Two of the authors of this report, Drs. Susan Shirk and Barry Naughton of UC San Diego’s 21st Century China Center, along with Ambassador David Lane of the Annenberg Foundation Trust at Sunnylands, will join the Pacific Council for a discussion of this report at the Pacific Council’s second installment of the Edgerton Series on Responding to a Rising China on April 1, 2019.

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The United States and China are on a collision course. The foundations of goodwill that took decades to build are rapidly breaking down. Many American opinion makers are starting to see China as a rising power seeking to unfairly undercut America’s economic prosperity, threaten its security, and challenge its values, while their Chinese counterparts are starting to see the United States as a declining power seeking to prolong its dominance by unfairly containing China’s rise.

Beijing’s recent policies under Xi Jinping’s leadership are primarily driving this negative dynamic, so the Trump administration is right to counter those Chinese actions that defy norms of fair economic competition, abrogate international law, and violate fundamental principles of reciprocity. The Trump administration is justified in pushing back harder against China’s actions, but pushback alone isn’t a strategy. It must be accompanied by the articulation of specific goals and how they can be achieved.

As the Trump administration stands up to China, it must also clearly express a willingness to pursue negotiated solutions by spelling out specific steps that could restore equity and stability to the relationship.

As the Trump administration stands up to China, it must also clearly express a willingness to pursue negotiated solutions by spelling out specific steps that could restore equity and stability to the relationship. Otherwise, the United States risks an irreparable, and possibly avoidable, rupture in this crucially important bilateral relationship.

To avoid such a breakdown, the United States and China should seek negotiated solutions to priority issues whenever possible and erect prudent guardrails—including the appointment of specially designated officials—to keep the relationship from running further off the tracks. An adversarial U.S.-China relationship is in no one’s interest. More responsible statecraft is required both to protect American interests and to increase the chances of avoiding that no-win outcome.

Fashioning a China Strategy Consistent with U.S. National Interests and Values

As the Trump administration begins its third year in office, this year’s Task Force report builds on the 2017 report to identify the fundamental interests of the United States in its relationship with China. These are a fair market-based global economic system, a peaceful and stable Asia-Pacific region, a liberal rules-based political and economic order, and a stable and productive relationship with China.

To further these interests, we propose a strategy of “smart competition.” “Smart competition” involves building on American strengths to compete effectively with China while maintaining as much cooperation as possible in areas of common interest; building international coalitions to press China to follow international laws and norms; negotiating resolutions of key disputes wherever feasible; and preserving and updating those international institutions that have enhanced the welfare and security of both countries and the rest of the world for so many decades.

“Smart competition” means that while the United States must never compromise its national interests, neither should it define those interests as always antithetical to China’s pursuit of its legitimate economic and security goals. It is natural for China’s international role to expand as its economy, international interests, and diplomatic capabilities grow.

China, with an economy (the second largest in the world) deeply intertwined with that of the United States, is both a competitor and a partner.

Opposing Chinese influence across the board is neither desirable nor feasible. Our policy goal should be to provide the kind of American leadership that maximizes the chances of China’s contributing at a global level in constructive ways that benefit not only itself, but the United States and the broader global community as well.

The Trump administration has put great power competition with Russia and China at the heart of its national security strategy. But Russia and China present very different challenges to the United States. Vladimir Putin aims to destabilize and subvert Western democracies, while China’s leaders instead have tried to influence Western narratives about China in an effort to win acceptance and favor for its economic development model and its one-party system of government.

The contrast between Russia and China is even sharper when it comes to their economic impact on the United States and the world. Except for oil and gas exports, Russia is neither a serious economic competitor nor an important economic partner of the United States. China, with an economy (the second largest in the world) deeply intertwined with that of the United States, is both a competitor and a partner.

Given the close economic ties between the United States and China, efforts to decouple our two deeply intertwined economies should proceed with great caution.

Given the close economic ties between the United States and China, efforts to decouple our two deeply intertwined economies should proceed with great caution. The United States must safeguard its national security and the key technologies that underpin it. But national security restrictions on trade and investment should be highly selective, and policymakers should be mindful of their costs, including to America’s own innovation ecosystem.

Disruption of production chains could hurt global economic stability and growth. U.S. alliances could be weakened if friendly countries believe they must choose sides between two valued trading partners, the United States and China. A properly regulated system of economic relations is a crucial part of a comprehensive national security strategy.

A strategy of “smart competition” must be a mixture of competition and cooperation that does not foreclose the avenues for stability, comity, and growth. Only if we make a good-faith effort to negotiate the issues of importance to the United States will we be able to continue to test the willingness of China’s leaders to modify their policies. Thus a deeper understanding of what is happening within China itself is essential information as we adjust our own policies going forward.

So long as we preserve our alliances and partnerships, the prospects that China will be able to drive the United States from the Asia-Pacific, much less to dominate the world, are slight.

Many of China’s recent actions require a firmer U.S. response and a greater insistence on fairness and reciprocity, and there is no guarantee that China’s leaders will be willing to respond to this challenge in a constructive way. But the United States has as much to lose from overreaction as it does from under reaction.

The United States must not defend itself in ways that undermine the openness and vibrancy of its own society; these, after all, are the ultimate sources of American strength and competitiveness. Our critical challenge is to right-size the China threat and pursue solutions that effectively address that threat without undercutting the vitality of the American system, our alliance structure, or our economic well-being.

So long as we preserve our alliances and partnerships, the prospects that China will be able to drive the United States from the Asia-Pacific, much less to dominate the world, are slight. When it chooses its policies wisely, the United States has many inherent economic and political advantages. In short, in the face of China’s rapid rise and the myriad challenges it poses, the United States has good reason to be confident in its ability to compete successfully and to continue to lead globally.

Read the full report here.

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Orville Schell is the Arthur Ross Director of the Center on U.S.-China Relations at Asia Society.

Susan Shirk is chair of the 21st Century China Center and research professor at the University of California, San Diego School of Global Policy and Strategy.

This report was originally published by the Asia Society’s Center on U.S.-China Relations and UC San Diego’s School of Global Policy and Strategy’s 21st Century China Center.

The views and opinions expressed here are those of the authors and do not necessarily reflect the official policy or position of the Pacific Council.