I want to preface this by saying:
I support free markets, free speech and democracy. The PRC/CCP lacks the legitimacy of its people and represents the greatest threat to personal freedoms and individual liberties around the world since the USSR. As with all totalitarian regimes it is deeply insecure, vindictive, coercive, and values its own survival more than the lives of it citizens.
There is a large and growing bipartisan consensus within the United States government and Congress that it’s relationship with the PRC has become hostile, and that it’s aggressive and coercive policies need to be checked. Based on how the American government is talking it looks as if they are going to retaliate against Beijing once corona is over. I think you’re going to see a massive coordinated retaliation against the CCP and it’s interests by the whole of the American government.
The current US/China power struggle (or as some call it coldwar 2.0) is often portrayed as a battle between two superpowers but that really couldn’t be further from the truth. The PRC, just like the USSR, has never met the criteria to be called a superpower, at best it’s a strong regional power. At its peak the USSR economy was 60-65% the size of the US, China’s is closer to 60% today (the CCP has inflated its GDP figures for decades) So even in relative terms it’s not as powerful a rival overall as the Soviet Union was.
A superpower is a state with a dominant position characterized by its extensive ability to exert influence or project power on a global scale. This is done through the combined means of economic, military, technological and cultural strength as well as diplomatic and soft power influence. Traditionally, superpowers are preeminent among the great powers.
In terms of overall wealth the US dwarfs China and produces more wealth each year than China does.
The US, China, and Europe contributed the most towards global wealth growth with USD 3.8 trillion, USD 1.9 trillion and USD 1.1 trillion respectively.
The media likes to portray everything as black and white so this “superpower rivalry” narrative has taken hold but it portrays china as much more powerful and influential than it actually is. Under all the propaganda and strongman talk the CCPs regime has become very brittle and non responsive. And it’s incredibly vulnerable to US political, military and economic pressure.
China’s entire economic foundation is build on a system dependent on access to US dollars, China keeps massive USD foreign reserves because that’s what backstops its own currency. If it was so easy to ween off USD they would’ve done it decades ago. Instead the opposite has happened, the US dollar is more dominate today than it was before the Great Recession. So much so that central bank governors like Mark Carney have warned that corona virus has likely made the worlds dependence on USD a permanent fixture because there’s no viable alternative.
The threat of dumping treasuries is a bluff, it would be significantly more damaging to China than to America. All the Fed would have to do is buy them as the PBOC sells them. China comes out no further ahead but does incredible damage to its own economy.
What if the US was as coercive as China?
Take a second and imagine a world where the US was as coercive in its foreign policy as the PRC. If it (or any other nation) didn’t do as told all America would have to do is announce it’s cutting china’s access to dollars and overnight the entire banking and financial system would become insolvent. I doubt this scenario would ever play out because the cascading effect would be devastating to other Asian economies. But it demonstrates one of the many policy tools America can use to bludgeon the PRC if it needed to. It’s very under appreciated how many knives America has on china’s jugular.
This struggle is by no means a contest between two equal powers, the PRC is dominated by the US in almost every domain and has likely hit its high water mark as the unsustainable debt load, inefficiencies and demographic crises begins to strangle it long term. Aside from coercion China lacks any real soft or hard power beyond economic clout.