As China remains the unspoken elephant in the quaint Quad room, Washington’s increasingly aggressive efforts to rein in Beijing have unmistakably taken on the flavour of a “new Cold War”, sparking global jitters.

Beijing’s various attempts at alternatives to US-led postwar power structures – the Belt and Road, Global Development, Global Security, and Global Civilisation initiatives – have rattled the handful of winners of neoliberal globalisation. These players are now scrambling to adapt to the new world order emerging, even as they had raised a toast to the so-called "end of history".

Officially, Beijing’s name is conspicuously absent from the Quad’s rhetoric, which China has branded as an “Asian NATO.” Yet, the spectre of China looms large, with only subtle nods to the East and South China Seas in official declarations.

However, the recent Quad summit offered a telling glimpse. While public statements were carefully crafted, a slip of the tongue from President Joe Biden pulled back the curtain.

In a hot mic moment, Biden revealed that Chinese President Xi Jinping was “looking to buy himself some diplomatic space” to pursue his aggressive regional ambitions. He bemoaned that China continues to act provocatively across various sectors, particularly in technology and economics.

Beijing wasted no time in denouncing the summit. Foreign Ministry spokesman Lin Jian accused the Quad of being a tool of US hegemony, claiming the meeting was designed to contain China. “Though the US claims it doesn’t target China, the entire summit focused on China. The US is lying through its teeth,” Lin said.

Though President Biden and his fellow Quad leaders have tiptoed around mentioning China directly, political observers argue the aim of the Quad is clear: containment.

Ironically, amid the fierce political divide in Washington, there’s rare bipartisan consensus on the China issue in domestic politics. Both Democrats and Republicans agree: that China poses a growing threat to US dominance.

Last month, in what was dubbed “China Week,” the House advanced 28 measures targeting China. Many of these bills were passed with bipartisan support, signalling rare unity in Washington where both sides increasingly view China, the world’s second-largest economy, as a geopolitical rival.

From drones to drugs, House lawmakers flexed their muscles throughout the week, showcasing their tough stance on China by introducing over two dozen bills aimed at countering Beijing’s technological, political, and economic influence.

The House Select Committee on the Chinese Communist Party proudly labelled this legislative blitz as "China Week," boasting that much of the legislation had “overwhelming bipartisan” backing.

Picking up on the tension, British columnist Gideon Rachman remarked in a Financial Times article how the talk of war between the US and China has become alarmingly common in Washington. Rachman observed that many influential figures now consider a US-China conflict not just possible but probable, with some US officials eyeing the Cold War as less a cautionary tale and more a potential blueprint for the future.

And if Trump were to return to office, it’s doubtful that the approach toward Beijing would soften. Matt Pottinger, Trump's former deputy national security advisor, has already signalled that the US needs to double down on its hardline stance, even hinting at regime change and quoting Cold War general Douglas MacArthur's infamous line, “There is no substitute for victory.”

Meanwhile, key US allies like Britain have largely fallen in line with Washington's hawkish stance.

The evolving “US-China Cold War”, which analysts argue began with Trump's trade war and Huawei ban, has only intensified under Biden, who took the reins by enforcing restrictions on semiconductor sales to China in a bid to stifle Beijing's technological ambitions.

Both Trump and Biden justified their decisions by citing national security concerns and raising alarms over Taiwan and the South China Sea. However, China's communist regime and its stance on Taiwan were neither new nor unexpected.

Critics question why these concerns surfaced only now, given that American corporations like Apple have operated along China's coast since the mid-2000s. Additionally, during the 1990s, Washington aggressively sought to welcome China into the World Trade Organisation.

After 2008, when China's investment soared from around 30% to over 50% of its national income — boosting global demand and stabilising US financial capitalism —these security concerns were notably absent. So, why the sudden shift towards a New Cold War before the conflict in Ukraine?

Cloud Capital

Political analysts caution that China's ascent in cloud computing and digital trade threatens to upset the apple cart of US dominance over the international payment system, a power it has wielded since it emerged as the sole economic superpower after World War II.

Through the Bretton Woods framework, the US established a dollar-centric global economy, managing to hold onto its influence even after slipping into deficit post-1971 by keeping a tight grip on international payments.

However, this status quo now faces a perfect storm, as China's digital currency and fintech innovations emerge as formidable contenders, challenging the US hegemony and its control over crucial systems like SWIFT.

China’s “Cloud Capital” advancements, particularly through platforms like WeChat, threaten US dominance in the financial technology sector.

Beijing’s fintech innovations, paired with the increasing reach of its digital currency, are challenging the dollar’s supremacy in global finance.

In his book ‘Technofeudalism: What Killed Capitalism’, Greek economist and former finance minister Yanis Varoufakis, says that with cloud capital dominating terrestrial capital, the maintenance of US hegemony requires more than preventing foreign capitalists from buying up US capitalist conglomerates, like Boeing and General Electric.

“In a world where cloud capital is borderless, global, capable of siphoning cloud rents from anywhere, the maintenance of US hegemony demands a direct confrontation with the only cloudalist class to have emerged as a threat to their own: China’s,” he writes.

Varoufakis likens the state of Chinese cloud finance and the digital yuan before 2022 to a new road with minimal traffic. The ultra-wealthy had little incentive to shift their funds to this yuan-paved route, monitored by the People’s Bank of China, when the dollar-built superhighway was available, albeit bumpy.

However, after the US seized hundreds of billions from Russia’s central bank following the initial blasts in Ukraine, Russian money was forced off the dollar freeway and onto the less-travelled Chinese alternative.

This shift wasn't just limited to Russian assets; many global investors began to question the wisdom of relying solely on Washington's dollar traffic cops and started diversifying their investments.

As the Biden administration noticed the trend, it became clear that the dollar's supremacy was increasingly in jeopardy. To stem the tide, President Biden announced a total export ban on key technologies to China, particularly microchips, on October 7, 2022.

The move, framed as a national security concern, aimed to strike a decisive blow against Chinese cloud finance before it could mature into a formidable competitor.

However, Varoufakis argues that while the ban may temporarily stall China’s tech advancements, it inadvertently encouraged global capitalists to flock to China’s cloud finance. A businessman in Hamburg, despite his allegiance to the Federal Republic and scepticism of the Chinese regime, finds himself compelled to open a digital yuan account to navigate the increasingly complex landscape shaped by US sanctions.

‘When the elephants fight… ‘

Meanwhile, as tensions escalate, concerns grow that it’s not just the “cold peace” at risk. If brinkmanship driven by domestic and hegemonic interests takes control, the future of humanity may be relegated to the backseat.

As the adage goes, “When the elephants fight, it’s the grass that suffers,” and in this case, political pundits caution that global industries are already feeling the heat. For many, choosing would mean losing.

Malaysia’s ambassador to China articulated the sentiment candidly in an interview with China’s state-run Global Times, stating that Malaysia will not comply with sanctions imposed on Chinese companies by the US in the region for allegedly supporting China’s claims in the South China Sea. He stressed that for countries like his, “to choose is to lose.”

Similarly, scholars and policymakers from both sides have called for calming the global jitters and collaborating instead of competing.

Kishore Mahbubani, a Singaporean diplomat and scholar, advocates for geoeconomics over geopolitics in Sino-American relations. In his book Has China Won? he argues that the US should not view China purely through the lens of competition. Instead, by focusing on economic cooperation, both countries could benefit.

Mahbubani points out the rising tide of animosity is gathering steam within the American political sphere against China.

He cites former Treasury Secretary Hank Paulson, who remarked: “We have a China attitude, not a China policy.… You have Homeland Security, the FBI, CIA, the Defense Department, treating China as the enemy and members of Congress competing to see who can be the most belligerent China hawk. No one is leaning against the wind, providing balance, asking what can we realistically do that has some chance of getting results that won’t be harmful to our economic and national-security interests in the long term."

Mahbubani writes that in the current hostile environment toward China, it would be political suicide for any American leader or public figure to advocate a more balanced approach. He notes that while China’s leaders seek to rejuvenate Chinese civilisation, they are not driven by any grand missionary zeal to make the world conform to their way of life.

However, the author laments that the irony of today’s world is striking: despite China’s historically insular nature and America’s professed openness, Chinese leaders seem far more adept at navigating the complexities of a diverse world.

They hold no illusions that other societies should mirror their own, unlike many American leaders, who still seem to expect the world to fall in line with their way of thinking.

He argues that America would be far better off if it stopped waging unnecessary foreign wars and focused on improving the well-being of its people. Given China’s lower per capita income, it shares this interest.

Mahbubani notes that while America is far wealthier than China—with a nominal per capita income of $62,641, over six times China's $9,771—the well-being of many Americans, particularly the bottom 50 per cent, has declined in recent decades.

A staggering fact stands out: the US squandered nearly $5 trillion on wars in the Middle East since 9/11. Brown University’s Watson Institute reported that “the US federal government has spent and obligated approximately $4.8 trillion on post-9/11 wars, and by 2053, interest costs could exceed $7.9 trillion."

Had this $4.8 trillion been distributed among the bottom 50 per cent of Americans, each person would have received roughly $29,000. Considering that two-thirds of US households lack even $500 for emergencies, this underscores why it is in America’s best interest to prioritize the well-being of its people.

He suggests that the US and China could find common ground in areas like infrastructure. While America faces a severe infrastructure deficit, China has become an infrastructure superpower, capable of building high-speed train networks faster than any other nation.

In 2012, Keith Bradsher of The New York Times reported, “China began service… on the world’s longest high-speed rail line, covering a distance in eight hours that is about equal to that from New York to Key West, Fla.… Amtrak trains from New York to Miami, a shorter distance, still take nearly 30 hours.”

"Common sense would dictate that both countries should cooperate in infrastructure. Yet, given the poisonous political attitudes toward each other, common sense cannot operate. This is why a major strategic reboot is needed in the relationship between the two powers,” Mahbubani writes.

“If the two powers first tried to define what their core national interests were—especially their core interests in improving the livelihoods of their people—they would come to the logical conclusion that there is fundamentally a noncontradiction between their national interests,” he further notes.

Jeffrey Sachs, an economist at Columbia University, has also called for the US to pivot away from its aggressive stance towards China, warning that such confrontations could derail global efforts to address pressing issues like climate change, poverty, and global health.

He notes that China's Belt and Road Initiative (BRI) and other geoeconomic strategies represent an opportunity for the world to engage in shared prosperity. Sachs argues that the US should embrace multilateralism and cooperation with China rather than resorting to economic or military conflict.

Wang Jisi, a prominent Chinese scholar and dean of the School of International Studies at Peking University, argues that the notion of a "shared future" is central to China's global outlook. Wang stresses that China's emphasis on development, trade, and peaceful coexistence offers a framework for addressing global issues collaboratively.

A Cold War mindset, in his view, would only deepen divisions, leading to a fragmented world order where global cooperation suffers.

While acknowledging the intensifying rivalry, many Chinese analysts aren’t crying wolf about a full-blown Cold War just yet. They recognise the need to navigate this shift towards competition without falling into the "Thucydides trap."

Despite the rising tension, China is still seen as the underdog, trailing behind the US in terms of overall strength. Analysts like Tao Wenzhao urge China to avoid rushing headlong into a strategic showdown, suggesting that a new model of interaction might eventually surface after a long, cautious dance.

To keep things from spiralling out of control, both nations must steer clear of economic "decoupling" but brace for a possible weakening of interdependence. Better crisis management and trust-building are crucial, especially as China’s influence, bolstered by the Belt and Road Initiative, continues to spread across the globe.

Effective dialogue and cooperation on global issues are necessary to avoid turning ideological competition into a defining battle line.