Observers of US–China relations increasingly talk of a new cold war. On top of a long-running trade war, the two countries now find themselves in a destructive cycle of mutual sanctions, consulate closings and increasingly bellicose official speeches. Efforts to decouple the US economy from China’s are underway as tensions mount in both the South China Sea and the Taiwan Strait.

A cold war between the United States and China would leave both countries and the world worse off. It would be dangerous and costly—not least because it would preclude needed cooperation on a host of regional and global issues.

The good news is that such an outcome is not inevitable. The bad news is that the chances of a second cold war are far higher today than they were just months ago. Even worse, the chances of an actual war, resulting from an incident involving the countries’ militaries, are also greater.

Why is this happening? Some say Sino-American confrontation is inevitable, the result of friction between the established and rising powers of the day. But this overlooks the various episodes in history when such power shifts did not result in war. Even more, it underestimates the importance of decisions already made and yet to be made. For better and for worse, little in history is inevitable.

A more serious assessment of how we got here begins with China. In recent years, and increasingly in recent months, the Chinese government has embraced a more assertive path at home and abroad. This is reflected in China’s crackdown in Hong Kong in the wake of its enactment of a harsh new national security law; the inhumane treatment of its Muslim Uyghur minority; the clashes along its unsettled border with India; the sinking of a Vietnamese vessel in the disputed South China Sea; and regular displays of military strength near Taiwan and the Senkaku Islands, which both China and Japan claim as their own.

This has triggered deep disillusion with China in the US, compounding underlying tensions stemming from China’s consistent theft of American intellectual property, trade practices that many blame for the disappearance of US manufacturing jobs, a concerted military build-up, and mounting repression at home. Hopes that integration into the global economy would bring about a more open, rule-abiding China haven’t materialised.

Why is China becoming increasingly assertive now? It could be that President Xi Jinping sees an opportunity to advance Chinese interests while the US is preoccupied with the fallout of Covid-19. Or it could be an outgrowth of China’s desire to distract domestic attention from its initial mishandling of the virus and the economic slowdown exacerbated by the pandemic. It wouldn’t be the first time a government turned to nationalism to change the political conversation.

A third explanation is the most worrisome. In this interpretation, China’s recent behaviour is not so much opportunistic or cynical as representative of a new era of Chinese foreign policy, one that reflects the country’s growing strength and ambitions. If this is the case, it reinforces the view that a cold war or worse could materialise.

Of course, all this is taking place during a US election campaign, and President Donald Trump’s administration is seeking to blame others for its own inept handling of the pandemic. To be sure, China bears more than a little responsibility, as it initially suppressed information about the outbreak, was slow in responding and failed to cooperate as much as it should have with the World Health Organization and others. But China cannot be blamed for the lack of adequate testing and contact tracing in the US, much less for Trump’s failure to accept science and support social-distancing and mask-wearing mandates.

But it would be wrong to attribute changing US views of China primarily to American domestic politics. A tougher China policy will last regardless of who wins the presidential election. Indeed, US policy towards China could become even more critical under a Democratic president. A Joe Biden administration would be less preoccupied with negotiating narrow trade agreements and more focused on addressing other troublesome aspects of Chinese behaviour.

In the short run, both sides should ensure that crisis communications are in good order, so that they can respond quickly to a military incident and keep it from escalating. More positively, the two governments could find common ground by making any Covid-19 vaccine available to others, helping poorer countries manage the economic fallout of the pandemic, or both.

After the US election, the two governments should start a quiet strategic dialogue to develop rules of the road for the bilateral relationship. The US will need to abandon unrealistic hopes that it can foster regime change in China and instead focus on shaping China’s external behaviour. China will have to accept that there are limits to what the US and its allies will tolerate when it comes to unilateral acts that seek to alter the status quo in the South China Sea, Taiwan or the Senkaku Islands.

In the long run, the best hope is a US–China relationship of managed competition, which would avoid conflict and allow for limited cooperation when it is in both countries’ interests. This may not seem like much, but it is quite ambitious given where things are and where they are heading.

Originally published 2 August 2019.

The backlash abroad against Xi Jinping’s China, at least in developed nations, has spread rapidly in the last year. Some smaller countries, like Australia and Canada, feel patronised and bullied. Neighbours worry they are being marginalised.

Advanced industrial nations, especially Germany and South Korea, see China coming at them like an unstoppable train. The US, for decades the world’s lone superpower, is confronted by a once-in-a-lifetime challenge from Beijing. All of these phenomena, once bubbling under the surface, have burst into clear view during Xi’s time in office.

Beijing’s opaque internal politics makes judgements about domestic Chinese politics more difficult, but there can be little doubt that a backlash is underway at home as well. That’s not to say that Xi’s position is in any way threatened. But an effort to track Xi’s fortunes at home is crucial to weighing his options abroad.

As a leader, Xi is unique in post-revolutionary party politics in not having any identifiable rival or successor domestically, largely because he has ensured that none have been allowed to emerge. But Xi has earned himself an array of what we might called ‘bad enemies’ and ‘good enemies’ since taking office in late 2012. They range from the once rich and powerful families he destroyed in his anti-corruption campaign, all the way to the small-r reformers angered by his illiberal rollback of the incremental institutional advances of the reform period.

Forced to lay low initially because of the dangers of challenging him outright, Xi’s critics at home have begun to find their voice over the past 12 months. They have been outspoken mainly on economic policy, but the deeper undercurrents of their criticisms are unmistakeable. The sons of former top leaders, revered scholars who had guided China’s economic miracle, frustrated private entrepreneurs and academics furious about Xi’s unrelenting hard line—all have complained in multiple public forums, in speeches, in online postings, and in widely circulated essays at home and offshore, about Xi’s policies and style.

‘Something strange is happening in Xi Jinping’s China’, wrote Ian Johnson in the New York Review of Books. In what was supposed to be the ‘perfect dictatorship’, the country was witnessing ‘the most serious critique of the system in more than a decade, led by people inside China who are choosing to speak out now, during the most sensitive season of the most sensitive year in decades’.

The exact number of ‘tigers’ toppled by Xi’s anti-corruption campaign—in other words, officials who were once part of the designated elite whose jobs had to be cleared through the party’s central personnel system—isn’t easy to calculate. The best estimates put it around 300 to 400, including scores of generals. The officials who have been prosecuted and jailed include members of the politburo, ministers, vice-ministers, the heads of state-owned enterprises, provincial party leaders and governors, and mayors.

In each of those cases, the investigations don’t just hit the individual official who has been targeted and detained. Literally, hundreds of thousands of people who are tied into and rely on that single person for their income are effectively swept up with them. Their livelihoods, and all that they have invested in clawing their way through the system, can evaporate with the stroke of a pen. Some members of the patronage networks are often arrested themselves.

Xi has made enemies of them all. As one prominent foreign businessman in Beijing told me: ‘Xi has destroyed millions of people in the elite who now all hold a personal grudge against him. These people are not a bunch of uneducated peasants from the sticks in Henan. They had skin in the game.’

Victor Shih, a US China specialist, was doubtless right when he said that the threshold for some kind of ‘intra-party uprising’ against Xi remains very high. ‘He would need to commit a catastrophic mistake that jeopardizes the continual rule of the Party for his potential enemies within the Party to rise up against him’, Shih told the New Yorker.

But the idea that Xi is ‘president for life’, as he is often referred to in the wake of the 2018 abolition of term limits, will in all likelihood be proved wrong.

From mid-2018, Xi was already facing a public backlash on economic policy, the area in which it has always been safest for Chinese to speak out. Xi has a legion of critics on foreign policy as well, who believe he has overreached and left the way open for the US and others to bind together on issues ranging from trade and technology to military and strategic influence in East Asia.

Most scholars have delivered their critiques in private, or in carefully coded language. Deng Xiaoping’s son, Deng Pufang, though, was explicit in a speech late last year to a disabilities forum which was leaked to the Hong Kong media. He urged China’s leadership to ‘know its place’ in the world and concentrate on its problems at home.

Finally, the abolition of term limits summed up the rage that many influential officials and scholars felt about their country’s leader. In one decision, Xi confirmed his critics’ view that he was an unrepentant autocrat willing to take China backwards in the service of his agenda.

Just as it’s difficult to anticipate where any challenge will come from, it’s equally hard to see how Xi’s supremacy in domestic politics can be sustained. Factors which remain out of Xi’s control will weigh against him. China’s slowing economy and rapidly declining demographics can obviously be leveraged to argue in favour of maintaining tight authoritarian controls. But they are much more likely to work against Xi in future. The same goes for China’s tightening fiscal situation.

Beijing’s ability to throw money at every problem, like bailing out cash-strapped local governments, will only get harder. In other words, by the time of the next party congress, due in late 2022, the issue of succession should return with a vengeance.

Further graphic revelations have emerged about how the Chinese state under General Secretary Xi Jinping is using its power against its own people and in the world in ways that are against Australia’s—and many other nations’—interests and values.

Most are developments in well-known issues. On Xinjiang, the 400-plus pages of detailed Chinese government documentation leaked to the New York Times have made it crystal clear that the level of violence and illegality visited on China’s Uyghurs is deliberate and premeditated. It’s Xi Jinping Thought at its most essential.

The documents reveal Xi’s personal directions for internal security terror against his 13 million Turkic Muslim citizens in Xinjiang, with chilling lines about using the ‘organs of dictatorship’ and showing ‘absolutely no mercy’.

China has refused visas for two Australian politicians to meet with a set of pro-Chinese-government voices, saying that they were not welcome. While both have criticised the Chinese Communist Party’s actions, their comments were in line with Australian interests, and were, as Penny Wong said, examples of free speech.

On Monday, we heard that the Australia–China Human Rights Dialogue, which has been running since 1999, was suspended by Beijing in August.

And, on our media, we see paramilitary police using increasingly lethal force against protesters in response to Xi’s direction that ‘the most pressing task for Hong Kong at present is to bring violence and chaos to an end and restore order’.

The Chinese state under Xi is confidently wielding its power domestically and internationally. As the song says, he’s only just begun.

Most interesting is Canberra’s hand-wringing about how to repair the relationship with Beijing, with the focus on what our political leaders must do and say to ‘put things right’.

A parade of the old and the bold tells us how things should be, how to get back to the way things used to be: focus on mutually beneficial economic engagement, minimise strategic differences by not noticing them or talking about them. We’re told to ‘create space’ for China while not allowing it to dominate—with not much in the way of what that means apart from a whiff of appeasement.

Unfortunately, it’s not possible to live in the world of the 1990s in 2019. The Chinese state that Australia engaged with then is not the beast that current and future governments need to deal with. Advice from that time is like a beetle frozen in amber from the distant past—beautiful and well preserved, but not a live option. The ghosts of Christmas past are not the guides we need to navigate Chinese power being used against us and our interests.

Xi is doing us a favour by ending the fictions that have defined the Chinese state’s relationships and engagement with many countries, not just Australia.

Given how Beijing has responded to mentions of its brutality against its people as ‘interference in China’s domestic affairs’, there’s no longer any point in engaging with the Chinese state in a ‘human rights dialogue’. It now doesn’t even have the value it used to have as a fig leaf to cover the fact that officials and ministers didn’t really want human rights getting in the way of ‘the relationship’.

We need to take the fact of Chinese action in other areas of the relationship to end more fictions that have outlived any utility to us—if not to Beijing.

Number one is the idea that success in dealings between Beijing and Canberra is measured by how happy Beijing is with Australia’s political leadership and our media reporting on China. That gives all power in the relationship to Beijing, enabling Xi to simply express emotion to teach us how we should behave.

It’s a demeaning and false measure of how nations’ political leadership and systems of government should engage when they have starkly different political systems, values and interests. Those differences will become starker as Beijing’s use of its power grows more confident and extreme.

Beijing was deeply unhappy about Australia’s decision to exclude its national tech champions—Huawei and ZTE—from building our digital nervous system in the form of a 5G network. That’s because the party will not now obtain incredibly valuable insider-driven electronic access to government and corporate information travelling over this network. And because Australia’s open statement of the grounds for the decision has sparked a deep international debate informing other nations’ decisions, Beijing’s unhappiness told us we did the right thing.

So too did its unhappiness about Australia’s foreign interests transparency law, passed after egregious interference in our political system by Chinese money connected to the Chinese government. Again, as with the 5G decision, Australia’s action has encouraged other states to look at their own legal frameworks.

Acting in accordance with Australia’s national interests will not make Beijing happy. Only acquiescing to Beijing’s directions and deferring to its interests when ours conflict will do that. And acting in accordance with our national interests can continue to show others that they’re in good company if they join us.

Instead of the ‘Beijing happy-o-meter’, we need to define our relationship with Beijing as Beijing defines its with us—through our decisions and actions and not our words.

Words are important, but only if they describe cogently and calmly the actions and decisions we’re taking. And it’s more important to be able to explain those things to Australians than to Beijing. That will communicate our views to Beijing in a way that no formal talks can replicate.

Number two in the queue is the idea that the Australia–China military relationship ‘builds trust and understanding between the militaries of Australia and China’. It doesn’t. And it won’t while the CCP uses the People’s Liberation Army to seize territory disputed by others, threaten freedom of navigation in international waterways, create a creeping military presence in Australia’s neighbourhood—and perhaps kill its own people on the streets of Hong Kong. Xi has set the scene for this with his words about ending chaos, and Chinese Defence Minister Wei Fenghe has too, saying in June that the massacre of Chinese citizens by the PLA in Tiananmen Square in 1989 was ‘correct policy’ needed to restore stability.

The military-to-military relationship needs to be rebased to the purpose of avoiding miscalculation and misunderstanding, while politely but firmly acknowledging that neither of us wants to help increase the other’s military power.

Number three is the notion that all research relationships with Chinese institutions and corporations that bring money and collaboration to Australian universities are great, because science is value-free and for the good of all humanity. Let’s replace this fiction with clarity that any research that helps advance the military capability of the PLA, or that helps Xi’s internal security organs brutalise people in Hong Kong, Xinjiang, Tibet or Wuhan, is simply not in Australia’s national interests—and put the necessary policy and regulation into place.

Lastly, we need to end the fiction that Australia and China have a ‘comprehensive strategic partnership’. The relationship has many elements—people-to-people connections, corporate connections and two-way trade, which has grown to $215 billion per annum while political differences have become more stark, showing us that politics doesn’t drive the iron ore trade.

But the relationship is not now, and will not become, a ‘strategic partnership’. To do that, our interests and actions on national security would need to align—and they are, in many core areas, diametrically opposed. Saying so won’t end the world, but it will help end the unhealthy fictions that have surrounded our relationship as China has changed and our public policy hasn’t.

Managing the relationship by our decisions and through our actions, calmly taken and clearly explained, will prove a much more sustainable policy foundation than any new set of talking points from our diplomats and former leaders.

The Chinese state’s actions and decisions have shown us the way ahead. Thank you, Xi Jinping.

The backlash abroad against Xi Jinping’s China, at least in developed nations, has spread rapidly in the last year. Some smaller countries, like Australia and Canada, feel patronised and bullied. Neighbours worry they are being marginalised.

Advanced industrial nations, especially Germany and South Korea, see China coming at them like an unstoppable train. The US, for decades the world’s lone superpower, is confronted by a once-in-a-lifetime challenge from Beijing. All of these phenomena, once bubbling under the surface, have burst into clear view during Xi’s time in office.

Beijing’s opaque internal politics makes judgements about domestic Chinese politics more difficult, but there can be little doubt that a backlash is underway at home as well. That’s not to say that Xi’s position is in any way threatened. But an effort to track Xi’s fortunes at home is crucial to weighing his options abroad.

As a leader, Xi is unique in post-revolutionary party politics in not having any identifiable rival or successor domestically, largely because he has ensured that none have been allowed to emerge. But Xi has earned himself an array of what we might called ‘bad enemies’ and ‘good enemies’ since taking office in late 2012. They range from the once rich and powerful families he destroyed in his anti-corruption campaign, all the way to the small-r reformers angered by his illiberal rollback of the incremental institutional advances of the reform period.

Forced to lay low initially because of the dangers of challenging him outright, Xi’s critics at home have begun to find their voice over the past 12 months. They have been outspoken mainly on economic policy, but the deeper undercurrents of their criticisms are unmistakeable. The sons of former top leaders, revered scholars who had guided China’s economic miracle, frustrated private entrepreneurs and academics furious about Xi’s unrelenting hard line—all have complained in multiple public forums, in speeches, in online postings, and in widely circulated essays at home and offshore, about Xi’s policies and style.

‘Something strange is happening in Xi Jinping’s China’, wrote Ian Johnson in the New York Review of Books. In what was supposed to be the ‘perfect dictatorship’, the country was witnessing ‘the most serious critique of the system in more than a decade, led by people inside China who are choosing to speak out now, during the most sensitive season of the most sensitive year in decades’.

The exact number of ‘tigers’ toppled by Xi’s anti-corruption campaign—in other words, officials who were once part of the designated elite whose jobs had to be cleared through the party’s central personnel system—isn’t easy to calculate. The best estimates put it around 300 to 400, including scores of generals. The officials who have been prosecuted and jailed include members of the politburo, ministers, vice-ministers, the heads of state-owned enterprises, provincial party leaders and governors, and mayors.

In each of those cases, the investigations don’t just hit the individual official who has been targeted and detained. Literally, hundreds of thousands of people who are tied into and rely on that single person for their income are effectively swept up with them. Their livelihoods, and all that they have invested in clawing their way through the system, can evaporate with the stroke of a pen. Some members of the patronage networks are often arrested themselves.

Xi has made enemies of them all. As one prominent foreign businessman in Beijing told me: ‘Xi has destroyed millions of people in the elite who now all hold a personal grudge against him. These people are not a bunch of uneducated peasants from the sticks in Henan. They had skin in the game.’

Victor Shih, a US China specialist, was doubtless right when he said that the threshold for some kind of ‘intra-party uprising’ against Xi remains very high. ‘He would need to commit a catastrophic mistake that jeopardizes the continual rule of the Party for his potential enemies within the Party to rise up against him’, Shih told the New Yorker.

But the idea that Xi is ‘president for life’, as he is often referred to in the wake of the 2018 abolition of term limits, will in all likelihood be proved wrong.

From mid-2018, Xi was already facing a public backlash on economic policy, the area in which it has always been safest for Chinese to speak out. Xi has a legion of critics on foreign policy as well, who believe he has overreached and left the way open for the US and others to bind together on issues ranging from trade and technology to military and strategic influence in East Asia.

Most scholars have delivered their critiques in private, or in carefully coded language. Deng Xiaoping’s son, Deng Pufang, though, was explicit in a speech late last year to a disabilities forum which was leaked to the Hong Kong media. He urged China’s leadership to ‘know its place’ in the world and concentrate on its problems at home.

Finally, the abolition of term limits summed up the rage that many influential officials and scholars felt about their country’s leader. In one decision, Xi confirmed his critics’ view that he was an unrepentant autocrat willing to take China backwards in the service of his agenda.

Just as it’s difficult to anticipate where any challenge will come from, it’s equally hard to see how Xi’s supremacy in domestic politics can be sustained. Factors which remain out of Xi’s control will weigh against him. China’s slowing economy and rapidly declining demographics can obviously be leveraged to argue in favour of maintaining tight authoritarian controls. But they are much more likely to work against Xi in future. The same goes for China’s tightening fiscal situation.

Beijing’s ability to throw money at every problem, like bailing out cash-strapped local governments, will only get harder. In other words, by the time of the next party congress, due in late 2022, the issue of succession should return with a vengeance.

The world’s leading democracy, the United States, is looking increasingly like the world’s biggest and oldest surviving autocracy, China. By pursuing aggressively unilateral policies that flout broad global consensus, President Donald Trump effectively justifies his Chinese counterpart Xi Jinping’s longtime defiance of international law, exacerbating already serious risks to the rules-based world order.

China is aggressively pursuing its territorial claims in the South China Sea—including by militarising disputed areas and pushing its borders far out into international waters—despite an international arbitral ruling invalidating them. Moreover, the country has weaponised transborder river flows and used trade as an instrument of geoeconomic coercion against countries that refuse to toe its line.

The US has often condemned these actions. But, under Trump, those condemnations have lost credibility, and not just because they are interspersed with praise for Xi, whom Trump has called ‘terrific’ and ‘a great gentleman’. In fact, Trump’s behaviour has heightened the sense of US hypocrisy, emboldening China further in its territorial and maritime revisionism in the Indo-Pacific region.

To be sure, the US has long pursued a unilateralist foreign policy, exemplified by George W. Bush’s 2003 invasion of Iraq and Barack Obama’s 2011 overthrow of Muammar el-Qaddafi’s regime in Libya. Although Trump has not (yet) toppled a regime, he has taken the approach of assertive unilateralism several steps further, waging a multi-pronged assault on the international order.

Almost immediately upon entering the White House, Trump withdrew the US from the Trans-Pacific Partnership (TPP), an ambitious 12‑country trade and investment agreement brokered by Obama. Soon after, Trump rejected the Paris climate agreement, with its aim to keep global temperatures ‘well below’ 2°C above pre-industrial levels, making the US the only country not participating in that endeavour.

More recently, Trump moved the US embassy in Israel from Tel Aviv to Jerusalem, despite a broad international consensus to determine the contested city’s status within the context of broader negotiations on a settlement of the Israeli–Palestinian conflict. As the embassy was opened, Palestinian residents of Gaza escalated their protests demanding that Palestinian refugees be allowed to return to what is now Israel, prompting Israeli soldiers to kill at least 62 demonstrators and wound more than 1,500 others at the Gaza boundary fence.

Trump shoulders no small share of the blame for these casualties, not to mention the destruction of America’s traditional role as a mediator of the Israeli–Palestinian conflict. The same will go for whatever conflict and instability arises from Trump’s withdrawal from the 2015 Iran nuclear deal despite Iran’s full compliance with its terms.

Trump’s assault on the rules-based order extends also—and ominously—to trade. While Trump has blinked on China by putting on hold his promised sweeping tariffs on Chinese imports to the US, he has attempted to coerce and shame US allies like Japan, India and South Korea, even though their combined trade surplus with the US—$95.6 billion in 2017—amounts to about a quarter of China’s.

Trump has forced South Korea to accept a new trade deal, and has sought to squeeze India’s important information technology industry—which generates output worth $150 billion per year—by imposing a restrictive visa policy. As for Japan, last month Trump forced a reluctant Japanese Prime Minister Shinzo Abe to accept a new trade framework that the US views as a precursor to negotiations on a bilateral free-trade agreement.

Japan would prefer the US to rejoin the now-Japan-led TPP, which would ensure greater overall trade liberalisation and a more level playing field than a bilateral deal, which the US would try to tilt in its own favour. But Trump—who has also refused to exclude permanently Japan, the European Union and Canada from his administration’s steel and aluminum tariffs—pays no mind to his allies’ preferences.

Abe, for one, has ‘endured repeated surprises and slaps’ from Trump. And he is not alone. As European Council President Donald Tusk recently put it, ‘with friends like [Trump], who needs enemies’.

Trump’s trade tactics, aimed at stemming America’s relative economic decline, reflect the same muscular mercantilism that China has used to become rich and powerful. Both countries are now not only actively undermining the rules-based trading system; they seem to be proving that, as long as a country is powerful enough, it can flout shared rules and norms with impunity. In today’s world, it seems, strength respects only strength.

This dynamic can be seen in the way Trump and Xi respond to each other’s unilateralism. When the US deployed its Terminal High Altitude Area Defense system in South Korea, China used its economic leverage to retaliate against South Korea, but not against America.

Likewise, after Trump signed the Taiwan Travel Act, which encourages official visits between the US and the island, China staged war games against Taiwan and bribed the Dominican Republic to break diplomatic ties with the Taiwanese government. The US, however, faced no consequences from China.

As for Trump, while he has pressed China to change its trade policies, he has given Xi a pass on the South China Sea, taking only symbolic steps—such as freedom of navigation operations—against Chinese expansionism. He also stayed silent in March, when Chinese military threats forced Vietnam to halt oil drilling within its own exclusive economic zone. And he chose to remain neutral last summer, when China’s road-building on the disputed Doklam plateau triggered a military standoff with India.

Trump’s ‘America First’ strategy and Xi’s ‘Chinese dream’ are founded on a common premise: that the world’s two biggest powers have complete latitude to act in their own interest. The G2 world order that they are creating is thus hardly an order at all. It is a trap, in which countries are forced to choose between an unpredictable and transactional Trump-led US and an ambitious and predatory China.