The US–China relationship: building future scenarios
Janice Gross Stein outlines the role of scenarios in understanding great power competition between the US and China
The relationship between the United States and China will be a significant determinant of the next global order. Phrases such as ‘the rise of China’ or ‘American decline’ run through many contemporary analyses, but we rarely explore how the strategic choices that each great power makes affect their relative balance of power. In this blogpost I argue that scenarios can help us think about the future of the relationship between the two great powers.
Why scenarios?
There are several reasons why scenarios are useful for thinking about the future of the US–China relationship. The futures of both states are interdependent. The choices each set of leaders makes affect the other. For example, President Xi Jinping’s decision to pursue a zero-COVID policy has had a significant impact not only on China’s economy, but also on global supply chains that matter to the US economy.
Second, building scenarios prevents us from uncritically projecting the present forward with linear logic. Scenario-building helps us consider the factors pushing towards change as well as stability. Looking at a range of scenarios highlights the elements of the relationship that are likely to hold irrespective of which future develops, and those that are most likely to change.
I built scenarios that combine three possible futures for both the United States and for China that, when I combine them in a grid, create nine possible worlds by 2040. I draw on two defining drivers — economic productivity and the capacity of government to deliver — to structure each of the three scenarios for both China and the United States that create these nine worlds.
Growth, stagnation or decline?
In the best scenario for China, Beijing continues its accelerated economic growth at rates of 5 per cent or more, and becomes a robust, technologically advanced consumption economy where economic disparities diminish and high-value exports grow.
In a second, middle-of-the road, future, China’s efforts at reform falter, it does not push through the ‘middle-income trap’, its economic growth stalls at 4 per cent or less, and it faces deflationary economic pressure from an aging population, weak social supports, and inefficient allocation of capital.
In the third, most pessimistic scenario, China’s reforms fail, its private sector is depressed by an increasingly authoritarian state, and growth falls below 3 per cent. China fails to meet the economic and political expectations of its large middle class and political discontent grows.
I develop a parallel set of three scenarios for the United States. In the most optimistic scenario, the US leads in the development of the next general purpose technology, productivity grows, government and private-sector investment increase, and growth rates average above 3 per cent. Polarization recedes and political institutions become somewhat more functional.
In the middling scenario, the United States accelerates innovation and productivity but fails to address deepening inequality. Growth falls below 3 per cent and its benefits are distributed unequally. Deepening polarization further diminishes state capacity and allies become sufficiently concerned about the political future of the United States that they hedge their bets.
In the third — and worst — scenario the economy becomes increasingly oligopolistic, productivity stagnates and polarization deepens as inequality grows.
Mapping the results
The three possibilities each for the US and China logically create nine worlds. When the two middle possibilities for each country combine, the two great powers compete. The two engage in collaborative and competitive relationships as they evolve new patterns of interaction that reflect changes in the relative balance of economic and military power. In one of the nine worlds, China becomes the undisputed hegemon; in three others the United States retains its status as hegemon; and in the last possibility, both powers decline and continue to compete even as power is diffused more widely through the system.
Conclusion
A focus on ‘hegemonic decline’ obscures much of the variation that is possible in the relationship between the United States and China. This scenario-building exercise illustrates the range of possible outcomes in this relationship that goes beyond the decline of the United States and its replacement by China as the new hegemon. The domestic political economies in both the United States and China drive these outcomes, as do the strategic choices each set of leaders make. More important, these scenarios make clear how strategic choices can shift either China or the United States towards relatively better outcomes. It moves us off the contemporary discussion of ‘American decline’ or ‘peak China power’ and pushes us all to think outside the box and beyond the framework of ‘hegemony’, helping us to explore other global orders that could define the next several decades. The most worrying scenario is the one that is driven by the weakness and political dysfunction of both great powers.
Janice Gross Stein is the Belzberg Professor of Conflict Management in the Department of Political Science and the Founding Director of the Munk School of Global Affairs and Public Policy at the University of Toronto.
Her article ‘How not to think like a declining hegemon’ was published in the September 2022 issue of International Affairs.
All views expressed are individual not institutional.
