Competing with China

The US-China relationship is heading for more confrontation both because there’s too much at stake politically for US President Joe Biden at home for him to look for a “reset,” and because Biden (and, for that matter, pretty much the entire political spectrum in the US) has serious objections to China’s vision of the way the world should be run. In the near-term, that means the two countries will continue lobbing tariffs and sanctions at one another. The question for the rest of the world is how far the Biden administration will push this confrontational US-China relationship onto other countries, forcing them to choose between Beijing and Washington. Fortunately, the Biden team is a practical bunch.

It wasn’t long ago that the Trump administration strongly pushed countries to cut Chinese hardware out of their 5G networks. While some countries obliged – most notably the UK and other steadfast US allies like Australia – most strategically avoided making that decision. Unless you are in desperate need to keep Washington happy for other critical reasons (the UK needs a free trade treaty and good trading relations with the US post-Brexit, for example), signing up with one of the two economic superpowers in the world today to the exclusion of the other is to be avoided, limiting your ability to play one off the other as the geopolitical need arises.

Then there’s the fact that most developing countries don’t have the luxury of turning down money and technology offered by Beijing (much of it through its Belt and Road Initiative, or BRI) to better the lives of their citizens. If Washington demands that doing business with the US requires not doing business with China, it risks ceding much of the world to Beijing, the opposite of what it needs to be doing at such a critical geopolitical moment.

The Biden team knows this; it’s also more attuned to perceptions of the US abroad than the Trump administration, and understands the limits of trying to force countries into making these painful decisions. Instead, they are returning the US to the bedrock principle of capitalism: competition. Washington’s overarching aim is to “competitively coexist” in as many third-party countries with China as possible to make sure none fall completely into China’s orbit. The US recognizes the need to compete with China in dispersing funds and investments to the countries that need it most, and that are already being chased by Beijing in Latin America, Asia, Sub-Saharan Africa and Europe. These countries may not always do Washington’s bidding in such a “competitive” environment, but they won’t be guaranteed to do Beijing’s, either.

Pursuing this policy of “competitive coexistence” will be challenging. China is a state-directed economy, which means Beijing is able to more efficiently deploy Chinese businesses and funds in ways that directly benefit Chinese national interests. But the US still has plenty to offer if it’s strategic about foreign aid and giving incentives to private companies to invest in projects in important countries, and can also use its existing leverage to push multilateral institutions like the IMF to provide loans at favorable terms and with more transparent financing than those offered by the Chinese (to say nothing of the added benefit of strengthening these multilateral institutions in the process). We’ve already seen countries begin to back away from certain BRI projects, a sign that some recipient countries have begun bristling at the onerous terms being demanded by Beijing to build projects that are typically of lesser quality than their Western-backed alternatives.

China hawks in the US will object to the US directing money toward countries who are also doing business with the Chinese. But that’s the wrong way to think about confronting China. The Biden Administration feels confident in the US’s ability to compete with China abroad, leveraging the US’s particular strengths to do so. More importantly, they recognize it’s in the US interest over the long run to show the world for themselves why it’s better to partner with the US over China, rather than just demanding they do.

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Ian Bremmer is the president of Eurasia Group and GZERO Media and author of “Us vs. Them: The Failure of Globalism.”

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