By Eric Vandenbroeck and co-workers

The New Cold War

Many Chinese observers seem to be pessimistic or, at best, cautiously optimistic about that question. Their views on the prospect and nature of Sino-European relations generally fall into four categories, ranging from predictions of a new cold war, forecasts of a vicious spiral of rising confrontation, expectations of strategic competition, and hopes for limited competition and cooperation. Regarding ways of avoiding a cold war and maintaining peace, the most often-heard recommendations include deepening economic interdependence, maintaining the balance of power through alliances and hedging,  managing the domestic politics of the major powers, and nurturing mutual respect while exercising self-restraint. However, many of these ideas are based on assumptions of zero-sum games and power politics, following an individualist approach.

Adopting a systemic and relational perspective, and assuming that multilateralism matters, this chapter argues that a cold war between Europe and China is not  inevitable as long as the two sides commit to “inclusive multilateralism.” While recognizing the fundamental significance of rules in multilateral cooperation,  inclusive multilateralism emphasizes inclusiveness on several crucial fronts: plural and pluralistic ideas, norms, and identities and the role of consensus in addressing and accommodating the salient plurality, diversity, and complexity of world politics. Inclusive multilateralism is a consensus-seeking practice that coordinates relations among three or more states to address common problems and promote global governance. Supported by the three pillars of networking, openness,  and developmental security, inclusive multilateralism can function as a social security net, enhancing the resilience of international society to enable it to resist and contain strategic competition and to recover from tensions and conflicts more readily. The concept of inclusive multilateralism has been inspired by East Asian regional cooperation in the post–Cold War era. Inclusive multilateralism enabled  East Asia to withstand challenges at the end of the Cold War, resolve two financial crises, and manage regional power competition. The commitment of China and  Europe to inclusive multilateralism is crucial in helping prevent a new cold war and enhancing the resilience of the international order of peace and development.

The closing session of the National People’s Congress at the Great Hall of the People in Beijing, March 2024

The CCP is now underwriting proxy wars in multiple theaters to undermine the security and credibility of the United States and its partners. In short, global events driven by Xi and his “axis of chaos”, Russia, Iran (and its terrorist proxies), North Korea, and Venezuela, are simply overwhelming Biden’s China policy. As the Biden team frets about admitting that the United States is now in a cold war, Beijing is leading it into the foothills of a hot one.

 

What the United States Should Be Doing

What Washington should be doing to address the threat, which has quickly metastasized from a “pacing challenge,” as the Biden team politely calls it, into something much scarier, as the CCP is now underwriting proxy wars in multiple theaters to undermine the security and credibility of United States and its partners. In short, global events driven by Xi and his “axis of chaos”, Russia, Iran (and its terrorist proxies), North Korea, and Venezuela, are simply overwhelming Biden’s China policy. As the Biden team frets about admitting that the United States is now in a cold war, Beijing is leading it into the foothills of a hot one.

In October, at the 20th National Party Congress of the Chinese Communist Party (CCP), General Secretary Xi Jinping set himself up for another decade as China’s most powerful leader since Mao Zedong replaced his most economically literate Politburo colleagues with a phalanx of loyalists, and enshrined the Stalinist-Maoist concept of “struggle” as a guiding principle in the Party Charter. The effect was to turn the page on “reform and opening,” the term the CCP uses to describe the economic liberalization that began in the late 1970s and led to the explosive growth of the Chinese economy in the past four decades.

President Xi seems laser-focused on prevailing in a global struggle in which “capitalism will inevitably perish and socialism will inevitably triumph,” as he put it in a quintessential secret speech shortly after rising to power. Xi’s internal speeches, edicts, and actions show that he is pursuing global, not just regional, initiatives to discredit and dissolve Western alliances, co-opting international bodies to advance illiberal and autocratic aims, and even undermining the centuries-old Westphalian system of sovereign nation-states. These policies first took shape during the Obama administration, when Washington was at pains to engage and reassure Beijing.

In another statement, Xi said, “Our struggle and contest with Western countries is irreconcilable, so it will inevitably be long, complicated, and sometimes even very sharp.” Xi has clearly driven the contest into just such a “sharp” phase. In April, Secretary of State Antony Blinken stated that China is “overwhelmingly the number one supplier” of Russia’s war machine and that “Russia would struggle to sustain its assault on Ukraine without China’s support.” Beijing is following a similar playbook in the Middle East, making itself the primary consumer of sanctioned Iranian oil and providing strong diplomatic and propaganda support for Iran and some of its terrorist proxies in the wake of Hamas’s October 7 rampage in southern Israel.

Russian President Vladimir Putin shakes hands with Chinese President Xi Jinping during a meeting in Beijing, May 2024

If Washington wants to achieve victory without war in competition with a capable, belligerent Leninist regime, history tells us that it should adapt and apply the best lessons of the Cold War, from the clear-eyed theoretical framing that Kennan provided in the late 1940s to the resolute yet flexible policies that Reagan put into practice in the 1980s, policies that steered the Cold War to a peaceful conclusion that favored free nations.

Nine successive U.S. presidents, from Harry Truman to George H. W. Bush, chose to employ Cold War strategies, albeit with varying approaches. The Biden administration is repeating the mistake of the 1970s.

China has repeatedly reneged on its various tactical concessions or returned accommodation by others with eventual hostility or more expansive claims.” Why then believe China’s recent and minor tactical concessions will follow a different pattern?

 

Victims Or Perpetrators?

Dismissing the goals, resourcefulness, and initiative of dictators is all too common in Washington. 

Beijing’s formidable ambitions and capabilities and how threatening they are to U.S. interests (as does the Biden administration’s written strategies). It also defends the growing list of steps the Biden administration has taken to strengthen Pacific alliances and restrict Beijing’s access to U.S. markets and technology. U.S. policy toward China will need bipartisan foundations to succeed.

 China has the world’s second-largest GDP today, and so did the Soviet Union for most of the Cold War. In the 1970s, by the CIA’s estimate, the Soviet economy reached 57 percent of U.S. GNP, a share that is not far from the 65 percent of U.S. GDP that the Chinese economy is estimated to amount to today. The Chinese economy, like the Soviet economy, is almost certainly smaller than estimated, and it is going through a crisis reminiscent of the Soviet economic travails that became obvious by the early 1980s. We are the first to admit that reducing the West’s economic dependence on China will be much tougher than reducing its dependence on the Soviet Union was, given Beijing’s technological prowess. By the same token, the costs of failing to disentangle would also be far greater.

The United States should do nothing to strengthen the CCP’s power and confidence, which are sources of its aggression.

The United States and its allies have failed to deter their enemies over the past three years, in Afghanistan, Ukraine, and the Middle East, and what it says about the shortcomings of the administration’s foreign policy in general, including toward China. In March 2022, Biden drew a redline for Xi, warning him not to provide “material support” for Putin’s war in Europe. And yet Xi went on to do just that, with only token pushback from Washington, a failure that will probably embolden Beijing to undertake far more dangerous steps, including about Taiwan.

For example the Chinese People’s Liberation Army last week launched a series of military drills around the island of Taiwan. Beijing’s escalation was presumably undertaken to overlap with the inauguration of Lai Ching-te as president earlier this month: Taiwanese voters struck a blow to Beijing at the start of this year, by electing a candidate who campaigned on what many viewed as a China skeptic. platform.

By our reckoning, there is a lot of spiraling going on, in Europe, in the Middle East, in the South China Sea, and Beijing is at the center of it. Had the Biden administration adopted at the outset a stronger and more resolute policy toward U.S. adversaries, including, crucially, a major increase in defense spending, it may well have prevented the darkening geopolitical landscape that developed over the past three years. The Biden administration, inexplicably and inexcusably, is, in inflation-adjusted terms, cutting U.S. defense spending, even as it has initiated trillions of dollars in new spending on pandemic relief and progressive domestic priorities and is attempting to spend hundreds of billions of dollars more on college debt relief.

A Chinese attack on Taiwan is more likely to involve a naval blockade than a full-scale invasion

Lai makes Beijing nervous, hence the military exercises. On Monday, American lawmakers vowed to bolster Taiwanese deterrence against an incursion by China. At a news conference in Taipei US Representative Michael McCaul, chairman of the House Foreign Affairs Committee, stated that the military exercises were an attempt to “punish democracy”. Beijing has described them as “strong punishment” for Taiwan’s “separatist acts”.

Despite recently striking a conciliatory tone, Taiwan president Lai Ching-te clearly makes Beijing nervous

McCaul used the opportunity to urge Congress to speed up shipments of defensive weapons to the island, but the fear must now be that the current strategy is becoming out-of-date. For most of 2022 and 2023, the underlying assumption was that a Chinese attack on Taiwan were it to occur, would involve a full-scale invasion, not unlike the D-Day landings.

In such a scenario, the US and its allies would face a grim choice: either allow the Chinese to starve the Taiwanese into submission or send in the Western navies to break up the blockade. This would be no easy task considering that the Western navies have been unable to reopen the Red Sea against a far inferior force, but there is every reason to think that they would feel the need to act.

Such action could spark a direct military confrontation with China, which would be economically catastrophic. Presumably it would lead to the sorts of sanctions and counter sanctions that we saw placed on Russia after they invaded Ukraine. One recent study puts the cost at up to 10pc of global GDP, but even this likely understates the true damage.

Western economic supply chains are reliant on China in ways that no one person truly understands. China makes important intermediary and capital goods that are fundamental for Western manufacturers to function. Without access to these inputs, the Western economies would grind to a halt. The result would be severe shortages and uncontrollable inflation, unlike anything that we have seen in living memory. This would potentially be compounded by the Chinese dumping their Western bond and currency reserves.

To give some sense of this, consider that Chinese holdings of American bonds and reserves are large enough to represent a 40pc increase in the number of US dollars circulating in the daily foreign exchange market. These markets are used to very incremental changes in dollar liquidity, a shock dump of dollars making up 40pc of the market would send the currency into a tailspin. Hyperinflation would be a very real possibility as a result.

When Russia invaded Ukraine in February 2022, the economic effects were enormous – most notably through the rise in energy costs and the blowout in budget deficits in Western countries. But the economic threat from that war was never truly existential. The economic threat of a war between the US and its allies and the Chinese would be. Such a war could truly throw Western economies into severe turmoil.

These economies, already stagnant and overloaded with debt, could easily crumble in the face of such a threat. Social tensions in many Western economies are already riding high – especially around the issue of migration – and history gives us ample evidence that fractious societies can fall into chaos if hit with a large enough economic shock.

Western leaders might therefore want to consider diplomatic management of the situation in the South China Sea very carefully. It is in everyone’s interest to ensure that the situation does not spiral further out of control.

 

The Sources Of Chinese Conduct

One of the paradoxes of Marxist-Leninist dictatorships is that the more comfortable they are, the more aggressive they become.

It works the other way, too. The historian Richard Pipes, who served on the National Security Council during the Reagan administration and played a key role in fashioning its successful Soviet policy, held as a “central thesis” that “the Soviet regime will become less aggressive only as a result of failures and worries about its ability to govern effectively and not from a sense of enhanced security and confidence.” When he wrote those words, in his 1984 book, Survival Is Not Enough, he was predicting the internal forces that would ultimately unravel the Soviet Communist Party. Chen Weiss and Steinberg even allude to this dynamic, perhaps unwittingly, when they say that China’s current “economic headwinds,” combined with policies the United States is using to widen its economic and technological lead over China, “have created a window” for more stable bilateral relations.

It stands to reason, and Cold War history is replete with examples, that the weaker a communist dictatorship becomes, the more manageable a threat it becomes for Washington. Hence, the United States should first do nothing to strengthen the CCP’s power and confidence, which are sources of its aggression. As we made clear in our article, this isn’t the same as pursuing “regime change.” It is merely realistic and strategic thinking. Our view is the same as Pipes’s: “This is a call not for subverting Communism but for letting Communism subvert itself.” Washington shouldn’t be giving Beijing time—which the Biden administration’s détente-like policy does, to worm its way out of the economic conundrum it created for itself. Chinese leaders have long believed that the United States is trying to suppress Chinese economic growth anyway (even though it did precisely the opposite for more than three decades).

Washington shouldn’t be afraid to pursue peaceful victory in this competition. Beijing isn’t afraid of pursuing victory by any means necessary. In a major address in 2020 about China’s 1950 decision to fight the United States on the Korean Peninsula, Xi said, “War must be fought to deter aggression, force must be met with force, and victory is the best way to win peace and respect.” As we wrote in our original article: “China isn’t aiming for a stalemate. Neither should America.”

 

 

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