Executive Summary
This paper analyzes the complex US-China economic relationship, balancing between collaborative interdependence and an emerging economic cold war. It examines how China's state-controlled capitalism challenges the rules-based international trade system, while the US responds with aggressive trade measures and industrial policy. The authors propose a path toward constructive economic statecraft to manage competition and avoid conflict.
Why It Matters
This document is crucial for defense and geopolitical analysts as it details the economic dimensions of the US-China strategic competition, highlighting how economic statecraft is becoming a primary tool in global power dynamics and potentially leading to conflict or new frameworks.
Key Takeaways
- The US-China economic relationship is characterized by deep interdependence alongside increasing competition, risking an economic cold war.
- China's state-backed industrial policies and growing manufacturing capabilities challenge US dominance in critical technologies and supply chains.
- Effective economic statecraft is needed from both sides to negotiate a new rules-based framework and prevent further escalation of economic conflict.
Strategic Relevance
The economic competition between the US and China directly impacts global supply chains, technological leadership, and the stability of the international order. Understanding this dynamic is vital for assessing future geopolitical alignments and potential flashpoints.