The summit between Donald Trump and Xi Jinping in Beijing may not have had any decisive discussions on issues like tariffs, Taiwan or the Iran war, but the restrained and cordial manner in which the summit took place indicated a new, pragmatic approach. It pointed out that both the superpowers will now have to accept deep economic dependence on each other. It was clear that the American and Chinese presidents in Beijing were not viewing bilateral relations merely through the prism of geopolitical competition. If America accepts China as a powerful economic rival, it does not mean reducing its influence, but realizing the reality. Debates in the US over China’s rise have for years followed a familiar pattern: first deny it, then resent it, and then finally accept it. During the era of double-digit economic growth, many American analysts dismissed official Chinese data as unreliable or inflated. But as China’s economic miracle became increasingly difficult to ignore, its success began to be attributed to unfair practices such as its industrial policy, intellectual property theft, and currency manipulation. But those narratives are difficult to sustain now, as China has reached technological breakthroughs in many strategic industries. Most strikingly, Chinese EV makers have emerged as major global competitors across a variety of market segments – from low-cost models to increasingly sophisticated premium brands. Chinese firms have become innovative in the field of medicines. In semiconductors, China has also made significant progress in the production of advanced-chips, although it still lags behind TSMC. In such a situation, instead of focusing on denying or hindering China’s technological progress, the US should accept that Chinese competition is now going to be permanent and establish frameworks for economic co-existence and limited cooperation. Prominent US CEOs and business-leaders who accompanied Trump to Beijing also emphasized the message that complete isolation would be neither realistic nor desirable. A more likely path lies in the interdependence that should continue in selected areas. Xi, on his part, has defined bilateral relations by citing Thucydides’ trap. The term was coined by political scientist Graham Allison to describe the threat of conflict in which a rising power challenges an established power to oust it. But despite the many challenges facing America, it is too early to describe it as a declining power. The United States continues to be the world’s leading center of innovation and entrepreneurship, producing many of the transformative technologies of the last century—from computing and the Internet to smartphones and AI. No other country can match America’s combination of scientific leadership, capital markets, entrepreneurial culture, and institutional flexibility. As billionaire investor Warren Buffett once said, no one has ever succeeded by betting against America since 1776. In such a situation, the world will need more cooperation between the two largest economies. Today, the United States and China face similar challenges: rapid technological change, AI, financial instability, social inequality, and climate change. They will have to find solutions to these problems together. (@ProjectSyndicate)
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Pinelope Goldberg’s column: The world’s two superpowers will have to work together
