China-US Strategic Competition: Impact on Small and Middle Powers in Europe and Asia

Abstract

The present introductory chapter shall set the stage for the edited volume by broadly sketching the contours of the intense strategic competition between China and the United States and its potential to reshape Asia–Pacific and the world order. Briefly, this chapter will also allude to the future probable fallouts of the Russian invasion of Ukraine and its potential for redrawing geopolitical coordinates and allegiances, for the countries that are in the focus of the present volume.

This edited volume aims to tackle the China-US strategic competition—and its international repercussions—from the perspective of the various strategies adopted by specific countries in Asia and Europe, when dealing with the two hegemons. To this avail, the book includes a balanced selection of chapters regarding both European and Asian countries’ tactics to cope with the China-US strategic rivalry. The chapters do not simply look at the “unitary” foreign policy positioning of national governments but attempt to depict how a variety of actors within these countries view the strategic competition, well representing how fragmented and polarized societies within countries are, when it comes to the issue of how to deal with China and with the United States.

The present introductory chapter shall set the stage by broadly sketching the contours of the intense strategic competition between the two superpowers, with its potential to reshape Asia–Pacific and the world order. Briefly, this introductory chapter will also allude to the future probable fallouts of the Russian invasion of Ukraine and its potential for redrawing geopolitical coordinates and allegiances, for the countries that are in the focus of the present volume. The conflict is fundamentally changing the European security architecture and thus also impacts on the strategic future posture of European countries. The chapters’ authors have covered events up to the autumn of 2022, fully aware that the situation could change considerably by the time of this volume’s planned publication. Nevertheless, all chapters cover important strategic trends that will shape international security and domestic trajectories in the years ahead, regardless of the outcome of Russia’s war in Ukraine. Together, they address issues regarding the impact of the growing strategic competition between the United States and China on other states—middle and smaller powers, in Europe and Asia.

The present chapter will first sketch the China-US Strategic Competition in a theoretical and historical context; it shall then pinpoint the several dimensions of the China-US Strategic Competition; afterward, it will briefly discuss European and Asian countries’ strategic options; next, it shall dissect the theoretical framework and finally, outline briefly all the chapters included in the edited volume.

China-US Strategic Competition in Theoretical and Historical Context

Over the course of just a few decades, China has progressed from being a relatively marginal member of the international community to a great regional power, on its way to becoming a global hegemon. Presently, the world is witnessing a new form of “Cold War” between the United States and China; frictions have grown increasingly prominent during Trump’s Presidency and have continued in a similar fashion under Biden: trade wars, technological competition as well as mutual distrust and accusations constitute what seems to be lowest point in the relationship between the two, since the resumption of official ties in 1979.

While mostly geared toward economic interests and a trade and tariffs war, since the 2020 COVID-19 pandemic, the clash seems to have assumed more ideological hues. Frequent direct attacks of China, its government, the Communist Party non-transparent behavior and its violations of human rights and international protocols had been uttered by many within the Trump administration.

China had high hopes that the relationship with the United States could improve, with the election of Joe Biden in November 2020, but these hopes were dashed. While Biden has largely avoided the heated ideological disputes with the Chinese Communist Party that the Trump administration engaged with, in its final year, relations remain strained and regarding a variety policy spheres and dimensions, competition has even increased. From China’s perspective the United States under Biden has become even more proactive in trying to isolate China: Sanctions and export controls over China’s human rights abuses in **’s China, after “becoming wealthy” (fùqǐlai, 富起来) in the era of Deng **, now aspires to “strengthen” (qiángqǐlai, **起来) its prominence internationally, thus bringing to a definitive conclusion the “great renaissance of the Chinese Nation” (Zhōnghuá mínzú wěidà fùxīng, 中华民族伟大复兴) vowed by the Communist Party in its China Dream (Zhōngguó Mèng, **梦). Today, this objective seems closer than ever—in the eyes of the Chinese leadership—in an international context that is characterized by a “period of strategic opportunity” (zhànlüè jīyù qī, 战略机遇期), which is portrayed by the CCP as foreshadowing “the rise of the East and the decline of the West” (dōngshēng xījiàng, 东升西降) (Buckley 2019: 160), the Central Work Conference already back in 2009 called for a more assertive and active foreign policy mode. The new self-confident attitude was likewise prompted by China’s relative power growth, in both the economic and military “terms.” In fact, in 2009, the country surpassed Germany and became the world’s greatest exporter and in 2010 it surpassed Japan and became the world’s largest economy after the United States (Yahuda 2019: 162). Concerning military expenditures in 2015 China’s defense budget was already five times higher than all ten ASEAN countries together (Steinbock 2017), and it has meanwhile become even higher.

A higher degree of intransigence is detected in Bei**g’s practices and discourses within the boundary of its own periphery, with particular reference to territorial disputes as well as the “unresolved Taiwan issue.” At the same time, this unprecedented ambition characterizes China’s projection of power beyond the traditional regional horizon. Thus, to the increasing pressure exerted by the United States since the Obama administration, Bei**g responds by articulating its own vision of the international order and by claiming its own “discursive power” (huàyǔquán, 话语权) in the global public space. In this sense, the Belt & Road Initiative (BRI) represents only the most visible manifestation of a more generalized Chinese activism aimed at sha**, adapting, or challenging norms, rules, and institutions of the liberal international order since the end of the Cold War (Grano 2021). These successes have led many Chinese officials to believe that their nation is now a first-class power and needs to be recognized as such.

It is, therefore, important to emphasize that the ongoing tensions between China and the United States pre-date the Trump Era and even **’s ascent to power and have their roots in the more confident behavior China exhibits since the year 2008 and in its rise, bringing with it unintended consequences for the already established global hegemon, the United States. With its newly-acquired assertiveness and confidence, China expected to be able to play a larger role in global rule-making and to be recognized for its technological strides (Hass 2020) and military capabilities. Given that the United States has been the only superpower in the world since the end of the Cold War, China, with its rising power status, seeks to alter and shape the international environment in ways that are favorable to achieve its own goals, namely the creation of a China-centric global order (Doshi 2021; Grano 2021). Since Russia launched its all-out invasion of Ukraine on February 24, 2022, China has taken a rhetorically neutral stance in public, while avoiding direct criticism of Russia. The Chinese have so far restrained from openly allying themselves with Russia—against Europe and the United States. Nevertheless, Joe Biden’s new Strategy for a Free and Open Indo-Pacific (FOIP), released in February 2022, clearly indicates that China remains the number one potential threat for the United States’ security (Lieberherr and Maduz 2022).

Different Dimensions of the US-China Strategic Competition

According to Rush Doshi in his recent publication The Long Game, the Chinese leadership sees several opportunities to diminish America’s influence in the world and increase its own.

This strategy includes efforts to undermine the United States’ financial hegemony, become the global leader in advanced manufacturing and in key emerging technologies, and create a world-class military, capable of operating on a global scale (Doshi 2021).

In The Long Game Doshi also contends that China and the United States have been engaged in geopolitical competition over the political values and institutions that define the regional and global orders since the end of the Cold War. According to him those institutions, from Bei**g’s perspective, have inhibited China’s rise and hindered its freedom of maneuver (Doshi 2021). Deliberate strategies and maneuvers to thwart US influence involve both the political and economic levels, joining regional and international institutions to impede or alter their functioning or at the very least, utilize them to China’s advantage.

The ongoing debate surrounding whether the strategic competition can be defined as a new Cold War, needs to consider both the fundamental differences and the similarities with the real Cold War. The US-China strategic competition, which is currently taking place and presents several risks, lacks two essential and interrelated elements of the United States’ Cold War with the Soviet Union and its allies: first, China and the United States are not involved in a worldwide ideological struggle trying to win over third countries; and second, today’s highly globalized and interconnected world cannot be divided into totally separated economic blocs, as was the case with the Soviet-American Cold War.

Economic linkages between China and the US—including mutual dependences on technology, trade, and data—were non-existent in the real Cold War; back then, the Berlin Wall delineated a stark boundary between spheres of influence, between the free world and the soviet authoritarian one but at the same time it also impeded communications and trade between the two blocs. In the current standoff, the situation is different and the two economies are too intermingled to completely decouple. As the link between technology and security has become more important in the past few months of the pandemic, the United States enacted a “Special Act on Semiconductors” (Calhoun 2021) at the end of 2021, in the hope of accelerating the “internalization” of the semiconductor industry. The reorganization of what has so far been a China-centered international supply chain is restructuring the world economy and trade. At the same time though, in 2020, the first year of the pandemic and rancorous threats of “decoupling,” the United States exported $124 billion in goods to China and imported $434 billion (Office of the United States Trade Representative). The US goods’ trade deficit with China was $310 billion in the same year (Office of the United States Trade Representative). That made China the largest supplier of goods to the United States, and the third largest consumer of its exports, after Canada and Mexico. China is, therefore, financially and trade-wise much stronger than the Soviet Union, and much more integrated in the international system.

However, even though a comparison with the real Cold War of 40 years ago is on many levels, not a good fit, Jude Blanchette, interviewed in the New Yorker, stated:

We probably don’t want to spend the whole time talking about Cold War analogies, but I would just say that no historical analogy is perfect, and, like Churchill said of democracy, the Cold War is the worst possible historical analogy except for all the others. It’s not exactly a replay of Soviet-U.S. competition. But it is a multidimensional competition bordering on rivalry between two great powers that is likely to endure for some time, so the broad outlines of “cold war” at least help us to begin thinking about some of the things we need to do, to manage the relationship (Chotiner 2021).

Even though the competition between the two world powers presents several dimensions, which were non-existent in the Soviet-US Cold War, the present tension could well expand beyond a trade and tech war into a “full spectrum contest” encompassing ideology, military, and space characterized by the emergence of two blocs with the United States and its allies on one side and the Russia-China alliance on the other, competing on several fronts in the newly-emerging international order, after the Russian invasion of Ukraine (Carlson 2022). Therefore, the decades-long geopolitical contest could become more intense and widespread than the US-Soviet Cold War. Two main points characterize today’s conflict between the United States and China: first, an increasing economic decoupling in some areas of trade, capital markets, and technology and, second, a “war” that is purposely described as one of ideological values and of system rivalry. China’s authoritarian capitalist model challenges the US/Western one and it does so by utilizing ideological values to lend legitimacy to its expansionistic mires and desire for power.

What is worth noting is also the instrumentalization of the competition, which is being carried out for domestic purposes in both China as well as the United States, as seen in Chapter 3 of this volume. In fact, at a discourse level, the United States and China are both speaking to their own domestic and international audiences, outlining this as a competition between effective vs. ineffective governance (on the Chinese side), and authoritarianism vs. democracy (on the US side). The rediscovery of the democracy-autocracy divide in world affairs, after Trump’s unilateral and inward-looking era, and the spread of a negative China-image (in connection with the narratives of debt trap-diplomacy in the Belt and Road Initiative and of China being the main culprit for the global COVID-19 pandemic) have catalyzed the revival of the transatlantic network of democratic allies—establishing a new consensus among democratic parties, regardless of their political hue.

Although some economic decoupling seems to be under way, the PRC remains in many ways dependent on continued international trade. Contrary to the Cold War era, today’s focus rests on the need for nations to trade with each other. The US-China rivalry is and will thus be very different from the earlier US-Soviet one, which was largely military and ideological. The new conflict began a few years back with radical financial decoupling and disengagement and has now stepped up its pace entering the digital realm. What remains to be seen is how this conflict will fracture the international community regarding issues on which there should be widespread cooperation, hampering collaboration between economies, scientists, scholars, and ordinary people.

Finally, how the US-China competition ultimately evolves will also depend on the stability of the Chinese domestic political system, where the CCP is currently facing headwinds from multiple directions: from the slowest economic growth in more than thirty years to the unreasonable and difficult-to-explain loyalty to the “Zero-Covid” policy, which is kee** a quarter of China’s economic activity under one form of lockdown or another, to the 20th National Congress of the Party, in October 2022, where ** countries experience such rapid growth that they begin to overtake the dominant global powers of their era. This leads to a war which, in the past, has created a transition between the two powers. Power transition theory further postulates that a power could become dissatisfied with the international system and would thus attempt to reform it or replace it, whereas the current hegemonic power would be satisfied and would attempt to preserve the status quo (Serafettin and Wang 8), especially in the aftermath of recent scandals involving Chinese Communist Party’s United Front influence among the country’s political echelons (Bartlett 2022). At the same time though, Germany and Italy, equally traditional democratic allies of the United States, display a much greater ambivalence toward the two great powers, which can partly be explained by the fact that they are both deeply connected to China through trade and technology and are therefore hesitant when it comes to fully divert investments from China or participate in a US-led democratic alliance coalition against China, as shall be explained in Chapters 6 and 7 of the present volume.

China’s economic and military power, and its willingness to use both in coercive ways, is the primary driver of security change in East and Southeast Asia. Facing the choice between the United States and China, South Korea finds itself in an even more difficult position. Geopolitically close to China and poor in natural resources, South Korea faces a strategic dilemma of wanting to align with the United States for security purposes and with China for the economy gains, thereby risking the ire of both parties. The country, however, is a good example of how the war in Ukraine is hastening the creation of a new security order in East Asia; the new conservative administration, elected in March 2022, is strengthening its alignment with the United States and discussing how to bolster deterrence and lessen economic and energy dependencies on autocracies (Maude 2022; Chapter 10 in this volume). Japan is moving even closer to the United States, balancing against China, as clearly illustrated in Chapter 9 of the present volume while other states, are still firmly planted in the middle of the hedging zone. In Southeast Asia, Singapore presents a notable exception to a generally weak response to the Russian invasion of Ukraine; firm response which has much to do with Singapore’s history and the importance, for the small city-state, of concepts related to national sovereignty and the inviolability of territoriality.

Finally, the postwar US-led liberal international order, even though often criticized by small and middle powers, is what has allowed many of these countries to pursue market economy, democracy and multilateralism, while maintaining security. The general preferences, therefore, lie in improving and renovating, rather than eliminating or replacing the status quo. Given the United States’ technological capabilities, many countries are also likely to continue to be dependent on US semiconductors, software, and other advanced technologies for some time.

What the Russia-Ukraine war is likely to precipitate is the desire for small and middle countries to strengthen their military capability to keep adversaries at bay, in case of a potential conflict, as is the case with Taiwan, and to find reliable allies that can guarantee their security and defense, thus likely swaying some of the analyzed countries closer toward the United States, such as Sweden, Japan and recently, South Korea.

Discussion of the Theoretical Framework

The present section offers details regarding each potential analytical category and their bandwidth, ranging from “hard-soft balancing” to “limited bandwagon” and the zone in between, namely the “hedging zone.” All countries included in our edited volume can be classified into one or the other category of theoretical responding modes. This will allow us to understand the underlying reasons why a country adopts certain policy options, from a comparative perspective.

All the chapters in the volume analyze their country’s foreign policy by pinpointing whether that particular country is opting for a neutral stance or whether it “takes sides” in the competition. While “neutrality” may be strictly interpreted in legal terms, in our volume we define it, in line with its operational modes. To be specific, countries which declare that they will adopt a neutral stance in the US-China strategic competition are adopting a “hedging strategy,” at times also known as “accommodation zone” or “middle zone.”¹ The hedging strategy is in turn further divided into two sub-zones, which include some “return-maximizing” options and some “risk contingency” options (see Fig. 1.1).

Fig. 1.1

The balancing-bandwagoning continuum. Adapted from: Alan Bloomfield (2016: 262)

Cheng-Chwee Kuik, who analyzed Southeast Asian states’ response to China’s rise, further divides the hedging zone into five “sub-zones” (see Fig. 1.2). The three options located on the right side of hedging zone, close to the bandwagoning zone, are called “return-maximising options.” Such options are “economic pragmatism,” which stands to indicate a state that trades with China and is open toward Chinese FDI but abides by strict political and military neutrality; “biding engagement” which stands to indicate the behavior of states which engage with China and try to encourage China to participate in regional and international institutions therefore “binding it” to commonly accepted international standards; and “limited bandwagoning” when a state may align with China when their respective interests converge but will refuse to subordinate itself to it (Kuik 2008: 165).

Fig. 1.2

Adapted from: Alan Bloomfield (2016: 264)

The hedging zone continuum.

On the other spectrum of the hedging zone, on the left side, close to the balancing zone, we find a “soft balancing” sub-zone, when a state balances in the diplomatic and political realm, by forging close relations with the other hegemon and the “dominance denial” option, close to the center of the hedging zone, which characterizes states that pursue political-diplomatic balancing in order to ensure that other great powers, and especially the United States, remain in the region while at the same time maintaining a united coalition against China, when the latter appears to be more aggressive. Depending on the strategic environment that a country faces, hedging options may not be always available to it. Some countries will eventually have to choose sides between the United States or China, either pursuing a “balancing strategy” or a “bandwagon strategy.”

Since the Russian invasion of Ukraine in February 2022, the international community has adopted a wide variety of responses to the crisis, ranging from sanctions, to open support of Moscow’s position. In the Indo-Pacific, US allies and partners have adopted a similarly diverse set of policy reactions to the war. Some, such as India, have hedged in order to maintain ties with Russia, while others, such as Singapore, Japan, and South Korea, have joined the US-led effort to condemn Russian aggression, while at the same time aware that economic decoupling from China is not a desirable option, thereby indicating a high degree of pragmatism, concerning their relations to China.

Outline of Book Chapters

This edited volume will be divided into three parts; the first part analyzes the background and the main features of the ever-intensifying US-China strategic competition, including this introductory chapter (Chapter 1) and two more on the US-China strategic competition. The second part focuses on how European countries position themselves in the US-China strategic competition, and the third part discusses how Asian countries, because of their geographic proximity to the potential areas of conflict, respond to the US-China strategic competition.

Chapter 2, by Shelley Rigger and Jaime Rose Montagne, offers an excellent overview of the different stages in the US-China Strategic Competition all the way up to the 2020 COVID-19 pandemic, the Biden Administration and its impact on the ongoing strategic competition. The chapter is perfect in setting the stage, both in terms of historical overview as well in listing several dominant theories of IR and schools of thoughts and their changing influence in US politics, regarding how to behave toward China and why so-called supporters of the “engagement school,” despite the current situation of intensified rivalry, were not wrong in aiding China’s rise and in trying to bind it to the liberal Western-based order.

In Chapter 3, Brian G. Carlson analyzes how domestic and international factors influence decision-making processes and leadership attitude from the Chinese as well as from the American perspective, despite, as the author acknowledges, a large share of the explanation residing in the changing structure of the international system. Developments in domestic dynamics (such as the impact of ** presents to Sweden. In the end, the author provides an answer regarding how Sweden has moved from the “economic pragmatism” option in the hedging zone toward “dominance denial” with a growing sign that it is moving even further, toward “soft balancing in the future. The chapter also briefly addresses the monumental impacts, driven by the Russian invasion of Ukraine, on Sweden’s long-standing practice of non-alignment and its repercussions for Sweden’s attitude toward China.

In Chapter 6, Giovanni B. Andornino addresses Italy’s role in international politics, especially considering the Italian government’s decision to sign a Memorandum of Understanding (MoU) for cooperation within the framework of the Belt and Road initiative (BRI) with the People’s Republic of China in 2019. In so doing, the author evaluates why the normally risk-averse political establishment in Rome chose to pursue such an unprecedented deepening of its partnership with the PRC, in the face of increasing turbulence in relations between Bei**g and several Western countries. The paper argues that Rome used the BRI MoU as a tool to strike a tactical entente with the PRC in an attempt to leverage Bei**g’s resulting goodwill to extract the economic concessions that had long eluded Italian policy-makers. Finally, in times of changes at the level of the European Union’s positioning and sanctions toward China, in 2021, the paper also addresses the mutated environment vis à vis China under the Mario Draghi administration and integrates Bloomsfield’s theoretical model with a new policy space that fits at best for Italy, namely “selective followership.”

In Chapter 7 on Germany, Jens Damm analyzes the most recent political changes faced by Germany, the European Union’s most important player, and the fragmented and contrasting positions in the German political as well as academic environment, when it comes to China or the United States. All the while Germany’s economic dependence on China is evaluated as one of the key factors influencing the internal debate, given that China is Germany’s most important commercial partner since 2015, making the country’s strategic options between the two hegemons, quite difficult.

In Chapter 8, Roderic F. Wye studies how China’s bilateral relationships with the UK are changing, under the framework of a complicated relationship which touches upon: Britain’s historical relationship with the United States; Britain’s decision to leave the European Union; Britain’s own position as a middle power, deriving from its historical legacy; and Britain’s historical relationship with China, considering Hong Kong’s colonial legacy. Throughout the paper, the author analyzes how UK policy-makers are navigating the increasingly more complicated balance of the UK and its relationship with both the United States and China. The paper provides a detailed account of developments in the UK, emphasizing the impact of China’s own behavior, UK domestic polarization, and the impact of Brexit.

The third and final section of the volume focuses on how countries in Asia position themselves in the US-China rift and whether these can remain neutral or need to choose sides.

In Chapter 9, David Chiavacci looks at Japan’s foreign, economic and security policy under the leadership of Prime Minister Shinzo Abe and his successor Yoshihide Suga. The chapter follows the changes in the foreign policy sphere vis-à-vis China and the United States during two administrations, all the while depicting Japan’s international position and domestic constraints, considering recent meetings with the new US administration, signaling an even closer alliance with America. The chapter engages with the theoretical literature regarding Japan’s conundrum between security and prosperity caught between its long-standing ally and protector, the United States and one of its most important economic partners in the region, China.

In Chapter 10, Linda Maduz likewise analyzes how South Korea is being squeezed in a great-power rivalry, namely between its security guarantor, the United States, and its main economic partner, China, attempting to strategically balance between the two, without having to choose sides. Under the previous administration, observation seemed to indicate that South Korea tended to prioritize its economic interests over longer-term strategic interests—and thereby relations with China over its relations with the United States. After recent presidential elections held in March 2022 however, we see a complete turnaround with the current president, Yoon Suk-yeol, moving closer to the United States.

In Chapter 11, David W.F. Huang and Wen-Chin Wu start from the basic assumption that Taiwan is the most famous flashpoint for a potential conflict between the United States and China. One strategic choice facing Taiwanese citizens is whether Taiwan should ally with the United States against China, employing a balancing strategy. To investigate this issue, they analyze survey data and discuss Taiwanese people’s support for an alliance with the United States against China. They find that a balancing strategy against China, which is favored by Taiwanese citizens, has less to do with traditional party affiliation or unification-independence aspirations, but is related to more relevant circumstantial factors, such as peoples’ threat perception, and their inclination of “distrusting” versus “appeasing” China. How various administrations position the country, considering its special relations toward both China and the United States, is in the focus of the present chapter.

In Chapter 12, Ian Chong examines how Singapore’s behavior of “not choosing sides” is predicated on two conditions: (1) absence of intractable (territorial, ideological, etc.) disputes with China and the United States; (2) significant overlap in interests between the PRC and United States. The paper continues to consider how siding with one major power can risk angering the other while staying in the middle may upset one or both major powers. Acutely aware of China’s economic geopolitical importance, Singapore’s government nevertheless has concerns about China’s behavior and influence. In particular, the government is concerned about the People’s Republic of China’s (PRC’s) attempt to impose a Chinese identity on multi-racial Singapore. Chong’s paper dissects what possible scenarios constitute valid and feasible choices for Singapore, while minimizing losses.

Conclusions

This edited volume through the analysis of diverse national case studies in Europe and Asia, attempts to provide a coherent evaluation about the similarities and differences in these countries’ responses to the US-China strategic competition. From a comparative perspective, the authors of the various chapters pinpoint the underlying reasons for remaining neutral (hedging or accommodating) or taking sides (balancing against China, with the United States) in the case of the selected Asian and European countries.

In of all the countries analyzed there is an overwhelming predominance of powers that, for obvious reasons, be it in Asia or in Europe, prefer to remain safely in the “hedging zone” rather than to openly take sides. Also known as accommodation zone, this middle zone indicates a certain degree of pragmatism (or to a certain extent of diplomatic and economic opportunism), which allows small and middle powers caught in the middle of the China-US strategic competition to selectively decide when to balance against and when to bandwagon with one or the other superpower, according to the issue at stake. This is a common and logical choice for most small and middle-sized countries, seeking to maximize strategic choices to their own advantage, trying not to antagonize either one of the two hegemons. However, recent geopolitical shifts have accelerated a trend for siding closer to the United States, as the key security guarantor both in Europe and in Asia, and away from mere economic concerns; such a trend started some years ago, among other factors, due to China’s more aggressive posture on the world stage, but accelerated due to the COVID-19 pandemic, the sudden realization of supply chains’ unreliability, when depending on China and lastly, the war in Ukraine. Finally, the only power analyzed, which fits fully in the “taking sides” posture is—for obvious reasons—Taiwan, which since the year 2020 has high interests (and nothing to lose) in siding with the United States in order to ensure its survival and the continuation of the status quo across the Strait.