Alfredo Toro Hardy
By mid 2021, the tendencies in the correlation of power between China and the United States seemed to favour the former. Although the U.S. was still clearly on top, Beijing was rapidly discounting the advantage.
In the third quarter of 2023, though, Washington has consolidated its upper hand and the tendencies are moving in its direction. What happened in this short space of time?
A bit more than two years ago, China seemed to exhibit important advantages. Among them, the following. A management of Covid that appeared to be highly efficient. A no limits’ strategic alliance with Russia, that gave the impression of combining the strength of these two authoritarian revisionists powers, placing the U.S. in a defensive position. A clear-cut strategic consistency, with the year 2049 as the point in time when the Chinese regime aims at attaining world primacy.
An economy which had already surpassed that of America in GDP’s Purchasing Power Parity, and that was expected to surpass it in GDP’s absolute terms by the turn of the decade. And so on. In sum, the efficiency, the strategic initiative, the focus, and the economic growth, seemed to be on China’s side.
The sole example of Covid
The sole example of Covid’s management appeared to speak volumes. With 1.4 billion inhabitants, China’s contention of the virus mirrored the case of Singapore, a country of just 6 million people characterised by its efficiency. By the middle of June 2021, one billion Chinese citizens had already been vaccinated, which represented close to 40% of the 2.5 billion vaccine doses globally applied up to that moment. The death toll at that point was just a few thousand. By contrast, by the end of May of that year the U.S., with 4% of the world’s population, exhibited 600,000 deaths, which represented 25% of global deaths.
A few months later, America’s death toll would reach and surpass 1,000,000 people. In contrast to the Chinese social discipline, the United States exhibited a shameless picture of collective anarchy and lack of respect towards science, with 47% of Republicans and 29% of Democrats refusing to get vaccinated by July 2021. Moreover, the refusal to use masks became a distinctive sign of Republicans within its cultural war with Democrats, with some states controlled by the former forbidding any mandate on the use of them in schools. That, amid the peak of the Delta variance (1).
America’s dysfunctions
America’s dysfunctional Covid management presented itself as just one of the many examples of its wide social fracture, and of its inefficiency to solve big problems. Liberal democracy’s values, the essence of its political system, were under the siege of a powerful populist movement. But beyond democracy itself, also science, reason and objective reality, were threatened by the latter. On the other hand, endemic problems stayed unresolved as an inheritance of the Reagan Revolution, which denied the participation of the Federal Government in the solution of important collective needs.
On the foreign front, the trustiness of the United States vis-à-vis its main allies, which had reached a historical low during the four preceding years of the Trump administration, was not helped by the unconsulted and chaotic American withdrawal from Afghanistan. The cohesiveness of NATO remained shaky, as a result of Washington’s weak and doubtful leadership. In sum, the U.S. seemed to have lost its strategic compass, its social cohesion and its credibility before its traditional allies.
A simple example could illustrate the accrued deficiencies within America: The decrepit state of its infrastructures. In its 2009 quadrennial report of the country’s infrastructures, the American Society of Civil Engineers ranked the United States’ overall grade at an abysmal D. This included D in aviation, C in rails, D in roads, and D in energy. In this report, the Society concluded that the country needed to spend US$450 billion a year, for the next five years, simply to maintain the overall infrastructure in its then current condition.
In 2021, such a situation hadn’t improved much. In that year’s quadrennial report, the American Society of Civil Engineers slightly upgraded the nation’s infrastructure to a C-Minus., stating that if the U.S. did not update it, it would lose US$10 trillion by 2039. Indeed, the United States’ infrastructure ranked twenty-third in the world, as the country invested just 2.4% of its GDP in this area, versus 5 percent in Europe and 9 percent in China. The result being that the country’s bridges, roads, schools, electricity grid, waterways, rail systems, air traffic network, and levees, had dropped to Second World level. However, try after try to solve this chronic problem had proved unsuccessful, as a result Congress’ gridlocks (2).
In September, 2023, though, the situation has substantially changed in relation to a couple of years ago. Why has it been so? A concatenation of international and domestic circumstances in both countries, have altered the tendencies in the correlation of power between them. Or better to say, while the wind now pushes in Washington’s back accelerating its steps, it blows strongly in the face of Beijing, hampering its movements. Several reasons explain the above in the two cases. Let’s enumerate first those surrounding the U.S.’ boost, and subsequently those that have hindered China.
Strengthening the domestic front
First, Biden’s domestic strategic clarity, his experience in dealing with Congress, and his conviction that only strengthening the domestic flank would his country be able to successfully compete with China. Notwithstanding the fact that Biden had to fight inch by inch with a seemingly unconquerable opposition, while continuously negotiating with two reluctant senators from his own party, he was able to pass a group of transformational laws. Among them, the Infrastructure Investment and Job Act, the CHIPS and Science Act and the Inflation Reduction Act.
Together, these legislations allow for a government investment of a trillion dollars in the modernization of the country’s economy and its re-industrialization, including the consolidation of its technological leadership, the updating of its infrastructures and the reconversion of its energy matrix towards clean energy. Private investments derived from such laws would be gigantic, with the sole CHIPS Act having produced investment pledges of more that 100 billion dollars. This projects, vis-à-vis China’s competition, an image of strength and strategic purpose. Moreover, before foes and friends these accomplishments prove that the U.S. can overcome its legislative gridlocks, being able to modernise its economy and its competitive standing.
Re-affirming democracy
Second, the mid-term elections in the United States proved that its democracy was still strong, showing that through the ballot boxes it was possible to significantly debug the threats against it. Facing a powerful populist insurgency that feeds anti system sentiments and promotes rabbit hole escapes from reality, such elections reaffirmed liberal values and the robustness of reason and objective reality. Having centred its campaign in the defence of democracy (and that of the right to abortion as well), Democrats run a risk, as economic insecurity seemed to have been the prevailing concern of voters.
The vigour shown by Democrats, prevailing against electoral surveys and odds in the opposite direction, was tantamount to the importance given to liberal democracy by a majority of Americans. Moreover, all the candidates to governors and senators that had denied the results of the 2020 presidential election, were defeated. As a result, fears regarding the fragility of America’s democracy were importantly dismantled.
Buttressing alliances
Third, Washington alliances have significantly strengthened. In Europe, Russia’s invasion of Ukraine and Washington’s firm reaction to it, had important consequences. While the former showed to its European allies that America’s leadership was still indispensable, the latter made it clear that the U.S. had the determination and the capacity to exercise said leadership. Washington has indeed led in response to the invasion, in the articulation of the alliances and the revitalization of NATO, in sanctions against Russia, and in the organisation of the help provided to Ukraine.
It has also been Kiev’s main source of support in military equipment and intelligence, deciding at each step of the road what kind of armament should be supplied to the Ukrainian forces. In short, before European allies that had doubted Washington’s commitments to its continent, and of the viability of NATO itself, America proved up to be the indispensable superpower. More to the point in relation to Washington’s rivalry with Beijing, America’s alliances in the Indo-Pacific have also been strengthened and expanded. Multiple initiatives emerged as a result.
As the invasion of Ukraine made evident the return of geopolitics by the big door, increasing the fears of China’s threat to regional order, Washington has become for many the essential partner. America’s security umbrella has proved up to be for them a fundamental tool in containing what they perceive as China’s increasing arrogance and disregard for international law and jurisprudence.
Among the security mechanism or initiatives created or reinforced under Washington’s stewardship are an energised Quad; the emergence of AUKUS; NATO’s approach to the Indo-Pacific region; the tripartite Camp David’s security agreement between Japan, South Korea and the U.S.; a revamped defence treaty with The Philippines; an increased military cooperation with Australia; and Hanoi’s growing strategic alignment with Washington. Meanwhile, on the economic side, the U.S. was instrumental in the promotion of the Indo-Pacific Economic Framework for Prosperity and the freshly emerged Partnership for Global Infrastructure and Investment & India-Middle East-Europe Economic Corridor.
While the U.S. has shown an unexpected burgeoning, China has moved in the opposite direction. The following circumstances have, indeed, affected Beijing:
Zero Covid policy failure
First, China’s Zero Covid policy, which initially presented itself as an extraordinary efficiency achievement, turned out to be an utter failure. The inflexibility showed in its application, preserving it for long months against the mounting evidence of its costs, translated into a drastic deceleration of the country’s economic growth, and in a fracture of its supply chains. Before Covid, the country had 44 million registered small enterprises, which employed 80% of its non-State labour force.
The interminable closure of activities plus the lack of financial support to withstand it, had a devastating effect upon that economic sector. At the same time, the impact upon supply chains forced many foreign investors to move their factories to other countries of that region, or closer to home. On the other hand, the quality of China’s Covid vaccines left much to be desired. This, jointly with Beijing’s refusal to acquire the much more effective American vaccines, did not help to overcome the pandemic. Stubbornness and lack of flexibility multiplied the problem (3).
Economic crisis
Second, helped by the Zero Covid policy, but transcending it, China faces a serious economic crisis. On top of the long closure of its economy, other factors came into play to generate such crisis. Among them, the over regulation of its private sector, with particular reference to the high-tech sector where the bulk of its productivity resides; the imposition of restrictions upon foreign investors; and the huge crisis of its real estate sector. Both private consumption of durable goods and private investment have fallen significantly in relation to 2015, with the latter showing a two-third contraction during that period.
Nor consumers, nor private investors, trust the way in which the economy is been run and, as a result, chose to protect their money by keeping it in banks. Moreover, exports and imports are simultaneously falling, while a worrying deflation in course brings to memory the case of Japan in the 1990’s. On top, its youngsters cannot find employment and a growing malaise is taking root among them. With a public debt estimated in 282 percent of its annual national output, Beijing cannot buy its way out of problems through public investment, as it did in the past. As a matter of fact, the economic tools at its disposal are running thin.
At the same time, the superconductors’ blockade imposed by the U.S., resulting from Beijing’s frontal challenge to America’s high-tech leadership, forecloses China’s access to a fundamental technology. As a result of all of this, estimates that China would be surpassing America’s GDP in absolute terms by the turn of this decade, have evaporated. It would take at least until the 2060s for this to happen, if ever. With Xi Jinping’s emphasis on security over economics, and with the 7 members of the CCP’s Standing Committee and the 24 members of its Central Committee lacking economic experience, the “if ever” looks more realistic (4).
Partnering a giant with feet of clay
Third, what was perceived as a potent geopolitical block in the making between China and Russia, has turned out to be an important liability for the former. The combined strength of these two authoritarian and revisionists powers, seemed to have placed the U.S. in a defensive position. Not surprisingly, it was argued that Washington should have never allowed for this to happen. However, Russia ended up by being but a giant with feet of clay, and China’s support to it a burden that has seriously affected its economic relations with Europe. Moreover, it has placed Beijing at odds with NATO, who as a result has been approaching Japan and South Korea and is now engaging with the Indo-Pacific region.
By refusing to use the term “invasion” when referring to Russia’s actions in Ukraine, by repeating the same arguments provided by Russia in relation to the causes of the war, by abstaining itself to criticise Russia within the U.N., by strongly reaffirming its “no limits” strategic partnership with Moscow, by pursuing naval exercises with Russia amid the war, by becoming Moscow’s economic lifeline, China has greatly antagonised the Europeans. It comes as no surprise, thus, that the President of the European Commission, Ursula Von Der Leyen, is calling for a reduction of the risks (hence the term “de-risking”) involved in dealing with a “systemic rival” as China. Notwithstanding the economic costs involved for Europe, putting distance with China is seen as a “necessity”(5).
Nothing is permanent, everything flows
As seen, then, the tendencies in the correlation of power between China and the United States, have been reverted in relation to a couple of years ago. But is this a consistent trend? Can it be assumed that the wind at Washington’s back will be maintained? Not at all. The struggle for primacy in the Cold War between these two behemoths is, by its own nature, highly dynamic. Mistakes or attainments, political shortcomings or political successes, can move the balance in either direction. Moreover, black swans and the response to them, are also part of the game. More than the structural problems in each case, the willingness or the capacity to address them also counts much.
The national mood in each country also matters and its excesses, whereas unbridled nationalism or populism, can impose a heavy tool. As 5 Century BC’s well-known philosopher Heraciltus used to say: Nothing is permanent, everything flows. And indeed, within the U.S.-China relation, everything flows. So much so, that a single event in the United States could turn everything around: Donald Trump’s return to the White House would put the wind on China’s back.
Notwithstanding Trump’s many intemperances during his first term in office, a professional civil service and an institutional contention wall (boosted by the so called “adults in the room”), were able to keep the worst of his excesses at bay. According to a report by The Economist, though, that wouldn’t be the case during a second term, as thousands of career public servants would be fired and substituted by MAGA followers. The deconstruction of the so-called “deep State” would be the aim to be attained during that second term. This would translate into getting rid of every one that knows how to get the job done within the Federal Government. Hence, no matter how significant China’s shortcomings may be, they would pale in comparison to the furious whirlwind that would take hold of the United States (6).
References:
1 – Toro Hardy, A., America’s Two Cold Wars, London: Palgrave Macmillan, 2022, pp. 62, 65, 66.
2 – Brzezinski, Z., Strategic Vision, New York: Basic Books, 2013, p. 51; Huffitngton, A., Third World America, New York: Crown Publishers, 2010, pp. 106, 112; Schaper, D., “Potholes, grid failures, aging tunnels and bridges: Infrastructure gets a C-Minus”, MPR News, March 2, 2021.
3 – Mixin Pei, “China’s Pro-Growth Happy Talk”, Project Syndicate, January 24, 2023.
4- Posen, A.S., “The End of China’s Economic Miracle”, Foreign Affairs, August 2, 2023; Krugman, P., “Why is China’s Economy Stumbling?”, The New York Times, August 10, 2023; Goodman, P.S., “China’s Stalling Economy Puts the World on Notice”, The New York Times, August 11, 2023; Sharma, R., “China’s economy will not overtake the US until 2060, if ever”, Financial Times, October 23, 2022.
5 – Center for European Policy Studies, “The EU’s aim to de-risk is risky… yet necessary”, 7 September 2023.
6 – The Economist, “Preparing the way: The alarming plans for Trump’s second term”, July 15th, 2023.
Author: Alfredo Toro Hardy – PhD in international relations. Retired Venezuelan career diplomat, scholar and author. Former Ambassador to the U.S., U.K., Spain, Brazil, Ireland, Chile and Singapore. Author or co-author of thirty-six books on international affairs. Formerly, Fulbright scholar, Visiting Professor at the universities of Princeton and Brasilia, online Professor at the University of Barcelona, academic advisor to the University of Westminster, and a two-times Rockefeller Foundation Bellagio Center Resident Scholar.
(The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of World Geostrategic Insights).