An Emerging G2? The Key to a Working US-China Rivalry is Agency

The meeting on November 14 in Bali between Xi Jinping and Joe Biden did little more than change the media narrative on the China-US relationship. Both leaders came to the table with their domestic positions bolstered – Xi got his third term as head of the Chinese Communist Party (CCP) and stacked the policymaking politburo with loyalists, while Biden’s Democratic Party managed to hold on to its slim majority in the US Senate in crucial mid-term elections. The tone was certainly conciliatory, and the two announced that US Secretary Antony Blinken would visit China early in 2023 to keep up the momentum of talks.

Much has made of Biden’s maintaining his predecessor Donald Trump’s tough approach towards Beijing – he has not lifted Trump’s tariffs and has imposed his own set of exclusions and restrictions, most recently sweeping rules announced in early October to prevent the export of advanced semiconductors and chip-making equipment to China. Less attention has been paid to ongoing interaction of senior Biden administration officials including Blinken, his deputy Wendy Sherman, National Security Adviser Jake Sullivan, Treasury Secretary Janet Yellen, Commerce Secretary Gina Raimondo, US Trade Representative Katherine Tai, and Special Presidential Envoy for Climate John Kerry with their Chinese counterparts, some of whom will be replaced or promoted in the incoming government. There has been no lack of communication between the great power rivals, though of course there are questions about the quality and effectiveness of this interaction.

Indeed, prior to their encounter on the Indonesian island resort the day before the start of the G20 Summit, Xi and Biden had conferred five times by phone or video since the US president took office in January 2021. And even though Beijing announced the suspension of climate talks between the two countries after US House Speaker Nancy Pelosi visited Taiwan in August, there are indications that Kerry and China’s climate point man Xie Zhenhua continued their important consultations in the run-up to the UN Climate Change Conference (COP27), which opened in Egypt on November 6.

These senior-level discussions are arguably the most wide-ranging interaction between the US and China since the days of the Strategic and Economic Dialogue (S&ED) launched in 2009 during the administrations of Barack Obama in the US and Hu Jintao in China. The S&ED was an expansion of the Strategic Economic Dialogue (SED) begun under Obama’s predecessor George W Bush. The eighth and final round of the S&ED took place in 2016 in Beijing. The framework was as close as the US and China have come to pursuing a “Group of Two” (G2) approach to their relationship – the idea that the two countries, as the foremost powers, have a special role in the world and should take the lead in discussion not just bilateral matters but also the key global issues as a way to catalyze action to address them.

The G2 strategy was originally conceived by economist C Fred Bergsten in late 2004 mainly as a framework for economic issues. In his book The US vs. China: The Quest for Global Economic Leadership, published by Polity Books this year, Bergsten writes: “‘G-2’ is shorthand for a systematically cooperative relationship through which the United States and China would consult closely and continuously in an effort to adopt common, or at least consistent, leadership views on all major global economic issues, and as many others as possible. They would then work together, sometimes in concert and sometimes simply in parallel, to implement those strategies. It would enable them to pursue both their own national interests and those of the world as a whole. A more generic characterization of such a relationship would be conditional competitive cooperation.”

In his analysis of the S&ED, Bergsten identifies key reasons why that attempt to create an informal G2 faltered. Among the reasons he cites: an “upsurge in confidence, even a bust of hubris, after their successful recovery from the global financial crisis, and a sharp increase in disdain for the United States for causing the crisis and fumbling its own response.” He also notes the differences between the two countries on the climate change issue, referring to China’s “obsessive attachment to national sovereignty” that made it resistant to the idea that international commitments could supersede domestic policies. Beijing was suspicious that Washington was motivated more by a desire to co-opt or even contain China, Bergsten reckons.

In Bali, in their opening remarks, both Biden and Xi acknowledged the global context of their bilateral meeting. “We share a responsibility to show that China and the United States can manage our differences, prevent competition from becoming anything ever near conflict, and to find ways to work together on urgent global issues that require our mutual cooperation,” Biden said. For his part, Xi recognized that “the world expects that China and the United States will properly handle the relationship”, noting that the summit had attracted global attention. “So, we need to work with all countries to bring more hope to world peace, greater confidence in global stability, and stronger impetus to common development. I’m ready to have a candid and in-depth exchange of views with you on issues of strategic importance in China-U.S. relations and on major global and regional issues.”

There are strong arguments for the US and China to strive to shape, if not a G2 mechanism, at least a framework for Bergsten’s “conditional competitive cooperation (C3)”. After all, in their original strategic formulation of the relationship, Biden and Blinken proposed a similar schema – competition, cooperation and confrontation. A working C3 approach would certainly bring some calm to the turbulent ties between the two countries. In recent months, with Pelosi’s Taiwan stop and in the run-up to the CCP’s National Party Congress and the US mid-terms, the commentariat on both sides have focused on the idea that the US and China were heading for – or already engaged in – a Cold War or worse. Twitter threads from US analysts, some no doubt aspiring for roles in the current or a future administration, focused on the perceived inevitability of Beijing taking control of Taiwan and how the US would react. With war drums beating, the provocative question of the day: whether the US and China can even avoid conflict. In a policy world where hawks in the national security and intelligence communities are steering the narrative, the Thucydides Trap has seemed to be well and truly set, with the two adversaries already locked in for combat and gaming out the fight.

In their geo-economic, geo-technological and strategic competition, both the US and China have asserted many times that they are not forcing other countries – whether or not they are already allies or partners – to choose sides. Yet, inevitably they are doing just that, taking a zero-sum, “with-me-or-against-me” approach. Trump sought (unsuccessfully) to get other countries including allies such as Canada (with which the US was negotiating a revised free trade agreement with Mexico) to go along with its tariff battle with China. Beijing applied trade measures on Australia in reaction to Canberra’s echoing Washington’s call for an independent investigation into the origins of Covid-19.

After the US and Australia jumped on Japan’s “Indo-Pacific” bandwagon, the Americans (along with the Australians and Japanese) have successfully pressured other players to adopt the nomenclature which has the containment or countering of and the diversification away from China as a subtext. The US managed to persuade Japan and Mexico not to join the Beijing-conceived Asian Infrastructure Investment Bank (AIIB). China’s Belt and Road Initiative (BRI) was designed as a foreign policy strategy meant to enhance China’s economic relationships and integration with trading partners across the world and gain influence across its footprint.

Biden convened a summit for democracy aimed at projecting his view that a central feature of geopolitics this century will be the contestation between autocracies and democracies. Both China and the US, with various measures from sanctions to exclusion lists, have fuelled the decoupling narrative. US officials have promoted the idea not just of reshoring outsourced manufacturing to domestic production facilities but also of “friendshoring” to rely on supply chains linking only trusted partners excluding China.

Among countries in the region, Singapore has been among the most vocal about the need for the US and China to refrain from forcing other countries to pick sides. In a speech on November 9, Foreign Minister Vivian Balakrishnan called for a new non-aligned movement for science, technology and supply chains in response to the decoupling push by the two great power rivals. “There has to be a commitment to open science, the fair sharing and harvesting of intellectual property, and a system in which we will compete to be most innovative, reliable and trustworthy, rather than be judged simply by which side we have taken,” he declared. “I do not believe any self-respecting Asian country wants to be trapped, or to be a vassal or, worse, to be a theatre for proxy battles.”

Nations caught in the middle of the rivalry should be accorded the agency to make the choices that they deem to be in their interest – whether or not to ban Huawei network equipment or systems, or whether or not to join the Indo-Pacific Economic Framework (IPEF), Washington’s answer to the BRI and the Regional Comprehensive Economic Partnership (RCEP), the trade arrangement led by China and ASEAN. There is nothing wrong with China or the US courting countries to participate in their initiatives or strategies. That is a part of globalization and diplomacy. But there should not be reprisals for choices made (or not made). Recognizing the agency of other countries would have to be an important principle of any C3 US-China accommodation or G2 approach.

In May 2022, Chinese Foreign Minister Wang Yi toured seven Pacific Island states. He proposed that countries join a multilateral “Common Development Vision”, which would entail cooperation over law enforcement, fisheries planning, developing internet capacity, new Confucius Institutes, US$2 million in funding for Covid-19 relief, and 2,500 scholarships. Beijing also proposed the setting up of a China-Pacific Islands Free Trade Area that by 2025 would double the volume of bilateral trade from 2018 levels. Pacific island leaders rejected the agreement, preferring to have such regional matters addressed multilaterally through the Pacific Islands Forum. Months later, Pacific Island leaders were in Washington for the first-ever US-Pacific Island Country Summit. The Biden administration released its own strategy for the region, to a muted reception. “Fiji is not anyone’s backyard – we are a part of a Pacific family,” Fijian Prime Minister Frank Bainimarama tweeted in May, after receiving Australian Foreign Minister Penny Wong. “And our greatest concern isn’t geopolitics – it’s climate change.”

But whether or not countries feel that they can exercise their agency and make choices (or refrain from choosing) as they wish in the context of the great power rivalry, the question is: Can they truly remain neutral or act with perfect pragmatism? If the two leaders, their respective domestic political positions strengthened, are able to shape a China-US modus vivendi, then it would be possible for them to give space to smaller economies and regions to act in their respective interests on critical issues, unburdened by the political costs and stress that usually come with having to decide to which geopolitical team they belonged. This would afford each country the room to pursue the best solutions to deal with such global problems as climate change. But if the pressures from the two chief powers are such that nations are unable to make decisions or take positions in their own interests, then a C3 or G2 framework, however desirable for global stability and progress on major issues, will be, if not attainable, certainly not sustainable.