The rivalry between the United States and China has become the defining contest of the 21st century. Barely two decades ago, Washington and Beijing were partners in prosperity. America’s support for China’s entry into the World Trade Organization in 2001 epitomised the high-water mark of engagement, reflecting the belief that economic integration would lead to greater political cooperation. Today, that partnership has morphed into suspicion and confrontation. Relations between the United States and China have deteriorated so swiftly that many observers now describe them as locked in a “new Cold War”. The more pressing question, however, is not whether this analogy holds, but whether confrontation can be managed short of outright conflict.
China’s economic ascent was initially encouraged, even celebrated, by the US and its allies. In the 1990s and early 2000s, Beijing was seen as a responsible stakeholder, integrating into global supply chains, attracting foreign investment, and lifting hundreds of millions out of poverty. For a time, it seemed the promise of globalisation was being realised. But confidence gave way to concern as China began to flex its newfound power more openly.
The 2008 Beijing Olympics symbolised China’s national revival and confidence both at home and abroad. Four years later, Beijing’s construction of artificial islands and militarisation of the South China Sea unsettled the Southeast Asia region and signalled a bolder strategic posture. President Xi Jinping’s rise to power appears to be the decisive turning point. Within his first year, he launched the Belt and Road Initiative, a sprawling infrastructure and investment drive that revived both overland and maritime Silk Roads as platforms of influence.
The US was initially slow to react. President Barack Obama’s “pivot to Asia” promised to rebalance American strategy, but implementation lagged. Even when the Permanent Court of Arbitration ruled overwhelmingly in 2016 against China’s maritime claims, Beijing ignored the verdict without meaningful consequence. It was Donald Trump’s first presidency that marked the sharp break.
In his first term, Mr Trump’s imposition of tariffs and restrictions on advanced technology started a trade and tech war. His moves reflected a deeper political transformation in the US, as decades of scepticism toward globalisation and free trade moved from the margins to the mainstream. “America First” nationalism, once a fringe doctrine, became the organising principle of US foreign and economic policy. By his second term, Mr Trump could declare sweeping tariffs not as a sudden departure but as the logical culmination of a longstanding geostrategic campaign.
At home, the Trumpian movement emphasises nativism and tighter immigration controls. Abroad, it questions the value of the post-war order that Washington itself built. That order had allowed US allies in Europe and Asia to prosper under American security guarantees and open markets. But it also produced China’s meteoric rise, enabling Beijing to become a peer competitor. Washington’s resentment is now driving a more unilateral, protectionist, and confrontational strategy.
Yet the Cold War analogy only partly fits. The struggle between the US and the Soviet Union was waged between two systems that were fundamentally separate, with little economic interdependence. The Soviet bloc’s command economy could not keep pace with the dynamism of capitalism and collapsed under its own inefficiencies. China is a different kind of challenger.
Since Deng Xiaoping’s reforms, Beijing has combined one-party authoritarian rule with state-directed capitalism. The results were staggering: three decades of near double-digit growth, a manufacturing revolution, and the emergence of global Chinese firms in sectors from telecommunications to electric vehicles. Unlike the Soviet Union, China has embedded itself deeply in the global economy, making complete decoupling with the US impractical.
Instead, US companies and others in Europe now pursue “de-risking” — a selective disentangling of supply chains in strategic sectors such as semiconductors, critical minerals, and artificial intelligence, while leaving other forms of economic integration intact. For many countries, this balancing act reflects necessity. China is both a formidable rival and an indispensable trading partner. The world is therefore entering neither a full globalisation nor a full decoupling, but something in between.
At the heart of the contest is not just power but narrative. The US sees itself as the rightful guarantor of global order, the natural product of its “manifest destiny” — a belief in primacy that stretches back to the early 19th century. China, meanwhile, sees itself as reclaiming the greatness of its own through a “manifest resurgence”, Mr Xi’s vision of “national rejuvenation” after two centuries of humiliation and subjugation.
Both narratives carry entitlement and inevitability. The US will not cede its top position without a fight, whereas China this time will not be denied its rightful place. Each side views the other with suspicion. Washington believes Beijing has gained unfair advantages by copying technology and bending rules, while Beijing believes the US will seek to block its rise no matter what.
Such mistrust extends to public opinion. Polls show large majorities in both societies view the other unfavourably, even without direct personal contact. Even if leaders reached a pragmatic bargain, nationalist sentiment on both sides would undercut it.
Yet a full-blown military conflict and a nuclear Armageddon remain unlikely between the two sides, as deterrence is still working. But the spectre of a limited conventional war is not implausible. Taiwan remains the most combustible flashpoint, not only for its symbolism in Chinese nationalism but also for its central role in the global semiconductor industry. The South China Sea is another arena of danger, where US treaty obligations to the Philippines could transform a skirmish into a full-blooded crisis. In such volatile settings, accidents or miscalculations could escalate quickly.
For Southeast Asia, the stakes could not be higher. A US-China “grand bargain” that carves up spheres of influence would reduce regional autonomy. An outright conflict would devastate trade-dependent economies and destabilise security. The most realistic hope is a managed rivalry that is tense, competitive, and sometimes confrontational, but short of open war.
History’s warnings are sobering. Great-power clashes have repeatedly drawn smaller states into unavoidable choice and conflict. Yet history also points to alternatives. Europe, once the world’s most war-prone continent, has transformed itself into a zone of economic integration and relative peace, despite facing Russian aggression on its doorstep. As the European Union remains cohesive, its success shows that conflict is not inevitable and that cooperative frameworks can endure. The EU’s example demonstrates that cycles of conflict can be broken if states commit to cooperation, restraint, and shared rules and institutions.
The US-China contest is fundamentally about whose vision of global order will prevail. Will it be the US’s commitment to preserving its primacy or China’s determination to restore its centrality. Both sides feel entitled, both are unwilling to yield, and both are shaping the choices of other nations for decades to come. For Southeast Asia and much of the wider world, the challenge is to avoid being trampled as these giants collide. For Washington and Beijing, the task is to find a way to compete without catastrophe.