Zhao Hai on the New Paradigm in China-U.S. Strategic Competition
A top CASS scholar's observations on the evolving U.S.-China relationship and the emergence of "strategic accommodation"
Since the truce reached during the Xi-Trump meeting at Busan, China-US relations have entered a relatively calm period. Both sides have been looking inwards to strengthen their internal foundations. The US has begun establishing a rare earth supply chain to replace China, while China is betting on breakthroughs in its domestic technology, particularly in the semiconductor and AI industries.
In a recent speech, Chinese scholar Zhao Hai shared his observations from frequent travel between China and the US over the past few years. Zhao is the Director of International Political Studies at the National Institute for Global Strategy, Chinese Academy of Social Sciences. I admire his use of logical and multidimensional discourse in exchanges and debates with his US counterparts. During a debate last year at the CSIS, where he challenged the narrative of an unstable alliance involving China, Russia, and Iran, his arguments left a strong impression to the audience.
He believes the U.S. positioning of China has evolved from a “competitor” and “ideological rival” to a “challenger outside the Western Hemisphere” and a “near-peer competitor,” with its strategic focus shifting toward economic sovereignty and reciprocal competition. He proposed that China-US relations may be moving toward a new model characterized by “strategic accommodation(相互容忍)” featuring increasingly defined boundaries of competition, overall controllable conflict risks, stabilized economic relations in non-sensitive areas, and a shift toward more cautious “defensive strategic decoupling.” He argues that the U.S. strategic shift is part of a “cultural war” that will last a generation, making a “return to normalcy” unlikely even after Trump leaves office.
This is his keynote speech at the 463rd CF40 Biweekly Seminar on “U.S. Economic Trends and the Outlook for China-US Economic and Trade Relations.” I believe it is worth reading, and with thanks to Dr. Zhao Hai for his authorization, I am publishing the translated version in my newsletter.
A New Paradigm of U.S.-China Strategic Competition
The Shift in U.S. Attitudes Toward China
This visit to the United States was an exceptionally valuable learning opportunity and holds significant educational value for me.
First, I would like to reflect on the transformation of my personal understanding over the past half year.
Let me begin by addressing the issue of inflation. On the evening I arrived in New York, I purchased an ordinary hot dog for a staggering $17, which left me deeply shocked. Upon further observation of other consumer prices, if one removes the dollar sign, current U.S. prices are roughly comparable to those in China’s third-tier cities. Inflation has clearly become a severe problem—this was my most immediate impression.
From August 2025 to the present, I have visited the United States three times, and this visit was quite surprising. The reception we received was markedly different from the “bottom-line thinking” atmosphere of the previous two visits. In an earlier exchange, MAGA figures discussed U.S.-China relations and the situation with China in a manner completely different from Washington’s traditional think tanks and elite circles. They argued that U.S. foreign policy must change—the policies of the past 20 years have been a complete failure. The war on terror, in particular, consumed enormous fiscal resources and placed heavy economic pressure on American society. They believe that the international responsibilities the U.S. has assumed have brought no benefits whatsoever to the domestic population.
This visit focused primarily on economic, trade, and financial issues. My knowledge in this field is limited, so I mostly played a supporting role from the sidelines. Later, when discussions turned to how to interpret the latest National Security Strategy (NSS), particularly regarding the future direction of U.S. legislation, I developed some new thoughts. I proposed the concept of “Strategic Accommodation,” though I have yet to find an apt Chinese translation for it.
In the dictionary, “accommodation” refers to a special arrangement—perhaps it could be translated as “mutual toleration.” There are currently various definitions of U.S.-China relations in circulation: one view, represented by Niall Ferguson, holds that the U.S. and China have entered a “détente” period similar to that of the Cold War; domestically, there are also claims that the U.S. and China have entered a “stalemate phase.” I will explain later why this term came to mind and what it encompasses. I believe U.S.-China relations are evolving toward a new paradigm, involving multiple factors.
China’s Positioning Across Three National Security Strategy Reports
By comparing the three U.S. National Security Strategy documents from 2017, 2022, and 2025, one can clearly observe the shifts in American strategic thinking and how the dominant class perceives U.S.-China relations.
In 2017, the United States for the first time designated China as a “competitor.” Notably, however, every reference paired China with Russia as competitors, indicating that the U.S. recognized the emergence of global challengers but had not specifically singled out China. The primary concerns focused on China’s intent to displace the United States in the Indo-Pacific region, push the U.S. out of the area, and seek regional dominance. For the United States—which at the time still viewed itself as a global hegemon—this was unacceptable; it could not even tolerate China becoming a regional hegemon.
By 2022, the narrative had shifted to a so-called struggle between “democracy and authoritarianism.” China was still viewed as a competitor but was now assigned an ideological definition: it was characterized as the only competitor possessing both the intent to reshape the international order and the economic, diplomatic, military, and technological capabilities to advance that goal. At this point, China became a comprehensive, long-term, systemic competitor of the United States, distinguished from Russia. Russia, having initiated the conflict in Ukraine, was viewed as a “disruptor” and an immediate, real-time threat. Yet in the eyes of American liberals, Russia lacked the capacity to truly challenge U.S. hegemony, whereas China was believed to possess such potential.
The 2025 strategic document introduced a critical shift in China’s positioning: China was defined as a “challenger outside the Western Hemisphere” and an “economic near-peer competitor.” This geographically framed definition carries profound strategic implications—the United States is pivoting toward a “neo-Monroe Doctrine,” viewing China as a competitor beyond the Western Hemisphere while elevating its status to near parity with American power.
The strategy for dealing with a country far weaker than oneself, one that challenges in certain areas but lags behind in most, is necessarily different from the strategy for dealing with a country of nearly equal weight across all domains. Accordingly, the Trump administration has largely abandoned talk of ideology or values, shifting instead to emphasize rebalancing economic relations with China, prioritizing “reciprocity,” rebuilding American economic independence through “reciprocity and fairness,” focusing on trade balance with China, and concentrating on non-sensitive sectors.
With the tone set in the National Security Strategy, U.S. government officials also made clear in their exchanges with us: economic engagement with China will continue in “non-sensitive sectors,” while “American independence” will be maintained in other areas. The NSS repeatedly emphasizes U.S. “sovereignty”—a reversal of offense and defense. The U.S. now frequently accuses China of “bullying” and “coercing” America, claiming that China has caused the U.S. to lose its economic independence and seeking to escape the so-called “oppression” of Chinese supply chains. This shift is unmistakable.
Connecting these three documents leads to a conclusion: what remains constant is competition—the United States genuinely intends to engage in strategic competition with China. But the substance behind “competition” carries different meanings across political factions. Taken together, America’s strategic intent across these three phases can be summarized as follows: the contest for regional dominance, the contest for authority over the international order, and the contest for economic sovereignty.
Envisioning a New Paradigm
Based on the above understanding, how might a “Strategic Accommodation” take shape? I believe the conditions are now substantially in place: our summit diplomacy has matured considerably; economic interdependence is difficult to unwind; and technology is developing in parallel—the United States can no longer suppress China’s momentum of innovation. Geopolitical tensions among major powers are expected to gradually ease in 2026; the Russia-Ukraine conflict and Middle East issues remain generally manageable; and U.S.-China military capabilities are moving toward equilibrium. The fact that the U.S. military power report has yet to be released reflects, to some extent, the difficulty of accurately describing the current balance.
This new paradigm has four characteristics. First, there is a shift from the “intense competition” of the Biden era to the current “passive cooperation”—cooperation on the fentanyl issue is a typical example. Second, there is a gradual de-escalation on the conflict front and an increasing stabilization of economic relations. Third, bilateral relations are entering a more proactive management phase, with both sides avoiding encroachment on each other’s core interests. Finally, there is “defensive strategic decoupling”—the general direction of strategic decoupling remains unchanged, but both sides are proceeding more cautiously.
Policy Implications and Recommendations
In conclusion, a few policy insights:
First, experience has shown that in response to trade wars initiated by the United States, we must fight to negotiate—without the ability to win, there can be no favorable settlement.
Second, America’s “inward turn” stems from a “culture war/revolution.” The American domestic perception of the nature of their current struggle is not a short-term phenomenon; shorter oscillation cycles are the new normal, and structural adjustments will take a generation. Some believe that once Trump leaves office, everything will return to normal and America will revert to its former state. I consider this unrealistic.
Third, over the next three years, we need to focus on Trump and his MAGA movement with one hand, while also preparing with the other for possible shifts in Democratic Party ideology and their potential return to power.
Fourth, while U.S.-China economic and trade friction remains generally under control, we must also pay attention to the rising risk of friction between China and non-U.S. economies, as well as the accompanying pressure for RMB appreciation.
Finally, strengthening the construction of a new energy system may be China’s winning move. In the current U.S.-China competition, where has America fallen short? It has lost ground precisely because China has built a new energy system that is progressively moving away from fossil fuels. Trump made an erroneous decision by reversing America’s transition to new energy sources. This advance on one side and retreat on the other has created a gap between China and the United States in this domain. As the global trend continues toward green transition, this positions China as a leader in that transformation.