In a nutshell, the challenges about China are the same as they were two decades ago. The US got it wrong then can it get it right now? Plus, today, Beijing has its domestic issues to solve with or without America.
It’s one of the rarest events in history – its repetition a generation later. In 2003, China was awestruck and intimidated by the United States. The entire world had rallied around America after the 9/11 attacks, and the US had managed to take control of Afghanistan within days; the CIA had bought off Central Asian leaders for pennies. It then succeeded in toppling Saddam Hussein’s regime almost effortlessly.
At that point, the United States controlled the strategic passageways of Central Asia and the Middle East through its grip on Afghanistan and Iraq. Also, it held significant influence over oil prices, since Iraqi oil extraction was crucial for setting the global price. China felt physically and politically encircled. At that moment, Beijing considered changing its political and financial systems. Washington seemed poised to take everything.
Then, quickly, everything changed. The United States failed to impose a new order in Iraq, which fragmented into factional warfare. The situation also deteriorated in Afghanistan. Thus, control over the Middle East and Central Asia turned into a deadly trap. The failure of this operation likely also contributed to the financial collapse of 2008.
With hindsight, it’s easy today to see what went wrong back then. One straightforward thing: when Iraq was about to be invaded, or immediately after the invasion, the US should have replaced Saddam with another willing dictator, not tried to export democracy to the Middle East as if it were the latest model of cell phone.
Similarly, in Afghanistan, the Americans simply should have backed one faction against the others, or supported various factions, leaving it to them to decide what to do. In other words, they should have done what is being done in Ukraine: assist and arm the Ukrainians, but let them fight the war without sending troops and physically and politically taking over their struggle.
With all this in mind, the American strategy towards China becomes very simple. First and foremost, they must win and politically resolve the ongoing conflict in Ukraine and the Middle East. This would physically and politically encircle China, thereby pushing it towards radical changes. For China, however, it’s simply a matter of waiting for the proof to be in the pudding. Will America, which seems so strong, ultimately succeed in truly dominating the situation, or will it fail? For China, these are reactive strategies, while for America, they are lessons to avoid repeating the mistakes of 20 years ago.
However, all this leaves one situation unresolved: China’s internal problems are those of political economy. Many companies should have followed the course of the market economy, gone bankrupt, and invested in new sectors instead. First, it was real estate, and today it’s becoming the automotive sector.
Both suffer from overcapacity that China or the world cannot absorb. Continuing to pump money into these industries leads to the country’s failure, with or without America. Allowing these industries to fail, however, would trigger a financial crisis, then a social one, and then a political one.
Therefore, the solution to these problems is not economic but political: the country must decide how to address them. Throughout history, political reforms have either been tackled directly, accepting the risks and benefits of change, or they have spilled over into foreign wars. In theory, there would be a shared broader global interest in avoiding war and promoting political transformation.
But many things can go awry. The USA can slip in Ukraine, the Middle East or domestically giving China and the international arena new challenges. China may have its own calculations and so could many other countries dealing with China and the USA in these very confusing times.
