China and the United States – An Emerging Cold War?

Introduction

In recent weeks the Covid-19 crisis has significantly increased the tension between the US and China. The trade war of the past three years has damaged both economies. And the US concern about the evident ability of Huawei to compete successfully in the international 5G market has been well articulated by politicians in the US and the wider Western world. These mutual suspicions have now been greatly exacerbated by disagreement about the source of the Covid-19 virus and claims that China could have done more to contain it and prevent it becoming a worldwide pandemic.

Well informed commentators suggest that this pandemic and trade war could well mark the start of a new and potentially dangerous ‘Cold War’ between China and the US. And tensions between the two largest economies in the world over political issues, including Taiwan, Hong Kong, control of the South China Sea etc. could well boil over.

Concern about the emergence of China as a major power precedes the presidency of Donald Trump. In 2012 an article in The Atlantic suggested that the ‘Euro Atlantic world had a long run of global dominance but it is coming to an end’. That article pointed out that China’s share of world GDP was 2% in 1980 when the US accounted for circa 25%. More recent data released by the World Bank in late 2019 estimated that the US continued to represent a quarter of global nominal GDP, whereas China’s share had increased to in excess of 16%.

China has engaged significantly with the West, particularly the US, over the years since Deng Xiaoping launched a historic reform of the Chinese economy, welcoming inward investment and ultimately joining the World Trade Organisation in 2001. Thousands of US and European-based companies have established businesses and manufacturing plants there. Bilateral trade between the US and China exceeded half a trillion dollars in 2019. Hundreds of thousands of Chinese students study in some of the best American and European Universities. Major European and American automakers are now very dependent on the Chinese market. Over a third of VW’s and approximately 40% of GM’s worldwide sales were in China. The recent launch of the ‘Made in China 2025’ programme confirms China’s ambition to be a leader rather than a follower in industry and technology.

In short, China is an emerging power which is asserting itself on the global stage. Given the stakes in a potential standoff and cold war, it is worthwhile to consider the background to the ‘emerging conflict’ between the US and China, and in particular how China may view the world. We need that perspective to form an assessment at this crucial time.

There are profound differences of political attitude between China’s leadership and the values espoused in Western countries, and concerns about the country’s record that must be acknowledged. I share those concerns. At the same time, I believe that we have a responsibility to form a better understanding of the society which has such a growing influence in the world. My purpose in writing this blog is to consider aspects of its recent history, and to offer perspectives formed during visits to many Chinese cities, universities, and industries over the last thirty-five years.

A Note on China’s History: avoiding the Thucydides trap?

I will start by offering some salient points from my limited knowledge of the history of China. It is important to consider Chinese history because China is very conscious of it, and feels that it had, to put it bluntly, a ‘raw deal’ in the last 200 years or so; and believes it is only now beginning to assume its ‘rightful’ place in the world.

Does this make conflict China and other major powers inevitable? In 2017 Professor Graham Allison of Harvard’s Kennedy School published a book entitled ‘Destined for War – Can America and China Escape Thucydides’s Trap?’ Thucydides, the Greek historian of the 5^th century BCE, was author of the History of the Peloponnesian Wars. Thucydides concluded that the increasing power and influence of Athens, which instilled fear in Sparta, made war between the two city states inevitable. Allison generalised this concept. Rising powers threaten established powers, and sadly the issue is all too frequently resolved through war. He reviewed sixteen historical situations since the early 16^th century, where ‘rising’ powers challenged ‘established’ powers. In all but four cases, war was the outcome.

For example, he presents the Napoleonic wars and the defeat of Napoleon at Waterloo as the outcome of France challenging Britain’s dominance of the ‘ocean waves’.

At the turn of the 19^th and into the 20^th century, a rapidly rising Japan challenged China and Russia for dominance in Asia, resulting in war and ultimately Japanese mastery.

It is worth noting that the four cases he cites as being resolved without recourse to war are all relatively recent, starting with the transition from the British empire to the ‘Pax Americana’ post 1945, and including the end of the ‘Cold War’ in the 1980s. Maybe we have learned something from history?

Taking a longer perspective, in the 2012 BBC Reith Lectures, the British historian Neil Ferguson pointed out that ‘From the 1500s until the late 1970s, there was an astonishing divergence in global living standards as Westerners became far richer than, well ‘Resterners’. As recently as 300 years ago, the average Chinese was still a bit better off than the average North American and European’. In 1978 it is estimated that the average American was at least twenty-two times richer than the average Chinese. By the mid 2000s that ratio had fallen to circa five-to-one.

Looking further back into history, Professor Ian Morris of Stanford University, in his monumental history of the world entitled ‘Why the West Rules – for now’ points out that in the period from the decline of the Roman Empire circa 500CE to circa 1700CE the East – China and India mainly – were the most advanced societies and economies in the world. The Western-led ‘take off’ since 1750 or so left the East behind in relative terms. There are many explanations for this ‘take off’, but we should note it when considering the shape of the future.

Someone once said that ‘China had a difficult 19^th century’. The latter half of that century up to the early to mid 20^th century, in fact, was particularly challenging. The ‘Opium Wars’ in the 1840s and 1850s, the ceding of ‘treaty ports’ to various European and Asian rival powers (including Hong Kong), defeat by Japan in the first Sino-Japanese war of 1894-95, major internal strife brought about by the Taiping and Boxer rebellions, the emergence of regional warlords as the authority of the Empress Dowager Cixi and the central bureaucracy faded, resulted in what is considered by many Chinese to be ‘an era of humiliation’. The ‘Opium Wars’ in particular stand out. An imbalance of trade between Britain and China, largely a result of high demand in the West for Chinese goods, led the British East India Company to grow opium in Bengal and export it in huge quantities through merchants into China.

The collapse in the early 20^th century of the Qing dynasty, which had ruled China since the fall of the Ming dynasty in 1644, followed by civil war and the second Sino-Japanese war in the 1940s, continued the instability and indeed the general decline. The China of the Qing dynasty, which in the late 18^th and early 19^th century was a major economy accounting for up to 30% of the world’s GDP, and whose products such as tea, porcelain and silk were in great demand in the West, was reduced to penury by the early to mid 20^th century. A description of the grinding poverty in China in the early to mid 20^th is offered by the writer Pádraig Ó Murchú, who tells the story of the Maynooth mission to China in his book, as Gaeilge, entitled ‘Misean Mhaigh Nuala chun na Síne 1916 – 1963’ published in 2003.

My sense is that China is very conscious of its history and the patterns of the rise and fall of empires and powerful civilisations. I have spoken to many colleagues in various universities in China who are aware of the so called ‘Thucydides Trap’ and Professor Allison’s book. Indeed President Xi Jinping is reported to have commented on it and suggested that ‘the notion that a great power is bound to seek hegemony does not apply to China’ and that the two nations will reach an accommodation to avoid war. Professor Allison, in a lecture delivered to the 2019 Harvard Alumni Public Policy Forum in Beijing, suggested that ‘President Xi Jinping gets it’ and argues that the challenge for the US and China is ‘to build a new form of great power relations … and … if we are successful … we could avoid the Thucydides trap.’

Some Personal Impressions of China

The nature of China’s political system is well known. What is less perhaps widely grasped is the sheer scale of the transformation of its economy and infrastructure over the last 30 to 40 years. No doubt the capacity to deliver this relates to the Chinese body politic and its governance structures. I can comment on things that have struck me: an ambition and commitment to succeed is apparent in Chinese Universities and the wider society; an ability to move very quickly once a decision has been made; a level of confidence that China is on the right path; and a willingness of individual citizens to accommodate the needs of the community and the wider society – we might attribute this to the nature of its government, but NIMBY appears to be an alien concept; and finally the degree to which digitalisation has permeated Chinese society and its widespread adoption by Chinese citizens in their day-to-day lives.

That China is an investment-led economy is apparent to the casual visitor. Even in what are termed 2^nd and 3^rd-tier cities, the recent investments in road, rail including high speed trains and underground systems, broadband including 5G, real estate, airports, ports etc. are astonishing.

Coming off a very low base in the late 1980s, the infrastructure has and continues to be transformed. From a standing start in 2007, China Railway now manages almost 30,000km of highspeed rail track, which accounts for over two-thirds of the world’s highspeed train network. My first visit to Jinan, a city with a population of over 8 million people located some 500km or so south east of Beijing was in the early 1990s. I travelled by overnight train, a journey of over 8 hours. In 2019, the same train journey took under two hours.

Beijing has completed five ring roads since the late 1980s. Its subway system, which was initiated in the early 1970s, extends to700km and is reputed to be the busiest metro system in the world. Chengdu, the capital of Sichuan province and home of the giant pandas in south west China, with a population of over 16m, built its first metro line ten years ago and expects to have over 500km of metro by the end of this year.

China is ‘a country of cranes’ with new apartment complexes and office blocks under construction as the flight from rural areas into the cities, and the rapid growth of urbanisation continues. Major new housing zones are under construction in the cities and it appears that they are properly planned in terms of the availability of schools, health services, transport etc.

The level of continuing investment in the economy is difficult to comprehend as is the source of funding which underpins it. Maybe China is practicing ‘Modern Monetary Theory’, MMT, which suggests that governments that control their own currency can spend freely, as they can always create more money to pay off debts in their own currency! And there are economists who question the financing of the new infrastructure in China and wonder whether China is floating on a sea of debt. Clearly I’m not in a position to judge. But the results are certainly very impressive.

Talking to colleagues and students in a number of Universities in various cities in China over the years, what stands out is their level of ambition and their evident commitment to realising that ambition. This is true of top tier universities such as Tsinghua University in Beijing and what might be termed 2^nd level universities in provincial cities and the technical universities I am familiar with. I first visited Tsinghua in the early 1990s. At that time, it was an underdeveloped university with very limited resources. Today Tsinghua is unrecognisable from the Tsinghua back then. I realise that ranking systems are far from perfect but today Tsinghua is ranked 23^rd in the world by the THE, 16^th by QS, and number 1 in the world in the disciplines of Engineering and Computer Science by US News and World Report. Last year I gave a seminar to a postgraduate engineering class in Tsinghua. The class of about 60 students was comprised of 50% Chinese with the remainder from top universities in Western Europe, Canada, Russia, other Asian and African countries.

The transformation since the 1990s is remarkable. And in so far as I can judge, Universities all over China are developing with major investments in teaching and research infrastructure, and the recruitment of very high performing staff, many of whom are expatriate Chinese, with well-rewarded positions and ambitious students. The system for accrediting degrees and granting the authority to individual Universities to graduate students at bachelor, master and doctoral level is, in my experience, very searching and rigorous. The quality of courses appears to be very high, and there is a widespread appreciation of the need to maintain academic quality and not to ‘devalue the currency’ of the university degree.

There appears to be a widespread appreciation of the critical importance of higher education to the individual and the wider society and economy. I have been particularly impressed with the level of investment and the quality of programmes in technical universities I’ve worked with in some regional cities: I have seen excellent ‘state of the art’ undergraduate and postgraduate engineering projects in areas such as Robotics, Internet of Things and Artificial Intelligence, many of which were completed by student teams in cooperation with local industry. A particular feature of those technical universities is their close links to local industry. In so far as one who does not understand the Chinese language can judge, the cooperation seems ‘seamless’ and the student learning of very high quality. A feature of Chinese technical education seems to be the many competitions between student teams from the various Universities within cities and provinces for what are highly sought-after prizes and recognition.

I participated in a forum on PhD education in Beijing in late 2018. The forum was organised by the Ministry for Education and sought to compare experiences from Europe, represented by the European Universities Association; the US represented by senior academics from top US universities; and China. We know that degrees were abolished in China during the period of the Cultural Revolution, 1966 to 1976, and the PhD degree had to be reinstated there in the 1980s. China now trains more PhD students than the US, particularly in the fields of science, engineering and medicine. That growth is reflected in the number of papers from China in the scientific literature. What was interesting about that seminar was the clear understanding that the great majority of PhD graduates are expected to work in industry and the wider society, rather than pursue academic careers. Many PhD programmes in China seem to be designed on the principles of the structured PhD as we might label it.

One of the most interesting aspects of Chinese society is its ability to follow through and complete a project once the decision is made to initiate it. The centralised political structure no doubt has much to do with this. I suspect that it also reflects Chinese culture developed over hundreds of years, and an attitude amongst Chinese people which seems to strike a different balance between the rights of the individual and those of the wider community. My sense is that Chinese citizens, in general, are more conscious of community and the common good and more willing to compromise their personal rights in the interests of the wider community. As I indicated earlier, it appears that the concept of NIMBY does not exist in Chinese thinking.

I mentioned earlier in this blog that the ongoing investment in infrastructure is evident to the casual visitor to China. Equally evident is the tremendous take up of technology and the impact of digitisation on the everyday lives of ordinary citizens.

Smart phones and a particular so called ‘super app’, WeChat, are ubiquitous all over China, used by everybody from street traders to large department stores, young and old. WeChat is a user-friendly multi-purpose social media, messaging and mobile payments application which claims over 1 billion active users. WeChat users order taxis, feed the destination to the taxi, and then pay the bill in a single application. Goods are ordered, hotels and restaurants booked and paid for through WeChat wallet which can be readily linked to users’ bank accounts.

Effectively Chinese consumers have bypassed credit and debit cards and gone directly to mobile electronic payments systems. WeChat allows users to order goods and services, make payments including bill payments and transfer funds between users. Through WeChat and integrated mobile banking, China is rapidly becoming a cashless society. Cash transactions are now the exception and this is achieved through a single application based on QR codes implemented on a smartphone and without recourse to payment cards. And this system was originally designed for micro transactions.

QR codes – originally developed in Japan as an ‘extension’ of bar codes – are visible everywhere in China: whether it be in stores where users can readily access information on products and can for example trace food back to its sources, or in making information available on facilities, restaurants, visitor attractions etc.

This very high level of penetration of digitisation in the everyday lives of Chinese citizens has been achieved by a group of very successful homegrown Chinese companies, collectively known as the BAITs. In the west we talk about the FANGs: Facebook, Amazon, Netflix and Google. The Chinese ‘equivalents’ are the BAITs: Baidu, a search engine; Alibaba, similar to Amazon; jQiyi, similar to Netflix; and Tencent a social media business with applications comparable to Facebook, Spotify, Netflix and PayPal. WeChat is a Tencent product.

China is probably the only country capable of challenging the FANGs, mainly because of its huge population. Its home market is sufficiently large to offer the scale on which the success of all of these technologies and businesses is predicated. In more recent times, Chinese enterprises such as ByteDance have gone global with applications such as TikTok which now claims circa 40m users in the US and significant numbers in Europe and India. Aimed at young adults, TikTok is a video sharing application. Its popularity among young people in the US has resulted in concerns being expressed by some senior US politicians about data privacy.

It is no surprise that the widespread take up of these technologies, as in the West, creates the opportunity for data harvesting on a massive scale and the use of this data to develop ‘intelligent’ systems which monitor behaviour and personalise the ‘offering’ to the individual user, through targeted advertising, news feeds etc.

A very controversial aspect of the use of data harvesting is the development of a so called ‘social credit’ rating system in China. We in the West are accustomed to rating systems such as Amazon’s vendor rating system, Uber’s two-way rating system of drivers and customers, various travel and hotel rating systems etc. Many of us use them to help us make decisions on purchases, bookings etc. But the ‘social credit’ system now being rolled out across China is very different. Its stated purpose is to build ‘a high-trust society’ based on monitoring the behaviour of individual citizens and corporate bodies, through access to and integration of data from diverse systems including, mass surveillance systems, facial recognition systems, financial records, big data analysis of social media platforms etc. The intention is to arrive at scores for individual citizens which reflect their level of ‘trust worthiness’.

The system is said to pick up jaywalkers, fare violators on public transport, citizens who fail to pay bills or show for restaurant bookings etc! And there are suggestions that those considered untrustworthy have difficulty booking flights, train tickets, hotel rooms etc. For us in the West with our deep commitment to privacy and individual rights, there are very loud echoes of ‘Big Brother’ here. We could never envisage such an approach finding any acceptance in our liberal democracies, given our commitment to individual rights and freedoms. And talking to colleagues in China it is very difficult to understand what is involved and precisely how it works. I detect a greater willingness to accept such intrusion among Chinese colleagues. One long-time friend and colleague remarked that the level of petty crime, pickpockets on public transport for example and petty public order offences etc., had declined noticeably since the scheme was piloted in his city.

Maybe the alleged willingness in Chinese culture to strike a different balance between community and individual rights explains the apparent acceptance of what appears, to our Western minds, as unacceptable personal intrusion and oversight. The management consultant and widely read author, Peter Drucker, is credited with suggesting that ‘Culture eats strategy for breakfast’. And perhaps China is best understood in terms of an appreciation of its history and culture.

Concluding Comments

Someone said to me many years ago that ‘communism is a thin veneer on the body politic of China’, that it is possibly more revealing to consider China as China, rather than by simply considering it to be a communist state with all that implies in terms of Marxist-Leninist thinking. This perspective suggests there is a degree of continuity between the rule of the Chinese Communist Party, with its highly centralised approach and its tendency towards ‘command and control’, and the various dynasties which ruled China throughout recorded history. It’s an interesting if very simplistic perspective.

Referring back to Prof Allison and his ‘Thucydides trap’, I note that he concludes his book with the suggestion that ‘China and US are currently on a collision course for war’.

Let’s hope that the collision, whether an actual war or a cold one, will be avoided and that the behaviour of states in earlier times will not be repeated in the nuclear age. Indeed, as Professor Allison has shown, the experience of the 20th century gives real cause for optimism. But it will require very sophisticated and nuanced leadership in China and the US, supported by the wider global community, to deliver a peaceful and equitable resolution to what appears today to be an intractable conflict.

Some further reading

1. Niall Ferguson: ‘The Great Degeneration – How Institutions Decay and Economies Die’, Penguin, London, 2013.
2. Ian Morris: ‘How the West Rules – for now’, Profile Books, London, 2011.
3. Jung Chang: ‘Empress Dowager Cixi – the concubine who launched modern China’, Jonathan Cape, London, 2013.