From Partnership to Rivalry: China and the USA in the Early Twenty-First Century

Abstract Two unconnected crises in the 1970s, a crisis of profitability of global capitalism and a deep crisis of political legitimacy in China, led to creation of a formidable alliance between corporate/financial-led US capital and the Chinese state that sought to resolve both crises by opening China for corporate exploitation. The solution, however, masked different objectives. Transnational corporations moved to China in search of cheap labour to counter falling profits and Beijing sought to use foreign capital to develop the Chinese economy and gain access to technology. Over time China’s interests and those of the USA diverged, as US deindustrialisation became the obverse of China’s dynamic industrialisation. Factions within the US elite began to promote a different approach towards China than that of alliance and accommodation and were able to grab the upper hand during Donald Trump’s presidency, advocating an aggressive approach towards China. This posture consolidated under the Biden administration. These developments set up a struggle for hegemony to which China and the USA bring differing advantages and disadvantages. While a hegemonic transition is one possible outcome of this conflict, the possibility of a hegemonic stalemate or hegemonic vacuum cannot be discounted.