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US-China trade

In the foothills of a new Cold War


Published 11 August 2020 | 8 minute read

China’s “wolf-warrior diplomacy” is emblematic of more deep-seated tensions between the United States and China, which have precipitated into a new Cold War.

Article originally published in the LSE IDEAS China Foresight Forum blog

There is genuine bewilderment at Chinese President Xi Jinping’s decision to unleash his “wolf-warrior” diplomats on an askance world, aggressively asserting Beijing’s interests in cosmopolitan Europe, the Himalayas’ icy heights, and the Western Pacific’s troubled seas.

It is not just democracies on the receiving end of China’s prickly assertiveness, however. Vietnam and the accommodating Philippines have not been spared. Nor have the once-privileged citizens of Hong Kong, as Xi exposed “one country, two systems” as a rhetorical artifice, devoid of substance or meaning. Comply with our demands, or suffer the consequences, is Beijing’s unequivocal message to those who don’t toe the Chinese Communist Party (CCP)’s line.

Punishing countries for non-compliance seems so counter-productive to China’s own interests that even its most ardent supporters are struggling to understand Beijing’s rationale and objectives. Why is China lashing out so savagely and what does it hope to achieve? Is this a considered strategy, a thin-skinned reaction to unaccustomed criticism, or the zealotry of over-enthusiastic officials?

All three is the answer. The broad parameters of China’s strategy for becoming the dominant state in Asia, and eventually the pre-eminent global power, were set in stone decades ago. The CCP has worked assiduously, and with single-minded purpose, to achieve these goals.

But Beijing’s timing and methods have always been flexible, subject to assessments of the external environment. When competitor nations looked weak, or vacillating, Beijing exploits these opportunities to advance its agenda. The coronavirus crisis presents such an opportunity, in no small part because China is more advanced in its recovery than other nations.

Still, domestic and international criticism of Xi’s handling of the pandemic has stung Beijing’s strongman. To deflect international criticism and shore up his position at home, he has turned to a favoured tactic of authoritarian leaders: whipping up nationalism by blaming foreigners.

Inevitably, some Chinese officials have exceeded their brief secure in knowing that the CCP has their back, no matter how provocative their criticisms and disdain for normal diplomatic courtesies.

But Xi’s “wolf-warrior” diplomacy is emblematic of more deep-seated tensions. US-China relations have moved from a framework of cooperation to one of open rivalry and strategic competition to determine this century’s pre-eminent state, which has taken the world into the foothills of a new Cold War.

The underlying problem in US-China relations is the two countries’ diametrically-opposed political systems and associated values, compounded by Beijing and Washington’s respective senses of exceptionalism. Both countries want to be great again.

Although a simmering rivalry is more likely than a hot war, this is hardly cause for relief or complacency. A second Cold War could be worse than the first, given the interdependence of the US and Chinese economies, their centrality to global prosperity, and the proliferation of dangerous military and digital technologies.

At the end of the last century, China’s leaders understood that their country could never be a superpower without a world-class military and mastery of the cutting-edge technology necessary to sustain it. Accordingly, they launched a major effort to modernise the People’s Liberation Army (PLA), closing its yawning technology gap with the US military. 

This resulted in double-digit increases in annual defence and national security spending, as well as massive and sustained investment in defence technology. As the PLA modernized, it became clear that Chinese leaders hoped to match, and eventually surpass, the United States’ capacity to project its military power in the Western Pacific.

Beijing thinks it has found a winning formula: outspending and outbuilding the US in naval ships, submarines, and missiles while closing the gap in just about every other measure of military capability. 

Indeed, China already boasts the world’s largest force of conventionally-armed ballistic and cruise missiles. Current trends suggest that the Chinese navy will have roughly the same number of warships as the US by 2021, but with a higher proportion of modern ships. Its submarine fleet is already larger. And the Chinese navy is on track to have six aircraft carriers by 2030, thereby enabling it to deploy four powerful carrier groups to support Beijing’s territorial claims in the East and South China Seas.

This leaves US forces in Japan, South Korea, Guam, and even Hawaii vulnerable to attack from Chinese bombers and missiles launched from the Chinese mainland, garrison islands in the South China Sea, and the Chinese fleet.

Moreover, as the trade war has widened into a tech war, industry policy has become a new Sino-US battleground, namely because of its centrality to both military capability and economic competitiveness. Any state able to exercise a controlling influence over information and communications technology, artificial intelligence, quantum computing, and semiconductors will be well placed to become the next global rules-setter and the world’s indispensable power.

The United States, however, will not allow China to dominate supply and value chains for these emerging technologies. Tougher American restrictions on China’s access to the large and advanced markets it needs are almost certain, as are measures to slow its capacity to accelerate innovation and acquire both technology and associated know-how. 

But the United States is unlikely to dissuade China from abandoning its attempt to control the future high-tech landscape by subsidising local companies, stealing competitors’ Internet Protocol addresses, and forcing foreign companies to transfer technology to Chinese partners. These practices are integral to the CCP’s plans for achieving technological breakthroughs, boosting productivity, sustaining growth, preserving social stability, and maintaining its grip on domestic power.

Perhaps the best that can be hoped for is that Xi will curb some of the more egregious elements of China’s techno-mercantilism. He may have an incentive to do so if Washington’s pressure develops into a basketball-like full court press, and US President Donald Trump (or his successor) can unleash the country’s innovative spirits, a traditional American strength. 

These developments would pose a much more formidable long-term challenge for China and offset its dirigiste advantages in long-term planning, resource mobilisation, and state funding of strategic industries.


Dr. Alan Dupont is a Research Fellow at the Hinrich Foundation and CEO of the Cognoscenti Group, a geopolitical risk consultancy. He has been named by the Australian Financial Review as one of Australia’s leading strategists.

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