Dr. Sujit Kumar Datta
The U.S. and China strategic rivalry no longer takes place in boardrooms but has been shifted to battlegrounds, the trade negotiations have been substituted with technology blockades, and geopolitical friction with supply chain disruption in all parts of the world. It is currently an international competition that covers a wide spectrum of arenas: semiconductors (chips), maritime power (ships), financing of infrastructure, military posturing, energy politics, and narrative control. The Ukraine and Gaza crisis, the Indo-Pacific Strategy (IPS), the Belt and Road Initiative (BRI) of China, South China Sea tussles, and the scramble for rare earth elements are all good examples of a fast-moving chessboard in geopolitics. These are not only an economic race, but also the struggle to set the rules of the world order of the 21st century.
The tiniest yet powerful are semiconductors, which drive smartphones, missiles, etc. The United States understood that it was strategic and thus took decisive action to make sure that China did not become independent in the manufacture of high-end chips. Washington was threatening the availability of high-tech chip equipment (particularly artificial intelligence and quantum computing) to China in the CHIPS and Science Act of 2022 and widespread export controls. China, in return, reacted by accelerating the speed of its Made in China 2025 policy and investing more in home manufacturing, and diversifying its technology partnership with partners such as Russia, Iran, and some of the BRICS+ countries. Beijing understands that control over the chips translates into international military and economic power. The chip war is no longer a war of trade, but a war of whoever is going to be the master of war in the future: money and surveillance.
The new ideological frontier is shrunk down to an infrastructure. In China, the investments of the Belt and Road Initiative (BRI) have pumped billions of dollars into roads, railways, ports, and digital infrastructures in Asia, Africa, and Latin America. The ports built by Chinese money in Sri Lanka (Hambantota), Pakistan (Gwadar), and Djibouti will not only give Beijing an economic edge but also a potential military base. In response to this, the United States launched the Indo-Pacific Strategy (IPS) and joined the QUAD with India, Japan, and Australia to defeat the growing power of China in the Indo-Pacific region. Furthermore, the American-initiated projects like Build Back Better World (B3W) and India-Middle East-Europe Economic Corridor (IMEC) are designed to compete with China by offering so-called democratic infrastructure alternatives. However, the number of countries in the Global South that are pragmatic, preferring to make Chinese loans quickly and a U.S. partnership as a means of striking a balance politically, is large.
The 20th century was oil-driven, but rare earth minerals are fueling the 21st century. Electric vehicles, missile control systems, artificial intelligence servers, and so forth, need such rare earth elements as neodymium and dysprosium. China now controls over 60 percent of the rare earths mining and nearly 85 percent of the processing capacity in the world. The U.S. views this as a strategic weakness and is therefore diversifying by setting up supply chains with Australia, Canada, and African nations. The Biden administration’s Inflation Reduction Act actually spurs the decoupling of the Chinese rare minerals supply chains. Beijing is now able to employ minerals as a geostrategic weapon, as OPEC used to employ oil. The scramble for the most valuable minerals in the world is changing the alliances and reemergence of resource nationalism.
The U.S.-China rivalry in soft power projection has been in the form of global crises. The U.S. is the primary Western ally against Russia in Ukraine, and this enhances the resurrection of NATO. Though China has not been fully allied with Moscow, it has portrayed itself as a peacemaker that is neutral, a factor that has drawn countries that question Western interventionism towards it. Similarly, the Gaza crisis has instilled resentment in the Middle East against U.S. support to Israel. China has also made a form of advocacy for Palestinian rights to improve its relations with the Arab and Muslim majorities. The Beijing foreign policy is aimed at subverting the moral leadership of the U.S. and making China more attractive to the Global South. The territory is not the only place of battle in these conflicts. It is also ideological.
Supposing that these chips are semiconductors, then the South China Sea is where ships symbolise power. The sea routes in this region handle three-quarters of the world trade, and whoever is in control of these waters is in control of the economy. The Chinese assertion of the nine-dash line goes against the territorial assertions of the Southeast Asian nations and violates the international law of the sea. U.S. Freedom of Navigation Operations (FONOPs) is a statement of its freedom in the Indo-Pacific. In this period of time, China is militarising the artificial islands, establishing airstrips and naval bases to gain power. The South China Sea in this sea battle is a real-life litmus test on whether a liberal order led by the U.S. will work, or a China-led regional order will be established.
There is also the financial power at stake besides ships and minerals. Other emerging economies, such as China and Russia, among others, are pushing the need to de-dollarise in conferences such as BRICS+ and local currency trade agreements. The New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) offer rival financial services to the IMF and World Bank, which are predominantly American. Even though China is yet to invert the U.S. dollar, it is gradually affecting the dollar system by offering parallel monetary institutions and local currency-based trade options- particularly to the countries that are under Western sanctions.
The U.S.-China rivalry has grown holistic and has touched upon technology, oceans, infrastructure, minerals, diplomacy, finance, and ideology, among other things, from chips to ships. It is not a classic Cold War, which the world is undergoing, but a form of fluid and multifaceted competition of systemic primacy. The countries that are in the middle between Silicon Valley and Shenzhen, Washington and Beijing, now have to make a choice. Non-partisanship may be a virtue in such a period of strategic uncertainty; membership may also be helpful. As Ukrainian crises and Gaza reformulations rewrite the script, as the rare earths replace oil as an economic policy, and as the South China Sea is becoming an oceanic marker of power.
The writer is a Professor of International Relations at University of Chittagong and Deputy Director of Hong Kong Research Centre for Asian Studies (RCAS)
