A Tale of Two Pivots: Nixon, Obama and Beijing

­­­­­­­­­­­­­­­­­­­­­­­­­Pax Americana has had more endings than Peter Jackson’s rendition of the Lord of the Rings (including Krauthammer 1990, who pronounced its death at its birth; Sakakibara 2003; Layne 2012; Buruma 2019; and Lind 2023). But this time seems real. 

As 2023 draws to a close, we have war in Europe, war in the Middle East, a coup zone across the Sahel in Africa, and border disputes resolved by force in the Caucasus (Azerbaijan’s seizure of Nagorno-Karabakh) and announced in the Americas (Venezuela’s annexation of Guyanese territory that comes with oil benefits). Not that Pax Americana was all that peaceful, but data confirms that fatalities in state-based conflicts soared in 2022 to post-1989 highs (Davies et al. 2023). The returns in 2023 will be no less grim, and what is shaping up for 2024 and beyond is not promising (to say the very least).

Adding insult to injury, Russian President Vladimir Putin was greeted by a 21-gun salute and jets streaming red, white and blue smoke on his arrival on 6 December 2023 in the United Arab Emirates (UAE) and later that day in Saudi Arabia (Al Jazeera 2023). At the time, according to a military-oriented tweeter,[1] there were at least 4 Patriot batteries manned by US troops in the UAE – twice as many as provided by the United States to Ukraine. Putin’s plane and his accompanying four military jets landed at the UAE’s commercial airport because the UAE’s Al-Dhafra Air Base is a major U.S. military hub. Recall that Putin’s air force had earlier in the year knocked an unmanned US reconnaissance aircraft out of the air over the Black Sea, without US retaliation. At the same time, Saudi Arabia was the largest foreign military sales (FMS) customer of the United States, with more than $100 billion in active FMS cases. Putin shook hands with Saudi Crown Prince Mohammed Bin Salman – also known as “Sawbones” for having overseen the murder and dismemberment of Jamal Khashoggi, a US-based journalist.

Finally, adding more injury to insult, US military forces in Iraq and Syria have, according to Knutson (2023), been targeted in over a dozen attacks by Iranian-backed militia groups since Hamas' 7 October attack on Israel catapulted that region into war, risking further escalation and Western commercial shipping through the Red Sea has been effectively shut down by the threat of attacks stemming from Yemen. Importantly for the present narrative, this has pinned down the United States in the Middle East, a region from which it had been seeking to extricate itself given the profound change in its interests caused by it becoming a net energy exporter and its technological rivalry with China (Ciuriak 2023a).

How, one wonders, did the US “unipolar moment” unravel so quickly and so thoroughly? While origin stories can reach back as far as the narrator wishes, the present narrative goes back to two pivots: President Richard Millhouse Nixon’s pivot to China in the early 1970s and President Barack Obama’s pivot to Asia in 2009. The first created the geopolitical setting for America’s rise to its unipolar moment; the second for its collapse. Let’s see where this takes us.

From Nixon to Obama

In his inaugural address on 29 January 1969, Richard Nixon signalled what would be the core element of his foreign policy – détente, a policy that would re-define US-China relations:

“We seek an open world – open to ideas, open to the exchange of goods and people –a world in which no people, great or small, will live in angry isolation.

We cannot expect to make everyone our friend, but we can try to make no one our enemy.

Those who would be our adversaries, we invite to a peaceful competition – not in conquering territory or extending dominion, but in enriching the life of man.” (Nixon 1969)

At the time, America was looking to extricate itself from an unpopular land war in Asia in order to address domestic priorities. While the main thrust of the détente policy at the time was negotiated de-escalation with the Soviet Union, a second major element was rapprochement with China, and a third was economic opening, not isolationism. 

The rapprochement with China is of particular interest here. It unfolded rapidly through a series of landmark events, including: Nixon’s announcement of his intent to reconsider the then-current policy of containment of the People’s Republic of China (PRC) in his Nixon Doctrine speech in Guam in 1969 (Office of the Historian, no date); the visit of the US ping pong team to China in April 1971; the secret visit by US Secretary of State Henry Kissinger to Beijing in July 1971; UN recognition of Beijing in October 1971; and Nixon’s state visit to China in February 1972. These moves brought China out of isolation and into a tacit alliance with the United States (Chen 2019). 

This configuration of global relations would be cemented by Deng Xiaoping’s visit to Washington in January 1979, where he was greeted with a 19-gun salute. This set up China’s period of “opening up”, which the United States facilitated by granting China normal trade relations status (on an annually renewed basis), allowing Chinese goods to enter the US market under its “most favoured nation” or MFN tariff program under Title IV of the Trade Act of 1974 (Pregelj 2001). 

This was fateful for US-China relations and individually for both economies. As described in Ciuriak (2023), in 1980, technological developments were about to launch the US economy into a new phase – the knowledge-based economy (KBE). The release of the IBM personal computer (PC) in 1981 and the release of computer-aided design/manufacturing (CAD-CAM) software for the PC in 1981-1982 put powerful new tools on the desktops of researchers across the country. A complementary policy development was the passage by the Carter administration of the University and Small Business Patent Procedures Act (Bayh-Dole Act) in 1980, which recognized the importance of innovation and intellectual property for the US economy and encouraged universities to commercialize their research. Rejuvenated by a newfound innovation dynamic, the United States went from strength to strength, dismissing Japan’s “Red Sun Rising” industrial challenge, winning the Cold War, and reaching its unipolar moment, while enjoying a jet-fueled boom in the value of its intangible intellectual property assets, even as it shuffled off unskilled labor tasks. 

Meanwhile, China was acquiring a good share of these production tasks and, in the process, was learning the industrial arts of a modern economy, starting it on its way to becoming the new “workshop of the world”. As it industrialized, China put in place modern economic governance to manage a private sector economy, legalizing private enterprise, preparing its state-owned enterprises for public listing, establishing stock exchanges, developing corporate governance and securities laws, establishing a government bond market, etc. (Shirai 2002). In preparing to join the World Trade Organization (WTO) in 2001, it steeply reduced tariff protection and undertook a major liberalization of non-tariff measures in its trade regime. And, under its WTO accession commitments which were quite onerous compared to those demanded for other developing country applicants to the WTO, it carried out a further major liberalization of tariff and non-tariff measures.[2]  The economic dynamism which this liberalization unleashed enabled China to achieve the greatest reduction in poverty the world has ever seen in such a short span of time.

While US-China relations had their bumps in the road (Tiananmen Square, the Taiwan Strait crisis of 1996), these did not prevent the Clinton Administration from extending “Permanent Normal Trade Relations” to China in 2000, setting up the Bush Administration to support China’s accession to the WTO in 2001, and to facilitate a Taiwan-mainland economic cooperation framework agreement and the re-opening of direct commercial links across the Taiwan Strait in 2008 (Wei 2012). 

To reiterate, Nixon’s pivot combined economic opening up, rescinding or at least relaxing containment, and above all, not cultivating enemies. It worked. There was of course serendipity: the technological conditions that would enable the knowledge-based economy and underpin the symbiotic rise of the United States and China was not yet on the radar screen when Nixon went to Beijing. We can return to this.

The Obama “pivot to Asia” announced in 2009 also came at a time when America was seeking to extricate itself from an unpopular “never-ending war” in Asia. The pivot consisted of a trade component and a military component. The trade component was couched in adversarial terms: the United States made clear it was joining the negotiations towards a Trans-Pacific Partnership (TPP) to ensure that the United States, not China, wrote the rules of the road for commerce in the Asia-Pacific (Obama 2016; Chow 2016; Rodiles 2019).[3] The military component was the Air-Sea Battle doctrine, which was crafted to address China’s rapidly growing ability to assert its claims in the South China Sea and to deny US force projection in the West Pacific more generally (Krepinevich 2010). The exclusion of China from the International Space Station (ISS) by the US Congress in 2011 added technological barriers to China’s development.

A related initiative was an investigation by the United States International Trade Commission (USITC) into the “Effects of [China’s] Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy” (USITC 2011). This report concluded that increased protection for intellectual property by China could boost US cross-border exports to China, increase foreign affiliate sales by US multinational corporations in China, and increase the returns to US capital. There was a hint of worry about China’s future technological development, but the main thrust of commentary was for the United States to use the threat of Section 301 economic sanctions to elicit policy change in China for American corporations’ current benefit. 

Whatever ultimately underpinned the rationale for Obama’s pivot – and this is not clear since there were no obvious triggers (Lieberthal 2011) – what is notable for the present purposes is that it had the opposite characteristics of Nixon’s: it invoked containment rather than relaxing it; it threatened China with tariffs and technology exclusions rather than embracing trade; and above all, it redefined China as a “frenemy”, going against Nixon’s rule of not cultivating enemies. 

Inert systems do not react to pressure. But biological systems acquire immunity or “gain of function” when put under selection pressure as was made abundantly and painfully clear during the COVID-19 pandemic. Economies, which are also biological systems, gain competitive advantage when forced to innovate due to constraints, as Michael Porter argued in his famous 1990 work, The Competitive Advantage of Nations. The Obama pivot put China under this type of “selection pressure” – and China reacted as should have been expected and with the outcomes that Porter would have expected.

China Plays Go 

Containment is the strategic objective of the game of Go, a game that China knows how to play well. Perhaps not surprisingly, therefore, China’s strategic response to the Obama pivot mirrors the breakout tactics in Go, where the focus is not a confrontational attempt to break through barriers, but on going around them.  

Excluded from the TPP negotiations, China put its weight behind the Regional Comprehensive Economic Partnership (RCEP), which was signed by China and fourteen other Asia-Pacific countries in November 2020, making it the largest free trade agreement in the world. The United States pulled out of the TPP under the Trump administration, immediately after it assumed office. China then applied to join the TPP (its application, along with that of Taiwan will be considered in 2024 under Canada’s chairmanship).

Confronted with the maritime containment implicit in the Air-Sea Battle doctrine and made explicit by US and allied naval operations in the East China Sea and regular Freedom of Naval Operations (FONOPS) sailings through the Taiwan Strait, China looked west to its Asian hinterland through the Silk Road-inspired Belt and Road Initiative (BRI) launched by China’s President Xi Jinping in 2013. The BRI has signed up almost as many countries as the WTO has members (Ciuriak 2023a).

Faced with the Indo-Pacific diplomatic partnership of the Quad (a cooperation framework involving Australia, India, Japan, and the United States, which inter alia mounts joint naval exercises but is neither a security alliance nor a trading bloc), China built up its own naval forces and now has the largest navy in the world by far. 

Of particular interest is the inclusion of India in this partnership, which put the “Indo” in the “Indo-Pacific”. India recently commissioned its first domestically designed and built aircraft carrier, the Vikrant, several years after China commissioned a similar Soviet-era-design carrier, the Shandong, but already a generation behind China’s newest carrier, the Fujian, the first super carrier to be built outside the United States (Gatopoulos 2022). With its current assets, India lacks the capacity to project force in the west Pacific and could only contribute to a containment strategy by interdicting China’s trade with Europe, Africa and the Middle East (Ciuriak 2020). However here it is vital to observe that India is neither an ally nor a free trade partner of the United States (and indeed had a mini trade war with the United States during Trump’s time in office). It is a determinedly independent player. If this was not clear from long history, it should be clear from India’s embrace of trade with Russia following the latter’s invasion of Ukraine in flagrant violation of UN commitments. This went beyond declining to participate in sanctions on Russia to actively seeking to put in place mechanisms to facilitate circumvention of those sanctions through an arrangement to trade in own currencies (since abandoned, but here it is the thought that counts). 

Excluded from the ISS, China continued to develop its space program on its own and not only built its own space station but landed a Mars rover and a lunar probe that brought back rocks from the moon that it is now sharing with US researchers (David 2023). 

Faced with technological containment on high-end computer chip manufacturing, China bought up non-sanctioned kit and found technical workarounds to manufacture 7 nanometre chips, as featured in Huawei’s Mate 60 Pro cellphone, released on the occasion of US Commerce Secretary Gina Raimondo’s visit to China (Pan et al. 2023), and is about to break through to 5 nanometre chips (Shilov 2023). Huawei, which was knocked off its first-place position in global cellphone sales by US sanctions, is not only back in the cellphone business, but has indicated it will be unveiling a line of “leading, innovative and disruptive” products in 2024, including a developer preview version of HarmonyOS Next, which will no longer support Android-based apps in a direct challenge to Google. Notably, McDonald’s operations in China have shifted onto the Huawei platform and the Alibaba group is developing apps compatible with this platform (Deng 2003).

Faced with the threat of IP sanctions, China rolled with the punch (which is more Tai Chi than Go) and raised its IP game, becoming the global leader in patent applications, a sophisticated player in pursuing standards-essential patents, and now the fastest-growing country in terms of international receipts for intellectual property. According to the Australian Strategic Policy Institute (ASPI), China now leads the world by far in new strategic technologies (Gaida et al. 2023; see also Atkinson and Tufts 2023). It is worthwhile quoting the ASPI report at length:

“Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains. China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas … for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US) … We also see China’s efforts being bolstered through talent and knowledge import: one-fifth of its high-impact papers are being authored by researchers with postgraduate training in a Five-Eyes country.”

And finally, where Nixon played the China card against the Soviet Union, pinning it, Obama’s pivot allowed Xi Jinping to play the Russia card against the United States with his “no limits” pact with Vladimir Putin, unfathomably (from a US strategic policy formulation perspective) allowing the formation of what is in effect a “Rogue States United” coalition against the United States and its allies. This coalition is not only supplying Iranian and North Korean munitions to Russia to pursue its war of aggression in Ukraine even as the West runs out of ammo, but also pinning down the United States in the Middle East, as noted above. Meanwhile, China stays in the background, not having fired a shot.

Is there a way forward?

We know what didn’t work – the Obama-Trump-Biden pivot. This has turned out to be an abject failure that has unleashed hell in Eastern Europe and the Middle East. Is it possible to learn from Nixon’s pivot as to how to make a course correction? 

To extricate America from Vietnam, Nixon went to Beijing. To extricate America from the Middle East, the corresponding move for Biden would have been to go to Tehran. This would have kept a lid on Middle East conflict as the US withdrew, while at the same time preventing the formation of the said “Rogue States United” bloc aligned against the United States. And it would have maintained a pin on both Russia and China. 

This perspective can be contrasted with how Fantappie and Nasr (2023) describe the US strategic vision in their current Foreign Policy piece:

“Before October 7, 2023, it seemed as if the United States’ vision for the Middle East was finally coming to fruition. Washington had arrived at an implicit understanding with Tehran about its nuclear program, in which the Islamic Republic of Iran effectively paused further development in exchange for limited financial relief. The United States was working on a defense pact with Saudi Arabia, which would in turn lead the kingdom to normalize its relations with Israel. And Washington had announced plans for an ambitious trade corridor connecting India to Europe through the Middle East to offset China’s rising influence.” 

To the extent this actually describes US policy thinking, that thinking was completely out of touch with reality. The messy pullout from Afghanistan opened the door for China to step into both Afghanistan and Iran, in the latter case through the 25-year cooperation agreement struck between the two parties. It resulted in Iran and North Korea supplying Russia with drones and shells to bomb Ukraine. It resulted in Russia and Iran backing Hamas’ play in Israel. It resulted in India embracing trade relations with Russia, including trying to negotiate away the use of the US dollar. And it resulted in erstwhile US allies UAE and Saudi Arabia rolling out the red carpet for Vladimir Putin, an ominous echo of the 19-gun salute that greeted Deng Xiaoping in Washington in 1979. 

The only parallel to the Nixon pivot that now presents itself to the United States is in fact the Nixon pivot itself. The US President has to go to Beijing.

There is an opening. Xi Jinping came to San Francisco and to all appearances olive branches were exchanged. Following the Xi-Biden summit, China withdrew its objection to the merger deal involving Broadcom and VMware and approved Mastercard’s entry into the Chinese card payments market (Chen 2023); and Shein, a Chinese company now headquartered in Singapore but under close scrutiny, announced an initial public offering (IPO) in America.

The follow-on moves are straightforward. 

Vis-à-vis China, the United States should cancel the WTO-illegal and commercially self-harming tariffs imposed by the Trump Administration (Ciuriak 2023b). This would have the extra benefit of lowering US consumer prices and pre-empting any further monetary tightening by the Federal Reserve and thus attenuating the risk of an untimely recession – recall, the US yield curve is still inverted (Ciuriak 2023c). Such a move would give China the opportunity to reciprocate. 

Secondly, the United States should greenlight China’s and Taiwan’s joint accession to the Trans-Pacific Partnership, ideally after itself rejoining the deal first. This would be a return to 2001. As noted, Canada will be chairing the process in 2024 and it has the negotiating skills to manage that process.

Thirdly, the United States needs to back Donald Tusk’s play. The newly appointed Polish Prime Minister has called for “full mobilization” of the West to counter Vladimir Putin’s assault on Ukraine (Dickinson 2023). 

Here it is critical to look at the geoeconomic lie of the land. Table 1 provides the relevant data.

The West – defined here as the United States and its allies of Canada, Western Europe (the EU27, the UK and the EFTA states), Australasia, and the Northeast Asian Pacific Rim states of Japan, South Korea and Taiwan – accounts for less than 1/6^th of humanity but for close to 60% of global GDP and over 45% of its manufacturing output. It is hardly a piker on those grounds. However, much more importantly in an age of innovation, the West has a dominating 92.7% of the world’s commercially valuable intellectual property (IP), dominates the counts on Global 500 firms, Unicorns, deployed industrial robots, manufacture of the new wave of service robots, and the tools to develop artificial intelligence, the world’s new technological battleground.

China – defined here as the People’s Republic of China, Hong Kong and Macao – has a similar share of the world’s population but substantially smaller shares of GDP and manufacturing, although it punches above its population weight on manufacturing and is commonly referred to as the “workshop of the world”. However, much more importantly, it punches way above its population weight in global 500 companies and robotics, has led the world in patent applications for the better part of a decade and, since 2016, has been growing its international receipts for IP at a near 40% compound annual growth rate (CAGR). Moreover, in the critical new area of artificial intelligence, China has some 8 million developers working for some 200,000 companies developing industrial applications on Baidu’s PaddlePaddle AI development tool. And as noted earlier, in a wide range of emerging technologies, it has seized the lead.

The rest of the world is a highly variegated collection of countries which collectively has 4 times the population of China but otherwise a roughly comparable scale on other indicators (global 500 companies and robotics aside where China is far ahead) and has virtually no presence in the supply of technology. And of course, the rest of the world lacks entirely the capacity to act in a co-ordinated fashion to advance interests that are not actually in common. In that sense, strategically it is not on the board except for UN votes.

Table 1: China, the West and the Rest

Source: IMF, World Economic Outlook, October 2023, for population and GDP; Macrotrends for manufacturing (https://www.macrotrends.net/countries/ranking/manufacturing-output); World Bank World Development Indicators, Charges for the Use of Intellectual Property, Receipts, https://data.worldbank.org/indicator/BX.GSR.ROYL.CD?locations=1W; Global 500 data from Fortune; Unicorn totals from Crunchbase, https://news.crunchbase.com/unicorn-company-list/; industrial robots from various World Robots reports; and author’s calculations. 

The West cannot “contain” China, nor can it stop China’s technological advance. But the collective West can balance China as Table 1 shows. To do that effectively, it needs to come together in both trade and defence. 

And as Nixon’s pivot showed, it has to involve reaching out to China with a partnership, not a containership. The label for this – just a suggestion – would be a Sino-Pacific Policy (not a “strategy”). 

This will not be easy to do as is clear from even a cursory review of the report of the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party (Select Committee 2023), in light of the drumbeat for war that is now building (e.g., Krepinevich. 2023), and in light of the narrative on China that continues to be aired in US epistemic community (e.g., Acemoglu and Johnson 2023). But Nixon going to Beijing was not easy. Obama going to Tehran would not have been easy either. Biden going to Beijing on the basis sketched out above will not be easy. But that is where the current analysis leads us.

Dan Ciuriak is a Canadian economist who holds fellowships with the Centre for International Governance Innovation in Waterloo, Canada, where he writes on the digital economy, the C.D. Howe Institute (Toronto), where he writes on trade policy, and with the Asia Pacific Foundation of Canada (Vancouver), where he focuses on Asia-Pacific issues. Formerly he was deputy chief economist with Foreign Affairs and International Trade Canada.

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