The US-China Rivalry Enters a New Phase: Management Over Victory

Last month in Zurich, at the Asia Leaders Series forum, I witnessed something remarkable. The conversation around US-China rivalry had fundamentally shifted. Instead of asking "who will win," participants were asking "how do we manage this?"

From Competition to Coexistence

The change in tone was striking. European policymakers, in particular, seemed to have moved past the binary thinking that dominated earlier discussions. A German official put it bluntly: "We need to trade with both China and America. We don't have the luxury of choosing sides."

The numbers back this up. Germany's trade with China reached $254 billion in 2023, while its security cooperation with the US remains essential. This isn't ideological—it's practical.

Asian participants were even more pragmatic. A former Singaporean diplomat noted that ASEAN countries have been "playing this balancing game for over a decade. Now the rest of the world is catching up to our playbook."

The Decoupling Myth

What struck me most was how the decoupling narrative—once dominant in Washington policy circles—has quietly evolved into something more nuanced. The new buzzword is de-risking: reducing vulnerabilities without severing ties entirely.

This shift reflects economic reality. US-China trade volume still exceeds $700 billion annually. Complete separation isn't just difficult—it's economically destructive for both sides.

Even Apple, once held up as a symbol of US-China economic integration, has diversified its supply chain to India and Vietnam. But it hasn't abandoned China entirely. Instead, it's managing risk while maintaining access to the world's largest consumer market.

The Middle Power Opportunity

For countries caught between the superpowers, this shift creates new possibilities. South Korea offers a compelling case study. Samsung and SK Hynix generate massive revenues from Chinese markets while complying with US semiconductor restrictions. It's a delicate dance, but it's working.

The Chip 4 Alliance and IPEF (Indo-Pacific Economic Framework) represent America's attempt to create China-free structures. But even within these frameworks, there's growing recognition that complete exclusion of China isn't sustainable.

A Korean executive I met in Zurich joked that he "wakes up every morning wondering which country to side with today." Behind the humor lay a genuine strategic challenge that many multinational companies now face.

Compare: Two Approaches to Strategic Competition

The New Rules of Engagement

The November 2023 meeting between Xi Jinping and Joe Biden in San Francisco marked a turning point. Both leaders acknowledged that complete separation isn't in either country's interest. They've established minimum communication channels to prevent accidental escalation.

This doesn't mean the rivalry has ended. Competition in technology, military capabilities, and global influence continues intensely. But both sides now recognize that this competition must be managed, not won.

China has embraced the shift from "decoupling" to "de-risking" because it suggests partial engagement rather than complete separation. The US has accepted this framing because it allows for continued economic benefits while addressing security concerns.

Business Implications

For multinational corporations, this new paradigm offers both opportunities and challenges. Companies can no longer assume that choosing one market means abandoning the other. Instead, they need sophisticated strategies that allow them to operate in both ecosystems while managing political risks.

Tesla's approach illustrates this new reality. The company has built significant manufacturing capacity in China while maintaining its US operations. It navigates regulatory requirements in both markets without fully committing to either geopolitical camp.

The key is building resilience rather than efficiency. Supply chains need redundancy. Market strategies need flexibility. Corporate diplomacy becomes as important as product development.