The Rewards of Rivalry

In many ways, competition between the United States and China is just that—a rivalry between two powerful countries. But it is also much more than that. This is a contest not only between two rival states but also between two rival hierarchies. As the United States and China square off against each other, they are also vying for the allegiance of countries across the globe.

The broad arena of competition does increase the number of potential points of friction and raise the odds that countries wishing to remain outside the contest will be dragged into it. But the main effect is to force the United States and China to outdo each other, to the benefit of the states they are trying to woo. Just as competition between the United States and the Soviet Union contributed to remarkable accomplishments—such as sending humans to the moon, developing civilian nuclear power, and lifting millions out of poverty—so, too, could a new era of international rivalry. Already, U.S. and Chinese efforts to win over other countries mimics the patterns of Cold War competition between Washington and Moscow. The two superpowers are engaging in competitive shaming, attempting to attract or retain partners by drawing attention to the abuses of their rival. And they are trying to outbid each other, bestowing economic benefits on countries to win them over to their side. They also, however, sometimes pursue institutionalized cooperation when facing common threats. To combat the influence of authoritarianism and illiberal economics—and to intelligently compete against a rising China—U.S. policymakers must understand how these three styles of engagement work.

At stake is leadership of the global order and its rules for the world economy. To prevail, Washington will need to understand how far to press its competition with Beijing. As the war in Vietnam and other Cold War proxy conflicts demonstrated, it is possible for U.S. leaders to become so obsessed with the potential influence of a rival superpower that they walk into a quagmire of their own making. Washington will also need to manage the domestic responses to such competition, so that electoral politics does not sabotage national strategy.

The twenty-first century version of superpower competition is important for a variety of issues but perhaps none more consequential than climate change. New environmental conditions create new threats and opportunities for many countries, altering the geopolitical landscape. The United States can use its recent domestic accomplishments on climate change, most notably the adoption of the Inflation Reduction Act, to pressure China to do more to reduce its greenhouse gas emissions and contribute to climate solutions. Working with European partners, the United States can force China to either clean up its act or become a climate villain in the court of world opinion.

The Bargaining Stage

An international hierarchy is, in effect, a network of semi-explicit bargains between a dominant state, such as the United States or China, and one or more smaller states. A dominant state offers its smaller partners benefits, such as military protection and favorable economic ties. In return, the smaller state gives up some of its sovereignty. In the extreme, it becomes a colony in the dominant state’s formal empire, but modern hierarchies are generally less formal. Dominant states typically want to enlarge their hierarchies; doing so involves competing for the allegiance of smaller states.

That type of competition characterizes the world today, as the United States and China each try to attract smaller states to their respective spheres of influence. For instance, in the South Pacific, the Chinese recently signed a security pact with the Solomon Islands. Beyond giving China access to a key maritime outpost between Australia and Guam, the agreement contained alarming language that could allow Beijing to deploy Chinese police and military forces at the Solomon Islands’ request to “maintain social order” in the country. Recently, the Solomon Islands turned down a request from a U.S. Coast Guard vessel to refuel there. In the economic realm, Pacific nations such as Papua New Guinea have accepted large loans from China that could be unaffordable. Indeed, in November 2018, the prime minister of Tonga called on other Pacific Island leaders to urge China to write off their debts, saying his small nation was suffering “serious” debt distress.

In June 2022, Chinese Foreign Minister Wang Yi took a ten-day regional diplomatic tour to float a proposed cooperation agreement on security, policy, cybersecurity, and economic development with other countries in the region, including Fiji, Papua New Guinea, and Samoa. In response, Micronesian President David Panuelo warned in a letter to 22 other Pacific leaders that the Chinese proposal was intended to pull Pacific Island nations with diplomatic ties to China “very close into Beijing’s orbit.”

To counter China’s moves, the United States and its allies are seeking to shore up their support in the South Pacific. The Biden administration convened the first-ever U.S.-Pacific Island Country Summit on September 28 and 29 in Washington. It followed up on the June 24 announcement that Australia, Japan, New Zealand, the United Kingdom, and the United States were launching a scheme called the Partners in the Blue Pacific, which aims to help small island countries in the region tackle issues from climate change to illegal fishing. The United States also offered sweeteners such as an increased U.S. diplomatic presence in the region, more COVID-19 vaccines, and an initiative to send young leaders from the region to executive education courses in the United States. U.S. officials acknowledged that all these moves were intended to reverse a long-declining U.S. presence in the region.

Meanwhile, Washington has repeatedly sought to cast Beijing’s actions in the region in a negative light. In 2021, the United States successfully dissuaded Kiribati, Micronesia, and Nauru from pursuing a Chinese company’s low bid to build an undersea Internet cable that would improve communications capabilities but potentially open them up to Chinese spying. U.S. Secretary of State Antony Blinken also warned leaders of Pacific countries about “threats to the rules-based international order” and “economic coercion” in a thinly veiled swipe at China’s growing influence in the region. He argued that “every country, no matter its size, should always be able to make choices without fear of retribution.” In July of 2022, speaking in Fiji, U.S. Vice President Kamala Harris criticized Chinese policies in the region, referring to “bad actors seeking to undermine the rules-based order.”

China has launched its own attacks, of course. Cui Tiankai, China’s former ambassador to the United States, told CNN in June that Western countries treat the South Pacific like their “backyard” in a throwback to the colonial era, whereas Beijing sees the small island nations as “equals.” China has often turned to “Wolf Warrior” diplomacy—that is, assertive language and actions to safeguard China’s interests—to damage the United States’ image. In a March 2021 meeting with Blinken, for instance, Chinese Communist Party foreign affairs chief Yang Jiechi unleashed a 16-minute tirade, denouncing U.S. actions and attitudes. The effectiveness of this style of diplomacy is open to question, but clearly China is trying to assert its own power and legitimacy and erode those of the United States.

The South Pacific is not the only region where this rivalry is playing out. Consider the Arctic, where geopolitical competition has been no less intense. Greenland, a semiautonomous part of Denmark, has for decades been chafing against its relationship with Copenhagen. And although the U.S. controlled Thule Air Base in Greenland offers local authorities benefits, such as jobs and profitable contracts, it also disrupts the lives of local residents—a continual source of friction between Greenland and Washington. Here, China saw not only economic potential but also a geopolitical opportunity to drive a wedge between Greenland and the West. In 2015, a Chinese company with the improbable name General Nice Group invested in an iron mining project in Greenland and then followed up with an offer to buy an abandoned Danish naval base at Kangilinnguit. These moves appeared to follow a playbook that scholars say describes China’s actions in Africa and elsewhere: use engineering projects as a way to gradually bind local political interests to China’s. But in 2016, Denmark turned down the Chinese offer and withdrew the base from the market. Although Denmark did not officially comment, anonymous sources told Reuters that the Danish government backed away from the deal out of fear that the sale might antagonize Washington.

A similarly competitive dynamic has played out elsewhere. In a number of places, China gained partners with its Belt and Road Initiative, a multitrillion-dollar infrastructure and investment effort to encourage global trade and economic integration, centered on the needs of the Chinese economy. The BRI has led to Chinese control of ports in Greece and Pakistan, transportation hubs in Kenya and Sri Lanka, and industrial activities in Africa, Latin America, and elsewhere. Increasingly alarmed by Chinese efforts, the G-7 countries responded in 2022 with the Partnership for Global Infrastructure and Investment. According to a White House announcement in June, the United States plans to offer $200 billion over five years to finance global infrastructure projects, principally in developing countries. China was never explicitly mentioned in the announcement, but there was no doubt about why the new partnership was formed and whose influence it was intended to contain.

Echoes of the Past

This form of competition, in which rival hierarchies vie for dominance across the globe, has a long and rich history. European empires competed for centuries, as did the United States and the Soviet Union during the Cold War. Just as China and the United States do today, previous hierarchies often relied on two tools of persuasion: competitive shaming and outbidding.

To understand the dynamic of shaming in foreign policy, it is helpful to consider the geopolitics of nuclear technology in the early 1950s. The United States had demonstrated its terrible weapon in 1945, but afterward kept nuclear technology a closely guarded secret. That secrecy extended to civilian nuclear applications, which scientists were then developing for electrical generation and medical purposes. In the early days of the Cold War, the Soviet Union seized on this secrecy and reliance on nuclear weapons to shame and delegitimize the United States on the world stage, especially at the newly formed United Nations. Then Secretary of State John Foster Dulles argued that “propaganda picturing us as warmongers on account of our atomic capabilities has done incalculable harm.”

When competition between rival hierarchies is fierce, smaller states often receive more benefits.

Largely to combat this shaming and draw attention to U.S. beneficence and the peaceful application of nuclear energy, U.S. President Dwight Eisenhower’s Atoms for Peace program dramatically reversed the U.S. policy of nuclear secrecy. He proposed that the United States and other atomic powers transfer nuclear material to an international body—what would become the International Atomic Energy Agency, or IAEA—that would use it for peaceful purposes worldwide, under safeguards. When he unveiled the program in a speech at the United Nations in 1953, Eisenhower declared his desire for “all peoples of all nations to see that . . . [the United States is] interested in human aspirations first, rather than in building up the armaments of war.” The U.S. government quickly circulated the speech internationally. In truth, however, the government was making the most of a situation it had not wanted: Soviet shaming had worked, forcing the United States to change policy to repair its reputation.

Moscow responded to this new American effort by seeking to outbid the United States with a nuclear cooperation program of its own. Until then, the Soviet Union had given no serious attention to the export of nuclear technology or expertise. After Eisenhower’s address, however, Moscow began offering nuclear assistance to communist allies such as China and Czechoslovakia, as well as unaligned countries such as Egypt and Yugoslavia. Crucially, the Soviets offered nuclear technology with fewer restrictions on its use, shaming the United States as imperialist for requiring safeguards on the material it transferred.

The Soviet entry into the nuclear assistance game only accelerated the outbidding. Worried that Moscow would successfully use nuclear assistance to win over key unaligned countries, the United States ramped up its own program. Within four years of the Atoms for Peace speech, the United States sealed agreements to provide nuclear assistance to more than 40 countries. The State Department proudly reported that these efforts “put atomic energy at the service of major political objectives—in Asia, that of [tying] the uncommitted countries to those Asian countries more closely associated with the United States, in Europe, that of utilizing atomic energy to further European integration.”

One of the key lessons from this Cold War experience is that when competition between rival hierarchies is fierce, the smaller states often receive more benefits. Indeed, many states in what was then considered the Third World became remarkably adept at playing off the two superpowers and eliciting increasingly generous foreign aid packages or other concessions from one or even both sides. India, for instance, used the prospect of Soviet assistance to prod the United States to provide substantial nuclear aid, which ultimately helped India develop nuclear weapons the following decade.

Today’s politics mirrors this behavior, especially in Asia, as countries try to maximize the benefits they gain from their relationships with China, the United States, or both. Many of the members of U.S.-led initiatives such as the Indo-Pacific Economic Framework—including Malaysia, the Philippines, and Vietnam—also participate in China’s Belt and Road Initiative. Pakistan and Turkey seem especially well positioned to squeeze benefits from both sides. And just as during the Cold War, shaming seems to have sparked outbidding, as China has responded to U.S. criticism of its statecraft by stepping up its role as a mediator in Africa and providing more generous debt relief.

Rival hierarchies don’t simply compete, however—they can also cooperate when they face shared risks. Their cooperation can cut against the interests and desires of their smaller partners. Here again, the nuclear politics of the early Cold War are instructive. After launching nuclear assistance programs, both the United States and the Soviet Union worried about inadvertently accelerating the spread of nuclear weapons. By the early 1960s, the superpowers were cooperating to create stronger safeguards, especially through the IAEA, which seeks to block states from using civilian nuclear technology to help produce weapons. As unaligned states such as India and Indonesia foresaw at the time, the creation of the IAEA eventually led to intense restrictions and regulations on civilian nuclear power. Despite the objections of smaller partners and unaligned states, the superpowers not only created the IAEA but went on to negotiate the Nuclear Nonproliferation Treaty of 1968 and more nuclear control measures in subsequent years. In today’s context, smaller states should be mindful of how the politics of rival hierarchies can turn against them, if and when the great powers decide they have a mutual interest in cooperation.

Bragging Rights

One crucial area where competition and cooperation between China and the United States could benefit rather than harm the interests of smaller states is climate change, which has altered the strategic landscape and therefore the context of today’s rival hierarchies. Climate change in the Arctic, for instance, is shaping Chinese strategy. Warming temperatures have made mining opportunities in Greenland increasingly attractive and could open up shipping lanes north of Russia, theoretically cutting travel times from Asia to Europe by weeks. Like their counterparts in the West, many Chinese analysts saw Greenland as potentially the first place to win independence on account of climate change; according to this thinking, climate change would unlock economic opportunities that could free Greenland from its current dependence on Danish subsidies. Some analysts in China advocated investing in Greenland to make that economic independence from Denmark possible while positioning China as an economic and political partner.

In the South Pacific, however, climate change is seen as an existential threat rather than an economic liberator. Rising sea levels and increased storm activity could destroy many Pacific Island nations. Those countries tend to see Washington as failing to take seriously the risks they face. In the 2018 Boe Declaration on Regional Security, Pacific Island leaders embraced an “expanded concept of security” to deal with regional challenges, including climate change. Washington should realize that leaders in the Pacific and elsewhere are looking for more robust U.S. commitments to offsetting climate change and helping threatened countries adapt. Accepting that role offers the United States a chance to cast China as a climate laggard. Failure to do so invites the reverse.

Fortunately, competition and cooperation between the United States and China on climate change could also generate benefits for everyone. One example of beneficial cooperation is the diplomacy the Obama administration conducted with China to pave the way for the 2015 Paris accord on climate change, the first time developing countries agreed to a set of emissions cuts. In the long run, however, competition over green technologies might prove as beneficial as cooperative diplomacy, perhaps even more so. For instance, European countries, the United States, and others have become alarmed at Chinese dominance of the supply chain for minerals such as copper and lithium and other commodities that are essential for producing clean energy. As those governments belatedly act to shore up their supply chains, they are facilitating mining investments worldwide that could lower the costs of decarbonization for everyone.

The more the United States accomplishes its own climate goals, the more pressure it can apply on China. Already, diplomats are trumpeting U.S. accomplishments such as the Inflation Reduction Act (IRA) as a way of spotlighting China’s economic reliance on activities that harm the climate. After the legislation passed in August 2022, for example, U.S. Ambassador to China Nicholas Burns boasted on Twitter, “You can bet America will meet our commitments,” and he pointed to the disparity between the emissions of the United States and those of China. This type of competitive shaming in front of international audiences might be at least as productive as nominal cooperation. As Todd Stern, who led U.S. climate negotiations under U.S. President Barack Obama, put it: “If someone said to me, ‘You can have lots of interaction between the United States and China but no IRA, or you can have the IRA but less dialogue and collaboration,’ I would absolutely pick No. 2. The more China sees the U.S. charging in the direction of the clean energy transformation, the better.”

How the Cold War Can Stay Cool

The long view of how great powers build and maintain rival hierarchies provides three key lessons. First, competitive behavior is normal and should not be an occasion for panic. Indeed, in some instances it can provide benefits for smaller states—so long as a cold war doesn’t turn hot at their expense. During the U.S.-Soviet competition, it became common for politicians and analysts to worry about smaller countries being “lost” to the other side. Such concerns can be warranted but sometimes go too far. An example of this pitfall is the desperate fear in the 1960s of “losing” Vietnam, which led the United States into a quagmire, as well as other proxy wars in the developing world that killed millions of people. Competing for the support of states through incentives should take precedence; direct military intervention should be employed only when vital U.S. interests are at stake, for example, to defend a treaty ally or a small set of other crucial partners.

In a competition between rival hierarchies, one cannot expect either side to win all the time, and one should not assume that “losing” one ally in a peripheral region will create a domino effect globally. Indeed, because dominant powers routinely engage in competitive outbidding when offering benefits to smaller states, one might argue that if a dominant state never loses such a competition, it might be “overpaying” for the loyalty of its subordinate states. A corollary to this lesson is that the need for outbidding is in part a function of how effectively a great power can shame its rival on the international scene. In other words, if dominant powers are perceived as more benign, they do not need to provide as many material benefits to attract smaller states. This offers another reason to avoid overreacting to prevent a “loss” of a country, either through military force or support for regime change or coups: these efforts often provide effective propaganda that can be used against the intervening state.

A foreign policy designed around “America first” is folly.

The second lesson is that a network of international partners is a costly but powerful source of national strength. One main reason Soviet leaders embraced reform and retrenchment in the 1980s is the terrible strategic situation they found themselves in, overextended by the task of competing with the United States around the globe. In the shorter run, the strength of a hierarchy influences its ability to shape the rules for the global economy and the international order more broadly. For example, if most countries accept Western ideas about sovereignty and market capitalism, it is much easier to call out Chinese abuses of those norms than if China has a large sphere of influence. More selfishly, American and Western businesses will find it far easier to prosper if the U.S. government shapes the rules of international business than if its influence is weak. Thus, a foreign policy designed around “America first” is folly. The American network of allies is one of its strongest geopolitical advantages, and keeping that network requires treating allies with respect and offering them benefits for cooperation.

Third, U.S. politicians must effectively manage domestic politics if they are to succeed in this competition. Democracies have considerable advantages in the international competition for legitimacy, status, and loyalty. For instance, recent research on the effects of foreign aid in Africa identifies a remarkable asymmetry between Chinese assistance and U.S. aid. Chinese loans and investment appear to have done little to improve public opinion about China, and might harm it, whereas foreign aid from the United States has had a strong positive impact. Despite many mistakes in its past, the United States has also learned what works in foreign aid and economic development. That experience, along with an ideological commitment to individual freedom and democracy, could serve as a significant strength in the global competition for influence.

Of course, democracy has downsides, as well. In the nuclear realm, for instance, research shows how the Soviet Union and, later, Russia supplanted the United States as the dominant supplier of civilian technology, in large part because of domestic opposition to the nuclear industry in the United States. Public pressure led the U.S. nuclear industry to wither, and legislators intervened to make it more difficult to export nuclear reactors, gradually ceding the overseas market to more autocratic countries.

More broadly, democracies seeking to build their network of allies and partners face domestic accusations of hypocrisy and illegitimacy when they cooperate with foreign autocrats, putting them at a potential disadvantage. When Chinese leaders travel to Saudi Arabia to woo its leaders, for instance, they feel no need to criticize their hosts, but U.S. leaders are expected to talk about human rights records when they make similar visits.

Another important disadvantage is the growing domestic polarization that has made U.S. foreign policy more erratic over time, as shown by U.S. withdrawals from the Paris agreement and the 2015 Iran nuclear deal. American politicians must guard against being seen as “weak on China”—that is, not doing enough to entice allies and losing some countries to China’s influence—and being too aggressive or “spending too much overseas” by being too generous to allies and getting involved in conflicts peripheral to U.S. security interests. Politicians who want to avoid those twin pitfalls must craft a coherent foreign policy vision and forge a quasi-bipartisan elite consensus. Doing so would keep complex diplomatic issues off the radar for most voters.

Ultimately, as U.S. policymakers compete with China for global influence, they should heed past lessons about the usefulness of competitive shaming and outbidding to rally allies and partners. If they conduct this diplomacy with finesse, officials in Washington could make a crucial difference on climate change while preserving the core components of the American-led international order.