Institutional Balancing Between China and United States

 

Photo source: Foreign Policy

By Naveed Qazi | Editor, Globe Upfront

At the G20 Bali Summit 2022 in November 2022, Joe Biden and Xi Jinping met face to face for the first time since Biden took office. The tone was careful but clear. Both leaders accepted that rivalry between their countries would continue, yet stressed that it must be managed responsibly. As Ananth Krishnan reported in The Hindu, they agreed to avoid military confrontation and to revive cooperation on issues such as climate change and global economic stability. The meeting reflected a shared understanding: a war between the United States and China would have devastating global consequences.

What has taken shape instead is a quieter, more complex form of competition—often described as ‘institutional balancing’. Rather than relying on military build-ups or rigid alliances, this approach uses international institutions, rules, and norms to gain strategic advantage. States compete by shaping agendas, setting standards, and influencing membership. As Kai He and Huiyun Feng argue in International Affairs, this kind of rivalry need not weaken the global order. On the contrary, it can strengthen multilateral institutions by drawing major powers more deeply into them.

Much Western commentary still frames US–China tensions in Cold War terms. Yet this comparison is misleading. Today’s rivalry is not defined by strict ideological blocs, but by economic interdependence and shared institutional spaces. As Gideon Rachman has observed, the world is moving towards a more fluid, multipolar system in which competition and cooperation exist side by side.

Since the 1990s, this institutional competition has unfolded in two broad phases.

The first phase, from the end of the Cold War to the 2008 Global Financial Crisis, took place under clear American dominance. Globalisation expanded rapidly, and China rose within a system largely shaped by the United States.

During this period, both countries relied on existing institutions, especially those linked to the Association of Southeast Asian Nations.

The ASEAN Regional Forum became an important venue. China used it to promote principles such as non-interference and to avoid sensitive debates, particularly on Taiwan. The United States, meanwhile, strengthened its ties with ASEAN, eventually forming a strategic partnership in 2015.

This was a phase of what might be called inclusive balancing. Competition existed, but it took place within shared frameworks. China’s decision in 1998 to publish its first defence white paper—encouraged by ASEAN processes—illustrates how institutions still fostered transparency and engagement.

The second phase began after 2008. The financial crisis exposed weaknesses in Western economic leadership and gave China greater confidence to shape the international order. From this point onwards, competition became more assertive and, at times, more exclusive.

The United States, for example, promoted the Trans-Pacific Partnership, a major trade initiative that excluded China. As Daniel C. K. Chow has explained, this was a deliberate attempt to set economic rules without Beijing’s involvement. Although Washington later withdrew, the strategic logic behind the move remains significant.

In the security sphere, the revival of the Quadrilateral Security Dialogue (Quad) in 2017 marked a similar shift. Bringing together the United States, India, Japan, and Australia, the grouping has expanded its focus beyond defence to include technology, infrastructure, and public health—areas that indirectly counter China’s influence.

China, for its part, has advanced its own institutional initiatives. The Belt and Road Initiative, launched in 2013, is the most prominent example. Covering more than 150 countries, it represents a vast effort to finance and build infrastructure across the developing world. Reporting by The New York Times and analysis from the Council on Foreign Relations highlight both its scale and the concerns it raises, particularly around debt and political influence.

At the same time, China has expanded regional organisations. The Shanghai Cooperation Organisation has grown to include India, Pakistan, and Iran, making it one of the largest regional groupings by population. It provides a platform for promoting a more multipolar order and reducing reliance on Western-led institutions. China has also supported forums such as the Conference on Interaction and Confidence Building Measures in Asia, advancing the idea that Asian security should be managed primarily by Asian countries.

These developments show that US–China rivalry has shifted away from direct military confrontation towards competition through institutions. This does not remove the risk of conflict, but it does change its nature. Both sides are now competing to provide public goods—investment, trade frameworks, and development initiatives—while also seeking influence.

The Bali meeting captured this balance. As Martin Wolf has argued, the central challenge is not to end rivalry but to manage it within rules that prevent escalation. If the United States and China continue to channel their competition through institutions rather than force, the result may be a more stable—if still tense—international order.

In that sense, ‘institutional balancing’ offers a form of restraint. It allows great powers to compete vigorously without crossing into open conflict. In an increasingly multipolar world, that may be the most practical path to stability.