Report of Monday Morning Meeting on State of Sino-US Relations

Ms. Mayuri Banerjee, Research Analyst, Manohar Parrikar Institute for Defence Studies and Analyses, made a presentation on “The Status of Sino-US Relations: Assessing the Contemporary Trends of Sino-US Rivalry” at the Monday Morning Meeting held on 31 July 2023. The session was moderated by Dr. Prashant Kumar Singh, Research Fellow, MP-IDSA. Maj. Gen. (Dr.) Bipin Bakshi (Retd.), Deputy Director General, MP-IDSA, and scholars of the Institute were in attendance.

Executive Summary

Ms. Mayuri Banerjee's presentation highlighted the escalating rivalry between China and the US, marked by strained relations across economic, technological, geopolitical, and military domains. The trade war featured tariff battles and technology restrictions. The tech competition extended to AI and semiconductor exports. Geopolitical issues included tensions over Taiwan and power struggles over regional influence. Both nations employed initiatives to bolster their sway. The rivalry, reminiscent of Thucydidean dynamics, stems from a decline in cooperation, treating issues as security matters. The future looks uncertain, with both sides unlikely to ease stances, resulting in a conflicted coexistence.

Detailed Report

Dr. Prashant Kumar Singh initiated the discussion by highlighting the genesis of the Sino-US rivalry and then provided an overall overview of the Sino-US relationship. Additionally, he discussed the ongoing dynamics between the two nations, encompassing matters such as high-tech trade and concerns surrounding the Taiwan Strait.

Ms. Mayuri Banerjee began her presentation by giving a broad overview of the current situation of the Sino-US relationship. Ms. Banerjee explained that rivalry arises when two nations have hostile ties and there is potential for armed conflict. Recent events and behaviors indicate a shift towards major power rivalry. Sino-US relations are strained and historically low, marked by heightened economic, political, technological, and military competition. Further, disputes, disagreements and threats to use force persist, leading to frozen bilateral ties. Recent high-level meetings have failed to yield significant breakthroughs.

The speaker highlighted the fault lines of the Sino-US relationship in four different domains: trade war, geopolitical competition, high-tech war, and Taiwan.

In the trade war section, Ms. Banerjee highlighted that in 2018, the Trump administration launched the trade war. Thereafter, both US and China imposed tariffs on various goods sourced from each other. She explained that China's Huawei was restricted, and cotton imports from Xinjiang were banned by the US. During Trump's term, tariffs increased significantly across four rounds, reaching 21% from 3.1% in 2018. The following Biden administration maintained tariffs but with a more focused approach. By August 2022, about 660 Chinese companies faced US trade restrictions, and the sale of communication equipment from Chinese telecom firms was prohibited. In response, China created its Entity List in 2020 and introduced the Anti-Foreign Sanctions Law in June 2021. In 2023, China excluded US chipmaker Micron from critical projects and passed the Foreign Relations Law in July, as a counter-measure to the US restrictions.

In addition to the trade war, she highlighted the Sino-US clash over high technology and artificial intelligence. She pointed out that Trump restricted semiconductor exports to China, putting key chip makers like Huawei and SMIC on the "Entity List." In September 2022, Nvidia and Advanced Micron Devices halted AI computing chip exports to China. The Biden administration then introduced comprehensive export controls, including limiting China's access to certain chips made with US equipment. By December 2022, the US had blacklisted China's YMTC (Yangtze Memory Technologies Corp) and other firms. In retaliation, China banned mergers between Chinese companies in the US market and their US counterparts. Recently, China announced export controls on critical minerals like germanium and gallium.

The tech rivalry between the US and China is closely linked to Taiwan. Ms. Banerjee explained that Sino-US bilateral relations took a major hit after Nancy Pelosi's visit in August 2022. China canceled and suspended eight bilateral dialogue mechanisms. Dangerous military encounters between the US and Chinese Navy in the Taiwan Straits were reported in June 2023.  With regard to Taiwan, both sides accuse each other of trying to change the status quo. The US claims that Chinese economic and military pressure on Taiwan, imposition of diplomatic isolation, and interference in Taiwan‘s election are aimed to coerce Taipei into China’s fold. On the other hand, Beijing asserts that US diplomatic and military support is aimed to strengthen Taiwan’s aspiration for independence.

Elaborating on the geopolitical competition, Ms. Banerjee highlighted that China and the US are locked in a competitive struggle, vying for control over political, military, and economic influence across different regions like Africa, Latin America, and South-East Asia. They're competing in sectors like infrastructure, healthcare management, technology, training, and capacity development. Both countries are trying to shape rules and institutions to enhance their sway over regional security and economic patterns. China is utilizing initiatives such as the Belt and Road Initiative (BRI), AIIB, SCO, GSI, GCI, and GDI, among others. Meanwhile, the US has sought to counter through initiatives like Free and Open Indo-Pacific, Build Back Better World, Quad, IPEF, Partnership for Global Infrastructure and Development, AUKUS, Five-Eyes alliance, and NATO Plus Five.

She also highlighted that the current dynamics of rivalry between China and the United States can be interpreted through four frameworks; Thucydidean rivalry, power-maximisation and security competition, securitization, and erosion of pro-cooperation lobby in both countries.

Concluding her presentation, Ms. Banerjee highlighted the future of Sino-US Relations remains uncertain as neither side has shown signs of easing their foreign policy approach toward the other. The US is likely to focus on strengthening partnerships in the Indo-Pacific region to enhance deterrence. China, on the other hand, will further collaborate with Russia, enhance its military capabilities, and increase diplomatic engagement in the Indo-Pacific and beyond. For the foreseeable future, both countries are expected to continue a conflictual coexistence.  

Q&A Session

Deputy Director General, Maj. Gen. (Dr.) Bipin Bakshi (Retd.) in his remarks emphasised the significance of the US Defense Secretary’s visit to Papua New Guinea. He highlighted the US’ endeavor to enhance relations and establish a dual-use base, catering to both civilian and military purposes in the central Pacific region. In her reply, Ms. Banerjee mentioned the recent summit held in the US between US President Joe Biden and the leaders of the Pacific Island nations. She noted that independent research is required to understand the smaller nations' efforts to navigate the Sino-US rivalry.

Dr. Prashant Kumar Singh, Research Fellow, addressed the origins of the Sino-US rivalry, pointing out its roots in politics, history, geo-strategy, and China's commitment to the one-China policy. He made a query about the perspective of the US business lobby towards China within this rivalry's context.

Capt. Anurag Bisen, Research Fellow, posed a query regarding India's stance on the Sino-US rivalry.

J. Mohansakthivel, Research Analyst, brought up the use of the term "Cold War 2.0" to describe the current rivalry and questioned its appropriateness.

Mr. Anit Kumar, Research Intern, asked whether a similar competition existed between the two nations in Space.

Dr. Adil Rashid, Research Fellow, expressed concerns about the impact of Chinese currency devaluation on the US.

Mr. Harshit Sharma, Research Intern, posed a question about China's potential to reshape the world order.

Dr. Prashant Kumar Singh and Ms. Mayuri Banerjee gave a detailed explanation on the comments and questions raised by the participants.

Report prepared by Mr. Mohan Singh Dhangar, Research Intern, East Asia Centre, MP-IDSA, New Delhi.