The Next Cold War?

Everyone pretty much agrees that the Cold War of the last century was over by 1991. Regan’s tactic of out spending the Soviets worked. The American capitalist economy beat the Soviet’s Marxist command economy.

Now, eighteen years later, it appears another Cold War is brewing. This time, the American economy is under fire domestically as well as from foreign sources. This article from the UK Spectator brings into focus our next national threat.

Wednesday, 17th February 2010

The growing rift between the United States and China has chilling similarities to America’s old rivalry with the Soviet Union, says Daniel W. Drezner

When Barack Obama burst into the room to disrupt China’s meeting with its fellow climate change sceptics at the Copen-hagen summit, it was clear that something was not right in the relationship between the two countries. The American president had made his way past reporters, with a face like thunder, and shouted at his Chinese counterpart, ‘Mr Premier, are you ready for me?’ Wen Jiabao was not; and according to numerous press reports, Mr Obama was berated by a mid-ranking Chinese official for his rudeness. It was obvious to all present that the relative amicability that had defined Sino-American relations for most of last year was over.

Just a few months earlier, they seemed to be getting along famously. Hillary Clinton had been sent to China to thank them for buying so much American debt and to ask them to buy some more. White House staff were working well with their Beijing counterparts, and even military-to-military contacts had been rekindled. Pundits in Washington began to debate the prospect of a new ‘G-2’ alliance with Beijing to solve matters of global import. Sino-American relations seemed to be on the mend.

It didn’t last long. The relationship has worsened — and with ominous implications. For example, after Google announced its intention to withdraw from China after cyber-attacks on its Gmail service, Mrs Clinton gave a speech on internet freedom and alluded to China’s efforts to censor the web. China reacted vehemently, accusing the US of seeking to perpetuate its ‘information hegemony’. When Washington sought an additional round of United Nations Security Council sanctions against Iran’s nuclear programme, China acted as the brake.

A fortnight ago, the Obama administration announced a $6.4 billion arms sale to China’s diplomatic nemesis, Taiwan. China responded by threatening to impose sanctions on US firms such as Boeing. Their reaction was no less strong when American officials announced that Obama would meet the Dalai Lama, another of Beijing’s enemies. To these diplomatic set-tos, one can add tariff disputes over tyres, chicken, steel and other products.

The Obama administration initially toned down its rhetoric about Chinese currency manipulation — but it has changed course in recent weeks. Returning economic fire, People’s Liberation Army officials suggested using China’s vast dollar holdings as a foreign-policy lever. Major General Luo Yuan told a Chinese magazine, ‘We could sanction them using economic means, such as dumping some US government bonds.’ This is a financial version of the nuclear button. In response to the Taiwan arms sale, the state-controlled People’s Daily newspaper accused the US of having a ‘Cold War mentality’. Soberingly, a recent poll claimed that 55 per cent of Chinese agreed that ‘a cold war will break out between the US and China’.

An alarming prediction — but how accurate is it? Is the new Sino-American frostiness really a reboot of the Cold War? There are, alas, striking similarities. During the Cold War, for instance, America persistently exaggerated the military, economic and ideological strength of the Soviet Union. With an astronomically high investment rate, the Soviets achieved impressive but misleading economic growth. In the mid-1970s, the infamous ‘Team B’ exercise by the CIA produced a vastly exaggerated analysis of Russia’s military power. From Kennedy’s ‘missile gap’ to Reagan’s ‘window of vulnerability’, American leaders overestimated the USSR’s military capabilities.

Today, the Great Recession has led many Americans to overstate China’s power. Thomas Friedman, an influential newspaper columnist, has advanced the idea that the so-called ‘Washington Consensus’ of free markets and globalisation may be supplanted by a ‘Beijing Consensus’ model — a Confucian-Communist-Capitalist hybrid under the umbrella of a one-party state. These notions are by no means confined to political theorists: the public are guilty, too. An opinion poll in December last year found that 44 per cent of Americans believe that China is the world’s leading economic power; just 27 per cent name the United States.

The Middle Kingdom is certainly growing faster than the Grand Old Republic, but by any conventional measure — economic output, military capabilities, scientific and technological capacity — the United States is the most powerful country in the world. And it’s not a close-run thing.

But during the Cold War, the Soviet Union projected great strength while masking fundamental weaknesses. It was the world’s largest country, possessed a bounty of natural resources, was armed with nuclear weapons and had great strategic depth. Compared with the United States, though, it had tremendous disadvantages: it was a much poorer country with a weaker navy, and beyond the major cities it was bedevilled by poor infrastructure. The Russian elite was ever-conscious of the simmering ethnic tensions that plagued many of the outlying Soviet republics.

The array of potential adversaries on Soviet borders — including many with territorial disputes — was impressive. External criticism of its human rights record was an attack on the communist regime’s legitimacy. The Soviet leadership sometimes compensated for these weaknesses with bravado and bluster on the global stage.

All of which seems eerily similar to the new froideur between Washington and Beijing. The fundamentals of China’s economy are stronger than those of the old Soviet Union. It has the world’s largest population, a rapidly expanding middle class and a frightening amount of US bonds — but again, in comparison with America, its weaknesses are legion. The one-child policy has created a rapidly ageing population and, in common with the old Soviet leaders, the Beijing elite is painfully aware of simmering ethnic tensions on its own border regions.

Beijing faces periodic riots in Xinjiang and Tibet, daily worker unrest, unruly provincial leaders, and mounting ecological catastrophes. It has three enduring rivals (Japan, India and Vietnam) as neighbors. Its allies — North Korea and Myanmar — are sources of international embarrassment. And for all the fuss about Chinese cyber-attacks, internet experts agree that the United States possesses more ‘online offensive capabilities’ than any other country in the world. Even more than the old Soviet Union, China is both a great power and an extremely poor country.

Similarly, exhortations for the United States to ‘get tough’ on China usually come from Congress or newspaper comment pages — not from the Obama administration. For all her grandstanding, Hillary Clinton actually tap-danced around the China-Google imbroglio in her speech on internet freedom; and the US Department of Defense’s newly released Quadrennial Defense Review paid less attention to China than the last one did in 2006.

The novelty of the current situation is a key source of the bluster. Chinese officials are justly proud of their newfound economic strength — and wary of the responsibilities that come with it. Other countries expect Beijing to act as a responsible great power — but the Chinese elite view themselves as too poor to oblige. At the same time, American officials are out of practice in dealing with independent forces of national power.

For two decades the United States has been the sole undisputed global superpower. As a result, it is used to having all decisions of consequence go through Washington, and the current generation of thinkers and policy-makers are unprepared for the idea of other countries taking the lead.

The leaders of both countries already recognize the greatest similarity between the Sino-American relationship and the Cold War: the possibility of mutually assured destruction. During the Soviet-US stand-off, it was the prospect of nuclear Armageddon that haunted statesmen and citizens alike. Today, the tension between America and China concerns what Obama’s adviser Larry Summers called the ‘balance of financial terror’. China is now the world’s largest exporter, and the United States is their second-largest export market. Beijing’s economic policies since the start of the credit crunch suggest that they are pinning their recovery hopes on more export-driven growth. Meanwhile, the Obama administration’s budget projections show that the United States will need to rely on foreign-debt servicing (i.e. huge investments from China) for some time. In a global economy still struggling to recover from the Great Recession, the world’s largest exporter and largest consumer market can’t afford a serious rupture in their relationship.

In the Cold War, moments of brinksmanship caused both countries to back away from the precipice. It is possible that, as tensions between China and America mount, nervous chauvinism — in the form of economic nationalism, bureaucratic rivalries or Congressional stupidity — might trigger a cascade of misguided actions and cause a damaging conflict. We can hope that politicians in Beijing and Washington will learn the right lessons from history. But we can expect plenty more tension as Uncle Sam and the Dragon settle down together.

Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.

Go here for the complete column.

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