The main driver of this new era is no longer economic globalization but, increasingly, great-power competition. This competition—primarily between China and the United States—will dominate nearly every policy domain: trade and investment, financial markets, information technology, biotechnology, foreign policy, military power, and ideology. It will also dominate nearly every region of the globe as it draws countries, corporations, and institutions into an increasingly binary race.
For these reasons, we are also seeing the return of the state’s dominance as the enforcer of national competitive advantage, not just in China but also in the United States and elsewhere. While the efficiency costs will be high, this new period of “state-onomics” will continue until the outcome of the race for global supremacy is resolved.
The 2020s will therefore be a decade of living dangerously. To mitigate the risks—of crisis, conflict, and war—Washington and Beijing will likely find it in their interest to agree on some basic guardrails to contain their growing strategic competition. The coming era will, therefore, be one of managed strategic competition: Great-power rivalry will intensify, while red lines in national security are likely to be observed. Competition will be intense across the board, while defined areas of collaboration, such as on climate policy, will still be possible. And within this race: May the best system win. The alternative to managed strategic competition is an unmanaged one, which both great powers are likely to find too dangerous and destabilizing to sustain over the long term. The state will truly be back as a regulator, driver, and active participant in the economy, driven ultimately by the overriding dynamics of this new era of managed strategic competition.
First published in Foreign Policy Magazine.