HorizonS Ten Alternative Futures for U.S.

-China Relations

Ten Alternative
Futures for
U.S.-China Relations
Kevin Rudd

W
HAT is likely to happen power at home and in reconsolidating

Photo: Guliver Image

in this dangerous decade America’s alliances abroad after the
ahead? The fixed factors at trauma that was Trump.
work in the U.S.-China relationship,
including China’s expanding military, Then there are the unpredictable
the broad contours of Chinese Presi- third-country variables that are also at
dent Xi Jinping’s long-term strategy, play—for example, the decision by the Few good scenarios on the horizon of U.S.-China relations
and the growing intensity of strategic European Commission to forge a new
competition, may be relatively clear. investment treaty with China in the dy- against the long-term lure of the Chi- in China’s domestic growth model,
But the variables are still vast. The ing days of the Trump administration in nese economy. Even before the Biden referred to throughout this book, as Xi
most important of these include the January 2021. This also followed the de- administration was sworn in, the global seeks to reassert party control over the
content, continuity, and implemen- cision by America’s principal Asian allies gravitational pull of the great Chinese private sector, depressing Chinese busi-
tation of American strategy under in October 2020 to join with China in economic juggernaut was—as Xi Jinping ness confidence with as yet unknown
President Joe Biden and its long-term the Regional Comprehensive Economic had predicted—beginning to look ir- consequences for long-term economic
political sustainability through the Partnership—a far-reaching Asia-Pacific resistible. On the other hand, the Euro- growth—and with some potential to un-
2024 and 2028 presidential elections. free trade agreement—while both Amer- pean Parliament’s decision in May 2021 ravel the fundamental domestic econom-
There is also the question of how ef- ica and India remained outside. Both to suspend ratification of the investment ic underpinnings of China’s long-term
fective this strategy will be in rebuild- developments indicate that America will treaty with China (because of Beijing’s claim to global geopolitical power.
ing American military and economic still have a difficult task on its hands intimidatory tactics against parliamenta-
ry members of the European Parliament It is hazardous, therefore, to attempt
Kevin Rudd has served as President and CEO of Asia Society since January 2021, having been President who had opposed Chinese policies in any single, authoritative forecast of
of the Asia Society Policy Institute since 2015. In his rich diplomatic and policymaking career, he also Xinjiang) demonstrates just how politi- what the U.S.-China relationship will
served as Australia’s 26th Prime Minister from 2007 to 2010 and Foreign Minister from 2010 to 2012, cally volatile diplomatic and economic look like by 2030. The best way to envi-
before returning as Prime Minister in 2013. He was nominated as Australia’s Ambassador to the United
States in December 2022, a position he is expected to assume in 2023.This essay is an updated and relationships with Beijing have become. sion the future is to instead outline a
edited excerpt from his latest book entitled The Avoidable War:The Dangers of a Catastrophic Then there are the problems unfolding range of scenarios based on different
Conflict between the US and Xi Jinping’s China (2022).You may follow him on Twitter @MrKRudd.

Winter 2023, No.22 24 25 Kevin Rudd

HorizonS Ten Alternative Futures for U.S.-China Relations

assumptions, providing some indication toward the People’s Republic); a massive
of the consequences that are likely to cyberattack against Taiwan’s civilian or
flow from each of them. military infrastructure; the military oc-
cupation of one or a number of Taiwan’s
Scenario 1: America’s offshore islands as a warning for Taipei
Munich Moment to seek terms; an economic blockade of
and the General Assembly through a animosity towards the Chinese Commu-
growing array of compliant member nist Party (CCP). China’s occupation of
states, including a number from the Taiwan would make the violence inflicted
developed world. The UN will conclude on Tibet and the measures taken in Xinji-
that the Taiwan issue is an internal mat- ang look peaceful by comparison. Taiwan
ter for the Chinese people to resolve. would become a gaping wound in China’s

U nder this scenario, Xi Jinping—

with or without provocation
from independentists in Taipei—de-
the island; a preemptive long-range at-
tack against the Taiwanese armed forces;
or a full-scale air and amphibious assault
The EU as an institution will likely side in the court of international public
remain neutral, particularly in the UK’s opinion for the remainder of the twenty-
absence and the ultimate first century. It would also
cides to bring about a on Taiwan itself. geopolitical ambivalence [Under Scenario 1], the collapse whatever moral
military solution to the Under [Scenario 1], Xi of Germany and France geostrategic standing authority China had by

T
Taiwan question before Jinping […] decides to his scenario as- on China-Taiwan. and international that stage in the eyes of
this decade’s end. The bring about a military sumes that the moral authority the international com-
political motivation for solution to the Taiwan American military The geostrategic stand- of the U.S. would munity. The world would
such a course of action question before this response would be ing and international brace itself for a return to
then collapse due to
could include a radi- nominal and that of its moral authority of the an earlier atavistic age in
cal turn in Taiwanese decade’s end. This allies nonexistent. The United States would then America’s failure to which might made right,
domestic politics follow- scenario assumes that Western response would, collapse due to America’s defend a small but effective international
ing the 2024 Taiwanese the American military in this case, consist of failure to defend a small vibrant democracy institutions were little
presidential elections, a response would be the usual array of trade, but vibrant democracy with which it had been more than dreams, and
desire by Xi in the years nominal and that of its investment, and finan- with which it had been a de facto ally for three- the rules-based order lay
leading up to the 21 or
st
cial sanctions, although a de facto ally for three- in tatters.
22 Party Congresses
nd allies nonexistent. these have already been quarters of a century. quarters of a century.
to secure his ongoing position as para- factored into Chinese scenario planning American treaty allies’ confidence in Scenario 2: A Second Midway
mount leader, and/or a conclusion that
American domestic politics were in
such structural disarray that the risk of
with relevant contingency planning
already put in place to mitigate their
impact. This would include preparing
the credibility of Washington’s security
guarantees would be undermined. It
would likely be seen globally as Ameri-
B eijing believes the likelihood of a
full American military, economic,
and cyber response to an attack on
U.S. armed intervention was minimal. China’s financial system to withstand ca’s Munich moment, much as the origi- Taiwan is less probable than not. But
any assault from what would then be a nal event effectively saw the end of the its sense of strategic caution means this
The military or paramilitary tactics weakened U.S. dollar and a weakened United Kingdom as a global great power. scenario remains the subject of active
Chinese action could take against Tai- American capacity to mobilize the dol- planning by the People’s Liberation
wan would be consistent with the pat- lar-denominated international financial However, the problem for China under Army (PLA). Based on public reporting
terns of Chinese war-gaming over recent system to impose punitive financial this scenario would be the brutality of of both American and Chinese war-
years. They could include one or more sanctions. Chinese leaders feared this the military occupation that would be gaming, the prospect that the United
of the following: organizing domestic would happen over Hong Kong in 2020, necessary to control an island with a States could actually decisively “win”
insurrection within Taiwan (though but it failed to materialize. The UN will mountainous geography, home to 25 mil- such a war is also less likely than the al-
unlikely to succeed alone, given largely be silent, as China will have secured its lion people with sophisticated skill sets, ternative. But this scenario leaves aside
negative Taiwanese public sentiment position both in the Security Council weapons, and a deep and widespread the question of how any such “win”

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HorizonS Ten Alternative Futures for U.S.-China Relations

should be credibly defined. It could
mean the “defeat” of all Chinese naval,
air, and missile assets deployed across
the Taiwan Strait; the cessation of Chi-
nese military and paramilitary action
to remain in power, it is more likely Scenario 3: An American at 15 to 20 different beachheads on the
than not that Xi would be predisposed Waterloo island following lightning attacks by
to escalating a military conflict with
America once one has begun in order
to retain nationalist support. China
A s previously indicated, based on

published reports of the most recent

Chinese airborne and helicopter troops.
the current balance of forces and The result: “Team Blue” would have “its
ass handed to it for years,” according to
against Taiwan; the withdrawal of any is also deeply aware of the American war-gaming by both sides, an Ameri- David Ochmanek, a former U.S. deputy
Chinese forces from Taiwan; the col- public’s limited appetite for foreign can loss, at present, assistant secretary of de-
lapse of Xi’s rule; or the collapse of the wars, having observed closely the im- represents the most Based on the current fense. With the Taiwanese
CCP regime itself as a result of the total pact of public opinion on U.S. military probable outcome of balance of forces […] army generally consid-
loss of domestic political legitimacy that engagements in Korea, Vietnam, Iraq, a full-scale American an American loss, at ered to be undertrained,
would flow from such a Syria, and Afghanistan. conventional military present, represents the under-armed, and poorly
dramatic military failure. In Scenario 2, Beijing Xi is a keen student intervention in support most probable outcome organized, the Americans
believes the likelihood of the Chinese action of Taiwan. According
of a full-scale American would likely only have
Each of these possibili- of a full American against American forces to military analysts that a matter of one to two
run regular simulations conventional military
ties brings up a further military, economic, and in Korea, where Wash- weeks to rush significant
range of contingencies, ington preferred to for the Pentagon, most intervention in support forces to Taiwan’s defense
cyber response to an
such as how the United scenarios would begin of Taiwan. Whatever
attack on Taiwan is less leave in stalemate rather and would find defend-
States could possibly de- than commit ground with a massive barrage form a Chinese military ing the island especially
probable than not. of Chinese missiles
feat Chinese forces com- forces to fight in China. victory over the United difficult without striking
mitted to attacking Taiwan without also Xi would therefore likely use whatever targeting Taiwanese and States might take, the the Chinese mainland.
disabling the core of the Chinese com- means are at China’s disposal to make American aircraft, ships, The results of recent war-
bottom line is that it
mand, control, and communications a war with the United States over the and infrastructure in gaming underline Bei-
systems coordinating that attack. That Taiwan Strait as long and as costly as Taiwan, Okinawa, and would signal the end of jing’s significant strategic
would mean at least partially disabling possible, enabling him to develop and Guam, overwhelming the American Century. success over the last two
the line of communication with the deploy an effective domestic political American missile defenses. RAND ana- decades in closing the military capabili-
Central Military Commission in Bei- narrative that would rally national- lysts describe projected American losses ties gap in the theater with the United
jing—thereby risking rapid and near- ist sentiment and mask any military as “staggering,” and say the destruction States, China’s growing numerical advan-
total escalation. This brings us to the defeats in the field. Xi is sufficiently of basic infrastructure would make it tage in weapons systems most relevant to
question of escalation to a larger-scale realistic to understand that an Ameri- “exponentially more difficult to project Taiwan scenarios, and the overwhelming
conventional war with China, including can victory in response to Chinese power” into the region. value of immediate geographic proxim-
the threat of nuclear confrontation. military aggression against Taiwan—or ity—as opposed to fighting the war from
even a stalemate that left Taiwan out of While American attack submarines Guam, Honolulu, and Washington.
The bottom line of this scenario is Beijing’s hands—would be terminal for near enough to Taiwan to respond would
that given that the domestic politi-
cal stakes in Beijing to secure victory
would be higher than at any time
his leadership. That is because return-
ing Taiwan to Chinese sovereignty has
occupied a bigger part of Xi Jinping’s
have an advantage, they would only be
able to sink a limited number of ships in B ut this scenario also presents real
risks for China. Military success
China’s amphibious invasion fleet, which could only be guaranteed by taking
since 1949, and given that the party’s political mission and mandate than would aim to land a PLA standing force out critical American bases—includ-
number-one priority has always been any of his post-Mao predecessors. of some 220,000 soldiers and marines ing Guam—which would constitute an

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HorizonS Ten Alternative Futures for U.S.-China Relations

attack on the sovereign territory of the American Century—not just in Asia lost to the Russian Far East during the army, which faced near extinction at vari-
United States. This, in turn, would trig- but for the rest of the world. America’s czarist period. Beyond treaty allies and ous times during its century-long history,
ger the likelihood of large-scale military treaty allies and security partners would partners, the world under this scenario would cause it to regroup and continue
escalation by the United States, turn- then likely seek varying levels of strate- would gravitate quickly toward a global the fight once strategic circumstances
ing a Taiwan conflict gic accommodation with order anchored in Beijing, with global changed. Additionally, its army grew up
into a general war in the The bottom line of Beijing, as governments institutions increasingly compliant on guerrilla warfare, in which major bat-
western Pacific, with the Scenario 2 is that across the world would with Chinese foreign policy interests tlefield wins are not required to prevail,
possible participation of given that the domestic conclude that Ameri- and values. America’s military defeat by only wearing down the enemy over time
America’s Asian treaty political stakes in can military power no China over Taiwan would likely be seen in what Mao called “protracted war.”
allies, including Japan. Beijing to secure longer offered effective as an American Waterloo, heralding Therefore, for China, a military stalemate
victory would be higher protection against the the beginning of a new and uncertain is an acceptable—albeit not a desirable—
While the United States next global superpower. Chinese Century. outcome. But it would be difficult to see
has not committed to a than at any time since Xi Jinping would be Xi Jinping surviving for long under such
no-first-use nuclear doc- 1949, and given that further emboldened Scenario 4: Chinese and circumstances, even if the party itself did.
trine (which would not the party’s number-one to prosecute China’s American Military Stalemate The same cannot be said for the United
permit the use, or even
the threatened use, of
American nuclear forces
priority has always
been to remain in
remaining outstand-
ing territorial claims in
the East China Sea, the
T his is a possible extension of sce-
nario 2 and is drawn from the les-
sons of the Korean War, which involved
States, whose political system and culture
is more predisposed toward final resolu-
tion and less tolerant of rolling ambiguity
power, it is more likely
even in the event of likely South China Sea, and more than three years of protracted, or drawn-out conflict, especially after
conventional military de- than not that Xi would against India. Europe— seesawing military conflict with large- the experiences of Afghanistan and Iraq.
feat), in practice—given be predisposed to historically predisposed scale casualties. It is difficult to project Still, American military commanders are
historical evidence—the escalating a military toward maximizing its what such a stalemate would look like, likely to have options at their disposal for
United States would be conflict with America economic interests in given that China’s military strategy of long-term, lower-level military engage-
extremely unlikely to re- once one has begun China while regard- air-sea denial against American forces ment (such as a blockade on crucial
spond with nuclear force. ing China’s security would probably tend toward more deci- Chinese shipping) that could also deny
in order to retain
If Washington declined challenges as an Asian sive outcomes in the maritime domain. China a clean victory.
to use nuclear weapons nationalist support. rather than a European But some military theorists suggest that
in Korea, Vietnam, and the Taiwan concern—would quickly return to its continued U.S. investment in similar Scenario 5: Washington’s
Strait crises of the 1950s when there was long-running strategic drift toward standoff area denial weapons, this could Best-Case Scenario
negligible risk of any form of nuclear
retaliation, the United States would not
do so over Taiwan in the 2020s, when
Beijing. Indeed, Europe may see China
as its best long-term strategic leverage
against Russia, given that Beijing sees
lead to the region’s ocean surface and
airspace becoming a no-man’s-land,
creating something like a maritime ver-
In the best-case scenario for both
Washington and the current gov-
ernment in Taipei, it is possible that
the escalation risks are much greater. Berlin, Paris, and Brussels—not Mos- sion of World War I’s trench warfare. they could successfully deter China
cow—as major economic, trade, and from seeking to take Taiwan for the
Under this scenario, whatever form investment partners. Moscow would Nonetheless, the political imperatives duration of Xi’s reign. This would be
a Chinese military victory over the likely become anxious that a bold and of survival for the CCP would never al- achieved through combined economic
United States might take, the bottom confident China might even try to re- low any formal concession of defeat. The and technological strength, military
line is that it would signal the end of the claim what was once Chinese territory party’s deep experience as a revolutionary preparedness, and diplomacy. It would

Winter 2023, No.22 30 31 Kevin Rudd

HorizonS Ten Alternative Futures for U.S.-China Relations

depend on the United States rebuilding necessary to preserve social harmony, number of near misses in recent years, situation could arise in the air, with
its national economic power in the post- or a failure to keep pace with critical as Chinese naval commanders have Chinese military aircraft colliding with
COVID period and sufficiently funding new game-changing military technolo- maneuvered within yards of American American or allied planes—as hap-
the U.S. military to reassert American gies developed by the United States. destroyers at full speed. In each of these pened with the 2001 EP-3 incident in
dominance in the air-sea gap across the cases, the U.S. vessel changed course to the South China Sea.
Taiwan Strait. It would However, there is avoid a collision. This will not neces-
also require Taiwan to For China, a another possibility: that sarily prevent collisions in the future. The proliferation of Chinese coast
intelligently upgrade its military stalemate America and Taiwan While there are bilateral military proto- guard, customs, fisheries, and intel-
military weaponry and is an acceptable […] might succeed in deter- cols effective from the Obama period— ligence vessels engaged in gray-zone
training (supported, outcome. But it would ring a Chinese military aimed at both avoiding and managing activities to consolidate Chinese territo-
where necessary, by assault but fail to pre- incidents at sea—future rial and maritime claims
be difficult to see Xi In the best-case
American arms sales) vent a comprehensive collisions could result across the South China
and cyber and civilian Jinping surviving cyberattack that disables in a general escalation scenario for both Sea presents a growing
defenses in order to pre- for long under such much of Taiwan’s criti- between combatants Washington and the number of possibilities
sent a credible national circumstances, even if cal infrastructure. This, within the wider area. current government for future incidents at
deterrent against attack the party itself did. The in turn, would pose in Taipei, it is possible sea. There are several
or internal subversion by same cannot be said for the question of how A second possibil- that they could hundred Chinese vessels
the mainland. Washington and Taipei ity could also involve successfully deter engaged in such activi-
the U.S., whose political
might retaliate in such a Chinese vessels deliber- ties in the region at any
Such a scenario would system and culture scenario while avoiding ately ramming or at-
China from seeking to one time, meaning the
require Taiwanese is more predisposed escalation into a general tacking non-U.S. allied take Taiwan for the probability of incidents
diplomacy toward the toward final resolution war. Therefore, a suc- naval vessels conducting duration of Xi’s reign. at sea continues to rise
mainland to become and less tolerant of cessful deterrence strat- freedom-of-navigation operations in exponentially. These could also involve
more dexterous than in rolling ambiguity or egy under this scenario the South China Sea. China’s unof- American treaty allies such as the Phil-
the recent past, capable would need to prevent ficial media, such as the Global Times, ippines, which has, together with Viet-
of exploring new forms
drawn-out conflict. the full range of mili- have already threatened that this could nam, the largest conflicting territorial
of long-term political accommodation tary and paramilitary actions by China happen to Australian naval vessels. and maritime claims against China. For
with Beijing while preserving Taiwan’s and against Taiwan—not just physical While such an attack would likely trig- these countries, the importance of these
democratic system and absolute politi- armed attack, amphibious assault, inva- ger the mutual assistance provisions of claims is not just theoretical, as they of-
cal autonomy. It would also be premised sion, and occupation. America’s formal defense treaties with ten center on areas crucial to their local
on Beijing becoming more conscious of its Asian allies, China might regard fishing industries. Philippine vessels’ re-
its constraints in the use of its national Scenario 6: A Limited War in this as a lesser risk than a direct assault sponse to Chinese actions would be less
hard power. Such constraints might the South China Sea on an American naval vessel. Besides, likely to adhere to the level of restraint
include any weakening of Chinese eco-
nomic growth, new budgetary limita-
tions on the future growth of Chinese
P erhaps one of the most likely—
albeit unintentional—scenarios
would arise from a collision between
such an attack could be carried out with adopted by the U.S. Navy, which has
enough ambiguity that the struck vessel standing encounters-at-sea protocols
would not be able to prove it was not in place with their PLAN counterparts.
military spending because of competing Chinese and American naval vessels in an accident, making it more difficult for Should the Philippine domestic politi-
domestic spending priorities deemed the South China Sea. There have been a the United States to retaliate. A similar cal climate take a turn toward more

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HorizonS Ten Alternative Futures for U.S.-China Relations

anti-Chinese populism, such confronta- above. However, that was possible at a any incident involving the collision of Despite this, the scope and intensity
tions between Manila and Beijing could time when the bilateral political rela- Chinese and Japanese vessels and air- of Chinese and Japanese naval, air force,
easily escalate. tionship, while fraught, was still stable. craft particularly dangerous. The risk of coast guard, and other deployments
That is no longer the case. Furthermore, escalation is both real and immediate. If have been increasing and are consider-

O ne further set of possibilities if any of these incidents did result in

arises if China resumes its efforts escalation, including the deployment
to reclaim further “islands” in the South of weapons systems, while it might be
America failed to militarily back Japan
in any such conflict against China, it
would automatically herald the de-
ably greater than those between China
and the U.S. in the South China Sea.
China has ramped up the pace and scale
China Sea or continues possible to quarantine mise of the U.S.-Japan defense treaty of its incursions near the Senkaku/Di-
militarizing the seven it Perhaps one of the most any ensuing military and could trigger a new aoyu Dao Islands, with
has already built. China’s likely scenarios would exchange to combat- debate in Tokyo on the Under [Scenario 7], the a total of 88 Chinese
last reclamation exercise arise from a collision ants operating within need to rapidly increase immediate combatants vessels entering Japa-
began under President between Chinese the South China Sea, the its relatively constrained would be the two nese territorial waters
Obama when Biden and American naval integrated theater com- military expenditure claimant states to the in 2020. By November
was vice president, and vessels in the South mand structures govern- or even acquire its own Senkaku/Diaoyu Dao 2020, Chinese coast
Beijing was delighted ing both the Chinese nuclear deterrent. guard vessels entered
China Sea. […] if any Islands, located in the
it was able to succeed and American militaries and operated inside
without any real Ameri- [such] incident did would make fighting a Nonetheless, China is East China Sea: China Japan’s contiguous zone
can military resistance. result in escalation, strictly limited war very wary of Japan’s current and Japan. In the for a total of 283 straight
China may be inclined the integrated theater difficult. All the political military (and particu- event of a conflict over days in 2020, setting
to push the envelope command structures and military variables larly naval) capabilities, the Senkaku Islands, a new annual record.
once more. But given governing both the at play, including the even in the absence of Washington has already Japanese officials em-
the radical change in the nationalist sentiment, American interven-
Chinese and U.S. publicly declared that its phasize that this pattern
political environment militaries would make would likely push in the tion—as it would be of behavior continued to
toward China in Wash- mutual defense treaty
fighting a strictly limited direction of escalating politically catastrophic
with Japan would apply.
accelerate, oblivious to
ington since that time, it rather than containing for the CCP to find itself the state of diplomatic
is much more probable war very difficult. any such conflict. in a war with its old foe Japan and not engagement between Beijing and Tokyo
that the United States would provide a win decisively. Given the historical role at any given time.
military response. Scenario 7: Fighting Japan & Japan and its navy played in China’s
the U.S. in the East China Sea Century of Humiliation, failing again Moreover, while Chinese strategists
The critical factor in all of these
sub-scenarios is that their trajectories
and outcomes, beyond the immediate
U nder this scenario, the immedi-
ate combatants would be the two
claimant states to the Senkaku/Diaoyu
would destroy the CCP’s legitimacy in may regard the East China Sea as only
the eyes of the people, especially given their third-most important territorial
the decades of triumphalist propa- claim, Senkaku/Diaoyu Dao is still re-
triggering incidents themselves, are all Dao Islands, located in the East China ganda. Japan’s expanding naval and air ferred to in Chinese strategic literature as
uncertain. It was in an effort to deal Sea: China and Japan. However, in the capabilities, combined with the real one of China’s core interests. In an ideal
with these uncertainties that the Obama event of a conflict over the Senkaku Is- risk of American military intervention world, at least from Beijing’s perspective,
Administration negotiated protocols lands, Washington has already publicly are likely to continue to act as an effec- the East China Sea problem with Japan
with China on the management of declared that its mutual defense treaty tive deterrent against any preemptive could wait until after China demonstrat-
both air and naval collisions referred to with Japan would apply. This makes Chinese military action. ed the finite limits of American power

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HorizonS Ten Alternative Futures for U.S.-China Relations

over Taiwan and the South China Sea, erupt there, the global consequences of pressure on Pyongyang to dismantle its change even if a unified Korea was no
assuming that American failures there a likely involvement of the world’s three nuclear and/or missile program. How- longer formally allied to America. Chi-
would lessen Japanese resolve. However, largest economies would be profound, ever, if North Korea refuses, China will na may seek to position itself as South
the history of international relations tells potentially sending Asian economic not apply any effective energy supply Korea’s best security guarantee against
us that crises are rarely resolved in such a growth into a tailspin for a decade. sanctions against the North to force any any nuclear threat from the North,
neat and linear sequence. policy change. Beijing refused to do so with Beijing working to limit Pyong-
Scenario 8: A U.S.-China in the past when Xi’s relationship with yang’s nuclear expansion in exchange

C hinese strategic thought normally Conflict over North Korea

cautions against provoking inci-
dents across several fronts simultane- T his may seem a remote possibility,
but the absence of sustained inter-
Kim was in bad repair. And after several
years of improved interpersonal rela-
tions between the two leaders, Xi will
for continued economic support for the
regime. Ironically, China, rather than
the United States, would then become
ously, but China’s decision in 2020 to national media attention on the future of be even less likely to do anything dra- South Korea’s nuclear guarantor.
increase the tempo of its activities across the North Korean nuclear program since matic that would worsen his hard-won
all its disputed boundaries (the East Chi- the 2018 Trump-Kim Jong-un summit in
na Sea, the South China Sea, the Taiwan Singapore does not mean that the prob-
Strait, and the Indian border) as well as lem of North Korea has disappeared.
relationship with Kim. Xi’s bottom line
is that as long as Kim does not point his
missiles at China, his weapons program
F or these reasons, in the absence of
any other negotiating leverage ap-
plied by Washington toward Beijing or
domestically (in Xinjiang, Inner Mongo- Nor should we forget that the only time doesn’t fundamentally harm China’s any political implosion in Pyongyang,
lia, and Hong Kong) provides a caution- Chinese Communist forces have fought wider national security interests. A the Biden Administration will discover
ary tale to us all. Indeed, the experience American troops was on the Korean North Korean nuclear capability would that, on the central question of the
of 2020 points to a more fundamental Peninsula, when China judged that its likely be exclusively targeted at China’s elimination of North Korea’s existing
factor at play in Chinese politics and immediate national security interests strategic adversaries: the United States, nuclear arsenal and missile program, Xi
geopolitics: if the party believes it is un- were at stake. From Beijing’s perspec- Japan, South Korea, and even Australia. Jinping is unlikely to be helpful. In fact,
der threat at home, its default instinct is tive, there are immutable principles of Complicating these countries’ threat en- given the general deterioration in the
to demonstrate resolute strength abroad. strategic geography to consider when it vironment may enhance China’s overall U.S.-China relationship since 2018, Xi
comes to the Korean Peninsula, includ- interests rather than the reverse. may actively seek to hinder any pro-
History also suggests that any incident ing a deep neuralgia about any adversary gress through his newfound warmer
in Sino-Japanese relations is capable being able to threaten its continental In particular, China is adamantly op- relationship with Kim Jong-un. This
of rapid political escalation, and the territorial integrity. These concerns are posed to the idea of a unified Korean would represent a further setback in the
toxicity in the relationship dating from reinforced by China’s historical view state on its borders. With the possible U.S.-China relationship, but would be
much of the twentieth century is still that Korea lies within the ancient Con- exception of Russia, Beijing does not unlikely to result in any form of con-
capable of triggering raw, nationalist re- fucian world—and now within China’s see any of its neighbors as sufficiently frontation on the peninsula.
sponses on both sides. The bottom line legitimate modern sphere of influence. strong to challenge China’s national
is this: while the Sino-Japanese dispute For these reasons, Beijing likely retains security, foreign policy, or economic However, should Kim recommence
over the East China Sea may receive less a series of redlines regarding any new interests. China has no interest in his nuclear and/or long-range mis-
public attention in Washington and the American strategy toward North Korea. changing the political status quo on sile testing program, the U.S.-North
West than Taiwan and the South China the peninsula, even if it resulted in a Korea relationship would immediately
Sea simply because it is relatively well But now that Trump’s rolling circus neutral Korea and certainly not if it be thrust into a new crisis. The United
managed, the East China Sea remains act with Kim Jong-un is over, China involved a pro-American, unified Ko- States would have to confront the real-
inherently volatile. And if war were to may seek to help the U.S. apply further rea. China’s view would be unlikely to ity of allowing North Korea to become

Winter 2023, No.22 36 37 Kevin Rudd

HorizonS Ten Alternative Futures for U.S.-China Relations

a full-fledged nuclear weapons state,

able to threaten nuclear blackmail
against South Korea, Japan, Australia,
Korean effort to achieve a full nuclear
break-out and produce nuclear-tipped
missiles in large numbers. Any resump-
What would Xi’s definition of suc-
cess be under this scenario? Certainly,
Xi’s political position would be as se-
T aiwan would have concluded that
America would not defend it,
and Taiwanese domestic politics would
and potentially other allies including tion of hardline American diplomacy to- cure as Mao’s had been during his last include those conducting secret nego-
the United States itself. ward North Korea could decade in power, having “rectified” tiations with Beijing on some form of
This, in turn, would In the absence of any prompt just that. Biden’s all his potential opponents within the greater Chinese confederation in the
trigger regional debates negotiating leverage imperative is therefore party and having established a water- face of a China prepared to make a
across Asia on the need applied by Washington to convince Beijing to tight surveillance state. Xi’s economic decisive move to take the island before
to develop independ- toward Beijing or any forestall any such action model—while delivering suboptimal 2035. On the South China Sea, China
ent nuclear deterrents political implosion in by Pyongyang. economic growth—would have still would have concluded its code-of-
in case the American Pyongyang, the Biden managed to stay suf- conduct negotiations
nuclear umbrella proved Scenario 9: Xi’s ficiently high, through Under [Scenario 9], with ASEAN and opera-
Administration will by decade’s end and
insufficiently reliable—a Optimal Plan rising private consump- tionalized its first major

U
different sort of strategic discover that […] Xi nder this scenario, tion and public invest- in the lead-up to the joint maritime resource
nightmare for China. Jinping is unlikely to by decade’s end ment, to narrowly avoid 22nd Party Congress extraction projects with
Any such decision by the be helpful. In fact […] and in the lead-up to the middle-income trap in 2032, Xi would have individual Southeast
North could thus trigger Xi may actively seek the 22nd Party Congress and create the largest
achieved all his major
Asian states, thus secur-
several unforeseen con- to hinder any progress in 2032, Xi would have consumer market in ing de facto control of
sequences across Asia. achieved all his major history, drawing the domestic and foreign the South China Sea.
through his newfound
domestic and foreign rest of the world into policy objectives to the China would also have
warmer relationship
An alternative sce- policy objectives to the its economic orbit. point of establishing declared an air defense
nario would be for the with Kim Jong-un. point of establishing Chi- Xi’s China would have identification zone over
This would represent a China’s regional and
United States to militarily na’s regional and global achieved an early peak the South China Sea of
preempt any such effort further setback in the preeminence. This would in carbon emissions by
global preeminence. the type it declared in
by North Korea to secure U.S.-China relationship, be accomplished without 2025 without upsetting domestic eco- the East China Sea in 2013. These com-
a full-blown nuclear and but would be unlikely China facing any major nomic output and established a trajec- bined actions would have increasingly
missile capability. How- to result in any form of political or economic set- tory for reaching carbon neutrality as rendered future freedom of naviga-
ever, if this happened, backs or having to fire a soon as 2050—becoming a leader on tion operations in the area futile in the
it would likely result in
confrontation on shot. This is certainly Xi’s global climate-change action. Hong eyes of regional states, as they became
large-scale military action the peninsula. optimal plan. To achieve Kong would have been calmed and increasingly resigned to China’s overall
by the North against the South, risking it, the United States and its Asian and made compliant through the National maritime and territorial claims. In the
a second Korean War. Once again, di- European allies would need to conclude Security Law, while its economy East China Sea, partly because of Japa-
rect Chinese military engagement could that the sheer critical mass of China’s would have been absorbed as but one nese political and military resilience
result in support of the North against the strategic, economic, and technological part of a Greater Bay Area economic and despite the continued escalation in
South—including the South’s principal weight had given it unstoppable momen- zone incorporating Shenzhen and the Chinese deployments to Senkaku/Di-
ally, the United States. In early 2020s, such tum and that to arrest or even slow down rest of the Pearl River Delta. Xinjiang aoyu Dao, an uneasy status quo would
scenarios may seem fanciful, but that is its ascension would require a crippling would also have been pacified, with have been maintained without conflict.
based on the absence of a genuine North expenditure of blood and treasure. no tangible response by the West. South Korea would have moved more

Winter 2023, No.22 38 39 Kevin Rudd

HorizonS Ten Alternative Futures for U.S.-China Relations

into China’s strategic and economic or- economic superpower. China would also continent away from the United States three critical variables. First, the success
bit, creating even deeper splits in South have secured military dominance over on trade, investment, technology, capital or failure of Xi’s adjustment of China’s
Korean politics between right and left, the United States across East Asia and markets, and ultimately digital com- domestic economic model in generat-
while Xi Jinping would have succeeded the western Pacific, having sustained merce. As for the rest of the world, Africa ing sufficient long-term, sustainable
in persuading North Korea to refocus the pace of its military modernization would have progressively become China’s growth while avoiding social instabil-
its military threats away program, completed its long-term source of needed commodi- ity and also funding China’s large-scale
from Seoul and toward Taiwan would have regional reorganization, ties and its next big consumer market military needs. Second, the success or
Tokyo and Washington. concluded that and sustained its naval after India. Brazil would be developed as failure of China’s new national technol-
North Korea would have America would not expansion plan. More China’s long-term supplier of its iron-ore ogy strategy in closing the gap between
achieved its independ- defend it [under broadly, across Asia, Chi- needs, Beijing having concluded that Beijing and Washington on the critical
ent nuclear deterrent Scenario 9], and na would have leveraged Australia was no longer secure because technologies of the future—particularly
without an American its influence to succeed of its umbilical security relationship with artificial intelligence, semiconductors,
preemptive strike.
Taiwanese domestic in joining the CPTPP Washington. Perhaps Afghanistan and and quantum computing. And finally,
Center-left governments politics would include trade agreement, while Central Asia, successfully kept stable, the (in)ability of the American system
in Seoul would also have those conducting secret the United States contin- would also contribute their vast mineral of divided democratic government to
requested a reduction negotiations with ued to languish on the reserves to the Chinese economic ma- successfully rebuild American power at
in American forces on Beijing on some form outside due to continu- chine. And finally, in what remained of home and harness the collective ener-
the peninsula. Xi would ing protectionist political the UN and the Bretton Woods institu- gies of American allies abroad in order
have cut a deal over
of greater Chinese sentiments. By decade’s tions, China would have become the to meet the China challenge.
the Sino-Indian border confederation in end, Xi would also likely single largest source of finance for much
with India’s then leader, the face of a China have given the green light of the global multilateral system, which The jury is still out on the first and
perhaps leveraging the prepared to make a to liberalize the Chinese would have become increasingly compli- second of these. On the third (at least
threat of full-scale mili- decisive move to take capital account, including ant with Chinese interests and values. for now), the odds appear to lie with
tary action to secure the the floating of the Ren- Consequently, the UN Human Rights China. America and much of the rest of
border on China’s terms.
the island before 2035. minbi and the full and Commission would have been redirected the collective West appear to have lost
China would then turn India into a new open circulation of the digital Renminbi toward American and Western failures confidence in themselves, their mission,
mass consumer market for Chinese globally, putting it on a path to become rather than examining the political ex- and future. The danger of this loss of
goods and services while opening the the preferred currency for global digital cesses of authoritarian states, and China common purpose is highlighted when
Chinese market to India through a new commerce. Xi would have scaled back would have succeeded at entrenching its contrasted with the ruthless discipline
free trade agreement. This would finally the financial scope of the Belt and Road set of global human rights norms that of China’s Leninist state and the soften-
wean Delhi away from its strategic en- Initiative, turning it into a more sustain- privileged collective economic develop- ing economic seduction of access to the
gagement with the United States, Japan, able infrastructure investment program. ment over individual rights. world’s largest market. In many respects,
and Australia. the greatest asset the CCP has is its abil-

China would have become the larg-

est economy in the world by a large
In Europe, China would have built on
its 2020 China-EU Investment Treaty
(by then unfrozen and successfully rati-
W hat is the likelihood of such a
scenario coming to pass? On
the balance of probabilities, Xi’s current
ity to bluff the rest of the world into be-
lieving that China is much bigger, more
powerful, and more fiscally solvent than
margin, thereby accelerating its inter- fied) with a comprehensive free trade prospects for success appear reasonable. it really is. In doing so, China successful-
national acceptance as the next global agreement as it continued to peel the However, this outcome depends on ly masked many of its domestic failures,

Winter 2023, No.22 40 41 Kevin Rudd

HorizonS Ten Alternative Futures for U.S.-China Relations

weaknesses, and vulnerabilities from the corporate debt, and bank liquidity and strategy that would respond effectively face for both the party and the coun-
rest of the world. To some extent, this the capacity of the system to sustain the to Chinese pressure and include all try. Further failure would result from
masking strategy continues to succeed collapse of financial institutions would Washington’s major treaty allies and large-scale protests in Hong Kong or
today, always capitalizing on a residual be insufficient. This has long been the economies, such as India, Indonesia, elsewhere and any bloody repression
Western gullibility. Now, however, the ticking time bomb within the Chinese and Mexico—a situation that the Biden of such unrest.
gap between the image and the reality of financial system, fueled by debt-driven administration took a step closer to
Chinese power is much narrower than growth, threatening those whose pro- achieving in June 2021 But the ultimate
it was before, although a jections for the future with a closer alignment In foreign and security failure for Xi Jinping,
significant gap still exists. If China’s political of the Chinese economy on China through the policy, Xi’s ambitions as noted above, would
leadership continued have always been naively G7. Under those cir- [c]ould fail as a arise from a military
Scenario 10: to balk at the prospect bullish. Such a finan- cumstances, Xi would result of America’s crisis with the United
A Defeated and of liberalizing the cial crisis would cause be critiqued internally comprehensive States that resulted in
Humiliated Xi capital account and governments around the for being too assertive any form of Chinese
international strategy
I t would be easy to
assume that this
scenario is simply the
allowing its currency
be freely traded before
to
world to reappraise the
scale and sustainability
of the Chinese economic
too soon in China’s
development, thereby
inducing a strategic
that would respond
effectively to Chinese
defeat. This would be
especially terminal if
it occurred over Tai-
reverse of the previous. decade’s end, it would miracle, on which a raft reaction before China pressure and include wan, as Xi’s colleagues
To some extent, that is undermine China’s of foreign policy and se- was able to prevail. Any all Washington’s and competitors would
true. But it would also efforts to replace the curity policy judgments movement to transform major treaty allies round on him for pro-
involve Xi being judged United States as the are being made. Further- the Quad into a full- ducing a political and
and economies, such
harshly for failing on a more, if China’s political fledged quadripartite strategic catastrophe.
recognized center of the as India, Indonesia,
wider set of domestic leadership continued security treaty, resulting The same would likely
and foreign policy objec- global financial system. to balk at the prospect in Chinese strategic en- and Mexico. apply over any disas-
tives. This would include an outbreak of liberalizing the capital account and circlement, would be criticized in the trous escalation of a crisis in the South
of factionalism within the party as a allowing its currency to be freely traded same terms among Chinese political China Sea. That is why any decision by
reaction to the series of party purges before decade’s end, it would under- elites. But as disastrous as that would China to escalate would probably be
Xi has instigated since 2013. But more mine China’s efforts to replace the be, any rapprochement between Rus- deeply calibrated against the likelihood
importantly, it would be defined by United States as the recognized center sia and the United States would create of Chinese success and/or American
economic stagnation and static income of the global financial system. Another the greatest levels of alarm in Beijing, retreat. The consequences for Xi’s
levels, rising unemployment, and a major blow to Xi would be a significant given that China’s freedom of strate- serious miscalculation in this regard
once-vibrant entrepreneurial class now forced retrenchment of the BRI, were gic maneuver has, for decades, been would be career-ending. It is impossi-
on a private investment strike. One it to become financially unsustainable, predicated on the security of its long ble to attach any degree of probability
further liability would be China’s long- given that it is one of Xi’s longest-run- northern border. On human rights, to this Xi-fails hypothesis. There are
standing problem of its financial system ning signature personal projects. failure would come from China being multiple permutations and combina-
stability, given a total debt-to-GDP indicted before international tribunals tions of what such a failure might con-
ratio already standing at around 300 In foreign and security policy, Xi’s for its treatment of its many ethnic sist of. And at this stage, comprehen-
percent. Slowing growth would com- ambitions would fail as a result of minorities but particularly in Xinjiang. sive failure would appear to be more
pound the problem of unsustainable America’s comprehensive international This would be seen as a major loss of of a possibility than a probability. It is,

Winter 2023, No.22 42 43 Kevin Rudd

HorizonS

nonetheless, one that haunts all Chi-
nese political leaders, given the stark
consequences that flow from it.
Four Additional Factors
rapid demographic decline brings
about earlier-than-anticipated im-
pacts on domestic consumption, labor
market cost, and government finances.
The third is whether China can suc-
one form or another of major armed
conflict. Wars radically change the
course of human history, often in
radically unpredictable directions.
For example, the collapse of three
mined instead by the chaos of the
battlefield.
Such profound geopolitical and
military unpredictability should

N one of these scenarios are defini- ceed in closing the semiconductor

tive. It is not possible to predict
which of these scenarios may come to
manufacturing gap between itself
and America and its allies, given that
global empires with world war and
the rise of fascism and Bolshevism as
a result. The international anarchy
therefore weigh heavily on the
minds of decisionmakers in both
Washington and Beijing. As should
pass during the decade silicon chips underpin of the interwar years came with the the unknowable human and finan-
ahead. There are simply The ultimate failure the future drivers of the absence of any effective international cial costs of war. For these reasons
too many moving parts for Xi Jinping […] global digital economy, system, leading ultimately to World alone, it would be worthwhile for
in the overall strategic would arise from a military technology, and War II and then the rise of the U.S.- leaders to consider what measures
equation. But if there military crisis with the artificial intelligence led order following World War II and might be available to manage the
is no sustained coun- the United States that revolution. Finally, it its triumph in the Cold War over the deeply engrained competitive im-
terstrategy from the remains to be seen how Soviet Union. International develop- pulses of China and the United
United States over the
resulted in any form China will resolve its ments of this scale were not in any States, thereby maximizing the pros-
next several administra- of Chinese defeat. current internal dispute way predictable beforehand, deter- pects for continued peace.
tions that effectively rebuilds American between its rising wolf warrior genera-
power, reenergizes alliances, and creates tion and its older traditional cadre of
a credible global economic alternative professional diplomats on how Chi-
to the long-term gravitational pull of nese diplomacy should be conducted.
the Chinese market, the overall trend How this is answered will determine
lines appear to favor Xi’s China. whether Beijing continues to unite the
liberal-democratic world against it or
However, of all the moving parts at whether a return to an earlier, more
play in these scenarios, there are four positive pattern of global diplomatic
in particular that should be analyzed engagement will allow China to frac-
most closely: three domestic economic ture that coalition. Taken together
factors and one external, where the with the future trajectory of Ameri-
policy settings lie largely in Chinese can strategy toward China, these five
rather than American hands. The first factors will do much to determine the
remains the long-term sustainability outcome of the great strategic race
of the emerging Chinese economic between Washington and Beijing over
growth model, given Xi’s move to the the course of the next decade.
left on Chinese economic policy, and
the uncertain effects this will have on
private-sector business confidence. The
second is the extent to which China’s
T he problem for all of us around
the world is that five of the
ten scenarios outlined here involve

Winter 2023, No.22 44