Xi has spent decades preparing for a Cold War with the US

Chinese leader Xi Jinping’s strategy draws on his understanding of Soviet failures

Chinese leader Xi Jinping often talks about the fall of the Soviet Union as a lesson for China. Picture: Anthony Kwan / POOL / AFP

In the US-China conflict, President Trump is waging an economic assault. But Chinese leader Xi Jinping is fighting a Cold War.

Xi is entering trade negotiations with a grand strategy he has prepared for years — one that, according to policy advisers in Beijing, is inspired by his understanding of what the Soviet Union got wrong during the first Cold War.

Well aware of the US’s continued economic and military superiority, the advisers say, Xi is seeking to avoid direct confrontation, while holding China’s ground in a protracted, all-encompassing competition.

Xi aims to achieve what Mao Zedong used to call a “strategic stalemate” — an enduring equilibrium where American pressure becomes manageable and China buys time to catch up to the US.

“For China, ‘strategic stalemate’ is the most realistic and preferred outcome in the foreseeable future,” said Minxin Pei, a Claremont McKenna College professor and editor of the quarterly journal China Leadership Monitor. “Strategic patience, conservation of resources and tactical flexibility will all be critical in achieving this stalemate.”

A tourist poses with cardboard images depicting Russian President Vladimir Putin and his Chinese counterpart Xi Jinping at the touristic Arbat street in downtown Moscow. Picture: AFP

In some ways, Beijing is pursuing a sort of guerrilla warfare, sparked by Henry Kissinger’s analysis of the nature of asymmetric conflicts: “The conventional army loses if it does not win. The guerrilla wins if he does not lose.”

One key pillar of the lessons Xi has drawn from the Soviet collapse is economic: The Soviets put all their economic bets on heavy industry, focused on energy and weaponry. Beijing by contrast is trying to produce everything, fortifying the Chinese economy against trade and technological restrictions from the US while still leveraging world markets’ appetites for its goods.

Another pillar is geopolitical, where the goal is to avoid Soviet-style isolation. This involves weakening US alliances while promoting what Beijing calls “multialignment,” where countries engage with multiple global powers rather than choosing a single side.

Also key to the strategy is to continue China’s military build-up but without a costly arms race with the US. The country’s official defence budget has grown at a stable rate of about 7.2 per cent over the past three years. While that exceeds China’s overall economic growth, it is below 1.5 per cent of its gross domestic product.

And crucially, the main pillar involves further strengthening Communist Party control over all aspects of society.

Xi often talks about the Soviet fall as a lesson for China. “Why did the Soviet Union disintegrate? Why did the Communist Party of the Soviet Union fall to pieces?” Xi said in a closed-door speech to senior party officials in January 2013, shortly after he took the reins of the party. “An important reason is that in the ideological domain, competition is fierce.” Translation: The party must allow no challenges to its authority.

Turning point

China has a long history of studying the Soviets. In 1953, the year Xi was born, Mao launched a campaign to promote the Soviet model for China’s political, economic and military systems. Xi’s father, Xi Zhongxun, a party revolutionary who fought alongside Mao, went to Moscow in the late 1950s, when China had almost no industry, to visit industrial sites and learn about their operations and technology.

YIWU, CHINA – APRIL 28: A worker sews fabric to be used in Christmas decorations for export at a factory in China. Picture: Kevin Frayer/Getty Images

That profoundly shaped Xi’s youth, leading to a deep-rooted admiration for Soviet values, history and culture. His “Russia complex,” as some party insiders called it, was so deep that nearly three decades of a Soviet-China split didn’t shake it.

But by the time Xi was a rising political star in the late 2000s, the Soviet Union had collapsed and his view had shifted. As head of the Central Party School, an elite party academy, he used the Soviet unravelling as a cautionary tale, highlighting ideological decay and a loss of political control as the key reasons for the collapse.

After taking power in 2012, Xi commissioned a documentary about the end of the Soviet Union that portrayed Mikhail Gorbachev, the last Soviet leader, as a villain who abandoned the party.

But even then, Beijing’s study of the Cold War focused on how China could avoid a similar demise; Xi didn’t yet see China as a contender in a superpower clash with the US.

The turning point was Trump’s first-term trade war with China in 2018 and 2019. His “Make America Great Again” motto demonstrated to Xi the US’s resolve to maintain its supremacy. Often caught off guard by Trump’s pressure tactics, the Xi leadership started a reassessment of the Cold War, according to the Chinese advisers. The new focus: how to fight and ultimately win a Cold War against the US.

Donald Trump with t Xi Jinping during a meeting on the sidelines of the G-20 summit in 2019. Picture: AP /Susan Walsh

In 2020, when the Covid-19 pandemic all but severed bilateral relations, Xi trotted out the first major piece of his new Cold War strategy: Under the vague label of “dual circulation” — produce domestically what China needed and send goods overseas — he kickstarted an all-out effort to better insulate China from outside shocks, in particular from the US.

When former President Joe Biden continued with Trump’s tough-on-China policies, Xi’s determination to fight a protracted conflict with the US became even more urgent.

That’s when Beijing more forcefully made clear it wanted to be treated as an equal of the US and also, crucially, when it further cosied up to Russia. In early 2022, right before the Russian invasion of Ukraine, Beijing and Moscow declared their friendship had “no limits.”

Yet, Xi was careful to not copy the Soviet playbook of fostering a largely isolated Eastern bloc. While he realised China might need to disentangle from the US, he was making sure the country wasn’t closed off from the rest of the world, keeping it integrated in the global economy, particularly with lower-income countries.

To counter accusations China has been buying influence by trapping countries such as Sri Lanka and Zambia with predatory lending, Xi and his team has overhauled the trillion-dollar Belt and Road infrastructure program to make its lending more sustainable for recipients of Chinese financing.

“China’s economic and diplomatic policies are all oriented toward positioning themselves for a long-term struggle against the US,” said Evan Medeiros, a former senior national-security official in the Obama administration and now a professor at Georgetown University.

Buying time

Xi’s counsel to the party apparatus, the Chinese advisers say, is one of patience, convinced that the global balance of power will inevitably tilt in China’s favour.

The steady calm is intended to contrast with what Xi sees as US chaos and the Trump administration’s ever-shifting posture toward China. In just a few months, the White

House has gone from applying maximum tariff pressure on China and trying to isolate the world’s second-largest economy to now seeking a broad deal with concessions on both sides.

It is an environment Beijing uses to its advantage, setting the terms for future competition.

The Trump administration has dismantled the US’s foreign-assistance agency, giving Beijing a chance to try to swoop in at a time of heightened geopolitical competition. And while the US has targeted Chinese student visas and is slashing operations such as Voice of America, the Chinese government is offering all-expenses-paid trips to American social-media influencers they hope will help promote a “cooler China.”

American content creator IShowSpeed, who has more than 120 million social-media followers, handed Beijing a soft-power win when he visited China for 10 days in April. His widely viewed videos, which showed him marvelling at the country’s high-speed trains and ubiquitous electric cars, became a global sensation.

Vladimir Putin and Xi Jinping at the Kremlin in May. Picture: AFP

In addition to trade talks, Beijing wants to restore the kind of recurring “dialogue” Washington sees as a waste of time. To Xi, it’s a ploy to buy time.

“They have every intention of playing hardball and dragging it out,” said Pei of Claremont McKenna College.

Whether China can prevail in its strategy is far from certain.

Xi’s policies to further China’s great-power competition threaten to exacerbate its economic struggles. The party’s command-and-control is stifling private-sector activities, and the policy aimed at producing everything, notably, is leading to a deepening cycle of deflation.

To Xi, however, all that may be tolerable side effects of the longer-term goal of tiring the US out.

“Xi’s goal is to achieve technological pre-eminence and play an even more influential role in this long-term competition,” said Robert Hormats, Kissinger’s senior economic adviser in the 1970s.