Big Picture:
“Cold War 2.0” refers to the economic, technological and ideological competition between the United States and China. Over the years, the U.S. and China have grown apart. China has taken the role of a revisionist power, and the U.S. is a current hegemonic state. From trade wars and continuous violations of international laws to China’s ever-growing hunger for power and allies, the competition between China and the U.S. will dominate global politics for a long time. A critical factor for the strength of Cold War 2.0 is that the matters of contention are incredibly fragile, which makes the creation of a middle ground improbable.
Operative Definitions:
Hegemony: American academic Robert Keohane introduced the concept of hegemony into international relations literature. It’s derived from the Greek word hegemony, which means domination or leadership. In politics, the term refers to an actor's national role in the international system. A state can be categorized as a hegemonic state if it enjoys dominating other states, or is characterized as a “leader” state. The United States, in the current world order, is considered a hegemonic state.
Revisionist State: A revisionist state tries to move away from the global status quo. A revisionist state seeks to restructure the world to fit its point of view. Often, such states are not global hegemons but can be regional powers in their regard and possess the potential to outgrow the status of the current global hegemon. China, in the contemporary world, is the best example of a revisionist state, as it tries to undo much of the progress made by the U.S. in global structures.
Thucydides Trap: Thucydides was a Greek scholar who wrote extensively about wars between states. Based on the work of Thucydides, former U.S. Assistant Secretary of Defense for Policy Plans Graham Allison posited the theory of the ‘Thucydides Trap.’ In this theory, Allison viewed 16 historical examples of power transitions where 12 ended in a brutal war. The basic assumption of the approach lies within the power struggle between the hegemonic state and the revisionist power. The Thucydides Trap has been extremely popular in explaining the implications of a power struggle between the U.S. and China, and the likelihood of that event ending in an all-out war.
Purchasing Power Parity (PPP): Economic comparisons between countries often take place in terms of the GDP of a nation, which reflects the total number of goods and services sold within the domestic territory of the country. Purchasing Power Parity helps facilitate this process, as it is an economic theory that compares different countries' currencies through a "basket of goods" approach.
Special Economic Zones: Special Economic Zones (SEZs) are specific areas that governments use to attract foreign direct investments to the country. Businesses set up in an SEZ usually get benefits in terms of subsidies or tax cuts.
Important Facts and Statistics:
The United States accounts for more than 17% of all Chinese exports.
China outgrew the U.S. in PPP terms in 2021.
Recently, China has been indulging in corporate espionage and intellectual property theft to improve, adding to the tensions with the U.S.
The U.S. grows increasingly worried about the future of Taiwan.
Three-Point Plan:
(1) Diversification of the supply chain. The U.S. depends on China for all sorts of manufactured products, and many American businesses have their factories in the SEZs of China; this makes the U.S. extremely vulnerable to potential trade sabotage. If the U.S. or China further engages in trade wars or, in the most extreme case, an actual war, China would most likely restrict the flow of goods globally to create pressure. This would be catastrophic to the global economy, but there is a solution to avoid it: shift the modes of production away from China. India is a highly reliable business partner. With readily cheap labor and a booming tech industry, India proves to be the best replacement for China. Similarly, Vietnam and the Philippines would welcome such initiatives.
(2) Increased engagement with the Association of Southeast Nations (ASEAN) and the Quadrilateral Security Dialogue (QUAD). ASEAN and the QUAD remain vital assets for the U.S. to nullify the effects of any harmful engagement with China. ASEAN already possesses an incredibly robust single market which, with engagement with the U.S., can bear good fruit. QUAD shows the unmatched potential that the U.S. has not yet utilized. India can effectively enforce and protect key strategic areas without making any significant compromises to protect the democratic world order.
(3) Banding with the African nations. One of the reasons why China has become so successful is its incredibly ambitious method of manufacturing alliances and lucrative infrastructure projects. These projects help China gain a firm foothold in Africa, which in the long run can prove fatal for the U.S. To combat this rise of China, the U.S. should invest in the tech sectors of African nations and help build the service sectors of the country. Another area where the U.S. can shine in Africa is helping the continent leapfrog in certain areas of energy infrastructure. This would turn the tide of influence, and the U.S. would be able to crush the momentum of revisionist China.
Why This Initiative Is Important:
The U.S. victory in Cold War 2.0 is crucial for the survival of an international law-based system. The discussions of the Thucydides Trap show that continuous confrontation between the U.S. and China may lead to an all-out war, which must be avoided at all costs. The Ukrainian conflict has shown the global cost of two important nations at war with each other. The severity of these two big economies engaging in battle would leave the world at a standstill, and most nations would face economic ruin. Therefore, it is best to follow soft strategies, gather allies and invest to nullify the effects of Chinese influence to avoid war.
Acknowledgements:
The following student worked on this proposal: Abhinav Banerjee, Masaryk University, Brno.
The opinions expressed in this article are those of the individual author.
Sources:
Dirzauskaite, Goda, and Nicolae Cristinel Ilinca. "Understanding “hegemony” in international relations theories." Development and International Relations Aalborg University 18 (2017).
Johnston, Alastair Iain. "China in a world of orders: Rethinking compliance and challenge in Beijing's international relations." International Security 44.2 (2019): 9-60.
Allison, Graham. "The Thucydides trap: are the US and China headed for war?." The Atlantic 24.9 (2015): 2015.
Workman, Daniel. “China’s Top Trading Partners.” China's Top Trading Partners 2021, 2021, https://www.worldstopexports.com/chinas-top-import-partners/.
“What Is Purchasing Power Parity (PPP), and How Is It Calculated?” What Is Purchasing Power Parity (PPP), and How Is It Calculated?, Investopedia, 30 Sep. 2022, https://www.investopedia.com/updates/purchasing-power-parity-ppp/#toc-the-bottom-line.
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