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Where is the US-China relationship headed in 2022?

Wesley Rahn | William Yang
December 22, 2021

The US and China are increasingly locked in a serious economic and geopolitical competition, and the rivalry looks set to escalate next year.

US President Joe Biden and Chinese President Xi Jinping
In November, Biden and Xi held a teleconference during which both leaders pledged to manage competition in the futureImage: Yue Yuewei/Xinhua/AP Photo/picture alliance

The US and China saw their rivalry reach new heights in 2021 as both countries embarked on trade, defense and diplomatic policies marked by increased suspicion and antagonism.    

This trend looks likely to continue into 2022. In the United States, bitterly divided Democrats and Republicans heading into pivotal mid-term elections can agree on one thing: there is no room for being soft on China. 

In Beijing, President Xi Jinping is preparing to further cement his power at China's helm during the party congress in October, with the Communist Party fully behind his hard-line policies. 

An icy start to the year

The Beijing Winter Olympics portends a rocky start to 2022. The US has already said it will not send government officials to the games, and the UK and Australia have joined Washington's diplomatic boycott. China, in response, promised unspecified "consequences" for the move.

Tensions are likely to increase as February approaches, with the US using the games and the boycott to draw attention to China's crackdown on the Uyghur Muslim minority in the Xinjiang region. 

In Hong Kong, Beijing's continued pressure on the territory's civil liberties will also continue into 2022, as more and more pro-democracy activists are incarcerated under a national security law that was put in place in 2020. 

"I believe this tension between China and the US will continue in 2022, including in the areas of human rights, geopolitics and security," said Wu Qiang, an independent political commentator based in Beijing.

"This is a situation that the leaderships of both China and the United States are happy to see and anticipate. I don't think they will take any effective measures to reduce the tension in this situation, but they will control it," he said.

Taiwan conflict unlikely in 2022

As Hong Kong's special autonomy is slowly being worn away by Beijing, nearby Taiwan watches warily as Chinese planes in recent months have carried out hundreds of sorties into its defense identification zone

In 2021, the US has angered Beijing by sending unofficial delegations of lawmakers to Taiwan and expressing support for the government of President Tsai Ing-wen.

China abhors any question of Taiwanese independence. Under Xi, Beijing is pursuing a policy of inevitable "reunion" of Taiwan with the mainland. China can be expected in 2022 to continue opposing attempts at diplomatic recognition of Taiwan, along with efforts by Taipei to participate in international organizations. 

As tensions continue in the Taiwan Strait, the possibility of a Chinese military invasion is seen as the most dangerous potential flash point for armed conflict between the US and China. However, as the Communist Party prepares for its big event, they are more likely to want stability than sabre-rattling.

"The risk of a PRC attack on Taiwan prior to the 20th Party Congress in the fall of 2022 is very low," Bonnie Glaser, director of the Asia Program at the German Marshall Fund of the US, told DW.

"Xi Jinping is unlikely to take such a risk that might put in jeopardy securing a third five-year term in power," Glaser said. 

Overall, in the South China Sea, the US and its allies will continue carrying out "freedom of navigation" naval maneuvers in international waters claimed by Beijing. China is slowly but surely developing its navy to defend these interests, but a naval conflict in the waters is something both sides want to avoid.

Xinjiang: China's muslim minorities

US-China tech decoupling 

Cybersecurity will be a big issue moving forward, affecting both economic and strategic policy. In 2021, the US accused China of sponsoring massive data hacks. Washington has also opposed the global deployment of Chinese next-generation communications technology, especially 5G. 

The US drive to isolate Chinese technology from the rest of the world looks likely to continue in 2022, with Washington not holding up on making it difficult for Chinese firms to acquire critical US-made hardware.

"The US is just beginning to implement tighter restrictions on technology transfer to China, and there will be more steps taken in 2022," Glaser said. 

In 2022, the US Department of Defense is expected to close regulatory loopholes that, for example, have allowed Chinese semiconductor maker SMIC to purchase critical US technology, and other Chinese entities will likely be added to the US Commerce Department's blacklist, Glaser added. 

Export controls are also under discussion with US allies, along with screening of outbound foreign direct investment to China, she said.

The Communist Party's heavy-handed crackdown on the country's champions of industry, especially in the tech sector, is also a cause for concern. Added pressure from both US and Chinese regulators on foreign investment in Chinese companies is likely to keep global investors wary in 2022.  

'Confrontation remains the main theme'

China's economic expansion is expected to slow in 2022, with some estimates suggesting that growth could be just 5% next year. Some analysts say this could provide an incentive for Beijing to work with the US on softening Trump-era trade barriers.

How China is reining In its tech titans

In November, Biden and Xi held a teleconference during which both leaders pledged to manage competition in the future. But observers remain skeptical about the prospect of the two countries working together to amicably resolve their differences.

"I think the easing of economic and trade tensions between China and the US is probably temporary, as confrontation remains the main theme," said Shen Ling, an economist at the East China University of Science and Technology.

"As the economic power between the two countries changes, China is now closer to the United States than ever in terms of economic strength. Therefore, the bilateral relationship will be more about competition rather than cooperation."

Both sides are becoming increasingly locked in an existential competition to prove which system of governance is superior. For China as a rising power, it is state-controlled capitalism and the "rise of the East." 

"Domestic politics will heavily influence both US and Chinese policies in 2022 due to China's 20th Party Congress and the US midterm elections. Therefore, I'm not optimistic that significant progress will be made on any issue," Glaser said. "However, if it is in the interests of both countries to make some agreements, that remains possible."

Edited by: Srinivas Mazumdaru

Wesley Rahn Editor and reporter focusing on geopolitics and Asia