Harvard Scholar Article: There are overlooked common interests in China and the United States

On August 8, the website of the Eurasian Review published an article entitled "China and the United States: A New Era and a New Game", written by William H. Overholt, a senior researcher at the Kennedy School of Government at Harvard University. The full text is excerpted below:

The game between China and the United States is different from the conflicts between rising powers and established powers in the past. Most analyses of such contests are based on pre-World War II history and fail to note that the game changed radically after World War II. Sometimes, when the rules or tools of the game change, so does the risk and optimal strategy.

Leading scholars and strategists often misinterpret the lessons of past Sino-American conflicts because they fail to recognize that these fundamental changes have brought about a new game.

Disciplinary disciplines have led scholars to overemphasize political-military relations and have led political scientists and historians to ignore decisive economic issues. Leaders responsible for handling U.S.-China relations also place too much emphasis on the military, because in peacetime, the allocation of U.S. national resources depends on lobbying in Congress, and the military-industrial complex often has an overwhelming advantage in Congress.

How to properly understand and unfold the game while dealing with other key issues in the relationship between the two countries will be the whole content throughout this article. The gist of it is that military conflict is far from inevitable; that we have serious conflicts with China, but also of great common interests that are currently being ignored; that China is not a demon, and that our allies are not angels; that we need to live in the real world, not in the world we want; and most importantly, that the United States must engage in a new game in order to remain a world leader.

Economic games become a new way

A common analogy in U.S.-China relations is the Thucydides Trap. From ancient Greece to World War II, when rising powers met with existing powers, about three times out of every four encounters there would be wars. From ancient Greece to World War II, the main conflicts were usually between neighboring countries, each using military power to seize territory from neighboring countries. But this was not the case in the post-World War II conflict. Two things have changed: we've learned how to make the economy grow faster; military technology (not just nuclear technology) has become more destructive. If both sides are pursuing the old method of gaining great power dominance, they are likely to fail.

Thus, the road to becoming or maintaining a great power is primarily the economic one. This is a fundamental shift in the way the world works – a new game. Ignoring this is tantamount to economists ignoring the Industrial Revolution.

During the Cold War, the United States needed a strong army because we had to airlift supplies in Berlin and gain the upper hand in the Cuban Missile Crisis. But it was economic strategy that ultimately won the Cold War. We provided decisive aid and institutional development programs, and then we used the Bretton Woods system, with the World Bank, the International Monetary Fund and gattactions and the General Agreement on Tariffs and Trade/World Trade Organization as the three pillars, to create a global development network centered on ourselves, elevating partners and allies in a sustainable and growing way.

In contrast, the Soviet Union devoted all its resources to the army while maintaining a traditional empire that eventually bankrupted itself. For us, it was an economic victory. The United States used the new method to play, the Soviet Union used the old method, so the Soviet Union lost.

The path to successful power has become an economic strategy protected by powerful armies (or allies with strong armies). Economic strategies differ from military strategies in that they are not inherently zero-sum games and can achieve a win-win situation. When Germany and France went to war, one side won and the other lost. But when the U.S.,D., Japan, or the U.S.-China competes, both sides can prosper.

China is 8,000 miles away from the United States, and the territorial problems between the United States and China are negligible. If we act like the great powers before World War II, we risk turning the Thucydides Trap into a self-fulfilling prophecy. If we play the traditional way, we might really get into trouble. Graham Allison's book Destined for World War I brilliantly elaborates on this consequence. We may lose the leadership struggle because of mistakes in economic management. Military conflict is not a law of history, especially after World War II.

Economic cooperation is good for the world

While we have conflicts with China that require decisive action to resolve, we also have enormous common interests. For example, China is far more open to U.S. trade and investment than its allies Japan and South Korea. This openness to trade allowed us to save the deteriorating General Motors Company and a large number of jobs during the 2007-2008 financial crisis. Car companies, the film industry, the world's major luxury goods manufacturers, and much of the economy, among other sectors, will survive only if they can meet China's demand. Now, the focus of the world consumer market is Asia, mainly China. That's only going to get bigger, and those who advocate decoupling — who usually see China only as a supplier — could lead to a sharp decline in the United States. The common interests of the two countries are inseparable.

Effective U.S.-China economic cooperation has led to the largest poverty alleviation in human history. For the first time in the thousands of years of human existence, humans have more basic necessities than we actually need—clothes, food, and many other things. The resulting stability, and the consequent reduction in global discontent and terrorism, have yielded enormous national security benefits.

Sino-US cooperation has ushered the world into a post-industrial era. Most jobs in this era were in the service sector, mostly high-paying, and there was very little heavy physical work in the agricultural and industrial eras. U.S.-China cooperation gives our world real hope of addressing the fundamental challenge facing the next generation: climate change and environmental degradation. If China, like India, remains mired in poverty, there will be little hope of meeting these challenges.

Politicians of both parties in the United States are aware of this, but they prefer to focus only on the conflict with China. They especially like to accuse China of making it impossible for us to adapt to the world of automation. While losing 3 million manufacturing jobs in a decade weighs heavily on American society, when China once faced losing 45 million state-owned jobs — mostly manufacturing jobs — their leaders helped laid-off workers reemploy — and the new jobs were largely in the services sector, not in the United States. But our politicians choose to blame China rather than deal with a social crisis at home.

The coexistence of multiple institutions is the norm

Led by Princeton University professor Alan Friedberg, many American commentators argue that we cannot coexist with another great power with a different system. This lesson was learned from the plundering of Nazi Germany and the Soviet Union. But unlike Nazi Germany and the Soviet Union, China did not try to impose its system on other countries. In addition, China is also different from Russia. China sees its system as unique. Beijing's mantra is that every country should have the right to choose its own path of development, free from external pressures.

While China has not forced or induced other countries to adopt its development model, it has had much success in improving the lives of its own people compared to India or the Philippines, challenging our insistence that "Western institutions are effective for any country at any level of development."

The global financial crisis of 2007-2008 and the rise to power of President Donald Trump and Brexit have convinced China that Western political and economic models are highly vulnerable to catastrophic economic mismanagement.

We cannot refute this view with force, subversive destruction or economic impediments. We must find ways to make Western institutions work better in India, in Africa and within our own countries than in the past. If we insist that India has developed a better society than China, then most developing countries have reason to despise it. It's a major challenge, but it's a problem for us and India, not a threat posed by China.

What will be the result of this for us? We will not be able to defeat China or gain the upper hand in the contest with China for the foreseeable future; and vice versa. We have a rivalry. This competitor does not seek to wage war. Historically, a multi-institutional world has been the norm.

The Belt and Road Initiative is even better

During the Cold War, we won the geopolitical game with our geoeconomic strategy. The World Bank under the Bretton Woods system, together with the International Monetary Fund and gatt and trade general agreements/WTO, finances global infrastructure by setting international standards and managing economic crises.

Economic success has made our system of alliances stable, dynamic and unified. Maintaining military superiority is absolutely necessary, but this alone is not enough, the economic game is the core.

After winning the Cold War, we allowed the institutions and aid mechanisms of the Bretton Woods system to shrink day by day. After the Mexican rescue operation in 1994, the U.S. Congress banned such rescue programs, making it impossible to rescue allies such as Thailand during the Asian financial crisis of 1997-1998. The miserly Congress refused to increase capital for the World Bank and the International Monetary Fund — even though that would ultimately cost the United States anything. Congress does not want to reform the way these international institutions are governed to suit the world economy of today, not the 1940s. Reform means ceding some power to rising countries, especially China. Short-sighted leaders have cut the State Department's budget, eliminated the U.S. Information Agency, and cut off our aid and institution-building development programs.

Efforts to constrain China and make it difficult to function have created a vacuum, such as the $12 trillion gap in global infrastructure investment. Recently, there has been a leadership vacuum in international economic integration, improving the environment and mitigating climate change. China has filled this vacuum. Its Belt and Road Initiative is now the Great Game.

China emulated our Bretton Woods system by setting up development banks to finance infrastructure; systematically creating common standards (in railways, customs clearance procedures, information technology standards, etc.); striving to make the renminbi an international currency; establishing a currency exchange system to aid other countries in times of economic crisis; and establishing institutions to liberate trade and investment. Moreover, China is now leading the way in a variety of green energy sources, spending more on environmental protection than the United States or europe as a whole, while we are abandoning our leadership to subsidize the declining coal industry.

Like the Bretton Woods system of the past, the Belt and Road Initiative offers an ambitious vision. China has gathered more than 40 African heads of state to develop development plans and then provide them with funding. In contrast, the United States provides special forces to other countries to combat terrorism, sending naval and air forces overseas. If it's a game of influence, China has won. Recently, our most important tool for expanding our influence in Africa has been President George W. Bush's AIDS initiative, the President's Contingency Plan for AIDS Relief. Even if we can win a local battle on the issue of counter-terrorism, in the long run, the Belt and Road Initiative can curb the development of terrorism.

The Belt and Road Initiative (BRI) is primarily focused on the regions least affected by the success of the Bretton Woods system, namely Central Asia, the Middle East and Africa. Merely blaming the Belt and Road Initiative without making any effort, as U.S. policymakers have done recently, will only discredit ourselves.

The Belt and Road Initiative has many advantages. It puts co-development at the heart of China's policies and brands. Its road, rail, port and telecommunications facilities are connecting Africa and Central Asia. The Belt and Road Initiative allows Chinese companies to extend their reach to the world. When the Belt and Road Initiative promises to build a road, it begins immediately, and it could take the World Bank eight years to make a decision. Just as the Bretton Woods system accelerated the recovery of Western Europe and East Asia after World War II, the Belt and Road Initiative accelerated the great waves of the 21st century: the integration of the Ten Nations of Europe and Asia and the rise of Africa. The global development network envisaged by the Belt and Road Initiative is much more complex than the one envisioned by the International Monetary Fund and the World Bank, which use a largely bilateral approach.

The United States has made the wrong game

Why didn't the United States play the right game, despite the fact that its Cold War strategy brought about the most successful great power competition in modern history? A small part of the problem is that our scholars have failed to elucidate this new game. But the biggest problem is that in peacetime, our resources are allocated by congressional lobbying, not by strategic considerations.

At the national security level, this situation of competition and common interest reflects the prioritization of the problem. U.S.-China cooperation has driven global development, and the national security benefits have never been counted, but they are crucial. Chinese leaders are well aware that the United States and China have common interests, and china does not "seek to destabilize the United States and EU countries" as Russia does.

In order to live in a peaceful world, Americans must accept the fact that we have a rival that is evenly matched. During the administration of President George W. Bush, we never encountered anything like this. We can choose to deal with this situation, or we can choose nuclear war. China does not want to destroy the United States.

As we work to contain China and prevent it from playing its part, we hurt ourselves and create a vacuum that actually makes China stronger. We have to face reality.

While the United States can coexist with China, the United States must successfully participate in this game. During the Cold War, we incorporated all the elements of national power — diplomacy, information, military, and economics. Now we have the best army in the history of the world, but we allow other tools to shrink day by day. Our military budget is equivalent to the sum of the military spending of the bottom eight countries, but it will never be enough. We always feel exhausted. We didn't lose, but we didn't win either. America can only win by acknowledging that we have been playing a new game since World War II. It is time to articulate the national security strategy that applies to this new game.

Source: Reference News Network