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The competition over competitiveness: US-China relations and the US presidential elections

With the US election only one day away, the recent bipartisan consensus on US policy toward China seems to have disappeared. Democrats and Republicans are taking different tacks and both sides are jostling to show their strategy is best. What does this mean for Europe and the rest of the world?

As the US enters the final stretch before the November 3 presidential elections, much is at stake in the increasingly embittered US-China relationship. Until recently, the conventional wisdom was that there was a new, bipartisan consensus in US policy toward China. Even though Democrats and Republicans were able to agree on little else, the thinking went, there was now broad support for a get-tough approach toward China as a “strategic competitor” rather than as a “strategic partner”.

Such a view certainly captured broad-based American frustration with China’s state-led trade and assertive regional security policies, not to mention growing concerns about the repressive direction of China’s domestic politics, but the idea of a “consensus” belied a ferment of ideas about what the appropriate responses should be. In fact, the American election season has exposed how much divergence there is in views of what a truly “competitive” American response to the various challenges posed by China should include.

This is especially so among those seeking to make the case that a potential Biden administration would enact a more effective China policy than has Donald Trump. The question to be answered is what a set of truly competitive China policies would be. In the critical areas of trade, the environment and security, whoever makes the more compelling case is likely to also determine the tone and direction of US-China relations.

A new route on trade

On trade, these discussions are driven primarily by criticism of the Trump administration’s coercive and unilateral approach and its broader push for “decoupling”. Critics of the Trump-led trade war largely focus on its failure to fundamentally change Chinese behavior, pointing to China’s industrial policies, the continued limitations on market access, and the costs to American consumers and farmers.

Others argue that the push to decouple the two economies has the potential to harm American firms and that there is a danger in applying overly broad or blunt export controls or in continuing to employ bullying tactics to get American and European firms to comply with preferred American policies.

Much of the public and also behind-the-scenes discussions focus on the details of what a more competitive approach to trade and to managing interdependence, including supply chains, should look like in practice. Broadly speaking, a Biden presidency would emphasize cooperation with like-minded partners in Europe and Asia on concerns about China’s industrial policies, on reducing supply chain risks linked to China, and on setting trade and investment standards.

Diverging views on climate change

On the environment, the discussions are more obviously split down partisan lines. While the Trump administration ended Obama era climate and clean energy cooperation with China (and, indeed the rest of the world), the Democratic party and the Biden campaign have signaled a clear intent to re-engage on global environmental challenges, including with China.

Yet rather than renewing a grand bargain with China on global climate targets, the Biden campaign and those seeking to guide his future policies are more focused on developing foreign energy and environmental policies that can compete with those of China. Ideas include, for example, promoting clean energy as an alternative to the coal-fired power plants China is building in countries belonging to its Belt and Road Initiative. They also include greater cooperation with like-minded countries and multilateral institutions to promote higher environmental standards for energy generation and consumption in countries where China is an important investment and financial player.

Different takes on security

Lastly, on security, discussions about a more competitive US approach have focused on a growing range of non-traditional security issues – ones that have been exacerbated by the growing US-China strategic rivalry.

Debates about more effective American approaches to traditional security concerns and flashpoints in the US-China relationship, such as North Korea, the South China Sea and Taiwan, focus more on managing rivalry than on effective competition, including for instance, working more closely with allies to build strategic trust in security hotspots in Asia. Yet even in this context, discussions about a more competitive US approach emphasize the increasing cross-over between economic and security issues.

A Biden presidency would likely build on this economics-security nexus to include non-traditional security concerns such as global warming, technology standards, and the links between development and security in developing countries – especially in the wake of economic crises precipitated by Covid-19.

Consequences for Europe

On trade, if a more competitive American agenda on China means working with like-minded European and Asian partners to better manage the risks of interdependence and strengthen the rules-based trade regime to counter Chinese protectionism, then this will leave ample room for enhanced Transatlantic cooperation. But even an American trade policy more focused on competitiveness with China will likely retain a high dose of skepticism about the reformability of the WTO and will emphasize standards or supply chain resilience that prioritize American commercial and security interests first.

Europe will certainly have high expectations for climate cooperation with a possible Biden administration, but with the US on a more competitive clean energy agenda in Asia and the developing world, it should keep a clear eye on options for practical collaboration in this area.

While Europe has a less direct role in traditional Asian security matters, renewed European interest in the Indo-Pacific and the growing importance of non-traditional security issues in the US-China relationship points to potential for greater Transatlantic cooperation in the region.

For Europe, much is at stake in the debate around what constitutes a more competitive US policy response to China. The EU has itself identified China as a competitor (as well as a partner and “systemic rival”) and therefore needs to develop its own clear plan for how to best pursue competition with China. Especially under a Biden presidency, American discussions about a more competitive set of China policies would open up multiple options for expanded Transatlantic cooperation based on Europe’s own competition agenda with China. Yet European policy makers and businesses should also be clear that a more competitive America will also seek to compete, not just cooperate, with Europe on a range of trade, climate and security issues.

Read also this article's companion piece on whether China is right to bet on the inevitable decline of the USA.