(Not) Another Cold War: Why the U.S.-China Rivalry Won’t Resemble the Past

Another Cold War?

Why the U.S.-China Rivalry Won’t Resemble the Past

Are we heading toward a new Cold War? Many analysts believe so. They argue that as China becomes more and more powerful, both militarily and economically, Beijing is almost too keen to expand its power and influence, particularly in the Indo-Pacific. This, of course, put Beijing on a collision course with the United States, where Washington is also almost certain to resist the growth of Chinese power and influence. As a result, it is very likely that we are about to witness an intense rivalry to shape the future of the global order, mirrored in the original Cold War between the United States and the Soviet Union.

But are we really headed toward another Cold War? Are we really going to see the return of the containment strategy from the side of the United States? Are we really going to see a similar level of intensity in arms races as in the original Cold War? These are the kinds of questions that I see being addressed in this piece.

In what follows, I take issue with the increasingly popular use of the Cold War narrative to describe the US-China rivalry. Specifically, I argue that while the United States and China are bound to compete against each other for power and influence to shape the global order, that rivalry is unlikely to closely resemble the US-Soviet Cold War. While the rivalry will surely be intense, I further argue that it is much more benign compared to the Cold War for reasons I lay out below.

However, it is important to note here that my argument does imply that China’s revisionist challenge is to be taken lightly. On the contrary, Washington should work to great lengths to push back against Beijing. In doing so, however, Washington is unlikely to pursue the same strategies it used to compete with Moscow all those years. In other words, to engage in this new rivalry with China, the United States needs to be more ‘creative’ in choosing its strategies.

How Interdependence Complicate Matters

Compared to the world that emerged after the end of the Second World War, today’s world is significantly more globalized and interdependent. Thanks to the rapid advancement of technology, trading costs have been significantly reduced, which in turn led to significantly higher global trade flows. Data acquired from the World Bank indicates that global exports of goods and services went from $383.66 billion in 1970 to $31.34 trillion in 2022. The same can also be seen with the data on global imports of goods and services, which showed an increase from $381.05 billion in 1970 to $30.73 trillion in 2022.[1]

With regards to US-China trading relations, it was estimated by the Office of the United States Trade Representative that in 2022, trade between the two powers would total $758.4 billion. The US itself exports less than it imports from China, with $154.0 billion of exports compared to $536.3 billion of imports. The Office further stated that Washington had a trade deficit of $367.4 billion with China in 2022.[2] China’s figures on the other hand stands at $583 Billion of Exports to the United States in 2022 and $178.96 Billion of imports from the US.[3]

This high level of trade interactions between the 2 countries already exceed those between the United States and the Soviet Union, Back then, Washington and Moscow had very little interchange between each other. What does this imply? This implies that, if the Cold War means that the United States should and will employ economic decoupling in its efforts to contain China (part of the broader containment strategy that is), it is not as straightforward as some people assume.

And I am by no means a lone wolf in arguing the impracticability of decoupling with China. Bradley Martin, a senior researcher at RAND Corporation, argued that while the level of interdependence between Washington and Beijing has decreased, it is by no means compatible to decouple. He argued that the consequences for both sides “might well be extensive.”[4] Likewise, Joseph Nye also argued that complete decoupling with China would not only be expensive for the United States but also for its allies.[5] Thus, even if Washington is willing to bear the economic cost of decoupling, its allies (and potential allies) might not follow suit, which means compromising Washington’s economic strategy. That said, however, it is to be expected that the United States would be pursuing some measure to reduce its interdependent relationship with China.

This condition was, of course, wholly different when the United States was facing the Soviet Union. With Moscow, back then, Washington had little (if not none) interchange. This was also the case with its allies. Therefore, during the original Cold War, it was practical for the United States and its allies to employ containment because, in practice, they were not reliant on the Soviets for goods and services.

This line of argument, however, does not underestimate the might of Washington’s economic power. The United States will continue to be the largest economy for the foreseeable future, and it certainly must use its prime position to its advantage. However, policymakers in Washington should not be overconfident. A prudent and creative economic strategy is needed to counter the rise of Chinese power, while taking into account the level of interdependence with China.

Rising Institutionalization: Great Power Politics by Other Means

One other fundamental difference between the Cold War and the ongoing US-China rivalry is the fact that the ongoing great power rivalry takes place in a world that is deeply institutionalized. The liberal order—its values, norms, and institutions—that the United States led and helped to create in the aftermath of the Second World War has greatly expanded. Even China is currently a member of that liberal order, as is most apparent in its membership in the World Trade Center and UN Security Council.

The existence, increasing role and attractiveness of institutions is a crucial factor that has and will continue to influence the course of the two superpower’s rivalry.[6] This is why, I would argue, while there’s no doubt the US-China competition will involve traditional aspects such as military modernization and even arms races, in general, the current rivalry is more benign compared to that of the Cold War.

I would further argue that there are two basic reasons why both the United States and China will go to great lengths to pursue institutionalization as a means to conduct great power rivalry. First, as John Ikenberry[7] on numerous occasions, that institutions are a great way to both “lock in” secondary states compliance and commitments and to establish and sustain the leading power’s prime position. Compared to the traditional race for arms and allies (as Cold War was), institutionalization is thus more benign in nature, which means it is more likely to win over many small and especially middle powers.

Second, and relatedly, many contemporary middle powers refused to be explicitly aligned or allied with Washington and China. Today’s middle powers (the Global South, more importantly) are much more willing to engage both with the United States for security cooperation on the one hand and with China for economic reasons. Therefore, through institutionalization, both the United States and China could rally up the support of the middle powers to favour their own side by providing leadership and global public goods. We can expect, as we have seen already, both powers to engage more and more with the Global South to secure their support.[8]

To conclude, the increased level of interdependence and the fact that the world is deeply institutionalized as the product of the US-led liberal world order make the ongoing rivalry between the United States and China won’t resemble that of the United States and Soviet Union during the Cold War. I argue that as a result of these two important factors, the US-China rivalry would be more benign, though not necessarily peaceful, compared to the Cold War. Lastly, also due to those 2 factors, the United States would have to pursue a markedly different strategy than the Cold War-like containment in favour of a more ‘creative’ strategy that embrace multilateralism to counter Chinese power and influence.

[1] See: World Bank. n.d. “Imports of goods and services (current US$) | Data.” World Bank Data. Accessed March 2, 2024. https://data.worldbank.org/indicator/NE.IMP.GNFS.CD.

[2] See: Office of the United States Trade Representative. n.d. “The People’s Republic of China | United States Trade Representative.” USTR. Accessed March 2, 2024. https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china.

[3] See: Trading Economics. 2024. “China Exports to United States – 2024 Data 2025 Forecast 1992-2022 Historical.” Trading Economics. https://tradingeconomics.com/china/exports/united-states; Trading Economics. 2024. “China Imports from United States – 2024 Data 2025 Forecast 1992-2022 Historical.” Trading Economics. https://tradingeconomics.com/china/imports/united-states.

[4] Martin, Bradley. 2024. “Interdependence and Its Discontents: Why Would Nations with Incentives to Avoid It Go to War?” RAND Corporation. https://www.rand.org/pubs/commentary/2024/02/interdependence-and-its-discontents-why-would-nations.html.

[5] Nye, Joseph. 2023. “America should aim for competitive coexistence with China.” Financial Times. https://www.ft.com/content/00d06e5c-7bb0-460e-904e-942498bcccb4.

[6] See: He, Kai. 2023. “The Upside of U.S.-Chinese Competition.” Foreign Affairs. https://www.foreignaffairs.com/united-states/chinese-competition-asia-stability-institutional-balancing.

[7] Most famously in: Ikenberry, G. J. 2001. After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order After Major Wars. Princeton: Princeton University Press.

[8] Ikenberry, G. J. 2024. “Three Worlds: the West, East and South and the competition to shape global order.” International Affairs 100 (1): 121-138.