US v China will soon be the dominant fault line of global politics

Ever since 9/11, the US and China have been rubbing along nicely. The US needed China’s support in the war against terror and China is anxious to create the best conditions for its economic growth. But how long will this latest honeymoon last? A string of recent announcements coming out of Washington suggest that the Bush administration may be adopting a rather more abrasive position.

First, China was attacked for the huge wave of textile imports that followed the lifting of the global quota agreement at the beginning of the year, a decision the US had 10 years to prepare for. The US has now imposed quotas on Chinese textiles, as has the EU. Meanwhile the US treasury has demanded that China revalue the yuan within the next six months, describing its currency policies as “highly distortionary”. In fact, even if China does revalue the yuan, it will make precious little difference to America’s huge current account deficit; moreover China’s own current account is broadly in balance, suggesting that the case for revaluation is hardly overwhelming.

A fortnight ago Donald Rumsfeld, the US defence secretary, claimed that Chinese military spending was much higher than officially admitted, questioned the motives behind the increased expenditure, and called on Beijing to embrace a “more open and representative government”. A fortnight earlier it had been reported that the Pentagon is preparing to release a report on the Chinese military that warns that the US should take more seriously the possibility that China might emerge as a strategic rival to America: indeed, such was the tenor of the report that it has generated some controversy within the Bush administration.

Prior to 9/11, the incoming Bush administration had adopted an aggressive stance towards China, describing it as a “strategic competitor” rather than the “strategic partner” preferred by the Clinton administration. But 9/11 brought that to an abrupt end: for almost four years, the relationship between the two countries has been relatively mellow. But perhaps that period is also now drawing to a conclusion. Certainly it would appear that the importance of the anti-terror crusade is waning in the eyes of the Bush administration. The underlying purpose of the war against terror, of course, was never as stated but rather as a lever to begin the transformation of American foreign policy. To regard Bin Laden and al-Qaida as a serious threat to the US was a patent absurdity: even their capacity to wreak havoc has been profoundly limited. This was a case of the Grand Old Duke of York: terrorism was a pretext.

China is a different matter altogether. Bin Laden was never going to pose even the most minuscule threat to the position of the US as the sole superpower. China clearly could, and in the long run certainly will. Its growing economic power will, in time, underpin wider political and military ambitions. A strong sense of this is already evident in east Asia. Since 9/11 China has been extremely proactive and sophisticated in the way it has gone about seeking to enhance its position in east and south Asia, concluding a series of agreements, notably with India, Indonesia and the Association of South-East Asian Nations (Asean), aimed at better ties.

Its wider significance is clear. First, this is China’s back yard, and its ability to establish a pivotal position there will be a crucial determinant of its capacity to become a global power. Second, east Asia is destined to become the centre of global affairs, a role previously played by Europe during the cold war. Third, the US remains the dominant security player in the region; as China’s influence grows, however, that of the US will diminish, a process that is already under way. Since 9/11, the US has not been inactive in the region – in particular it has been forging closer links with Japan, directed against China – but its primary attention has been directed elsewhere.

No global power ever gives up its power voluntarily (in the case of the Soviet Union, it simply disintegrated). The US will be no exception. On the contrary, having defeated the USSR in the cold war and now glorying in its status and power as the sole superpower, it will defend its position with ruthless determination. The growing conflict between an extant America and a rising China will become the dominant fault line of global politics. We are not entering a period of calm or quiescence; the contrary in fact. The lines of future conflict are already anticipated in a Pentagon review of America’s military needs leaked by the Wall Street Journal in March: the review explicitly commits to the idea of huge military spending as a way of deterring would-be superpowers, with China explicitly mentioned in this context. Given the huge military expenditure of the US, Rumsfeld’s hypocrisy in criticising China’s still very limited military budget is manifest: the hubris and swagger of the sole superpower.

But even if this pessimism proves correct, we should not expect a simple rerun of the cold war. There may be obvious similarities, notably that the US will once again be one of the protagonists and that China is ruled by a communist party. But there the similarities end. First, China’s economy is immeasurably stronger than the Soviet Union’s ever was and its growth is continuing at breakneck speed: economic strength is the key precondition for global power and influence. Second, unlike the Soviet Union, which chose confrontation and autarky, China has opted for global integration and its own form of capitalism. As a consequence, China is already deeply entwined with the global economy. It is the biggest exporter to the US, the largest recipient of foreign direct investment and the main reason why the US is presently able to live with a huge budget deficit and enjoy an enormous house price bubble. The US’s relationship with China is strangely symbiotic in a way that its relationship with the Soviet Union never was.

Perhaps this will act as some kind of constraint. In practice it already has. The US has blown hot and cold over China ever since the rapprochement between Nixon and Mao, but it has so far always resisted seeking to isolate China or prevent its economic rise. China, for its part, has abided by the dictum of Deng Xiaoping and put the priority of economic growth above all else. But as China and the US bump against each other in a growing number of regions and over an expanding number of issues – trade and financial imbalances between the two, oil and natural resources in Africa, Latin America and the Middle East, regional competition in east Asia, not to mention Taiwan and Japan – then this will become progressively more difficult and relations will become increasingly fraught. It is not impossible, indeed, that the rise of China will undermine the advantages of globalisation in the American mind – as the US economist Clyde Prestowitz has recently suggested – leading to increasing acrimony, the end of globalisation as we know it, and a rising tide of protectionism.

The prospect of decades of political tension lies ahead. It will require enormous willpower on the part of the US, China, the EU and Japan to contain those tensions. China will be demonised for its political system and its profound cultural differences – for the first time in modern history, a non-white, non-European-based society will be a global superpower. The west will need to learn to live with difference rather than seeking to denounce and subjugate it. The US will need to learn to contain its primordial desire to have an enemy, be it Native Americans, the Soviet Union, Bin Laden or China. Otherwise the 21st century will be grim indeed.


Updated and expanded new Chinese edition just released.


Turkish edition just published!

When China Rules the World is the first book to fully conceive of and explain the upheaval that China’s ascendance will cause and the realigned global power structure it will create.

New edition available now from:

Amazon UK
and all good booksellers.

US second edition is available now via: 

Amazon US