Is a China-US Cold War in the Offing?
Economics explains why China may not want war. (Photo: AFP)
By Anita Inder Singh

Is a China-US Cold War in the Offing?

Sep. 24, 2019  |     |  3 comments

Does US-China rivalry represent a Cold War? Is China another communist rival that views the US as a foe and seeks to displace it as the primary Asian and global power? Possibly. However, a Cold War between the US and China is avoidable. The hallmark of the US-Soviet Cold War (1947-91) was the non-warring state of political tension between the two superpowers who viewed each other as military, ideological, social and economic enemies. The possession of destructive nuclear weapons by both was the main deterrent to the outbreak of military conflict.

Unlike the US and former Soviet Union, the main characteristic of the China-US rivalry is their economic competition. And unlike the USSR, China is not cut off from the world and is well integrated into the global economic system. What has confounded, puzzled and disappointed many in the West is that China’s progress shows little sign of leading it to democracy. On the contrary China claims that its development model — whether labelled “socialism” or “state capitalism with Chinese characteristics” — is superior to those of western democracies.  However, that does not stop it from integrating into the global economy. Rather, it is a party to many international trade deals. Additionally, unlike the Soviet Union, it is a member of the International Monetary Fund and World Bank.

China’s Power Rests on its Progress

China differs from the erstwhile Soviet superpower in other ways, too. The weak Soviet economy could not sustain its superpower.

The outstanding fact about China is that economic prowess has advanced its world influence. Whether this amounts to challenging the US globally is unclear. Economically, the trade war shows that China can stand up to the US despite losses. Militarily, it cannot. Its exact defense spending is uncertain, but its defense budget is at least one-third less than America’s USD 693 million.

China claims that its model of development is superior to that of the US. However, the implication that autocracy is necessary to achieve economic growth is wrong. After their total defeat in the Second World War, democratic Japan and West Germany had become the economic wunderkinder of Asia and Europe respectively by the 1960s. They were US allies.  More than two decades later, the totalitarian USSR collapsed in 1991 and disintegrated into 15 new states. In China itself, Mao Zedong’s brand of revolutionary autocracy failed to transform China into a great power.

In the 21st century, China’s expanding military arsenal highlights its military superiority in Asia. This military power certainly challenges American air bases and aircraft carriers in the Asia-Pacific. Arne Westad, a US-based historian, argues that the US can no longer claim supremacy in the region. This opinion is controversial. Another US-based analyst, Min Xin Pei, makes the case that China has embarked on an unsustainable arms race with the US.

As this controversy continues, the world can only wait and see whether China will achieve its ambition of creating top-class armed forces by 2050, and whether its military would by then be capable of global deployment. Also, would an excellent Chinese army be able to challenge America’s military ascendancy in Asia — which Washington would surely try to maintain?

Nevertheless, among Asian states, China is the main Asian and international challenger to the US — even if it is not a global power.

Does this point to military rivalry becoming part of the US-China tie and developing into a Cold War? A mixed picture emerges in the Asia-Pacific. The US and its Asian friends are undoubtedly concerned about China’s military ambitions in the South and East China Seas. The Philippines and Japan are among the American allies affected by China’s claims. China’s territorial ambitions also worry America’s old foe, Vietnam. However, the Philippines and Vietnam are on China’s Belt and Road Initiative (BRI) and welcome Chinese investment, though not without quarrels about the conditions demanded by China when it makes investments. For its part, China is indignant about the US insistence on freedom of navigation in the international waters of the South and East China Seas.

China is aware that economic interaction with the US has advanced its global economic influence. So, it is unlikely that it would want either a Cold War or armed conflict with the US.

Economics explains why China may not want war. Unlike the Soviet Union, China’s military strength is backed by economic prowess. Its nominal per capita income zoomed from USD 333 in 1991 to more than USD 7,000 in less than three decades.

The Chinese and US economies are intertwined. In contrast, the Soviet Union isolated itself from the world economy. The trade war is actually highlighting the interconnection between the Chinese and American economies. Exports account for nearly one-third of China’s GDP growth. The US is China’s largest trading partner and buys 19 percent of its exports. China’s main customer in the European Union (EU) — Germany — buys a mere 3.2 percent of its exports, while neighboring Japan, another Asian economic tiger, buys 6.2 percent.

At the intellectual level, China is well connected to the US and to the world. One significant illustration of this point is presence of more than 300,000 Chinese students in the US alone. Both the former USSR and 21st century Russia are a significant contrast to China in this respect. Russian students in the US number around 5,000. Over the last few years, Putin has been calling on them to return to Russia.

If economics is the main driver of China’s BRI, how will the US counter its economic influence? Given that China’s obvious strength is economic power, China is growing influence shows up the strong link between economics and security.

With its BRI stretching across Europe, West, Central, South, Central and Southeast Asia, China gains prominence as a global economic power. International organizations including the United Nations and World Bank have welcomed its international investments. Its Asian Infrastructure Investment Bank only enhances its image as a world economic powerhouse, second only to the US.

One problem is that Trump’s trade war has made the US appear as a most unattractive economic suitor to Asian countries. Although China is bearing the brunt of Trump’s trade war, the fight has upset America’s European and Asian friends as well. The EU is too divided and incoherent to replace the US as a western leader on global trade or indeed on any global issue.

At another level, Trump’s withdrawal of the US from the Trans-Pacific Partnership has aroused the fears of Asian countries that the US is an unreliable partner. This pessimistic view of the US can only work to China’s advantage as it offers investment to Asian countries. The US has yet to work out and announce a comprehensive economic strategy to counter the BRI. Meanwhile, on the strategic plane, Trump’s vague Indo-Pacific concept has failed to arouse enthusiasm among China’s Southeast Asian neighbors.


US-China economic ties underline the intertwining of economic cooperation and competition. China is aware that economic interaction with the US has advanced its global economic influence. So, it is unlikely that it would want either a Cold War or armed conflict with the US. The primary condition for the absence of Cold or Hot War between China and the US is economic, even as they simultaneously trade with each other and engage in a trade war.  In contrast, the US and USSR avoided armed conflict because of the fear of nuclear self-destruction.

The Sino-US rivalry will be a long-drawn-out affair. However, the chances are that the US and China will not become embroiled in a Cold (or Hot) War.