft to the Paracel Islands in the northern reaches of the South China Sea.
As the coronavirus crisis unfolded in 2020, both Chinese and American postures in the South China Sea started to harden further.
Then, on July 13, Washington announced a major change in its position on the legal status of China’s long-standing nine-dash line claim to sovereignty in the South China Sea. In the past, Washington—itself having not ratified the UN Convention for the Law of the Sea—had remained neutral on the legality of individual claims. Now, for the first time, Washington was formally rejecting the international legal validity of all Chinese maritime claims. (Australia followed suit ten days later, with a formal statement to the United Nations.) This change formally aligns the United States with the Southeast Asian states that have challenged China’s extensive maritime claims; previously, the United States had acted only in defense of freedom of navigation in the South China Sea, not on the legitimacy of individual claims.
This set of U.S. moves has further raised the temperature between the U.S. and Chinese militaries. China retaliated in late July: An administrative amendment to long-standing shipping regulations changed the designation of an extensive area of the South China Sea from “offshore” to “coastal,” and the Chinese air force began deploying long-range bombers for aerial surveillance flights over these disputed areas.
The existing memorandum of understanding on agreed protocols for avoiding and managing collisions in the air and at sea was negotiated during the Obama administration, before the nearly complete collapse in trust between Beijing and Washington. It is far from certain that these protocols will be effective with the rapid increase in air, naval, and other military assets in the area, where there is already a history of near misses between U.S. and Chinese military ships and planes.
The South China Sea has thus become a tense, volatile, and potentially explosive theater at a time when accumulated grievances have driven the underlying bilateral political relationship to its lowest point in half a century. The sheer quantity of naval and air force hardware deployed by both sides makes an unintended (or even intended) collision increasingly probable. Standard operating procedures and rules of engagement for both the Chinese and U.S. militaries are typically highly classified documents. The general pattern of near misses in the past has shown U.S. aircraft or naval vessels swerving and changing course at the last minute in order to avoid collision. It is not clear, however, whether these procedures, or those of the Chinese navy and air force, have now been adjusted to a more offensive posture.
The question for both U.S. and Chinese leaders is, what happens now in the event of a significant collision? If an aircraft is downed, or a naval vessel sunk or disabled, what next steps have been agreed in order to avoid immediate military escalation? A Chinese interlocutor recalls a recent desktop exercise hosted by an independent think tank that brought together retired Chinese and American policymakers and military officers to consider such a scenario. The results were disturbing. Although the military officers from both sides could agree on a protocol to extract a damaged naval vessel safely, the nonmilitary participants, more attentive to the political interests of their governments, failed miserably in this task. One set of practitioners managed to de-escalate; the other set did precisely the reverse.
In a real-world scenario, beyond the clinical environment of a desktop exercise, the prevailing domestic political circumstances in Beijing and Washington could all too easily drive both sides to escalate. Political advisers might argue that a localized military escalation could be “contained” within defined parameters. Nonetheless, given the highly charged public sentiment in both countries and the high political stakes in play for each country’s leader, there is little reason to be sanguine about the possibilities for restraint.
TWENTY-FIRST-CENTURY SLEEPWALKERS
We are often enjoined to remember the lessons of history. The truth is history rarely repeats itself in precisely the same form. But for the nationalists in both Beijing and Washington who may not realize how serious the stakes have become, a good weekend read would be my compatriot Christopher Clark’s book on the failures of crisis management and diplomacy in 1914, evocatively titled The Sleepwalkers.
The core lesson in the events leading to World War I is that a relatively minor incident (the assassination of an Austrian archduke in Sarajevo in late June 1914) can escalate into a war between great powers in a matter of weeks. Clark’s graphic account is one of relentless escalation, inadequate diplomacy, and crude nationalism, along with a disbelief by populations and leaders alike that actual conflict was even possible—until the “guns of August” grimly proved otherwise.
For the United States, the China challenge is real and demands a coherent, long-term strategy across all policy domains and in coordination with allies. It also requires a new framework for the U.S.-Chinese relationship, one based on the principles of “managed” strategic competition: political, economic, technological, and ideological competition with mutually understood red-lines, open lines of high-level communication to avoid an accidental escalation, and defined areas of global cooperation where it is mutually advantageous (such as on pandemics and climate change). But the foremost task now is to safely navigate the next several months, to avoid stumbling into conflict in the midst of a presidential campaign in the United States and a period of contested internal politics in China. Leaders on both sides should remember that nationalistic jingoism tends to become more muted after the shooting starts.
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