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Thinking competitively about China

Thinking competitively about China

By Julian Eagle Platón and Will Inboden

Does the United States benefit from having a strategic competitor? We share the common assessment that the U.S.-China relationship will be the most important geopolitical relationship this century. The complex competition between these two powers will play out not just in Asia but across the globe. Much commentary rightly focuses on the many ways a rising China may threaten U.S. interests.

But is this competition from China merely a threat, or also potentially an opportunity for the U.S.? We think it can be the latter.

Competition is good. We welcome competition in the marketplace. As one of the fundamentals of market capitalism, we have anti-trust laws to break up monopolies and allow competition to flourish. Competitive markets are more innovative and efficient than monopolistic markets, as competitors constantly strive for improvement and advantage.

These benefits translate to the political sphere. David Landes’ The Wealth and Poverty of Nations accurately identifies competition as a critical factor in Europe’s ascent to world leader for half of the last millennium. "Enterprise was free in Europe. Innovation worked and paid, and rulers and vested interests were limited in their ability to prevent or discourage innovation.  Success bred imitation and emulation…" Even inventions created elsewhere in the world (e.g. gunpowder) reached their maximum potential via European rivalries.

Lack of competition can breed complacency and inefficiency, hence the constant soul-searching of U.S. foreign policy wonks following the Cold War and the demise of the Soviet Union as our chief rival. A competitor focuses and invigorates thinking, while providing a benchmark to measure progress. Chinese competition can spur America to address its weaknesses, driving the U.S. to reach new heights.

Here we are optimistic. America’s capacity to compete remains strong; indeed the fundamentals of American power are undiminished. The U.S. enjoys a position of almost unparalleled geographic privilege. Natural resources are abundant, particularly arable land, new petroleum and natural gas reserves, and renewable resource capacity.  America benefits from secure borders and negligible territorial disputes. And access to two oceans facilitates continued maritime supremacy. China faces a critical shortage of arable land, numerous territorial disputes, uneasy and resentful neighbors, and comparatively limited access to the sea.

The U.S. also possesses a demographic advantage, which can continue if the U.S. maintains and reforms our open immigration system, and arrests our recent decline in fertility rates. Future immigrants will add to the population, spur greater entrepreneurship, widen the tax base, and help soften the burden of the baby boomer retirement. China faces the triple demographic peril of a shrinking and aging population with a growing gender imbalance.

Even economically, American competitiveness remains strong. The recent recession and ongoing budget travails notwithstanding, the U.S. continues to be the dominant creative force in the world. U.S. firms are strongly competitive in world markets. The U.S. also retains a significant advantage in soft power, evidenced by the greater willingness of regional powers to work with the U.S. over China.

Historically, America has a record of responding well to competition, even amidst adversity. During the 1970s, American stagnation and decline was exemplified by an ignominious retreat from Vietnam, Watergate, the oil embargo, stagflation, the Iranian hostage crisis, and an apparently ascendant Soviet Union. Similarly, Japanese economic competition in the 1980s, during another downturn in the American economy, had many prognosticators warning of looming Japanese supremacy. Japan’s economy was surging and Japanese investors – steered by the powerful Ministry of International Trade and Industry – purchased scores of American assets. Ezra Vogel’s 1980 book Japan As Number One crystalized this thinking.

In both cases, the magnitude of the competition was not nearly as threatening as the predictions. And in both cases the U.S. responded positively to the challenge. The Reagan economic expansion and military build-up in the 1980s helped end the Cold War, and the increased productivity and economic growth of the 1990s enabled the U.S. to meet Japan’s economic challenge.

Does Chinese competition rise to the level of the Cold War contest of the superpowers? Certainly not yet, and hopefully never. Skeptics highlight China’s relative weakness in comparison to the U.S., particularly in military power. Moreover, Chinese territorial ambitions in the East and South China Seas do not yet equate to Soviet domination behind the Iron Curtain and designs beyond.

China also fails to present a competing worldview in the manner of Soviet communism. Authoritarian capitalism has many hindrances and has not demonstrated an enduring appeal, as bribing populations to support authoritarian leaders can only stave off demands for self-determination in boom times. When the economy begins to lose steam, the cracks in such a scheme can be fatal. Deep flaws are already apparent in China’s vaunted economic growth, in the form of environmental degradation, a speculative real estate bubble, and soaring local debt.

Continued sober and accurate analyses of rival capabilities are essential to avoid exaggerated threats and wasted resources. Imagined threats are rightfully discarded, but it is imperative to respond to actual competition. Another risk comes from tunnel vision focused exclusively on the chief rival. This necessitates an awareness of potential competition from unlikely sources, and the flexibility to respond appropriately.

It is evident, however, that the Chinese leadership views the U.S. as a threat, and that China’s remarkable growth positions it as the chief competitor to the U.S. So, how can we make the most of this going forward, to ensure that competition remains free of conflict? After all, competition may have driven European supremacy in the last millennium, but it also caused incessant warfare that ultimately eroded Europe’s global dominance.

First, we must identify areas of cooperation and competition, building frameworks to make the most of the former, and be assertive on the latter. The dicey challenge comes from those issues that cut across both cooperation and competition (e.g. China’s holdings of U.S. debt; dual-use technology exports). The U.S. can enhance its comparative advantage in soft power by bolstering our alliances in the Asia-Pacific. Among other things, this means working with regional partners to deepen our economic engagement in Asia, such as completing the Trans Pacific Partnership to expand a liberalized trade regime. The U.S. must also address our internal weaknesses and inefficiencies. Serious debt reduction efforts will improve American efficiency and help restore economic growth, while boosting science, technology, engineering, and math education will ensure the intellectual capital necessary to compete.

Competition is not easy; it is an unending struggle demanding sacrifice and hard choices. But to stagnate in complacency carries a greater cost of decline. The magnitude of China’s "threat" may vary considerably with circumstance, but the existence of competition is undeniable. We should welcome the rise of a peer challenger as an opportunity to push ourselves to be better.

Julian Eagle Platón is a graduate student at the LBJ School of Public Affairs at the University of Texas-Austin. Will Inboden is an assistant professor at the LBJ School, and co-curator of Shadow Government.