In a world of rogue waves, US-China contest is really about survival

With climate change, cyberattacks and more pandemics promising greater repeated shocks, great power is about building resilience to radical change

Jonathan Brill

Published: 4:30am, 19 Jul, 2021

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Pundits frame US-China competition in economic, military and diplomatic terms. But it’s actually about something far more important.

US-China competition isn’t primarily economic. As China builds its consumer economy and becomes less dependent on exports for growth, its economic contest with the US will become less critical. While both countries compete for mineral and energy access, availability is generally a function of cost, not scarcity.

As China and the US age and double down on their knowledge economies, neither is likely to have enough high-skilled labour. But the growing competition for foreign minds requires carrots, not sticks. While the availability of low-skilled labour will also be an increasing challenge, it can be managed through domestic incentives and immigration. China is already offshoring its low-skilled manufacturing.

In trade, both countries have lopsided accounts, meaning neither can manage its economy without the world’s consent. Decoupling is undesirable for everyone involved. It may be impossible given international debt, non-fiat digital currencies, massive multinationals, and the accumulation of wealth across borders.

In military expansionism, US-China tensions will be dramatic. But compared to older empires, the US has gracefully shared influence over Southeast Asia, South America and Africa. Gray-area conflict will increase but no sane politician or soldier wants a repeat of the Soviet-US cat-and-mouse.

It’s not about governance either. The US isn’t as agile as it believes. While government leadership changes every few years, a small cadre of unelected technocrats writes and shepherds policy over decades.

As technology changes what governments can and should control, companies are taking on traditional governance responsibilities, regulating currencies and marketplaces. They stimulate consumption with a granular, real-time finesse that national policy never could. Both governments feel the tail wagging the dog and will eventually reassert control over their national technology infrastructure.

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It’s not even about the social contract. The US paints Chinese President Xi Jinping as an authoritarian and itself as the beacon of political freedom. Yet the Chinese Communist Party allows more debate than the West gives it credit for, while the US tries primarily nonviolent Capitol protesters who were convinced by a sitting president of constitutional violations.

Each nation justly chides the other for structurally disadvantaging minorities. History in both countries shows that rights are a fluid conversation that evolves with economic and technological progress.

So if these aren’t the locus of competition, what is?

It’s about resilience to rogue waves. All the trends described above are individually manageable waves of change, but they become unmanageable when they collide to create massive shocks – rogue waves. Resilience is the only metric that matters when a sea change like Covid-19 wells up. As the world moves faster and becomes more connected, we’ll see more frequent rogue waves.

These include climate change driven by economic growth, cyberattacks on financial, digital and physical infrastructure, and pandemics, accelerated by increased population density and air travel.

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Each is a network threat requiring the ability to recover from repeated shocks. All must be solved with collaboration, not coercion or puffery. No one wins if the world loses.

When rogue waves hit, expansionism makes states brittle. This dynamic broke the Soviet Union, and the British and Roman empires. US President Joe Biden and Xi’s game of geostrategic go is more than dangerous. It distracts from the real challenge. In our rogue-wave era, the first duty of leaders is to build resilience to radical change, for their people and the world.

Resilience is the foundation of power, not growth. If you can’t play, you can’t win. The US didn’t win the Cold War. The Soviet Union lost. Its zero-sum mindset caused it to overstretch, then an energy shock broke it. Money, might and influence can turn change into growth but first, you need to survive it. You need to be the leader with the life jacket.

Jonathan Brill is an expert, adviser and speaker on resilient growth and innovation amid uncertainty. He is the author of Rogue Waves: Future-Proof Your Business to Survive and Profit From Radical Change