BY EDWARD J. BARSS | IN-DEPTH PIECE
As Xi Jinping made clear in his recent discussion with Vladimir Putin at the Eastern Economic Forum, China aims to “oppose unilateralism and trade protectionism, to create a new type of international relations.” Or as China State Councilor Wang Yi put it: “China supports necessary reforms and the perfection of the current system, including the WTO, to make it fairer, more effective and more rational.” These statements reflect a broader Chinese vision of ‘international accommodation,’ which would lead to a reformed multipolar international system, anchored in economic reality. A post-Western system where the world is ‘fairer’, ‘non-hegemonic’, and countries can pursue sovereignty without interference.
At the same time, an oft repeated refrain in Chinese international relations discourse is that they wish for a peaceful rise, working within the rules based system to accommodate changes that will better reflect China’s new status. This would mean a new accommodation with the U.S. and better representation within the WTO, IMF, and other international organizations. However, as trying to work within the international system, China has begun to set up a parallel set of international organizations or initiatives where it can realize its broader vision within the regional context. This includes the Asian Development Bank, the Shanghai Cooperation Organization, and the One Belt One Road project. None of these organizations have the scope, inclusion, or reach to be fully global, but they still represent important focus points for regional integration, within a Chinese designed framework.
Included as part and parcel of this vision for ‘international accommodation’ is the desire to move towards a multipolar world order, anchored in multipolar economic system. This includes China’s move to pay for oil contracts in Renminbi, recent talks with Russia to link their international payment systems, and general concern over the dollar as a reserve currency. As for many countries, the dominance of U.S. dollar denominated contracts, debts, and transactions ties those transactions to the U.S. economy and, by extension, to U.S. monetary policy. For example, if a country has USD denominated debts, interest rates in the U.S. will determine the real payment on those debts, possibly exacerbating poor growth with high debt payments. However, debt (or other transactions) denominated in Chinese currency, allow China’s real rate of payment to better accommodate its own economic cycles.
The ability to implement a shift in the international system, economically, politically, or otherwise requires an accommodation with Washington and competing domestic visions of China’s international agenda. The idea of Chinese ‘win-win’ international politics is premised upon the idea that if China and the U.S. can make room to accommodate each other politically and economically, then each country can benefit. However, many of China’s core regional interests fundamentally clash with U.S. economic and security commitments. For example, China’s differing interpretation of the United Nations Convention on the Law of the Sea (UNCLOS) and the militarization of contested territory in the South China Sea clash with U.S. security commitments and freedom of navigation operations. Moreover, an internal siege mentality focused on threats foreign and domestic more often than not has left Beijing with few enduring international allies. The structural mismatch between Beijing and Washington’s strategic interests has led to a situation that David Shambaugh describes as ‘competitive coexistence’. This leads to a relationship where divergent interests and competition need to be managed cooperatively rather than negotiated or amplified.
However, recently it appears as if U.S.-Chinese relations are moving from one of ‘competitive coexistence’ towards open rivalry. First, in the economic sphere the increasing volume of reciprocal tariffs, challenging of China’s market economy status in the WTO, and the deteriorating attitude of U.S. business towards the Chinese market has strained relations spilling into other areas. In part this is a reaction to increased state control of the market in China and the inability to remedy conflict over intellectual property violations. Worsening relations are also a product of China’s moves to dominate the region economically and capitalize on strained relations between the U.S. and regional allies (such as the Philippines). Some of this is frictional, but much is also tied to personality clashes as economic prestige projects in China (Made in China 2025 and the One Belt One Road) and the U.S. (reducing trade deficits) buoy national leader’s domestic political capital.
Equally worrying is the spillover of economic and political issues into the security sphere where the notion of ‘competitive coexistence’ is more fraught. For the U.S. this includes increasing military support for Taiwan such as recent arms sales of spare parts for aircraft and the licensing of U.S. submarine technology, and the direct sanctioning of China for purchasing Russian military equipment (an S-400 surface to air missile system and 10 SU-35s). China for its part has built up a military presence in the South China Sea, again refused a port call to Hong Kong for U.S. naval vessels, and engaged in extensive military exercises with Russia.
These moves signal a turn away from a managed relationship, albeit through imperfect diplomatic solutions, towards direct zero-sum competition. The underlying structural strategic mismatch of interests is driving how these issues play out regionally, but it is the short-term domestic considerations which are bringing competition to a head. Competitive coexistence is a strategy for buying time, not avoiding conflict. As each country faces domestic crises or identity issues of varying degree, they will inevitably play out in the international sphere for better or worse.
 Direct quote: “携手维护国际公平正义和世界和平稳定，坚定不移维护联合国宪章宗旨和原则，共同反对单边主义和贸易保护主义，推动构建新型国际关系和人类命运共同体。” Wu Yan, Du Shang Ze, and Zhao Cheng [ 吴焰、杜尚泽、赵成] , “Xi Jinping engages in dialogue with Russian President Putin [习近平同俄罗斯总统普京举行会议] ，”People’s Daily, September 12, 2018. http://paper.people.com.cn/rmrb/html/2018-09/12/nw.D110000renmrb_20180912_2-01.htm
 Adam Jourdan and Ben Blanchard, “China says world trade system not perfect, needs reform,” Reuters September 13, 2018. https://uk.reuters.com/article/uk-usa-trade-china/china-says-world-trade-system-not-perfect-needs-reform-idUKKCN1LU00P
 David Shambaugh. China Goes Global: The Partial Power. Toronto: Oxford University Press, 2013. Pg. 74