The most important bilateral relationship in the world is in a free fall right before our eyes. China and the United States seem to be on a collision course in every aspect of their relationship.
A significant factor accelerating the downward spiral is that state-to-state relations have embarked on a course of ideological combat. The adjustments that started with economic and trade ties have stimulated both sides to explore the other’s boundaries, even bottom lines, in every field in the form of provocative diplomacy.
Once the underlying thinking of ideological diplomacy is established, it will do maximum harm to bilateral ties, which traditionally focus predominantly on national interests. Once the ties are shifted into a negative express lane, it no longer matters which party initiated the conflict.
“Which side is responsible for this?” is not a good question, because the truly meaningful conclusion is explicit: Both must share the consequences.
We live in an imperfect world. Just imagine: How could we have achieved such complexity in foreign affairs had our economies not converged? From religious wars in the Middle Ages to two world wars to socialist revolutions, one frequently repeated circumstance in world history has been that such superstructures, when associated with economic foundations, seriously damage the processes of economic development from time to time.
Is it because economic contradictions have become irreconcilable and economic diplomacy can therefore only be sustained by resorting to geopolitical conflict or even large-scale war? The causality here may forever be a subject for debate, but the economic consequences may not always necessarily justify unwise decision-making.
COVID-19’s impact on bilateral ties likely would have been mitigated rather rapidly had there been no politicization. Now both sides appear to have decided to “listen to its words and watch its deeds” when it comes to how to treat each other. Rhetorically, both sides believe that the other holds greater animosity. In all aspects of bilateral ties, both sides are exploring the other’s bottom lines with actual moves, one by one, testing the intensity of reactions.
Against such a rhetorical backdrop, even tentative moves may also escalate conflicts. Divergences may become more prominent or prevent the parties from seeing the prospect of cooperation. Bilateral relations undergoing adjustments may thus be misled by the adjustments themselves, and we’ll make historic mistakes as a result.
We should focus on whether China and the U.S. still have common interests, and if the answer is positive, on what they are. We should identify them one by one and compile a list. If the two sides’ common interests are temporarily forgotten; if people don’t know that the two sides still share common interests; if people fail to take the common interests as significant factors worth deliberating, then this itself is a major mistake to be avoided.
Nobody calls on the two parties to stop attacking each other and forsake mutual suspicions, because that’s simply an impossible mission. Something that could be done and yet has not been is, through collisions, tactically test the bottom line of the other side’s endurance in every area to make sure inadequate management and control doesn’t result in major blunders.
In the current situation, the prospect of the two sides addressing their points of contradiction starting with settling differences and then improving ties remains out of sight. Therefore, the other, more important aspect is to focus attention and action plans on defining common interests. Any negotiations aimed at easing bilateral ties must proceed from those. Common interests include mutual needs, as well as common needs in the outside world.
Dramatic adjustments in China-U.S. relations started in the economic and trade area, but the two sides’ common interests should not be ignored as they engage in tense confrontations.
Following are a number of areas worthy of deliberation:
1. The fourth industrial revolution driven by the internet of things will rationalize and reorganize international value chains. The pace is irreversible and presents the two countries with opportunities to cooperate on common interests. From the perspective of economic efficiency, rational international reorganization of the industrial economy will be based on the interconnectivity of things, where both sides have advantages. Combinations of concept formulation, design, manufacturing and marketing will reduce costs and improve quality and efficiency.
China and the U.S. must keep up with the changes of our times and resolve the problems of policy imbalances and asymmetry of interests on the basis of development via further policy adjustments and exploiting the advantages arising from international value chains on the basis of their cooperation over the past decades. Promoting innovation of international value chains by pursuing benefits and avoiding damage are in the two parties’ common interest.
2. When it comes to dealing with climate change and environmental protection, the two sides’ common interests are already becoming increasingly prominent. For various reasons, the Chinese economy’s recovery and its attempt to expand its internal circulation have rendered the previously hard-to-execute emissions reductions and environmental protection duties less than unachievable. Policy adjustments may even turn climate and environmental improvements into advantages for expanding domestic economic circulation. China and the U.S., whose key interests are interrelated, jointly fulfilling international obligations may attract other countries to facilitate the accomplishment of international goals together. In this aspect, their common interests should outweigh differences.
3. The two sides have significant differences in the South China Sea and even face a danger of conflicts. Even so, from an economic perspective, guaranteeing the safe passage of more than $5 trillion worth of goods through the international waterways in the South China Sea is no doubt a common interest.
4. In fighting the spread of the coronavirus, the two sides need to face the important reality that it keeps mutating, and the mode of its spread is changing. This entails all countries continuing to monitor changes in the spread, evaluating the effectiveness of organizational regimes for pandemic control, studying the social and economic impacts of various approaches and means of containment, obtaining reliable data for independent assessment and improving organizational regimes and containment measures. In the next few years, the probability of repeated infections spread through crowds will be high, and China and the U.S. share the need to improve administrative mobilization and approaches, drawing lessons from each other’s experiences. This is also where a key common interest lies.
5. Although a dramatic imbalance in trade is an ongoing problem in bilateral relations, the two sides also have a common interest in preserving the fairness of international trade. Economic rationalization of international industry chains dominated by multinational corporations has introduced various ways of processing trade to avoid the negative impacts of a country’s tariff and non-tariff regulatory measures. This constitutes a fundamental challenge for the existing full-value statistical regime of international trade.
Trade processing and the fourth industrial revolution require that international economic and trade data reflect the added value for each participating country, which happens to be beyond the reach of the full-value statistical regime for international trade. An unreasonable statistical regime remains an outstanding issue in China-U.S. trade.
In some years, trade processing between the two countries has reached 80 to 90 percent. Their common interest and orientation of cooperation was that both parties assume leadership responsibility, creatively develop a value-added statistical regime for international trade as a reference for the original full-value statistical regime, laying a technical foundation for preserving the fairness of international trade policies.
Otherwise, what happens between China and the U.S. will continuously repeat with other countries that participate in the formulation and transformation of international value chains through the course of the fourth industrial revolution. That would mean an endless series of groundless trade disputes.
China and the U.S. may be able to partially settle their trade conflicts within the existing statistical framework, but the misguided and outdated trade statistical regime for policymaking will inevitably upset bilateral trade ties in the long run, as well as trade ties with third countries.
Establishing a reasonable value-added statistical regime for international trade is in the common interest of both countries, and a basic responsibility of the two largest trade partners for the development of the world trade system.
6. With respect to cooperation in the technology market, the two sides have common interests. In the field of civilian technologies, advanced payment capabilities in the U.S. consumer market are an important precondition for commercializing innovative inventions.
But some of the large number of new technologies derived from marginal ones may be more suitable for successful commercialization in mass markets with many low-end users. In China, there has been no lack of examples of technologies that have difficulty making a profit in high-end markets, yet achieve commercial success in marginal mass markets with low payment capacity.
In science and technology development, cooperation and market sharing and protection, we indeed have common interests calling for protection. We shouldn’t let some incidents conceal the basic fact that China-U.S. science and technology cooperation once effectively served both parties’ interests. We should resolutely prevent such strategic misjudgments and misguided moves in an all-around sci-tech decoupling driven by a politicized and ideological intransigence and led by misperceptions.
This article is meant to inspire in-depth discussion, using facts in limited areas to remind observers that the dust stirred up by the two governments’ tentative actions, while exploring each other’s boundaries, has temporarily distracted people from their areas of common interests. Completely ignoring the two sides’ common interests, even highlighting differences in common interests, will present a mistaken picture and cause major country relations to slide into the so-called Thucydides trap.
If we work hard, we’ll certainly be able to identify more areas of common interest and establish a reference framework for the adjustments of bilateral ties. This is exactly where additional efforts need to be made.
