Nye, J (2022) - US & China

How not to deal with a rising China:
a US perspective
JOSEPH S. NYE, JR *
Downloaded from https://academic.oup.com/ia/article/98/5/1635/6686624 by guest on 10 November 2022

Will China displace the United States as the world’s leading power by the cente-
nary of communist rule in 2049? Former Singapore prime minister Lee Kuan Yew
believed primacy to be a natural aspiration, but doubted China could do it.1 Others
such as China’s incumbent president Xi Jinping aspire to make it happen.2 Will
China succeed in what Rush Doshi calls its ‘grand strategy of displacing American
power’?3 The outcome will depend on many unknowns, including what the two
countries do over the next three decades. Some see China declining after failing
to escape the ‘middle-income trap’.4 One could also imagine a plateau based on its
demographic decline and low factor productivity. Not even Xi Jinping knows the
answer. His own ‘China dream’ and any other linear projection could be falsified
by unexpected events such as a war over Taiwan or a financial crisis. Here again,
estimates of probability vary.5 There is never a single future, only many possible
scenarios; and which of those become more probable will depend in part on what
strategy the United States chooses to respond to whatever China does.
How, then, should policy-makers deal with this uncertainty? Most simply react
to events according to their gut instincts; but, as John Maynard Keynes famously
warned a century ago, such practical persons are often prisoners of some defunct
scribblers whose names they have long forgotten. From my experience, the
primary sources of their mental maps tend to come from historical analogies and
from International Relations (IR) theories. Both are highly imperfect representa-
tions of reality.
* This article is part of the International Affairs September 2022 special issue: ‘International relations: the “how
not to” guide’, guest-edited by Daniel W. Drezner and Amrita Narlikar.
1
Quoted in Joseph S. Nye, Jr, Do morals matter? Presidents and foreign policy from FDR to Trump (New York: Oxford
University Press, 2020), p. 201.
2
See Kevin Rudd, ‘Xi Jinping’s pivot to the state’, address to the Asia Society, New York, 8 Sept. 2021.
3
See Rush Doshi, The long game: China’s grand strategy to displace American order (New York: Oxford University
Press, 2021), ch. 1.
4
Hal Brands and Michael Beckley, ‘China is a declining power—and that’s the problem’, Foreign Policy, 24 Sept.
2021, https://foreignpolicy.com/2021/09/24/china-great-power-united-states/.
5
Robert D. Blackwill and Philip Zelikow, The United States, China and Taiwan: a strategy to prevent war, special
report (New York: Council on Foreign Relations, Feb. 2021); Admiral Philip S. Davidson, ‘Xi’s potential 2027
transition poses threat to Taiwan’, Nikkei Asia, 18 Sept. 2021, https://asia.nikkei.com/Editor-s-Picks/Inter-
view/Xi-s-potential-2027-transition-poses-threat-to-Taiwan-Davidson. (Unless otherwise noted at point of
citation, all URLs cited in this article were accessible on 20 April 2022.)
International Affairs 98: 5 (2022) 1635–1651; doi: 10.1093/ia/iiac117

© The Author(s) 2022. Published by Oxford University Press on behalf of The Royal Institute of International Affairs. All rights
reserved. For permissions, please e-mail: journals.permissions@oup.com
INTA98_5_FullIssue.indb 1635 24/08/2022 11.01

Joseph S. Nye, Jr
Mental maps from IR theory

There are many flavours of IR theories, but the two most prevalent are realism
and liberalism. Realists see the world in Hobbesian terms of a war of all against
all where only the fittest survive, while liberals see a possibility of Lockean social
contracts. In oversimplified terms, each of these models suggests a different mental
map to guide the American response to the rise of China.
Over the centuries, realism has been the standard model of international affairs,
the mental map that is shared by most policy-makers. But even for those who
accept a realist model difficult choices remain, because there are many variants

of realism. The classical realism of a Hans Morgenthau allows for managing a
balance of power relationship with accommodation and spheres of influence,
while the structural offensive realism of a John Mearsheimer foresees the failure
of restraint and a higher probability of war.6 Other variants of realism focus on
the changing balance of power between an existing hegemonic power and a rising
challenger, and see the prospects of conflict arising from their failure to manage
the hegemonic transition. For some, such as the political scientist Robert Gilpin,
the structural problem lies in the rising power of a challenger like Germany before
1914, but for others such as the economist Charles Kindleberger, the disaster of
the 1930s was the failure of the rising United States to produce global public
goods such as international order and an open economy as it replaced a weakened
Britain.7 In one variant, the rising power comes on too strong; in the other, it
is too weak. As Janice Stein pertinently points out in her article for this special
issue,8 we should pity the policy-maker who turns to hegemonic transition theory
for a recipe describing how to respond to a rising China.
Historical metaphors and analogies

These theoretical differences are often simplified as ‘lessons of history’, as though
the bright light of the past could shine through the fog of an uncertain future.
While history is an important partial guide to policy, it must be handled with
care.9 In the possibly apocryphal words of Mark Twain, at best history sometimes
rhymes, not repeats. All too often history lessons are oversimplified and misused
as though the future will resemble the past. As the distinguished historian Ernest
May used to remark, every time policy-makers are tempted to be guided by a
historical analogy, they should draw a line down a piece of paper and list on one
side ‘similarities’ and on the other ‘differences’.10 Historical metaphors and analo-
gies are rife in the current debate over how the United States should manage the
6
Hans J. Morgenthau, Politics among nations: the struggle for power and peace (New York: Knopf, 1955); John
Mearsheimer, The great delusion: liberal dreams and international realities (New Haven, CT: Yale University Press,
2018).
7
Robert Gilpin, War and change in world politics (New York: Cambridge University Press, 1981); Charles Kindle-
berger, The world in depression 1929–1939 (Berkeley: University of California Press, 1973).
8
Janice Gross Stein, ‘How not to think like a hegemon’, International Affairs 98: 5, 2022, pp. 1615–33.
9
Richard Neustadt and Ernest May, Thinking in time: the uses of history for decision makers (New York: Simon and
Schuster, 1987).
10
In personal conversations.
1636
International Affairs 98: 5, 2022

How not to deal with a rising China
rise of China, but three are particularly salient: a Thucydides trap; a new Cold
War; and 1914 sleepwalkers.
Thucydides’ trap
Many people have noted the similarities of the structural situation of the rise
of China with Thucydides’ account of the rise of Athens.11 Even China’s presi-
dent has noted it. Thucydides argued that the underlying cause of the devastating
Peloponnesian War was the rise in the power of Athens and the fear that created
in Sparta. By analogy, the rise in the power of China and the fear it creates in the

United States could precipitate a war today. Fewer note differences in the nature
of the respective contenders, such as the fact that that Athens was a democracy
while China is an autocracy, or that Sparta was an inward-looking land power
while the United States is a global naval power; or dramatic differences in context,
such as the existence of nuclear weapons or the problem of global climate change.
And Hal Brands and Michael Beckley argue that China is a peaking or declining
power, and that war could arise from Chinese elite fears that its window of oppor-
tunity is closing.12
Graham Allison has attempted to quantify cases of hegemonic transition since
1500 and argues that twelve out of his 16 cases have led to major war; but his
statistics and methodology have been challenged by other social scientists.13 It is
not clear what constitutes a ‘case’. For example, Britain was the dominant world
power in the mid-nineteenth century, but it let Prussia create a powerful new
German empire in the heart of the European continent through three wars from
which Britain abstained. Of course, Britain did fight Germany half a century
later, but there were many ups and downs in the relationship before that. If that
history is disaggregated into several cases, it changes the statistics. Moreover, the
First World War was not a simple Thucydides trap in which an established Britain
responded to a rising Germany. In addition to the rise of Germany, that war was
caused by the fear in Germany of Russia’s rising power, the fear of rising Slavic
nationalism in a declining Austria-Hungary, and myriad other factors that differed
from those pertaining to ancient Greece.
And transposing historical situations to current events ignores important differ-
ences between situations: for example, the fact that today’s power gap between the
United States and China is much greater than that between Germany and Britain,
for Germany had already overtaken Britain well before 1914. Even the classical
Greek case is not as straightforward as Thucydides made it seem. He claimed
that the cause of the second Peloponnesian War was the growth of the power of
Athens and the fear it caused in Sparta. But the historian Donald Kagan argues
11
Joseph S. Nye, ‘As China rises, must others bow?’ The Economist, 27 June 1998, p. 23.
12
Brands and Beckley, ‘China is a declining power’.
13
Graham T. Allison, Destined for war: can America and China escape the Thucydides trap? (Boston: Houghton Mifflin
Harcourt, 2017). Michael Beckley challenges this analysis and argues that power transition theory is littered
with false positives and false negatives: Michael Beckley, ‘The power of nations: measuring what matters’,
International Security 43: 2, 2018, pp. 42–3. Kori Schake argues that there has been only one case: Kori Schake,
Safe passage: the transition from British to American hegemony (Cambridge, MA: Harvard University Press, 2017).
1637

Joseph S. Nye, Jr
that Athenian power was in fact not growing. Before the war broke out in 431 bc,
the balance of power had begun to stabilize. It was Athenian policy mistakes that
made the Spartans think that war might be worth the risk.14 Athens’ growth had
caused the first Peloponnesian War earlier in the century, but then a thirty-year
truce doused the fire. Kagan argues that to start the second, disastrous war, a spark
needed to land on one of the rare bits of kindling that had not been thoroughly
drenched but rather continually and vigorously fanned by poor policy choices.
In other words, the war was caused not by impersonal structural forces, but by
bad policy decisions. Piling up logs may increase the potential for a fire, but that
structure can also serve as a warning against playing with matches.

So what should a policy-maker conclude are the lessons of history for how the
United States should respond to a rising China? If the second Peloponnesian War
was caused in part by the rise of Athenian power, it was also caused by the fear
created in Sparta. American policy-makers may not be able to control the rise in
the power of China, but they can affect the degree of fear that it creates in Wash-
ington. Exaggeration can mobilize domestic support, but if it is excessive and leads
to miscalculation, that would be the ultimate Thucydides trap.15 Metaphors from
Greek history can be useful as general precautions, but they become dangerous if
they convey a sense of historical inevitability. Maybe the better lesson from Greek
history is from the Odyssey: ‘Beware of Greeks bearing gifts.’
Moreover, as mentioned earlier, there is a second problem related to hegemonic
transition that can be called the ‘Kindleberger trap’. The MIT economist Charles
Kindleberger argued that the disasters of the 1930s were caused when the United
States replaced Britain as the largest global power but failed to take on Britain’s
role in providing global public goods. The result was the collapse of the global
system into depression, genocide and world war. Today, as China’s power grows,
will Beijing help provide global public goods? At the global level, public goods—
such as a stable climate, financial stability or freedom of the seas—are provided
by coalitions led by the largest powers because they can see the effect and feel the
benefit of their contributions. When those powers do not do this, global public
goods are underproduced. When Britain became too weak to play that role after
the First World War, an isolationist United States continued to be a free-rider,
with disastrous results.
To date, the record is mixed. Chinese leaders talk about public goods; China
is now the second-largest funder of UN peacekeeping forces, and heads four of
the 15 most important UN agencies. China has also benefited from multilateral
economic institutions—but, like other powers, it tries to manipulate these insti-
tutions to serve its own interests.16 China has also created parallel institutions
14
Donald Kagan, The outbreak of the Peloponnesian War (Ithaca, NY: Cornell University Press, 1972), p. 354.
15
According to Cai Xia, ‘Allison’s “Thucydides Trap” was quickly taken over by the CCP as pretexts to incite
anti-American sentiments among the Chinese people, and to mobilize social and psychological groundwork
to aggravate tensions and prepare for a future war’: Cai Xia, China–US relations in the eyes of the Chinese Commu-
nist Party, occasional paper (Stanford, CA: Hoover Institution, June 2021), https://www.hoover.org/sites/
default/files/research/docs/xia_chinausrelations_web-ready_v2.pdf, p. 21.
16
May Farid and Hui Li, ‘International NGOs as intermediaries in China’s “going out” strategy’, International
Affairs 97: 6, 2021, pp. 1945–62.
1638

such as the Asian Infrastructure Investment Bank (where it has a veto), and uses
its Belt and Road Initiative to compete with the United States.17 China offers
public goods on its own terms, and seeks to tilt the rules in its favour.18 When the
Philippines challenged China’s territorial claims in the South China Sea, China
rejected the judgment of the Permanent Court of Arbitration in The Hague.19 At
the same time, in some areas such as non-proliferation or climate change, China’s
behaviour has become more cooperative over time. It is neither a purely revisionist
nor a purely status quo power. Its behaviour illustrates both the Thucydides and
the Kindleberger versions of the structural dilemmas of hegemonic transition.
Competition is most likely, but metaphors that focus only on competition can

blind policy-makers to areas of cooperation. Ancient Greek history, and its appli-
cation to the onset of the two world wars, can provide useful cautionary notes
but not policy answers.
A new Cold War

The rhetoric of a Cold War has proven useful for political leaders seeking to
mobilize domestic political support, and the metaphor is used by some analysts to
describe a prolonged conflict. The distinguished historians Hal Brands and John
Gaddis answer ‘yes and no’ as to whether the world is entering a new Cold War.20
Some say that President Donald Trump launched a new Cold War, but Trump was
not the sole source of the problem. He poured petrol on a smouldering fire, but
it was China that lit the fire.21
After the Great Recession of 2008 called American leadership into question and
increased belief in American decline, Chinese leaders abandoned Deng Xiaoping’s
strategy of hiding capacity and biding their time and became more assertive, in
ways ranging from building artificial islands in the South China Sea to economic
coercion of Australia to abrogating guarantees to Hong Kong. On the trade front,
China tilted the playing field with subsidies to state-owned enterprises, coercive
intellectual property transfer and cyber theft. Trump clumsily responded with a
tariff war that included penalties on allies as well as on China, but he defended the
US against Chinese companies such as Huawei, whose plans to build fifth-genera-
tion (5G) telecommunications networks posed a security threat.22 Some people in
Washington began to talk about a general ‘decoupling’; but it is a mistake to think
that the United States can decouple its economy completely from China’s without
incurring enormous economic costs.
17
Selina Ho, ‘Infrastructure and Chinese power’, International Affairs 96: 6, 2020, pp. 1461–85.
18
See Doshi, The long game, pp. 223–5; Also Michael Mazarr, Timothy Heath and Astrid Cevallos, China and the
international order (Santa Monica, CA: RAND, 2018), p. 4.
19
Douglas Guilfoyle, ‘The rule of law and maritime security: understanding lawfare in the South China Sea’,
International Affairs 95: 5, 2019, pp. 999–1018.
20
Hal Brands and John Lewis Gaddis, ‘The new Cold War: America, China and the echoes of history’, Foreign
Affairs, Nov./Dec. 2021, p. 10.
21
Xiangfeng Yang, ‘The great Chinese surprise: the rupture with the United States is real and is happening’,
22
Daniel W. Drezner, ‘Immature leadership: Donald Trump and the American presidency’, International Affairs
96: 2, 2020, pp. 383–400.
1639

Joseph S. Nye, Jr
That is why the Cold War metaphor can mislead US policy-makers about the
nature of the challenge they face from China. In the real Cold War, the Soviet Union
was a direct military and ideological threat, and there was almost no economic or
social interdependence in the relationship. Containment was a feasible objective.
With China today, the United States has half a trillion dollars in trade and millions
of social interchanges, including those of students and visitors. Moreover, with its
‘market-Leninist’ political system, China has learned how to harness the creativity
of markets to authoritarian communist party control in a way the Soviets never
mastered. China cannot be contained in the same manner as the relatively weak
Soviet economy. More countries have China than the United States as a major

trade partner, and while they want an American security guarantee against Chinese
military domination, they are not willing to curtail their economic relations with
China as Cold War allies did with the Soviet Union.23
Interdependence is a double-edged sword. It creates network effects of sensitiv-
ity to what is happening in other countries, and can thus foster caution and deter
rash actions. But where it is asymmetrical, it also creates vulnerability, which can
be used as a political weapon by the less vulnerable party.24 That is what makes the
current relationship with China so different from the Cold War. With the Soviets,
the United States was involved in a standard two-dimensional chess game in which
it was highly interdependent in the military sphere but not in economic or transna-
tional relations. With China, the United States is involved in a three-dimensional
game with different power distributions at each level. At the military level, the
world is still unipolar and the United States is the only global power; but at the
economic level, the distribution of power is multipolar, with the United States,
China, Europe and Japan as major players—and on the transnational level of inter-
dependent networks that lie outside the control of governments (such as climate
and pandemics), power is chaotically distributed and no one country is in control.
And when they look at the economic level, US policy-makers have to remember
that while symmetrical interdependence can restrain conflict, asymmetrical inter-
dependence creates a weapon for wielding power. They have to plot carefully
horizontal moves on the traditional military board of chess (or weiqi if one prefers
a two-dimensional Chinese metaphor).25 However, if they ignore the power
relations on the economic or transnational boards and the vertical interactions
among the boards, the United States will suffer. If you play only two-dimen-
sional chess in a three-dimensional game, you will lose. A good strategy for China
must encompass all three dimensions of the interdependence, and the Cold War
metaphor is too closely locked into the traditional two-dimensional chess model.
Moreover, the United States and its allies are not threatened by the export
of communism in the same way as in the days of Stalin or Mao. There is less
23
Sebastian Biba, ‘Germany’s relations with the United States and China from a strategic triangle perspective’,
24
Robert O. Keohane and Joseph S. Nye, Power and interdependence: world politics in transition (Boston: Little,
Brown, 1977). See also Henry Farrell and Abraham L. Newman, ‘Weaponized interdependence: how global
economic networks shape state coercion’, International Security 44: 1, 2019, p. 42.
25
See David Lai, ed., US–China strategic relations and competitive sports: playing for keeps (Cham: Palgrave Macmillan,
2022).
1640

proselytizing now than during the real Cold War. Few people today take to the
streets or jungles in favour of ‘Xi Jinping thought with Chinese characteristics’.
Instead, the problem the United States faces is a hybrid system of economic
and political interdependence which China can manipulate to support authori-
tarian governments, and influence opinion in democracies to prevent criticism of
China—witness its economic punishment of Norway, South Korea and Australia
after they angered China. As noted above, China has become the leading trade
partner of more countries than the United States. Partial decoupling on issues
with security implications, such as that of Huawei, is appropriate; total economic
decoupling, however, would not only be costly, but—in contrast to the Cold

War—would prompt few allies to follow suit.
Moreover, with regard to the ecological aspects of interdependence, such as
climate change and pandemics, the laws of physics and biology make decoupling
impossible. No country can solve these transnational problems alone. The politics
of global interdependence involves power with others as well as over others.26 For
better and for worse, the United States is locked in a ‘cooperative rivalry’ with
China, in which it needs a strategy that can accomplish two contradictory things
at the same time. This is not like Cold War containment.
Meeting the China challenge will require a more complex strategy that lever-
ages US hard and soft power resources at home and abroad to defend a favourable
rules-based system.27 Some pessimists look at China’s population size and economic
growth rates and believe that the task is impossible. On the contrary, if the United
States treats its allies as assets, the combined wealth of the western democracies—
the US, Europe, Japan—will far exceed that of China well into this century. But
allies do not all see China in exactly the same way the United States does.28 Rheto-
ric about a new Cold War may have more negative than positive effects in the
maintenance of alliances. The metaphor of a Cold War may be useful for recruiting
domestic political support, but counterproductive as a strategy overseas.29
1914 sleepwalkers
The fact that the Cold War metaphor is counterproductive as a strategy does not
rule out the very real possibility of a new Cold War—or a hot one. We may get
there by accident or inadvertence. A more appropriate historical metaphor today
is not 1945 but 1914, when all the great powers expected a short third Balkan War
that would clarify the balance of power. Instead they got a world war that lasted
four years and destroyed four empires.
26
T. V. Paul, ‘Globalization, deglobalization and reglobalization: adapting liberal international order’, Interna-
tional Affairs 97: 5, 2021, pp. 1599–1620.
27
John M. Owen, ‘Two emerging international orders? China and the United States’, International Affairs 97: 5,
2021, pp. 1415–31.
28
Gabriele Abbondanza, ‘Whither the Indo-Pacific? Middle power struggles from Australia, South Korea and
Indonesia’, International Affairs 98: 2, 2022, pp. 403–21; Frank O’Donnell and Mihaela Papa, ‘India’s multi-
alignment management and the Russo-India–China (RIC) triangle’, International Affairs 97: 3, 2021, pp. 801–22.
29
Aspen Strategy Group and Munich Security Conference, Mind the gap: priorities for transatlantic China policy
(Munich, Berlin and Washington DC, July 2021).
1641

Joseph S. Nye, Jr
Leaders paid insufficient attention to changes that had altered the process of
the international order that had once been called the ‘concert of Europe’. One
important change was the growing strength of nationalism. In eastern Europe,
pan-Slavism threatened both the Ottoman and Austro-Hungarian empires, each of
which had large Slavic populations. German authors wrote about the inevitability
of Teutonic/Slavic battles and schoolbooks inflamed nationalist passions. Nation-
alism proved to be stronger than socialism when it came to bonding working
classes together, and stronger than the capitalism that bound bankers together.
A second cause of the loss of moderation in the early twentieth-century balance
of power process was a rise in complacency about peace. The great powers had not

been involved in a war in Europe for 40 years. There had been crises—in Morocco
in 1905–1906, in Bosnia in 1908, in Morocco again in 1911, and the Balkan wars in
1912—but they had all been manageable. However, the diplomatic compromises
that resolved these conflicts caused frustration. Afterward, there was a tendency
to ask: ‘Why didn’t we make the other side give up more?’ Many leaders believed
that short, decisive wars won by the strong would be a welcome change.
A third factor contributing to the loss of flexibility in the early twentieth-
century international order was German policy, which was ambitious but vague
and confusing. There was a terrible clumsiness about the Kaiser’s policy of seeking
greater power. Something similar can be seen in Xi’s ‘China dream’, the leader-
ship’s abandonment of Deng’s patient approach, as well as the excesses of nation-
alistic ‘wolf-warrior diplomacy’.30
Policy-makers today must be alert to the rise of nationalism in China as well
as populist nationalism in the United States. Combined with the clumsiness of
China’s wolf-warrior diplomacy, a history of stand-offs and compromises over
Taiwan, and clumsiness in American efforts to reassure Taiwan, the prospects for
inadvertent escalation exist. As the historian Christopher Clark has summarized
in writing of 1914, once catastrophes occur, ‘they impose on us (or seem to do so)
a sense of their necessity ... Contingency, choice and agency are squeezed out of
the field of vision.’ But Clark concludes that, in 1914, ‘the future was still open—
just. For all the hardening of the fronts in both of Europe’s armed camps, there
were signs that the moment for a major confrontation might be passing.’31 Poor
policy choices were a crucial cause of the catastrophe.
A successful strategy must protect against such a sleepwalker syndrome. In
1914, Austria was fed up with upstart Serbia’s nationalism. The assassination of an
Austrian archduke by a Serbian terrorist was a perfect pretext for an ultimatum.
Before leaving for his holiday, the Kaiser decided to deter a rising Russia and back
his Austrian ally by issuing Austria a blank cheque. When he returned and found
how Austria had filled it out, he tried to retract it—but it was too late.
The United States hopes to deter the use of force by China and preserve the
legal limbo of Taiwan, which China regards as a renegade province. For years, US
30
Steve Chan, ‘Challenging the liberal order: the US hegemon as a revisionist power’, International Affairs 97: 5,
2021, pp. 1335–52.
31
Christopher Clark, The sleepwalkers: how Europe went to war in 1914 (New York: HarperCollins, 2013), pp. 362–3.
1642

policy was designed to deter both Taiwan’s declaration of de jure independence
and Beijing’s use of force. Now some analysts warn that that the double deter-
rence policy is outdated because of China’s growing military power, which may
tempt China to act.32 Others believe that an outright guarantee to Taiwan would
provoke China into action. Even if China eschews a full-scale invasion and merely
tries to coerce Taiwan with a blockade or by taking an offshore island, and there
is a ship or aircraft collision that leads to loss of life, all bets are off. If the United
States reacts with freezing of assets or invoking the Trading with the Enemy Act,
the two countries could slip quite quickly into a real rather than a metaphorical
cold or even a hot war. The lessons of 1914 are to be wary of sleepwalking, but

they do not provide a solution to the Taiwan problem.33
An effort to bridge the gap

A number of scholars have addressed the important problem of how to bridge
the gap between academic expertise, including area studies, and practical policy
formation (as discussed by Naazneen Barma and James Goldgeier in this special
issue).34 Policy-makers often feel swamped, and have little time for abstract
theoretical debates or long academic articles. Those scholars who try to bridge the
gap by taking up policy positions usually find themselves spending the intellectual
capital that they accumulated before entering government service. That was my
experience in approaching the issue of a rising China during the administration
of Bill Clinton, first at the National Intelligence Council (NIC) and then in the
Pentagon. I tried to combine realism and liberal approaches.
The 1992 election had focused on the slogan: ‘It’s the economy, stupid’. Some
politicians proclaimed that the Cold War was over, and Japan had won. Early
White House meetings focused on the perceived threat from Japan. As a result
of participating in study groups at Harvard and Aspen with Asian studies experts
such as Ezra Vogel, among others, I came to believe that the threat from Japan was
being exaggerated and the issue of rising Chinese power underestimated. There
were three major powers in east Asia after the Cold War—the United States, Japan
and China. When there are three powers in a balance, common sense suggests that
it is better to be part of two than left out as one. Elementary realism suggested
the importance of reviving the US alliance with Japan, which was then being
discounted both in Tokyo and in Washington as an outdated relic of the Cold War.
I invited Vogel to fill the post of national intelligence officer for east Asia, and
he prepared an estimate that outlined eight possible Chinese futures, ranging from
collapse to dominance. Some scenarios we clearly had to try to prevent, but many
we could live with or try to shape. When I moved from the NIC to the Pentagon
32
Richard Haass and David Sacks, ‘American support for Taiwan must be unambiguous’, Foreign Affairs, 2 Sept.
2020, https://www.foreignaffairs.com/articles/united-states/american-support-taiwan-must-be-unambigu-
ous.
33
Blackwill and Zelikow, The United States, China and Taiwan.
34
Naazneen H. Barma and James Goldgeier, ‘How not to bridge the gap in international relations’, International
Affairs 98: 5, 2022, pp. 1763–81.
1643

Joseph S. Nye, Jr
and was put in charge of defence policy for the region, including production of
an east Asian strategy report, the first steps we took were to restore the US–Japan
alliance.35 The Japanese called this ‘the Nye Initiative’. After more than a year of
negotiations, the Clinton–Hashimoto declaration of 1996 reaffirmed the alliance as
the basis for stability in the post-Cold War era. While China grumbled somewhat
about our re-insurance policy, they accepted the reality and focused forward on
Clinton’s sponsorship of China’s membership of the World Trade Organization,
which finally transpired in 2001.36
In other words, we based our policy on realism, but then extended the prospect
of liberal gains from trade and engagement. We also realized that the prospects

of a Cold War-style containment of China would be impossible because other
countries would not follow America. In the view of Secretary of Defense William
Perry, we were trying to shape the environment in which China’s power rose,
and thus to shape Chinese behaviour. This policy was continued by the George
W. Bush administration, which added the goal of coaxing China to contribute
to global public goods and institutions by acting as what Robert Zoellick called
‘a responsible stakeholder’.37 I characterized the policy as ‘engage, but hedge’. To
those who argue in retrospect that we should have tried Cold War containment, I
would say: not only would we have failed with allies, but we would have guaran-
teed Chinese enmity. Adding engagement to a policy of balancing power did not
guarantee future Chinese friendship, but it avoided discarding all possible futures
between full hostility and full friendship.
Was the engagement policy a failure? In recent years many have argued that
it was. For example, Cai Xia, a former teacher at the Central Party School in
Beijing, says:
The Chinese Communist Party’s fundamental interests and its basic mentality of using the
United States while remaining hostile to it have not changed over the past seventy years. By
contrast, since the 1970s, the two political parties in the United States and the US govern-
ment have always had unrealistic good wishes for the Chinese communist regime, eagerly
hoping that the People’s Republic of China (PRC) under the CCP’s rule would become
more liberal, even democratic, and a ‘responsible’ power in the world. However, this US
approach was a fundamental misunderstanding of the CCP’s real nature and long-term
strategic goals.38
Cai was well placed to make a judgement about an engagement policy that
began with Richard Nixon in 1972, but some who have described Clinton’s policy
as naive have ignored the fact that the hedge or insurance policy came first, and that
the US–Japan alliance remains a robust and fundamental element of the balance
of power in Asia today.
35
US Department of Defense, East Asia strategy report (Washington DC, 1995).
36
Described in Yoichi Funabashi, Alliance adrift (New York: Council on Foreign Relations, 1999), and Michael
Green, By more than providence (New York: Columbia University Press, 2017).
37
Robert B. Zoellick, Deputy Secretary of State, ‘Remarks to National Committee on US–China relations’,
New York, 21 Sept. 2005.
38
Cai Xia, China–US relations in the eyes of the Chinese Communist Party, p. 1.
1644

Of course, there were elements of naivety—as when President Clinton
pronounced that China’s efforts to control the internet would be like nailing jello
to the wall. (It turned out that the great firewall of China works quite well.) And
more should have been done to punish China’s failure to comply with the spirit
and rules of the World Trade Organization. There were expectations that rapid
economic growth would produce greater liberalization, if not democratization,
as China became more wealthy and economically open. China experts such as
the distinguished ambassador Stapleton Roy argued that more Chinese citizens
were enjoying more personal freedoms than at any time in Chinese history. Other
experts noted the freedom to travel, foreign contacts, a greater range of opinions

in publications, and the development of NGOs including some devoted to human
rights. All this has been curtailed in the Xi era.
Were the assumptions of the engagement part of the policy wrong? Before
taking office, two leading officials of the Joe Biden administration wrote in 2019
that ‘the basic mistake of engagement was to assume that it could bring about
fundamental changes to China’s political system, economy, and foreign policy’,
and that a more realistic goal was to seek ‘a steady state of clear-eyed coexis-
tence on terms favorable to US interests and values’.39 On balance, they are correct
about being unable to force fundamental changes in China; but questions of lesser
degrees of change still remain. Chinese foreign policy changed notably on impor-
tant issues such as non-proliferation of nuclear weapons and missiles. Some area
experts argue that in the first decade of this century China showed increased signs
of domestic openness and moderation; but others argue that this was merely a
tactical shift, and that it began to change as Chinese elites interpreted the financial
crisis of 2008 as a sign of American decline.40
Even if Xi was the highly predictable product of a Leninist party system, there
remains a second question about timing. How long does modernization theory
take? Was the mistake at the beginning of this century to expect change in two
decades rather than in half a century? Or, as Lee Kuan Yew once told me, is it more
useful to think in terms of many generations? Xi is only the fifth generation of
Communist Party leadership. Or again, as the China expert Orville Schell argues,
is it ‘patronizing to assume that Chinese citizens will prove content to gain wealth
and power alone without those aspects of life that other societies commonly
consider fundamental to being human’?41 Unfortunately, policy-makers work
under pressure of time, and have to formulate objectives for the present rather
than half a century later. They can, however, try to design policies in a way that
does not foreclose the possibility of more benign distant futures, while realizing
they are very distant.
39
Kurt Campbell and Jake Sullivan, ‘Competition without catastrophe: how America can both challenge and
coexist with China’, Foreign Affairs, Sept.–Oct. 2019.
40
See Doshi, The long game. For a slightly different view, see Yuen Yuen Ang, ‘The robber barons of Beijing’,
Foreign Affairs, July–Aug. 2021, p. 39, https://www.foreignaffairs.com/articles/asia/2021-06-22/robber-
barons-beijing.
41
Orville Schell, ‘Life of the party’, Foreign Affairs, July–Aug. 2021, p. 74, https://www.foreignaffairs.com/
reviews/review-essay/2021-06-22/life-party.
1645

Joseph S. Nye, Jr
The return of great power competition

The American debate over engagement, whatever the time-frame, was called into
question with the announcement of President Trump’s National Security Strategy
in December 2017. There was much to be said for it. During the four decades of
the Cold War, the United States had a grand strategy focused on containing the
power of the Soviet Union. In the 1990s, with the collapse of the USSR, the
United States was deprived of that pole star. After September 2001, the Bush
administration tried to fill the void with an overall strategy that it called a ‘global
war on terror’; but this provided only nebulous guidance that led to long wars in

marginal locations such as Afghanistan and Iraq. Since 2017, the United States has
seen the return of ‘great power competition’, which the Biden administration has
re-christened ‘strategic competition’.
As a grand strategy, great power competition has the advantage of focusing on
major threats to security, economy and values. While terrorism is a continuing
problem that must be treated seriously, it poses a lesser threat than great powers.
Terrorism is like jujitsu, in which a weak adversary turns the power of a larger
player against himself. While 9/11 cost several thousand American lives, our
response led us to spend even more lives as well as trillions of dollars on ‘endless
wars’. The greatest damage was what the strategy led us to do to ourselves. The
fastest-growing part of the world economy is in Asia, and the Obama administra-
tion tried to ‘pivot’ or ‘rebalance’ to that area; but the global war on terror kept
the United States mired in the Middle East.
A strategy of great power competition helps the United States refocus, but it
suffers from two problems. First, it lumps together very different types of states.
Russia is a declining power and China a rising power. That could lead to under-
appreciation of the threat from Russia; but, as the world sadly discovered in 1914,
it was a declining power (Austria-Hungary) that was most accepting of the risk
entailed in the disaster of the First World War. Today’s Russia is declining both
demographically and economically, but it retains enormous resources that it can
employ as a spoiler on everything from nuclear weapons to cyber conflict to the
Middle East or, as it is currently doing, in Ukraine.42 The United States needs a
separate strategy for Russia that does not portray it as similar to the rising China.
A second problem is that the concept provides a necessary but not sufficient
alert to a new type of threat the world faces. It is still focused on two-dimensional
chess. National security and the agenda of world politics have changed since the
days of 1914 or 1945. New threats from ecological globalization are under-appre-
ciated by our strategy. Global climate change will cost us trillions and can do
damage on the scale of war. The COVID-19 pandemic killed more Americans
than died in the Second World War or all our wars since 1945. Yet our strategy
is reflected in a budget for the Pentagon that is more than 100 times that of the
Centers for Disease Control and 25 times that of the National Institutes of Health.
42
David Lewis, ‘Contesting liberal peace: Russia’s emerging model of conflict management’, International Affairs
98: 2, 2022, pp. 653–73.
1646

Meanwhile, Washington debates how to deal with a rising China. Some politi-
cians and analysts call the situation a ‘new Cold War’; but as discussed above,
squeezing China into a Cold War ideological framework misrepresents the real
strategic challenge the United States faces. Cold War metaphors can mislead us.
We and our allies are more deeply intertwined with the Chinese economy than
we ever were with the Soviet Union. Moreover, even if it were possible to break
apart economic interdependence, we cannot decouple from ecological interdepen-
dence, which obeys the laws of biology and physics, not politics. Since we cannot
solve these problems alone, we must realize that some forms of power must be
exercised with others.43 Coping with climate change or pandemics will require us

to work with China at the same time that we compete with China, using our navy
to defend freedom of navigation in the South China Sea. If China links the issues
and refuses to cooperate, it hurts itself.
Formulating strategy under uncertainty

Since no single future exists, good strategy must allow for multiple scenarios,
some of which the United States can affect and some which are largely beyond
its control. Rather than planning for maximal outcomes of which we may fall
short, a prudent strategy of no regrets aims for a long-term outcome consistent
with the Hippocratic Oath: at least do no harm. Rather than a theory of victory
involving regime change, the objective should be competitive coexistence in a
rules-based international order that is favourable to US and allied interests.44 That
is a goal which can bring allies together. Maintaining the alliances that consti-
tute the existing Asian military balance is a necessary condition for a successful
strategy, but because the United States is also a global power the strategy requires
more, namely cross-regional coalitions. The United States is uniquely positioned
to facilitate such diplomacy.
As former Australian prime minister Kevin Rudd has argued, the objective for
great power competition with China is not to inflict defeat or gain total victory
over an existential threat, but to pursue a ‘managed competition’. Cai Xia herself
argues that ‘the nature of the relationship between China and the US is actually
one of adversaries and rivals rather than competitors’, but goes on to say that
‘neither one can swallow the other, and a “hot war” between the two would
be calamitous for the world’.45 A sound strategy requires the United States to
avoid demonization of China and instead see the relationship as a ‘cooperative
rivalry’ or ‘competitive coexistence’, giving equal attention to both parts of the
description. If China changes for the better in the long term, that is simply an
unexpected bonus for a strategy that aims for successful management of a great
power relationship in a time of traditional as well as economic and ecological
interdependence.
43
For discussion of ‘power over’ and ‘power with’, see Nye, Do morals matter?, ch. 9.
44
Norrin M. Ripsman, ‘Globalization, deglobalization and great power politics’, International Affairs 97: 5, 2021,
pp. 1317–33.
45
Cai Xia, China–US relations in the eyes of the Chinese Communist Party, p. 26.
1647

Joseph S. Nye, Jr
A good strategy must rest on careful net assessment. Underestimation breeds
complacency, while overestimation creates fear—either of which can lead to
miscalculation. China has become the second largest national economy in the
world, and some analysts think that it may surpass the United States in the size
of its GDP by the 2030s. But even if it does, China’s per capita income remains
less than a quarter that of the United States, and it faces a number of economic,
demographic and political problems. Its labour force peaked in 2015, its economic
growth rate is slowing, and it has few political allies. If the United States, Japan
and Europe coordinate their policies, the democracies will represent the largest
part of the world economy and will have the capacity to organize a rules-based

international order that can protect their interests and help shape Chinese behav-
iour. A cross-regional alliance working with multilateral institutions sits at the
heart of a robust strategy to manage the rise of China.
China is a country of great strength but also significant weaknesses. The United
States has some long-term power advantages that will persist regardless of current
Chinese actions. One is geography. The United States is surrounded by oceans and
neighbours that are likely to remain friendly. China has borders with 14 countries
and unresolved territorial disputes with India, Japan and Vietnam that set limits on
its soft power. Energy is another American advantage. A decade ago, the United
States seemed hopelessly dependent on imported energy. Now the shale revolu-
tion has transformed it from energy importer to energy exporter, and the Inter-
national Energy Agency projects that North America may be self-sufficient in the
coming decade. At the same time, China is becoming more dependent on energy
imports, and much of the oil it imports is transported through the Indian Ocean
and the South China Sea, where the United States and India maintain a significant
naval presence. Eliminating this vulnerability will not be easy.
The United States enjoys financial power derived from its large transnational
financial institutions as well as the role of the dollar. Of the foreign reserves held
by the world’s governments, only a few percent are in yuan—most are in dollars.
While China aspires to a larger role in digital payments, a credible reserve currency,
whether digital or not, depends on currency convertibility, deep capital markets,
honest government and the rule of law—all lacking in China and not quickly
developed. While China could divest itself of its large holdings of dollars, such
action would risk damaging its own economy as much as that of the United States.
As argued above, power in interdependent relations depends upon asymmetric
vulnerability, and there are too many symmetries in US–China interdependence
at this point, though that might change if there is a much more radical decoupling.
Although the dollar cannot remain pre-eminent for ever, the yuan is unlikely to
displace the dollar until China develops deep and flexible capital markets and a
rule of law.
The United States also has demographic advantages. It is the only major
developed country that is currently projected to hold its place (third) in the
demographic ranking of countries (by total population size). While the rate of
American population growth has slowed in recent years, the US population is
1648

not shrinking, as it is projected to do in China, Russia, Europe and Japan. Seven
of the world’s 15 largest economies will face a shrinking workforce over the next
decade and a half, but the US workforce is likely to increase while China’s will
decline.46 China will soon lose its first place population rank to India, but even
more important is the unfavourable age profile. Its working-age population has
already peaked, in 2015.
America has been at the forefront in the development of key technologies (bio,
nano, info) that are central to this century’s economic growth, and American
research universities dominate higher education. In a 2017 ranking by Shanghai
Jiao Tong University, 16 of the top 20 global research universities were in the

United States; none was in China.47 China aspires to lead ‘the Fourth Industrial
Revolution’, and its government is investing heavily in research and develop-
ment.48 China competes well in some fields now, and has set a goal to be the
leader in artificial intelligence (AI) by 2030. Some experts believe that with its
enormous data resources and lack of privacy restraints on how data are used, and
the fact that advances in machine learning will require trained engineers more than
cutting-edge scientists, China could achieve its AI goal.49
Given the importance of machine learning as a general purpose technology that affects
many domains, China’s gains in AI are of particular significance. Chinese technological
progress is no longer based solely on imitation. If China can ban Google and Facebook
from its market for security reasons, the United States can take similar steps with Huawei
or ZTE. However, a successful American response to China’s technological challenge will
depend upon improvements at home more than upon external sanctions.50
American complacency is always a danger, but so also is lack of confidence and

exaggerated fears that lead to overreaction. In the view of former CIA director
John Deutch, if the United States attains its potential improvements in innova-
tion potential, ‘China’s great leap forward will likely at best be a few steps toward
closing the innovation leadership gap that the United States currently enjoys’.51
The United States holds high cards in its poker hand, but hysteria could cause it
to fail to play the cards skilfully. Discarding the high cards of alliances and inter-
national institutions would be a serious mistake. If the United States maintains
its alliance with Japan, China cannot push the United States beyond the first
island chain, because Japan is a major part of that chain. Another possible mistake
would be to try to cut off all immigration. When I asked why he did not think
China would pass the United States in total power any time soon, Singapore’s
former prime minister Lee Kuan Yew cited the ability of America to draw upon
46
Nicholas Eberstadt, ‘With great demographics comes great power’, Foreign Affairs, July–Aug. 2019, https://
www.foreignaffairs.com/articles/world/2019-06-11/great-demographics-comes-great-power.
47
See the Shanghai Ranking, 15 Aug. 2021, https://www.shanghairanking.com.
48
Jinghan Zeng, ‘Artificial intelligence and China’s authoritarian governance’, International Affairs 96: 6, 2020, pp.
1441–59.
49
Kai-Fu Lee, AI superpowers: China, Silicon Valley and the new world order (Boston: Houghton Mifflin, 2018), p. 83.
50
Peter Trubowitz and Peter Harris, ‘The end of the American century? Slow erosion of the domestic sources
of usable power’, International Affairs 95: 3, 2019, pp. 619–40.
51
John M. Deutch, ‘Assessing and responding to China’s innovation initiative’, in Leah Bitounis and Jonathon
Price, eds, Maintaining America’s edge (Washington DC: Aspen Institute, 2019), p. 163.
1649

Joseph S. Nye, Jr
the talents of the whole world and recombine them in diversity and creativity, a
route that was not possible under China’s ethnic Han nationalism. If the United
States were to discard its high cards of external alliances and domestic openness,
this could change.
Avoiding failures
Just as there are many possible futures, there are many possible failures, as the
editors warn in their introduction to this special issue. A prudent ‘no regrets’
strategy must be alert to more than one. The most dramatic would be a major war.

Even if the United States were to prevail, the costs would be disastrous. The case
of Taiwan and the dangers of 1914 sleepwalking have been noted above. A second
type of failure would be a demonization of China and lapsing into a Cold War that
would lead to a failure to cooperate in coping with ecological interdependence,
as most crucially in the response to climate change. Similarly, competition which
led to failure to cooperate in slowing the proliferation of nuclear and biolog-
ical weapons would be costly for all. On the other hand, a third type of failure
would be domestic inability to manage political polarization and deal with social
and economic problems that cause a loss of focus and a loss of the technological
dynamism that permits the United States to compete successfully with a rising
China. Similarly, the growth of a populist nativism that would curtail immigra-
tion or weaken US support for international institutions and alliances could lead
to a competitive failure. Finally, there can be a failure of vision and values. An
attitude of realism and prudence is a necessary condition for a successful strategy,
but a sense of vision about democratic values and human rights is also impor-
tant to generate the soft power that is another American advantage, and one in
respect of which China now trails behind.52 There are many ways in which the
United States should not try to manage a rising China; and the best place to begin
avoiding them is with awareness of them.
Conclusions
A successful American strategy starts at home and must be based on: (1) preserving
democratic institutions that create soft power that in turn attracts rather than
coerces allies; (2) a plan for investing in research and development that maintains
the US technological advantage with attention to particular critical industries;
(3) maintaining openness to the world rather than retreating behind a curtain of
fear and declinism. In addition, the United States should (4) restructure its legacy
military forces to adapt to technological change; (5) strengthen its alliance struc-
tures, including NATO and alliances with Japan, Australia and Korea; (6) enhance
relations with India; (7) strengthen its participation in and supplement the existing
52
‘China’s international image remains broadly negative as views of the US rebound’, 30 June 2021, https://
www.pewresearch.org/fact-tank/2021/06/30/chinas-international-image-remains-broadly-negative-as-
views-of-the-u-s-rebound/.
1650

set of international institutions it created to set standards and manage interde-
pendence; and (8) cooperate with China where possible on issues of transnational
interdependence.
In the short term, given the assertive policies of the Xi government, the United
States will probably have to spend more time on the rivalry side of the equation,
but if it avoids ideological demonization and misleading Cold War analogies, and
maintains its alliances, it can succeed with this realistic ‘no regrets strategy’. In
1946, George Kennan correctly predicted that it might take decades to succeed
with the Soviet Union. The United States cannot contain China in the same way,
but it can constrain China’s choices by shaping the environment in which it rises or

reaches a plateau. The US should avoid succumbing to fear or belief in decline. If
this relationship were a card game, the United States has been dealt a good hand;
but even a good hand can lose if it is played badly.
1651

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How not to deal with a rising China:

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Mental maps from IR theory

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Historical metaphors and analogies

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A new Cold War

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An effort to bridge the gap

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The return of great power competition

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Formulating strategy under uncertainty

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American complacency is always a danger, but so also is lack of confidence and

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