Minxin Pei says the current trade war between the US and China is just part of their geostrategic rivalry. Inspired by economic nationalism Trump lashed out at China’s unfair trade practices while he was a candidate. His belligerence highlighted “the demise of America’s decades-long policy of engagement” with China, that has led to this “critical development.”

The author points out how the Sino-American relations have deteriorated in the past five years. On President Xi Jinping’s watch China has abandoned Deng Xiaoping’s focus on economic growth and his cautious foreign policy slogan for three decades: “Hide your strength and bide your time.” Authoritarian at home and aggressive abroad, China’s rise to global power has not be seen as “peaceful” as Xi claims.

While Beijing seeks to defy “America’s global primacy,” the US lacks a “new China policy.” Nevertheless Washington sees China as a “revisionist power” seeking to displace decades-old US dominance in the Indo-Pacific region, despite Beijing’s assurance that it does not wish to “displace” any country. Although Trump had pulled out of the Trans-Pacific Partnership deal that would have served as an American-led counterweight to China, he defends the freedom of navigation in the South China Sea. Beijing has claimed almost the entire strategic waterway and built military bases on artificial islands there.

For the time being the main challenge faced by Beijing is pressure from the US to trim China’s huge trade surplus by $200 billion in two years, or else face a trade war. China is aware of its large holdings of US government debt, which would potentially give it leverage. It remains to be seen how effective it will be to pass a bill that retricts Chinese investments in the US, and “to limit visas for Chinese students who study cutting-edge science and technology at US universities.”

The author says even if China could “avoid a devastating trade war in the short term,” it would hardly improve the long-term Sino-American relationship, which is “almost certain to be characterized by escalating strategic conflict, and potentially even a full-blown cold war.” Unlike the one which ended the bipolar era following the collapse of the Soviet Union in 1991, the world today will fracture along the lines as countries accept, reject or manage China’s growing influence. The US may find it hard to contain China.

While many Asian countries will choose to do business with China, they may still rely on the US for security. Arms sale will still ensure America’s hardpower influence. Countries that buy American weapons bind their militaries and their foreign policies to the US. This reliance reminds of America’s military relationships in Asia, which date back to World War II. Instead of choosing sides, countries that are caught between the US-China hostility could pursue strategies that draw maximum benefit from both powers, and minimise risks of angering either and preserve their independence.

The author believes that neither the US nor China would “become enmeshed in such a dangerous and costly cold war – one that would likely last decades.” Instead they might opt for “a second scenario – managed strategic conflict.” Motivated by “economic incentives” they would “maintain a working relationship,” without staying away from proxy wars or abandoning direct military support to allies, while continuing to “compete actively for military superiority.”

In order to manage the conflictual relationship with China, the US under Trump lacks “a disciplined, well-informed, and strategically minded leadership.” Indeed, Trump’s “erratic approach to China demonstrates that he has neither the strategic vision nor the diplomatic discipline to devise a policy of managed strategic conflict.” The author sees the two countries engaged in a “transactional conflict” which is being “characterized by frequent economic and diplomatic spats and the occasional cooperative maneuver.” The absence of a “strategic coherence,” will raise tensions, “because individual disputes are settled in isolation from one another, based on a specific quid pro quo.”

There is fear that the two antagonists will be “drifting toward long-term conflict. Whatever form that conflict takes, it will entail high costs for both sides, for Asia, and for global stability.” It is unclear whether Russia could exploit this Sino-American hostility and benefit from the situation. Unfortunately the EU is too preoccupied with Brexit and internecine strife to be able to mediate between the two.