Why America Only Pretends to Compete With China

When it comes to Ukraine, Washington seems to be running two parallel but incompatible policy simulations. As the war drags on, and the minds of most Americans wander elsewhere, it’s getting harder to figure out which simulation we’re actually living in.

In the first, Washington is engaged in a hard-nosed traditional “great power competition” with Moscow and Beijing. Facing Chinese-backed Russian expansion on NATO’s eastern frontier, the United States has responded with enlightened but tough-minded realism by freezing Russia’s central bank assets, providing Ukraine with weapons, and labeling Vladimir Putin a war criminal, even as it continues to blacklist Chinese companies, sanction Chinese officials, ban imports from Xinjiang, and build and strengthen alliances—NATO, AUKUS, the Quad, Five Eyes.

In the second simulation, by contrast, Washington doesn’t appear to be engaged in much strategic rivalry at all. The United States is still importing petroleum products from Russia, exempting Russian banks from sanctions, withholding certain heavy offensive weapons from Ukraine, pleading with Beijing for help with Moscow, overlooking reports of Chinese cyberattacks on Ukrainian military facilities, and insisting, against all evidence, that Xi Jinping doesn’t support Putin’s war.

The fact that both simulations seem to be playing out simultaneously within the White House does not by itself suggest differing policy approaches or levels of conflict-avoidance among administration officials. Nor does it necessarily imply a concerted effort at deception. From one perspective, at least, it simply emphasizes the tendency of national press coverage to toe official lines without much equivalent attention to real-world outcomes. Far more media attention has been devoted to the idea that the West is united behind an “unprecedented” anti-Russia sanctions regime, for example, than the fact that the sanctions quite obviously aren’t working (and that sanctions against Serbia and Iraq were in many ways more severe). Europe is still sending Putin 800 million euros a day in energy payments, and since the war started, prices for Russia’s main exports—oil, gas, coal, copper, fertilizers, precious metals, wheat—have skyrocketed, producing windfall gains for Moscow’s war machine. President Joe Biden’s open speculation about regime change, trying Putin for war crimes, and seizing his minions’ yachts has served little purpose other than to obscure the strength of the ruble, the ongoing flow of hard Western currency revenues to the Kremlin, and the ugly truth that the war is going badly for Ukraine.

The gap between perception and reality is even wider when it comes to China. A U.S. sanctions regime that now includes not only Huawei and forced labor but semiconductors and cross-border data and capital flows has given the impression of a united Washington girded for decades of bipartisan competition with the Chinese Communist Party (CCP). But it’s hard to square talk about Cold War 2.0 with the reality that U.S. firms have in fact been increasing investment in Chinese semiconductor companies and accelerating gas and coal exports to China. While the U.S. Navy continues to serve as the security detail for Chinese oil imports from the Persian Gulf, U.S. elites advocate for a transition to renewable energy technologies dominated by Chinese supply chains and commodity inputs. When the American hedge fund BlackRock, the world’s largest asset manager, told investors last fall to triple their exposure to China, it was an expression of confidence that Washington has no intention of making good on threats to seriously restrict outbound investment into China. And BlackRock would know.

The effect of so much divergence between spin and reality is to stir suspicion that U.S. public officials and policymakers might be less comfortable with the return of great power rivalry than they’ve been letting on. And indeed, it seems everywhere you look there are signs that the upper echelons of U.S. leadership are less committed to geopolitical competition than voters have been led to believe—a fact that a largely docile press, which understands itself as having certain responsibilities to the administration, has helped muddy. To the extent that analysis of the great power drama unfolding in Eurasia is obligated to have one eye on the president’s sagging poll numbers, those interested in the actual direction of U.S. policy are advised to look elsewhere.

A watershed moment in America’s new era of great power competition came a few days before the 2020 election, when Chairman of the Joint Chiefs of Staff Mark Milley called his Chinese counterpart to assure him that “[w]e are not going to attack or conduct any kinetic operations against you ... If we’re going to attack, I’m going to call you ahead of time.” Milley later explained this to Congress as an attempt to “de-escalate the situation,” a reference to then-President Donald Trump’s aggressive rhetoric and military exercises in the South China Sea.

The specter of America’s highest-ranking military officer attempting to take policy into his own hands over the head of the president elicited very little comment from those otherwise concerned, as a representative Washington Post essay put it, that “The United States is heading into its greatest political and constitutional crisis since the Civil War.” Ivan Kanapathy, former China director on the National Security Council under both Trump and Biden, told Tablet that Milley’s call “validated the CCP’s core theory that the U.S. political system is failing, that democracy is failing. The message was taken as: ‘If these politicians go too far, we [the military] got this.’”

Milley’s decision to inform the People’s Liberation Army to disregard the White House—which incurred no disciplinary action from the civilian officials who nominally control the armed forces—was peculiar enough. From a purely strategic point of view, it was even stranger that Milley was willing to break the chain of command for the sake of eliminating unpredictability from U.S policy. “At the time Chinese forces were worried about an attack from us, and presumably on a defensive heightened alert posture,” says Kanapathy. “That costs them money and readiness, it was a cost we were imposing on them, the way they’ve always imposed that fear of uncertainty on us. But the decision was made that that wasn’t desirable.”

Another revealing moment came the day before Russia’s invasion of Ukraine, when U.S. Deputy Secretary of State Wendy Sherman told CNN, “Foreign Minister Wang Yi of the People’s Republic of China, the PRC, [said] that sovereignty and territorial integrity are critical principles, and that included Ukraine. … I hope that President Putin listens hard to the PRC in this instance. They have it right.”

Sherman’s reference was to a banal statement Wang had made a few days earlier about “the sovereignty, independence, and territorial integrity of all countries. … And that applies equally to Ukraine.” But Wang did not, in fact, declare either support for Ukraine or even neutrality, as the Biden administration knew well enough: In the same speech, Wang had also spoken of Russia’s right to stop Ukraine from joining NATO, and his supposed support for Ukrainian independence went unreported in Chinese media (which was prohibited, as a Chinese outlet itself advertised, from publishing “content that is unfavorable to Russia or pro-Western”).

In any case, Xi’s degree of support for Putin was known in advance. Three weeks before the invasion began, the two leaders had met in Beijing to sign a joint memorandum stating “that the new inter-State relations between Russia and China are superior to political and military alliances of the Cold War era. Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation.” Crucially, Xi agreed in the statement to “oppose color revolutions” and to “oppose further enlargement of NATO,” both references to Putin’s two main justifications for war. The proof that these were not just empty words was in the very real price Putin paid in return: a 25-year gas deal, with Gazprom increasing deliveries to China by 10 billion cubic meters per year at a steep discount.

Wang’s reference to the sanctity of the U.N. Charter and its equal application to Ukraine was, in reality, a relatively transparent effort to deflect responsibility for Putin from China and cast Beijing as a “mediator” in the coming war—paving an onramp for the United States to cooperate with China rather than compete. The day after the invasion began, The New York Times reported that the Biden administration had regularly shared intelligence on Russian troop movements with China “in hopes that President Xi Jinping would step in.”

The question of why the administration appeared to bite on what it likely knew was a mischaracterization of Chinese policy has come up more than once. On April 6, for example, Treasury Secretary Janet Yellen suggested to the House Financial Services Committee that if China invades Taiwan, the United States would deploy “the same” type of sanctions that it’s imposed on Russia. As the official with the most knowledge and power over economic sanctions on Earth, Yellen must have at least wondered whether Beijing would interpret “the same” in this context to mean “pretty manageable,” the way it clearly has been for the Kremlin. Xi—even more so than Putin—has already decided to sacrifice GDP growth for the sake of greater political control over the economy, which he has been pursuing for the last two years by controlling capital flows, weakening corporate control of private firms, forcibly deleveraging the property sector, and imposing the world’s most severe COVID lockdowns. Combined with Milley’s reassurance of military restraint and Sherman’s expression of diplomatic solidarity over Ukraine, Yellen’s tepid sanctions threat could be read as something like a yellow light with regard to Taiwan.

Yellen and other ostensibly sanctions-happy officials in Washington, including congresspeople from both parties, are also well aware that the deepening sanctions burden on America’s strategic competitors might be hastening a decline in U.S. financial supremacy—an advantage that no convinced participant in “great power competition” would ever willingly sacrifice.

The more Washington multiplies financial sanctions, the more it undermines the dollar as an international reserve currency and drives the development of systems of exchange independent from the United States. Given the scale and penetration of the Russia sanctions—which include a previously unthinkable reserve freeze—it’s no longer so difficult to imagine a world in which significant non-Western economies start accepting payments for international transactions in renminbi and invest them in Chinese government bonds to keep their wealth beyond the reach of Washington. At that point, it’s not clear how long the U.S. dollar would endure as one of America’s last real sources of hegemonic power.

At this point, it’s hard to say what Washington’s actual—as opposed to professed—China policy is, exactly. But it’s important to appreciate what it isn’t.

It isn’t to reduce the dependence of U.S. firms like Apple, Goldman Sachs, and JPMorgan Chase on the Chinese market, or to stop feeding Chinese industry with American fossil fuel exports. It isn’t to avoid U.S. dependence on China’s renewable energy supply chains, or to reshore manufacturing or rebuild American supply chains. It isn’t to exploit uncertainty about America’s willingness to use force, or to take advantage of the onerous burden that Ukraine has placed on Xi’s commitment to Putin. It isn’t to reform the federal bureaucracies, like the Treasury and Commerce departments, still committed to “engagement” with China, or to exclude people who made money from China in the private sector from working on China policy in the government. It isn’t to declare independence from the constellation of captured interests—Wall Street, Silicon Valley, Hollywood, universities, corporate donors—that would like to prevent Washington from ever taking actions that might target their assets in China.

To insist on the competitive nature of its approach to China, the administration typically points to alliance policy—a new trilateral security pact with Australia and the United Kingdom, pushing for the extension of NATO’s responsibilities to the Pacific, a possible new role for Japan in Five Eyes. But a serious effort to contain Chinese power would presumably require a big increase in consultation and support not just from Cold War allies and fellow democracies, but also from key regional powers like Vietnam, Myanmar, Thailand, and Singapore, regardless of their internal political systems. Yet one of the most ingrained habits of the current administration—going back to its campaign in 2020—has been an incessant attempt to frame U.S. foreign policy not as a struggle to preserve U.S. interests but as a global showdown between liberal democracy and autocracy. In turn, the “battle of values” approach requires Washington to act against its own strategic interests by shunning flawed allies that would strengthen America’s position against China if only it wouldn’t chase them away.

The administration therefore finds itself in the increasingly insane position of claiming to be in a new Cold War with China while simultaneously haranguing India for its human rights record, nationalist ruling party, and lack of sufficient hostility to Russia; it likewise remains committed to publicly insulting and icing out Saudi Arabia—the world’s swing oil producer, a Eurasian great power, and the holder of hundreds of billions of dollars in U.S. currency reserves. Whatever moral or domestic political itches this kind of performative diplomacy might scratch, it doesn’t say much for the sincerity of Washington’s official China policy.

The big opportunity to clarify America’s containment strategy and plans for building an anti-China coalition outside of Europe and the Anglosphere was the White House’s “Indo-Pacific Strategy of the United States,” released two weeks before the invasion of Ukraine. The document favors “rivalry” over “engagement” and contains many perfectly sane items, such as, “Our objective is not to change the PRC but to shape the strategic environment in which it operates.” But the document is light on commitments, and heavy on promises like “harness[ing] rapid technological transformation, including in the digital economy” to “expand economic opportunities for middle-class families.” Far from a new NSC-68, the White House’s seminal strategy paper for Asia reads like a quiet acknowledgement that successive administrations, Republican and Democratic, bungled the rise of China so badly and oversaw the destruction of so many American livelihoods in the process that voters no longer trust them to make foreign or trade policy.

One benefit of devoting so much PR to U.S. financial warfare against Russia—despite its apparent lack of impact on the prospects for Ukrainian national survival—is that it focuses attention on a country where U.S. elites have very little financial investment, rather than the one in which they’ve invested everything. And the advantage of couching U.S. China policy in terms of a “new Cold War” is that it evokes the moral clarity of the old one, in which two self-enclosed blocs really did compete with each other for political, economic, and military power. Which is an appealing and effective stratagem—insofar as it helps relieve the uncomfortable impression that the U.S. leadership class often gives of amassing fortunes by selling off their own country while plunging ordinary citizens into economic hardship.