Professor Ho-fung Hung of Johns Hopkins University delved into the intricacies of the U.S.-China rivalry in a recent online seminar hosted by Georgetown University. 

Hung, an acclaimed author and expert in political economy, posited that the ongoing tensions between the United States and China stem more from global capitalism’s evolving dynamics rather than ideological differences. Hung’s scholarly interests include East Asian development and nation-state formation.

Hung began his research during the latter half of the Trump presidency, saying he was interested in how structural and political forces have shaped the U.S.-China relationship.

“I have been giving this talk since the late Trump era. In the beginning, people were in doubt because in the late Trump era, people were asking whether this U.S.-China rivalry was just caused by one person, Trump,” Hung said at the event. “But I was skeptical of whether it would change under a Democratic administration. I believed that it was beyond the control of one particular president and I felt it was very hard to convince people that these are actually structural forces.”

Hung traced the origins of U.S.-China rivalry back to the 1990s, highlighting how Wall Street and U.S. corporations integrated Chinese firms into their global financial and supply chain systems. This integration facilitated a U.S.-China policy that emphasized economic engagement, overlooking ideological rifts post-1989.

However, the scenario shifted post-2010. China’s aggressive economic stance began to challenge U.S. and foreign capital within its sphere of influence, marking a departure from the earlier boom years. 

“The global financial crisis in 2008 is a turning point,” Hung said. “Then, with overcapacity and all the problems that Chinese corporations were struggling with, the Chinese government responded to this by trying to help them, squeezing foreign enterprise out of domestic markets and into the barren world market.”

Hung added that the effects of declining population growth and economic stagnation in China, as studied in the past, is affecting geopolitical tensions.

“The cost of the deteriorating U.S.-China population is slowing down and even the economic crisis in China. It is not a very kind of common knowledge or obvious knowledge and people still don’t believe that China was in the economic crisis but now it is becoming more obvious.”

This shift, according to Hung, sparked an inter-capitalist competition reminiscent of the historical U.K.-Germany rivalry, though he expects a different outcome.

“The U.K. and Germany were allies in the late nineteenth century and early turn of century but in the 1910s, U.K.-German competition, corporate competition and financial competition started to spill over to become war,” Hung said. 

“Back then, this corporate competition between Germany and the U.K. escalated easily, developing into this space of influence competitions and war, but now, the U.S. and China can have more arena to compete,” Hung added.

Hung’s presentation, centered around historical and economic analysis, also touched upon various phases of this evolving relationship. He noted the changing U.S. corporate interests in China and the role of policy in shaping these dynamics, as companies originally lobbied Congress in the 1990s to open China’s trade access without human rights conditions.

“The Chinese government was giving them a lot of promises and favors and in exchange for their effort to lobby the U.S. government to take out the human right condition on Chinese goods access to the U.S. market,” Hung said. “They knew that if they lobbied on behalf of China in D.C. that they would get the favor back.”

Corporate interests later came apart, weakening U.S.-China relations. After the global financial crisis in 2008, the Chinese government helped domestic corporations and limited foreign enterprise in Chinese markets. Hung said diminished U.S. corporate power in China resulted in less influence in Congress and more influence for other advocates and interests that oppose the Chinese government.

“The U.S. corporations are no longer the ambassador of China’s voice and interest in the U.S. political system,” Hung said. “And so the geopolitical hawks and ideological and human right activists can have the upper hand.”

“Whenever there’s a bill that is on the U.S. side that is hostile and not so friendly with China about human rights and everything else, you can get enormous and sometimes a vast majority of support,” Hung added.

Hung ended by saying the economic conflict is likely to worsen, though the United States should take steps to prevent the tensions from escalating.

“The conflict on economic terms, in trade and investment, is not going to improve any time soon,” Hung said. “The Biden administration is still rolling out the regulations that restrained U.S. investment into Chinese stock markets and it is going to still bite. But to prevent the conflict from becoming a political and military conflict is important.”