[EAI Special Report] US-China Competition 2050 ①_Phased Escalation and the Search for Compromise

Editor's Note

EAI has conducted research for several years with the aim of projecting the phased and sectoral development paths of US-China competition from a long-term perspective, and diagnosing the possibilities for compromise between the great powers while exploring the role of middle powers like South Korea. As part of this research, this special report series macroscopically analyzes the phased escalation of US-China competition across various sectors over the long term, extending to 2050. Taking 2030, when the GDP of the US and China is projected to reverse, and 2050, when their military expenditures and capabilities are expected to approach a balance, as key historical turning points, it presents the dynamics of cooperation, competition, and conflict between the two countries in the fields of advanced technology, monetary finance, values and norms, and military security. The content and schedule of the special report series are as follows.

1. US-China Competition 2050: Phased Escalation and the Search for Compromise - Ha Young-sun, Son Yeol (Published July 12)

2. US-China Competition 2050: Advanced Technology - Bae Young-ja, Lee Seung-joo (Published July 13)

3. US-China Competition 2050: Values and Norms - Kim Heon-jun, Lee Dong-ryul (Published July 14)

4. US-China Competition 2050: Monetary and Financial Affairs - Lee Yong-wook (Published July 15)

5. US-China Competition 2050: Military Security - Chun Jae-sung (Published July 16)

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

□ Research Question 1. Will US-China strategic competition lead to confrontation and conflict?

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

While the Cold War involved simultaneous competition, confrontation, and division across multiple domains such as security, economy, and ideology between the US and the Soviet Union, US-China competition is characterized by a phased escalation across different sectors over a long period, extending to 2050. The specific pathway is predicted to evolve from trade → advanced technology → values/norms → energy → currency → military security. (Table 1)

Key historical turning points are 2030, when the GDP of China and the US is projected to reverse, and 2050, when their military expenditures and capabilities are expected to approach a balance. ① Around 2030, as the economic power of China and the US becomes comparable, the two countries will engage in intense competition and confrontation in the realms of technology, economy, values, and norms. ② As China's military expenditure approaches that of the US around 2050, the likelihood of confrontation and conflict in the military domain increases. The intermediate period, 2040, can be characterized as a transition to military competition, with escalating tensions in both currency and military sectors. In essence, the 'all-out contest' between the US and China, namely full-fledged security competition and conflict, will unfold after 2040.

The US is pursuing a complex strategy that seeks to restore global leadership and deter or mitigate China's challenge, while also leaving room for cooperation as well as competition and conflict. China, too, aims to guide its relationship with the US through the three principles of 'new model great power relations': no conflict, no confrontation, mutual respect, and win-win cooperation. However, China emphasizes its core interests, summarized as sovereignty, security, and development rights, and has declared that it will resolutely counter any infringement upon these core interests by the US.

Therefore, until 2030, in the medium term, as long as the power asymmetry with the US does not change, China will not directly challenge the US militarily unless its core interests are critically threatened. The US, while cooperating with China on issues such as climate change, non-proliferation, and the establishment of a post-COVID economic order, will exploit China's weaknesses within the scope of not significantly sacrificing the benefits of economic interdependence, and will continuously exert pressure on issues of values and identity, particularly concerning the authoritarian regime and human rights abuses. (Table 2)

As China's economic power catches up to that of the US and its military expenditure surpasses two-thirds of the US level approaching 2040, China is likely to become more assertive within the framework of new model great power relations, leading to increased confrontation and conflict. A prime example would be China's intensified efforts to internationalize the RMB and challenge dollar hegemony. Meanwhile, the US may be tempted to use its military superiority as leverage to prevent China's visible overtaking in various fields. As shown in [Table 3], the possibility of military conflict in hotspots like the Taiwan Strait and the South China Sea increases during this period.

As China's economic power catches up to that of the US and its military expenditure surpasses two-thirds of the US level approaching 2040, China is likely to become more assertive within the framework of new model great power relations, leading to increased confrontation and conflict. A prime example would be China's intensified efforts to internationalize the RMB and challenge dollar hegemony. Meanwhile, the US may be tempted to use its military superiority as leverage to prevent China's visible overtaking in various fields. As shown in [Table 3], the possibility of military conflict in hotspots like the Taiwan Strait and the South China Sea increases during this period.

As the military asymmetry between the US and China diminishes and shifts towards a balance, various non-military competitive issues between the two countries will become securitized, leading them down a path of full-fledged military confrontation. Approaching 2050, both countries will engage in multifaceted competition in areas such as military spending, defense strategy development, weapon system innovation heavily reliant on advanced technology, and the expansion and strengthening of alliances. Alliance strategies, in particular, will be accompanied by strategies of de-concentration towards the adversary and de-legitimization strategies to support this, i.e., competition over values and norms.

□ Research Question 2. Do the US and China possess means (leverage) to secure decisive superiority over the other?

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

The US seeks to deter and frustrate China's challenge by employing various preemptive measures, including attacks on the legitimacy of the system and ideology, imposing burdens through diplomatic means, and exerting economic and military pressure, before China's balancing strategy fully materializes. Conversely, China is preparing ideological challenges and practical balancing measures to weaken the legitimacy and dominance of US hegemony. Let us examine whether both countries possess effective leverage to achieve their respective goals.

Overall, the US possesses a superior number of leverage points against China across multiple domains, including trade, advanced technology, energy, financial markets, and military security. However, as the network of economic interdependence between the two countries deepens, it becomes difficult for the US to use leverage points that would lead to high levels of decoupling and division from a national security perspective. Furthermore, as China accumulates leverage points against the US in the long term, the costs incurred by both countries through the exchange of leverage will increase. In particular, if China's economic growth becomes clearly evident, such as its GDP surpassing that of the US, the US's use of economic and technological leverage against China will conversely result in significant damage to itself.

In the 5G sector, a representative field of advanced technology, the US aims to prevent the spread of Chinese technology, separate the US-China network, and secure a technological advantage in the medium to long term. The issue is that while policy tools such as expanding export controls to China, restricting investment in Chinese companies, and forming a 'democracy vs. authoritarianism' confrontational framework may help reduce technological and production dependence on the other party and enhance domestic capabilities, they are unlikely to inflict a decisive blow on China's growth. Instead, it may lead to China reducing its dependence on the US and establishing its own independent 5G ecosystem centered around Belt and Road Initiative participating countries (Chapter 2, Lee Seung-joo).

In the case of semiconductors, a key issue in US-China competition, the US objective is to maximally delay China's rise in semiconductors, enhance the stability of the US-led supply chain, and maintain the technological gap with China. The US, holding a technological advantage in the semiconductor supply chain, seeks to weaponize interdependence against China. However, if it tightens control over key chokepoints—such as advanced ultraviolet (EUV) lithography equipment, immersion argon fluoride (ArF) lithography equipment, and deep ultraviolet (DUV) equipment—against China, the export channels for American companies like Apple, Intel, and Qualcomm to China, the world's most dynamic semiconductor market, will be blocked. Therefore, the US's realistic leverage will likely involve indirectly containing China by strengthening supply chain cooperation with countries like South Korea, Taiwan, and Japan, and compelling China into a strenuous competition through enhancing domestic technological innovation and manufacturing capabilities. Conversely, China, lacking commensurate countermeasures, will pursue a degree of decoupling from the US by establishing a 'red' supply chain through long-term institutional reforms, industrial policy adjustments, and indigenous technology development (Chapter 3, Bae Young-ja).

The energy sector is expected to unfold similarly. The US could adopt pressure strategies such as using military force to control China's major energy transport routes or increasing energy prices to burden China's economy. However, due to the deepening economic interdependence between the US and China, there are concerns that the economic situations of both countries will deteriorate. Furthermore, the US would incur significant diplomatic costs by provoking dissatisfaction among its allied nations that rely on energy transport routes.

Given that past currency wars between great powers have led to military conflicts, competition in the currency domain can serve as a key indicator for the long-term trajectory of hegemony. The US has a clear objective of defending the dollar-centric reserve currency system, which is the foundation of its global leadership, while China has consistently sought to weaken the dollar system, a core element of US-China power asymmetry. Particularly after 2030, when China's economy surpasses that of the US, fierce confrontation between the two countries over currency hegemony is highly likely. China possesses leverage such as inducing dollar value instability by selling large quantities of US Treasury bonds or by repeatedly buying and selling them. The US, through its asymmetrical advantage in the global financial network, possesses leverage to undermine the development of China's financial markets by imposing drastic restrictions on investment or withdrawing investments from Chinese financial markets. This can be seen as a state of 'balance of terror' or a 'mini-MAD' (Mutual Assured Destruction) situation, where neither side can inflict a disproportionately fatal blow. After a period of conflict, both countries are expected to enter a stable phase around 2040. Considering the high path dependency of international monetary networks, rather than the possibility of a sole RMB currency system, the dollar system is likely to prevail, or a composite currency system may emerge (Chapter 6, Lee Yong-wook).

Finally, competition in the realm of values and norms between the US and China takes the form of an identity contest over the legitimacy of being a global and regional hegemon. The US is maximizing the exposure of China's human rights abuses and its image as an authoritarian regime, focusing on issues such as Xinjiang-Uyghur, Hong Kong, Tibet, and Taiwan. In response, China will expose the limitations of the US-led liberal international order and the problems of American-style democracy, and furthermore, propose a counter-civilizational order based on Chinese civilization (Chapter 4, Kim Heon-jun; Chapter 5, Lee Dong-ryul).

This competition over values and norms serves as a basis for delegitimizing and deconcentrating the regional and global leadership of the adversary. As seen in the US's attempts to exclude China from security, technology, production, and financial networks by considering it an untrustworthy actor, both the US and China will continue their competition and confrontation by linking value and norm issues with economic or security issues.

In summary, neither the US nor China possesses leverage in economic, technological, energy, or values/norms sectors that can inflict a fatal blow on the other. However, in the long term, the weakening of interdependence and gradual decoupling in the economic, technological, and energy sectors will conversely reduce the effect of interdependence in deterring security conflicts. Furthermore, as the contest over values and norms intensifies, negative identities towards each other will be reinforced, leading to deepened strategic distrust and potentially entangling them in a vortex of mutual conflict. The probability of military competition and confrontation is likely to increase in the long term.

□ Research Question 3. Will the US and China engage in military conflict?

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

In past power competitions, most cases of the so-called Thucydides Trap involved armed conflict, and in most instances, it was the incumbent power, not the rising power, that initiated the use of military force. A hypothesis can be formulated that as US-China competition begins to manifest conflicts in various sectors such as trade, currency, technology, and energy, and as China's potential to overtake increases, the US will seek to deter and frustrate China's challenge through military conflict and preemptive strikes before its overwhelming military advantage narrows.

In contrast, China, being at a general disadvantage compared to the United States in the military sector, will not recklessly attempt military confrontation and conflict where a US counterattack is certain. However, if the US were to fundamentally infringe upon China's three core interests—domestic sovereignty, international security, and economic development—China might resort to military means. In China's surrounding hotspots such as the Taiwan Strait and the South China Sea, China may plan for military conflicts favorable to itself and seek to secure national interests through short-term, high-intensity preemptive attacks.

Particularly, if Taiwan's advancements in semiconductors, economic growth, and strengthening relations with the US and Japan increase the likelihood of a declaration of independence or efforts to regain sovereignty, China might initiate a rapid campaign to annex Taiwan by force before any US diplomatic or military intervention. If signs of efforts toward the forceful unification of Taiwan are detected, the US could escalate military confrontation with China by employing preemptive pressure tactics such as redeploying Indo-Pacific naval forces, strengthening the readiness of US Forces Japan bases for Taiwan contingencies, and enhancing military operational preparations with Taiwan.

Second, China is making efforts to enhance its military power in the South China Sea, which accounts for 60% of global maritime trade, and there is a possibility of preemptive military action to gain complete regional control. Conversely, the US may accelerate freedom of navigation operations while continuing strategic support for countries confronting China, such as the Philippines, Vietnam, Indonesia, and Taiwan, potentially leading to localized conflicts with China.

If the competition of wills and escalating tensions between the two countries continue in the Taiwan Strait and the South China Sea, the possibility of accidental conflict cannot be ruled out. Especially considering Taiwan's strategic importance and status, once a conflict erupts, it is unlikely that either side will back down, and it could escalate into an uncontrollable situation. However, given the high probability of direct conflict between the US and China and the existing strategic nuclear balance between the two nations, the likelihood of actual military conflict is considered very low. In the case of the South China Sea, there is a relatively higher possibility of the conflict being resolved without US intervention, thus the probability of an actual conflict occurring is assessed as higher (Jae-Seong, Chapter 6).

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

Beyond the 2040s, the US and China will engage in direct bilateral military competition, extending beyond contingencies in Taiwan and the South China Sea. This competition will unfold multi-dimensionally, involving sustained military spending and arms development to pressure the other side's expenditures, military strategy pressure, and the expansion of military alliances while fragmenting opposing alliances, similar to the past US-Soviet confrontation. China will fiercely pursue the US in terms of defense spending, and efforts to enhance naval and air power will be followed by efforts to augment strategic and advanced weaponry. China will strengthen its triad system, including intercontinental ballistic missiles, submarine-launched ballistic missiles, and strategic bombers, and with enhanced nuclear capabilities such as multiple warheads and hydrogen bomb warheads, it will significantly improve its nuclear capacity against the US mainland, thereby making the possibility of a full-scale nuclear war a reality.

Overall, while the US holds a clear advantage in terms of leverage over China, as China's leverage cards accumulate, the risk of localized conflicts in Asia between the US and China escalating into a nuclear war involving the US mainland will increase. If the arms race, centered on nuclear weapons, between the two countries intensifies, they will face a phase of Mutual Assured Destruction. As the potential damage to both sides becomes unmanageably large, the possibility of compromises and adjustments regarding nuclear weapons and missiles, similar to the Strategic Arms Limitation Talks between the US and the Soviet Union in the early 1970s, will increase.

It is possible that both the US and China will establish a cooperative framework for arms control, limiting their arsenals to the minimum necessary for assured destruction while controlling excess military buildup. Furthermore, if both countries achieve a rough balance in military spending, innovation in military technology and weapon systems, defense strategy development, and securing allies, a compromise in overall military security across various domains may be reached (Jae-Seong, Chapter 6).

Fundamentally, both countries require a comprehensive vision to resolve conflicts in the risk zones of the Asia-Pacific region through law and norms, mutual concessions, and compromise. The 1975 Helsinki Accords and the Conference on Security and Cooperation in Europe (CSCE) served as important political agreements that established military confidence-building measures prior to full-scale US-Soviet disarmament. Its significance lies in the participation of relevant European countries in a multilateral agreement, not just the US and the Soviet Union. To activate a peace process in the Asia-Pacific region, the two major powers, the US and China, along with regional stakeholders such as South Korea, Japan, and India, must establish a multi-basket framework encompassing military, technology, finance and currency, trade, and value norms through multilateral agreement, thereby fostering a multilateral and complex network of cooperation towards a new order in the Asia-Pacific.■

■ Author: Ha Young-sun_Chairman of EAI, Professor Emeritus at Seoul National University. He received his Ph.D. in Political Science from the University of Washington and has served as Professor in the Department of Political Science and International Relations at Seoul National University, Director of the Institute for International Affairs at Seoul National University, Director of the Institute for American Studies, and President of the Korean Peace Studies Association. His major works and edited volumes include 'Theories of Complex World Politics: Strategy, Principles, and a New Order,' 'A New Era for Korea-Japan Relations and a Symbiotic Complex Network,' 'Transforming World Politics,' and 'The US-China Competition in Architecting the Asia-Pacific Order.'

■ Author: Son Yeol__President of EAI, Professor at Yonsei University Graduate School of International Studies. He holds a Ph.D. in Political Science from the University of Chicago. His recent publications include 'Korea's Choices After the Crisis' (2020),Japan and Asia's Contested Order (2019, with T. J. Pempel), Understanding Public Diplomacy in East Asia (2016, with Jan Melissen).

• Managed and Edited by : Pyo Kwang-min Senior Researcher, EAI
  
  Inquiries: 02 2277 1683 (ext. 203) I ppiokm@eai.or.kr