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The Deepening Security Dilemma in US-China Relations

Ryo Sahashi

Introduction

In recent years, the US and Chinese governments are reviewing their bilateral relations to date through a combination of various policy measures. On the economic front, in particular, both governments are taking steps to dissolve some of their relations immediately or to do so in the future. On the other hand, the US and Chinese governments are contacting each other to create channels for dialogue, as exemplified by US Secretary of State Blinken's visit to China on June 18-19, 2023. It is uncertain whether such attempts will resolve the structural confrontation and security dilemma the two superpowers are facing. Yet, both governments, well aware of the seriousness of the present predicament and the growing possibility of a crisis, are seeking dialogue.

The US-China confrontation is already showing signs of protraction. The bilateral rivalry is becoming a subject of academic research based on various approaches. This theme will be prevalent not only in historical, American, and regional studies but also in studies regarding alliances and economic sanctions. Recent policy studies examine the US-China confrontation in terms of economic coercion and nuclear deterrence. International order experts are expected to discuss further the impact of the US-China confrontation. The US-China rivalry raises many questions about, for example, the future of globalization and the liberal international order. 1

The US-China confrontation is making the security dilemma more serious; this is true not only in the traditional security domain but also on the economic front. The United States and China seek autonomy from each other in their economic activities; this is beginning to have a grave impact on the international economy. The G7 declaration of de-risking is an attempt to maintain economic relations with China, as a whole, by announcing that the review of economic relations with China should be limited. However, the declaration seems to lack such cogency as intended.

The genesis of the US-China confrontation can be considered to be the result of China's revisionist behavior and US response; an analysis of power transition or authority transfer theories may be helpful. However, the current situation seems to suggest that an analytical perspective of the security dilemma may be more useful. This paper is intended to discuss the current status of the US-China rivalry from the viewpoint of an exacerbating security dilemma, which is emerging not only in the traditional security domain but also on the economic front. The present author believes that one of the reasons for this is "estrangement" that hinders mutual understanding, in addition to mutual distrust and uncertainties.

The Deepening US-China Economic Confrontation

The Biden administration has attempted to evolve its China policy around competition with the country on the economic, scientific, and technological fronts. The Trump administration focused on huge US trade deficits with China, Chinese trade practices, China's intellectual property rights infringement and technology theft. It employed retaliatory tariffs as a countermeasure. Meanwhile, the Biden administration is evolving its China policy through increased efforts in areas where regulations were introduced during the Trump administration: export controls, inward investment controls, government procurement, capital market regulations, economic and financial sanctions, and ICT services regulations. The Biden administration is making the former administration's approach even firmer; its impact on economic activity in China is harsher than retaliatory tariffs. 2

The Biden administration has enlarged the scope of the Entity List and the Foreign Direct Product Rule (FDPR) and has tightened restrictions on Huawei and other Chinese corporations. It implemented large-scale semiconductor-related export controls like those measures in October last year. 3 The US government explains that these actions, based on the so-called "small yard, high fence" concept, are imposing controls on exports to China of cutting-edge dual-use or military-use technologies. Yet, it remains uncertain whether the Biden administration aims merely at limited goals or whether it will adopt economic security measures in broader domains and develop policies emphasizing US national interests instead of dual-use technology regulations in a narrow sense.

An analysis of statements by Biden administration officials and publicized policies indicates that the administration's goal is to emphasize the growth of the United States and to widen the gap with China. 4 The comprehensive China policy framework that Secretary of State Blinken presented in his address of May 2022 appears to remain valid: The United States will continue competing with China through investment in science and technology and cooperation with its allies and partner countries. 5 Furthermore, as stated by National Security Advisor Jake Sullivan in his speech of April 2023, the United States is committed to competition with China not merely in the field of semiconductors but also clean energy, storage batteries, and other technologies, pledging to this end to use regulatory and other measures in conjunction with domestic industrial promotion. 6

Such an approach by the United States is a departure from its previous emphasis on trade openness and support for the free trade regime. The Biden administration repeats the regret that trade openness has not only promoted unfair trade practices but has also encouraged illiberal governments and helped create an international environment unfavorable to the United States. The Biden administration emphasizes applying the logic of security to the international order and the international economic order. It also stresses the importance of mini-lateralism. 7 These may be considered revisionist behavior toward the international economic order. The Trump administration attempted to damage the postwar order by withdrawing from the TPP and by refusing to appoint a member to the WTO Senior Committee. Meanwhile, the Biden administration is making revisionist moves, declaring its intention to change the postwar international economic order that the United States has led. This does not imply a shift back to protectionism, but it is unique in the sense that the United States will make significant changes to the global economic order that is based on openness and will pursue selective liberalization. 8

Some G7 allies including the EU, the United Kingdom, and Japan are taking care not to cause an economic detachment from China while reaching an almost unanimous agreement on their security outlook. The G7 joint statement of May 2011 adopted the de-risking concept, worked out by the EU, instead of decoupling. Some say that the Biden administration, which felt the need to rally domestic and foreign support for its China strategy, went so far as to accept the EU's terminology. 9

In the meantime, from the spring to early summer of 2023, Xi Jinping repeated his recognition of the harsh international situation at different CPC meetings; his so-called bottom-line thinking or extreme situation thinking seems to remain unchanged. 10 Xi's recognition will have an impact not only on military preparedness but also on economic security. The Chinese government is currently busy preparing domestic laws; it is poised to counter the United States by enacting laws such as the Export Control Law, Unreliable Entity List, Measures for the Security Review of Foreign Investment, Measures for Cyber Security Review, Data Security Laws, Anti-Foreign Sanctions Law, and Anti-Spying Law. In particular, the Anti-Spying Law (effective from July 2023) is a revised version of the previous one, expanded in the scope of activities to be considered spy activities: the theft of documents, data, information materials, and items related to the state's national security and interests; attack, infiltration, obstruction, control, or destruction—activities harmful to government departments related to state secrets/organs and the networks of critical intelligence infrastructure. 11 The External Relations Law, taking effect in July 2023, specifies in Article 33 that China has the right to employ corresponding countermeasures against acts that harm its sovereignty, security, and developmental interests. Thus, the Chinese government has established a legal framework for applying the law beyond the Chinese borders. 12

In addition to economic sanctions against some US military corporations, China has recently initiated export controls on semiconductor materials such as gallium and germanium. It is poised to implement economic security or economic statecraft. 13 Unlike the United States, however, many additional Chinese institutions have only been announced, presumably for intimidation purposes; it is uncertain whether they will be really institutionalized. Therefore, Japanese industry is beginning to seek alternative supply sources of semiconductor materials. 14

As the Tsugami paper in this issue of Security Studies points out, against the backdrop of distrust toward the United States caused by the US CHIPS Act and semiconductor regulations (October 2022) and the hostility of economic conservatives in China toward the West, the Xi Jinping administration is entering a stage where it will use economic security policy it has so far formulated not only to protect the Chinese economy but also as a foreign policy tool ("economic statecraft"). China is now moving toward an autonomous and self-reliant economy. This move will lead to technology transfer from foreign firms, especially in the IC sector. The Chinese government is also increasing the strategic indispensability of technology in the automotive sector, including storage batteries, which could lead to more coercive actions targeting the global economy. 15

The Dilemma Unresolved by Dialogue

US Secretary of State Blinken's visit to China finally opened the way to dialogue that both governments had been seeking for more than a year. Blinken's visit to Beijing initially aroused high expectations on the Chinese side and resulted in subsequent ministerial-level talks. At this moment, however, things will not go beyond the formation of dialogue groups just for show because the US attitude falls short of China's expectations. 16 The United States has made it clear that it will continue competition with China, maintaining various economic measures to this end; it is poised to rather strengthen the framework of its economic security policies following Blinken's travel to China. While no significant progress has been made on the Taiwan issue, the United States provided Taiwan, after Blinken visited Beijing, with military aid worth 48.6 billion yen ($345 million) under the Presidential Drawdown Authority (PDA). 17

On the other hand, the United States does not give up on dialogue with China. It is attempting to combine competition and dialogue or pursue the two concurrently, thereby making China accept such a situation. As Political Bureau member Wang Yi has stated so far, China will not lend an ear. Beijing appears to refrain from making specific concessions as it becomes clear that it cannot extract a major compromise from the United States.

Therefore, although US Secretary of the Treasury Janet Yellen visited China in July of this year and held talks, and she repeatedly denied decoupling, her efforts failed to achieve understanding from the Chinese side. Chinese officials reiterate that de-risking does not imply a significant change in US policy toward China. The Chinese official media's coverage of the United States assumes that China does not expect much for dialogue with Washington. 18 This illustrates the limits of dialogue efforts initiated under the structural confrontation between the two superpowers.

How should we understand the current US-China confrontation? Mutual distrust is a reason, which is what American and Chinese experts had for long referred to as a strategic distrust. 19 Some argue that the grave security dilemma due to the inability to understand each other's intentions accounts for the current deterioration of bilateral relations. A security dilemma is emerging on the economic front on top of the traditional security dilemma.

Generally speaking, the economic security dilemma stems from uncertainties about the behavior of the rival country that has undergone economic development. In the current US-China relationship, the dilemma is further deepening because it is not apparent how the rivals would introduce and apply economic restrictions, sanctions, and coercive actions in the future, and because neither of them can understand the rival's intentions. As a result, these uncertainties urge the rivals to avoid dependence on each other and to pay costs to build an autonomous economic bloc. 20 (See Figure 1)

Undeniably, the security dilemma is deepening in the traditional and economic domains, as far as the United States and China are concerned. Each country's domestic politics exacerbates the security dilemma by hindering them from offering reassurance for the rival to overcome the dilemma. The leadership of both governments, who are unable to ignore the voices of the conservatives―given the need to prepare for a long-lasting competition and confrontation―cannot assume the costs of offering reassurance to the rival. Rather both governments are deepening the dilemma by building up arms, forging alliances, seeking an autonomous economy, increasing economic countermeasures such as economic restrictions and sanctions―all of which arouse the rival's anxiety. 21

Fig. 1 The Economic Security Dilemma

In either country, conservatives in domestic politics are becoming increasingly competitive with their rivals, which makes it difficult for the political leaders to negotiate a compromise. In the United States, there is a discrepancy between China hard-liners in Congress and the administration's policy direction; but the hard-liners often dominate the arguments. For example, the government and the business community, which have been cautious about regulating overseas investment, have gradually changed their response as if thrust by the ultra-hard-liners' moves, and in August 2023, a presidential decree was issued regarding overseas investment regulations. 22 The Republican presidential candidate Governor Tim Scott of South Carolina, who originally distanced himself from the ultra-hard-liners, has come under criticism for his lukewarm stance toward China. 23 Meanwhile in China, majority groups within the regime are becoming increasingly hostile toward leading countries in the existing global order to such an extent as to be hard to justify under the guise of economic rationality; the party leadership cannot ignore this situation.

This situation is not only caused by distrust for the rival country and uncertainties about its intentions but is also caused presumably by a feeling of "estrangement" that abandons efforts to understand the rival's intentions. According to the Nihon Kokugo Daijiten (the most authoritative Japanese-language dictionary), estrangement means "dislike someone and keep away from him/her; feel less familiar with or feel more distant from someone." The US and Chinese governments seem to have even given up on efforts to create a situation capable of dispelling mistrust and uncertainties—still less eager to dispel the same.

As mentioned earlier, the security dilemma is deepening in the traditional and the economic security domains. In this context, the international economic order will likely become more fragmented, whereas the G7 and other developed countries adopt policy-induced measures to strengthen their economic ties. Meanwhile, China will use its diplomatic, economic, political, and military power to deepen economic relations with other countries—efforts to change the configuration of the international order from the economic domain. As long as the US and Chinese economies continue growing, other countries will be attracted to the two superpowers. This will herald the advent of an "elliptical world," as I point out in my book, "The US-China Confrontation." 24

Conclusion

What are the prospects for US-China relations and the international order affected by them? In the short term, unless an unexpected incident occurs, both governments will likely agree to pursue dialogue and continue coordination in the lead-up to the 2023 APEC Summit, which will be held in San Francisco in the fall of this year. The US-China summit will highly likely take place. However, the possibility is slim that both governments will overcome their distrust of each other's security and economic policies, abandoning their confrontational posture. Therefore, looking at things from the medium-term perspective beyond 2024, there will be no significant change in the configuration of the US-China confrontation. The 2024 presidential elections in Taiwan and the United States will rather make the situation more uncertain; the US and Chinese governments will continue efforts to increase their allies and partners. Although their vital interests depend on preventing politico-military conflicts and economic ruin, the two-level games at home will make it difficult for them to implement a reassurance policy.

In the foreseeable future, the configuration of the US-China confrontation will remain unchanged; a better situation will not come into being, which would enable them to exchange reassurance necessary to overcome the two-faceted dilemma. In the long term, the likelihood is slim that the fragmentation of the international order—unfavorable to many countries—will cease. In the medium to long term, there are concerns that liberal internationalism in the United States may significantly recede as a result of the forthcoming US presidential election; that with its economic slowdown as background, China may resort to military action—despairing of improving military balance in the Taiwan Strait and fearing the reduction of the "window of opportunity." 25

(Associate Professor, the University of Tokyo)

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