DAVID A. SHLAPAK, COLIN LEVAUNT, GREGORY SMITH
Coupled Competition
A Prototype Game to Explore the U.S.-
China Relationship
T
he complicated, interconnected relationship between the United States and China continues
to develop, and questions have inevitably emerged about the fundamental nature of the two
countries’ relationship. The situation can usefully be modeled as a game. Is this game zero-
sum, one side making gains largely at the expense of the other? Or is this game positive-
sum, a situation in which each side can enhance its situation without necessarily inflicting costs on
the other?
The questions that motivate this study as a whole and this game in particular are: How can the
United States ensure that its economy meets the nation’s needs under conditions of coupled, strategic
competition? Can this be done in a way that does not necessarily hamper the Chinese economy but
rather provides benefits to all?
1
Orthodox economic theory holds that the global economy is funda-
mentally a positive-sum system in which all participants can reap increased benefits from growth.
Taking only this into account, the answer to our question would be, “Well, yes, obviously.” However,
such a consideration ignores what the competition is about.
Certainly, the United States and China have moved into an era of economic competition, with
trade and investment as the battlefields. But why has this happened? Have U.S. consumers grown
tired of store shelves stocked with inexpensive goods imported from China’s factories? Have China’s
leaders decided that they no longer desire double-digit economic growth rates fueled by expanding
exports? Of course not.
The economic competition is subsidiary and result of a larger geopolitical competition
between the two sides. Washington and Beijing have very different views about how the world
should be ordered and who should do the ordering, and this geopolitical focus is the driving force
behind their competition.
Therefore, to understand how these countries’ economies might fare in the future, we must
examine the interplay between the geopolitical and economic elements. Whether both sides can
succeed—or whether the competitive dynamics mean that inevitably one can prosper, at least to a
degree, only at the expense of the other—depends a lot on how one imagines the world works.
One perspective is offered by the realist school of international relations theory.
2
Although
realism is used to describe numerous concepts that differ in many ways, the basic premises of
realism are straightforward and rely on three propositions about the nature of the global order.
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Research Report
