The implications of the deepening Sino-American rift are far-reaching, because several of the world’s most pressing economic problems can be solved only with contributions from both countries. And, to address global challenges, active cooperation between the two economic powers is indispensable.
SHANGHAI – The year 1979 was a pivotal one in Sino-American relations. On a historic visit to the United States, Deng Xiaoping, China’s paramount leader, met with President Jimmy Carter at the White House and attended the Round-Up Rodeo in Simonton, Texas, where he donned a ten-gallon hat and charmed the crowd. And, reflecting the rapid normalization of bilateral relations over the course of the decade, the two countries signed the US-China Science and Technology Agreement, which provided a framework for regulating technology, exchanging scientists, scholars, and students, and developing joint projects.
Now, 45 years later, that historic agreement has been allowed to lapse, a casualty of an American presidential-election year and heightened US-China tensions. And this breakdown comes on top of US tariffs on imports from China, prohibitions on exports of advanced technologies to the country, and, most recently, the addition of 42 Chinese firms to a trade restriction list for supplying the Russian military. Economic relations between the US and China have never been worse.
The implications are profound, because several of the world’s most pressing economic problems can be solved only with contributions from both countries. And, to address global challenges, active cooperation between the two economic powers is indispensable.
That said, there are at least a few faint glimmers of hope. US National Security Adviser Jake Sullivan’s trip to Beijing in August – the first by a national security adviser since 2016 – created the possibility of a constructive dialogue between President Joe Biden and President Xi Jinping. More consequentially, the next US administration may better appreciate the need for bilateral cooperation and take steps to rebuild it.
A starting point for rapprochement could be collaboration on the regulation of artificial intelligence. Absent such an agreement, a race to the bottom is inevitable, because both the US and China would shun regulations that risked leaving them behind in the development of this breakthrough technology. A rehabilitated US-China Science and Technology Agreement would be the obvious framework for negotiating an appropriate set of standards.
Second, there must be cooperation on the climate crisis, since only the largest countries, which are also the largest greenhouse-gas emitters, can lead the way. The Sunnylands Agreement negotiated late last year indicates awareness of this fact on both sides and suggests that there remains scope for the two countries to work together.
But progress also requires taking advantage of China’s prowess in manufacturing green products. By making its subsidies regime more transparent, China could reassure the US that it is not dumping solar panels, windmills, and electric vehicles onto world markets. The US could then be induced to remove the tariffs that make importing China’s green-technology products more expensive.
In fact, there is a bargain to be had on trade more generally. If China did more to boost domestic consumption of manufactured goods, the US would have less reason to worry about the bilateral trade imbalance and about China’s surplus vis-à-vis the rest of the world. Rebalancing the Chinese economy in this way could then prompt a reduction in bilateral tariffs and support efforts to revive the World Trade Organization.
China and the US will also have to work together to reduce low-income countries’ debt burden and help them to finance their green transitions. Similarly, they will have to agree on a regime to limit unhealthy competition in outer space. Their mutual interest in countering the production and trafficking of fentanyl and other narcotics is already obvious.
To be sure, there remain serious obstacles to cooperation: tensions over human rights, Taiwan, Ukraine, and China’s failure to help broker a truce in the Middle East. For its part, China is angry about US trade and technology policies.
The hope is that the US and China can compartmentalize areas where the two countries have irreconcilable differences and those where they can cooperate, as the economist Fred Bergsten has suggested. Whether this proves possible remains to be seen.
A future Kamala Harris administration will highlight China’s human-rights violations and privilege the complaints of American unions. And it seems unlikely that Trump in his second term would turn on a dime and embrace Xi in the manner he has embraced other strongmen, such as Vladimir Putin, Viktor Orbán, and Kim Jong-un.
This is not to say that US politics is the only obstacle to progress. Last week, on arriving in Shanghai for the Bund Summit, I was asked at the immigration booth whether I worked for the US government. To gain entry, I had to explain at some length that the State of California, for which I work at one remove, is not the federal government. The question – and the interrogation – did not leave me optimistic about the bilateral relationship. But who knows?
There are few certainties in world affairs. What we do know is that without much greater cooperation between the US and China, the world will be in dire straits.
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