The New Cold War? Sino-US Relations in 2024: a Precarious Balance of Power and Cooperation

Written by Shaan Lin (BSc Politics and Economics)

As we step into 2025, the world is increasingly shaped by the tense yet interdependent relationship between the United States and China. What was once framed as a cooperative partnership has now devolved into a strategic rivalry, a complex interplay of competition and cautious collaboration. The stakes are monumental, not just for these two superpowers but for the global order itself. The core question remains: can the US and China manage their differences without plunging the world into a new Cold War?

The Shift in US Foreign Policy

One cannot overlook the historical context of the US-China relations. The early 2000s saw both nations deeply enmeshed in an economic system that seemed mutually beneficial. US businesses outsourced manufacturing to China, while China, in turn, became a major buyer of US Treasury bonds, creating an economic loop that supported global growth. Scholars like Niall Ferguson and Moritz Schularick (2007) coined the term “Chimerica” to describe this interdependence. However, by 2024, this economic interdependence has become more of a liability than an asset, at least from Washington’s perspective. The Biden administration, building on policies established during the Trump era, has sought to limit America’s reliance on Chinese technology and manufacturing. The narrative has shifted from “Chimerica” to “decoupling,” particularly in high-tech sectors such as semiconductors.

The nuance here lies in the term “de-risking,” as championed by Biden. Unlike a full-scale decoupling, which could lead to economic chaos, de-risking seeks to maintain essential trade ties while insulating key industries from external vulnerabilities. Apple’s decision in 2023 to shift parts of its supply chain from China to India and Vietnam illustrates this shift, signifying a gradual disentanglement of economic ties once thought unbreakable (Jacob, 2023). Yet, this is not a zero-sum game. Both sides recognize that cutting ties entirely would be disastrous. Despite the rhetoric, US companies remain heavily invested in China, and Chinese firms still depend on American consumers. Here, we see the crux of the issue: economic rivalry has not yet destroyed cooperation, but it is slowly unraveling it.

Taiwan: The Most Volatile Flashpoint

If there’s one issue that could tilt the balance toward outright confrontation, it’s Taiwan. The island has long been the most sensitive flashpoint. For China, Taiwan represents an unresolved issue of national sovereignty and “an inseparable part of China’s territorial integrity”; for the US, it is a democratic ally in a strategically critical region, and its role as a hub for the most advanced semiconductor production adds an economic dimension to the geopolitical stakes.

Washington’s support for Taiwan, both militarily and diplomatically, has grown under successive administrations. In 2024, military drills and defence contracts between the US and Taiwan intensified (Kennedy, 2024). This has only exacerbated tensions, as Beijing views any form of US intervention in Taiwan as a violation of its sovereignty. The US frames its involvement as a defence of democracy in the face of authoritarian expansion. This clash of narratives makes Taiwan the most likely theatre for military escalation.

The danger here is that both nations are playing a game of brinkmanship. Chinese military activity near Taiwan has escalated, with frequent incursions into Taiwan’s Air Defence Identification Zone (Zhang, 2024). Meanwhile, the US has ramped up its military presence in the Indo-Pacific, with the AUKUS pact serving as a signal of Washington’s move to counter Chinese influence in the region. The military dynamics in the South China Sea and Taiwan Strait have become a tinderbox, where a single misstep could lead to catastrophic consequences.

While both sides seem ready for a showdown, neither truly wants one. China understands that a military conflict over Taiwan would invite massive US and allied intervention, which could cripple its economy and military. On the other hand, US policymakers are wary of a drawn-out military engagement that could destabilise the entire Asia-Pacific region and disrupt global trade. The challenge is maintaining a delicate balance, deterring aggression while avoiding provocation. However, as Taiwan becomes increasingly militarised, the margin for error continues to shrink.

A New Cold War or Just Strategic Competition?

Many analysts argue that we are already in a Cold War 2.0, a period defined by strategic rivalry and competing spheres of influence. But this framing might oversimplify the dynamics at play. The US-China relationship in 2024 is far more complex than the US-Soviet rivalry of the 20th century. For one, the global economy is much more interconnected now than it was during the Cold War. Unlike the isolated Soviet Union, China is a central node in global trade and supply chains, making the fallout from any decoupling much more severe.

Furthermore, the two powers are not just competing for influence over regional allies but are also for leadership in global institutions. The US has tried to rally its allies in Europe and Asia to counter China’s economic might, especially in key industries like semiconductors and electric vehicles. Meanwhile, China has expanded its Belt and Road Initiative, forming stronger ties with countries in Africa, Latin America, and even Europe (Gupta, 2024).

Where does this leave us? A full-scale decoupling would not just hurt China but could send shockwaves through the global economy. The real danger is that both countries may overestimate their ability to withstand such shocks. For now, we are in a period of “managed competition,” where both sides are testing the waters, probing for weaknesses, and calculating how far they can push without causing irreparable damage. But this is a dangerous game, one that could spiral out of control if not carefully managed.

The Exception that Proves the Rule?

Amidst all this tension, there remains a surprising area of cooperation: climate change. Both the US and China have a vested interest in mitigating the worst effects of global warming, not least because their economies are vulnerable to climate-related disruptions. The Biden administration has made climate change a priority, and despite the overall competition, Beijing has been willing to engage on this issue.

In 2023, both countries resumed climate talks, agreeing to collaborate on reducing carbon emissions and transitioning to renewable energy (Kennedy, 2024). This cooperation is not just a symbolic gesture – it’s a recognition that, despite their differences, some challenges require a unified approach. Climate change, unlike technology or Taiwan, is a global issue that transcends national borders.

However, even here, the cooperation is fragile. The broader Sino-US rivalry casts a long shadow over these negotiations. Any deterioration in the geopolitical relationship could quickly derail progress on climate goals. This is the paradox of Sino-US relations in 2024: the more they compete, the more they realize that cooperation is essential on certain existential issues.

Conclusion

In 2024, Sino-US relations were defined by a delicate balance of power, rivalry, and necessity. The US and China are locked in a strategic competition that spans economics, technology, and military posturing, yet they are equally aware of the catastrophic consequences of outright conflict. Taiwan remains the most dangerous flashpoint, but it is far from the only one.

The challenge moving forward will be to manage this rivalry without letting it spiral into conflict. Both nations must navigate a path that allows for competition without escalation. While cooperation on issues like climate change provides a glimmer of hope, the broader relationship remains fraught with tension.