Judging by their rhetoric and action, the United States and China, the world’s two largest economies, are clearly headed toward a long-term strategic confrontation or, if you will, the 21st century version of the Cold War. The return to great power rivalry is undoubtedly a geopolitical tragedy. But in retrospect, it appears almost inevitable. The leading cause is obviously the rapid change in the balance of power between these two countries that has resulted in America’s relative decline and rising anxiety about the loss of its global hegemony to China. These startling numbers tell the most compelling story about the unfolding U.S.-China cold war. In 1992, the year after the implosion of the Soviet Union, the Chinese GDP, measured in US dollars, was about 7 percent of the U.S. Today, it is about 65 percent. In other words, the gap of power between China and the U.S., in terms of the size of its economy, is now almost ten times smaller than 27 years ago.
To be sure, there are other factors driving the two countries toward conflict. The rise of Xi Jinping, a strongman with an ambitious global agenda and a huge appetite for risk, led to the abandonment of China’s long-standing grand strategy of keeping a low profile on the global stage and avoiding conflict with the U.S. at all cost. His signature foreign policy moves, such as building and militarizing artificial islands in the South China Sea and launching a $1 trillion global infrastructure project known as the Belt and Road Initiative (BRI), have only convinced America that China is now openly challenging its hegemony. The constant frictions between China’s brand of state-capitalism and America’s free-market capitalism have greatly further exacerbated trade tensions and now threaten to unravel their $660 billion bilateral merchandise trade.