First, a bipolar comparison. Conventional view is that China is ‘already a US peer or near-peer, economically’. However, as I had pointed out, in the present state of competition, China still needs to do a lot of catching up, as the American NPP — especially its military strength, power of alliances and its cosmopolitan, multicultural and educated demography — far outpaces China, the ‘hesitant regional power’ that is trying to become a more assertive superpower. The US GDP is almost twice as large as China’s and some analysts believe that the Chinese official figures are fudged, with Beijing manipulating key economic metrics, including GDP.
China is heavily dependent upon fuel imports; has almost 20% housing vacancy rates and over $1 trillion in debt from its 48,000 km high-speed rail networks. The US by comparison leads in key high-technology sectors like the IT/software and services sector (80% of global profit shares); aerospace and defence (66.35%); drugs and biotechnology (60%) and semi-conductors/chips (58%, compared to China’s miniscule 2.6% share).
Then there are studies indicating that in a full-blown trade war, ‘decoupling’ China from the international economic system (sanctions) will disproportionately hurt Beijing, if China has not undertaken economic hardening like Russia. Moscow, in anticipation of the West Plus’s reaction to Ukraine, had taken on years of pre-emptive economy-hardening steps to mitigate the ill-effects of sanctions.
China’s other handicaps include demographic weakness (overpopulation, effects of one-child policy, aging population); lack of alliances; its lighter presence in important global regions (Europe, the Middle East); its comparatively subdued power to influence others; China’s lack of experience and exposure to act big, unlike the US, having the benefit of history and multicultural pluralism; and China’s nagging legacy of trouble-spots (Spratly Islands, Tibet, Turkestan, human rights, etc). So far, there is no alternative to US power. But that does not mean China is and will not catch up.
Second, the prospect of a Sino-US conflict. One had disagreed with the likelihood of conflict, as Beijing is likely to blink first, because the global status quo is protective of its core interests. Additionally, China is not a ‘spoiler state’ like Russia. President Xi abandoning his ‘lone-wolf diplomacy’ has often asked the US to lift sanctions, especially on technology transfers. And President Trump recently lifted ban on the sale of America’s Nvidia-made semiconductors (especially the H20) to China. US’s I-Phone is designed in California and assembled in China by a Taiwanese company, Foxconn. And in more curious case of inter-dependence, China monopolises supply of rare-earths, needed for US-manufactured semiconductors, to be used in China’s high-end products, for export to the US/Western markets.
There are more anti-conflict indicators, especially about the much-touted US-China conflict over Taiwan. There is a great deal of soul-searching in the American policy establishment about the cost-benefit of a war to defend Taiwan against a Chinese invasion. The US rationale in defending Taiwan is to prevent China from gaining a new foothold to project power in East Asia and disrupt trade routes in the western Pacific, thus upsetting the western-dominated global economy. America’s ‘vital’ interest, however, is to prevent China from regional hegemony in Asia.
In reality, Taiwan does not confer any outsized military advantages to China, other than extending the range of its missiles, AD assets and surveillance systems by a couple hundred ‘unneeded’ kilometres. Beijing can still target US regional assets in Guam, Japan and Philippines. China’s under-sea gains would similarly be modest. In sum, Beijing’s control of Taipei hardly overturns the regional military balance. Military logic and economic considerations, hence, do not warrant direct US involvement to defend Taiwan.
Taiwan’s TSMC still produces 90% of the world’s most advanced chips. However, by 2032, the US company, Boston Consulting Group, will be producing 28% of the most advanced semiconductors. Likewise potential blockade of the narrow sea-lanes in East and South China seas by China marginally affects the global sea trade, as bypassing options exist through Indonesian and Philippine archipelago.
Similarly, the notion that Chinese invasion undermines the US credibility is also geostrategically flawed, as fighting China over Taiwan unnecessarily binds US resources, needed elsewhere for the bigger objective of containing China. The US military prioritises developing the ‘second island chain’ of Guam, Marshal and Northern Mariana Islands, Micronesia and Palau for this purpose. In the US reckoning, Taiwan certainly matters, but not enough to justify war with China, as composite deterrence would likely work to dissuade China.
And if push comes to shove, PLA will prevail in a conflict with Taipei with or without the US, the former scenario being more costly for the US Armed Forces. The suggestions that Taiwan should become a ‘porcupine’ in its denial-focused strategy against Chinese invasion is also not likely to work, as the island just does not spend enough on its defence, and ignores acquisition of anti-ship defence, naval mines, uncrewed weapons and drones. Taiwan can make the invasion slow, long and costly but not impossible, as its geography, low and dwindling materiel stockpiles in case of a Chinese naval blockade would ultimately tilt the operational balance in China’s favour.
So, no wonder, Washington officially supports ‘One China’ policy, respects China’s redlines and there is much noise in Washington about ‘competitive co-existence’ with China.
Third, alliances and economic integration. China remains one of the most important markets for EU especially Germany’s export-driven economy. It meanders carefully through bloc politics, tries to be a peacemaker in the Middle East and vies for leadership mantle in the Global South. It is wary of a conflict with the US and so is the US. So, collusion, competition short of conflict will persist and recur.