At the 2023 SIEPR Economic Summit, experts on U.S.-China relations discussed how the two countries got to this point and where they’re headed next.

It’s getting harder to see common ground in the increasingly rocky relationship between the United States and China. But according to Scott Kennedy, a longtime authority on China economic policy and senior adviser at the Center for Strategic and International Studies, the world’s two biggest economies share one important trait today: Both are stuck in their own echo chambers.

“People [in China] feel very estranged from the United States and the rest of the world,” said Kennedy, who spent six weeks last fall in China gathering the views of government officials, academics, business leaders, and journalists on the state of U.S.-China relations. “They have a very difficult time putting themselves in our shoes.”

The same goes in Washington, D.C. “There’s an inability to put [ourselves] in China’s shoes,” Kennedy said during the first panel session of the 2023 SIEPR Economic Summit. The all-day event at Stanford convened hundreds of policymakers, business leaders, and academics.

The result is a cold war — via trade sanctions, “decoupling” of U.S.-China technology ties and other economic weapons — that stands a good chance of spilling over into armed conflict, said Michael Pillsbury, a top national security advisor in presidential administrations from Richard Nixon to Barack Obama and now senior fellow for China strategy at the Heritage Foundation. “More and more indicators of a coming war are being checked off.”

Much of the session focused on how the two countries got so far off track and into thorny territory. While the reasons are complex, they boil down to a fundamental miscalculation by the West, said Chenggang Xu, senior research scholar at the Stanford Center on China’s Economy and Institutions (SCCEI). “Communist Party [leaders] actually care more about their power than the economy,” Chenggang said. And Xi Jinping, China’s leader, never intended to cede power to the country’s growing middle class of entrepreneurs and the democracy they feared would follow, he said.

Kennedy agreed. Instead of integrating China further into the international system, as some of his advisors suggested, Xi did the opposite: repressing civil society, restraining the private sector, moving to reduce the country’s reliance on the U.S. dollar, and increasing his own personal power.

“In Xi Jinping’s mind, the party is the only organization that can save China,” Kennedy said. “And this third, unprecedented term [in office] that he’s launching is really pushing China in a very different direction.”

When asked by moderator Jialu Streeter, a SIEPR research scholar and director of partnerships, about Taiwan’s role in rising tensions, Pillsbury and Kennedy said that the conflict over Taiwan has never been about its high-end semiconductor manufacturing capability and U.S fears that China would control the global supply of chips if it seized control of the island.

“The main issue about Taiwan that could cause a war, a really big war, is Taiwan’s political status and China’s view that the U.S. is moving more and more toward recognizing Taiwan as a country,” Pillsbury said. To China, “these are movements toward war.”

Watch the full discussion.