27th MAy 2024 – (Hong Kong) The relationship between the United States and China is arguably the most consequential bilateral relationship in the world today. As the two largest economies and most influential global powers, the state of U.S.-China relations has far-reaching implications for international stability, economic prosperity, and the trajectory of the 21st century. Yet in recent years, this crucial relationship has been strained by growing mistrust, economic tensions, and geopolitical rivalry.

To put the U.S.-China relationship back on a more positive footing, both sides will need to engage in a delicate balancing act – standing firm on core interests and values, while also finding ways to cooperate on shared challenges. It’s a tall order, but one that is essential for the well-being of both nations and the world at large.

One key area where the U.S. and China must find common ground is in the economic sphere. For decades, trade and investment ties have served as the “ballast” of the overall relationship, fostering interdependence and creating powerful incentives for cooperation. However, this economic anchor is now being strained by a host of issues, from disputes over market access and intellectual property rights to concerns about forced technology transfer and unfair subsidies.

To address these frictions, the U.S. should pursue a two-track approach. On one hand, it must be firm in defending its economic interests and pushing back against unfair practices. This means using targeted trade remedies when necessary, while also working with allies to pressure China to level the playing field and abide by global trade rules. At the same time, however, the U.S. should avoid broad-based decoupling or a full-scale economic war, which would be hugely damaging to both economies and the global trading system.

Instead, the U.S. should seek to deepen economic engagement with China in mutually beneficial ways. This could include negotiating a high-standard bilateral investment treaty, expanding market access in sectors like financial services and healthcare, and collaborating on infrastructure projects in third countries. By creating more avenues for positive economic interaction, the U.S. can help anchor the relationship and build goodwill for cooperation in other areas.

Beyond economics, the U.S. and China also have a shared interest in tackling transnational challenges like climate change, global health security, and nuclear nonproliferation. These are issues that no single country can address alone, and where U.S.-China cooperation is essential for making meaningful progress.

Take climate change, for example. As the world’s two largest emitters of greenhouse gases, the U.S. and China have a special responsibility to lead the global transition to a low-carbon future. While both countries have made significant commitments to reduce emissions, much more needs to be done to keep global warming below dangerous levels. By working together on issues like clean energy innovation, carbon pricing, and green finance, the U.S. and China can not only accelerate their own decarbonisation efforts, but also catalyze broader global action.

Similarly, in the realm of global health, the COVID-19 pandemic has underscored the urgent need for international cooperation to prevent and respond to disease outbreaks. As the two countries with the most advanced medical and scientific capabilities, the U.S. and China have much to gain from collaborating on vaccine development, disease surveillance, and capacity building in developing countries. By pooling resources and expertise, they can help strengthen global health security and save countless lives.

Of course, building a more constructive U.S.-China relationship will not be easy. There are real differences in interests, values, and political systems that will continue to generate friction and mistrust. The U.S. has valid concerns about China’s human rights record, its assertive behaviour in the South China Sea, and its use of economic coercion against smaller countries. For its part, China bristles at what it sees as U.S. interference in its internal affairs and attempts to contain its rise.

Managing these tensions will require deft diplomacy and a willingness to compartmentalize differences. The U.S. should continue to speak out on issues like human rights and freedom of navigation, but it should do so in a principled and consistent manner, without gratuitously antagonizing China or treating it as an enemy. At the same time, it should seek to expand areas of cooperation where interests align, building habits of dialogue and creating a more stable overall relationship.

Crucially, this effort must be underpinned by a robust domestic foundation. To effectively engage China from a position of strength, the U.S. needs to invest in its own economic competitiveness, technological leadership, and political cohesion. This means boosting funding for research and development, upgrading infrastructure, improving education and workforce training, and healing the deep partisan divisions that have undermined America’s ability to act with unity and purpose on the global stage.

Ultimately, the goal should be to forge a relationship with China that is competitive where necessary, collaborative where possible, and always grounded in mutual respect and understanding. This won’t be a smooth or linear process – there will be setbacks and disagreements along the way. But with patience, perseverance, and skilful diplomacy, the U.S. and China can steer their relationship towards a more positive and productive future.

In doing so, they can not only advance their own interests, but also contribute to a more stable, prosperous, and cooperative international order. In an era of global challenges that demand global solutions, that is a goal worth striving for – not just for the U.S. and China, but for the world at large.