Xi is entering trade negotiations with a grand strategy he’s prepared for years — one that is inspired by his understanding of what the Soviet Union got wrong during the first Cold War.
Well aware of America’s continued economic and military superiority, Xi is seeking to avoid direct confrontation while holding China’s ground in a protracted, all-encompassing competition.
Xi aims to achieve what Mao Zedong used to call a “strategic stalemate” — an enduring equilibrium where US pressure becomes manageable and China buys time to catch up to the US.
“For China, ‘strategic stalemate’ is the most realistic and preferred outcome in the foreseeable future.”
“Strategic patience, conservation of resources and tactical flexibility will all be critical in achieving this stalemate.”
In some ways, Beijing is pursuing a sort of guerrilla warfare, sparked by Henry Kissinger’s analysis of the nature of asymmetric conflicts: “The conventional army loses if it does not win. The guerrilla wins if he does not lose.”
One key pillar of the lessons Xi has drawn from the Soviet collapse is economic: The Soviets put all their economic bets on heavy industry. Beijing by contrast is trying to produce everything, fortifying the Chinese economy against trade and technological restrictions from the US while still leveraging world markets’ appetites for its goods.
Another pillar is geopolitical, where the goal is to avoid Soviet-style isolation. This involves weakening US alliances while promoting what Beijing calls “multialignment,” where countries engage with multiple global powers rather than choosing a single side.
Also key to the strategy is to continue China’s military buildup but without a costly arms race with the US. The country’s official defense budget has grown at a stable rate of ~7.2% over the past 3 years. While that exceeds China’s overall economic growth, it is below 1.5% of its GDP.
And crucially, the main pillar involves further strengthening CCP’s control over all aspects of society.
In 2020, Xi kick-started an all-out effort to better insulate China from outside shocks, in particular from the US.
“China’s economic and diplomatic policies are all oriented toward positioning themselves for a long-term struggle against the US.”
Xi’s counsel to the party apparatus is one of patience, convinced that the global balance of power will inevitably tilt in China’s favor.
The steady calm is intended to contrast with what Xi sees as US chaos and the Trump administration’s ever-shifting posture toward China. In just a few months, the White House has gone from applying maximum tariff pressure on China and trying to isolate China’s economy to now seeking a broad deal with concessions on both sides.
It’s an environment Beijing uses to its advantage, setting the terms for future competition.
Beijing is offering all-expenses-paid trips to American social-media influencers who they hope will help promote a “cooler China”.
IShowSpeed, an American content creator with more than 120M social-media followers, handed Beijing a soft-power win when he visited China for 10 days in April. His widely viewed videos, which showed him marveling at China’s high-speed trains and ubiquitous EVs, became a global sensation.
In addition to trade talks, Beijing wants to restore the kind of recurring “dialogue” Washington sees as a waste of time. To Xi, it’s a ploy to buy time.
“They have every intention of playing hardball and dragging it out.”
Xi’s policies to further China’s great-power competition threaten to exacerbate its economic struggles. The party’s command-and-control is stifling private-sector activities, and the policy aimed at producing everything, notably, is leading to a deepening cycle of deflation.
To Xi, all that may be tolerable side effects of the longer-term goal of tiring the US out.
“Xi’s goal is to achieve technological pre-eminence and play an even more influential role in this long-term competition.”
wsj.com/world/china/ch
