The US prevailed in the first Cold War not just because its economy was strong but also because its adversary’s was hollow. Starting in 1977, per capita output growth in the Soviet Union slowed dramatically, before plunging at a 4.3% average annual rate in the final two years of the Cold War. That presaged a subsequent economic collapse in the Soviet Union’s successor. From 1991 to 1999, the Russian Federation’s economy shrank by 36%.
Today, a weaker US economy is facing a rising China, in contrast to the earlier clash between a strong America and a faltering Soviet Union. Nor is China’s clout likely to be diminished by Russia, a bit player in the global economy. In 2021, Chinese GDP was six times that of Russia, and the gap is expected to widen further in the coming years.
Yet Putin gives Xi precisely what he wants: a partner who can destabilize the Western alliance and deflect America’s strategic focus away from its China containment strategy. From Xi’s perspective, that leaves the door wide open for China’s ascendancy to great-power status, realizing the promise of national rejuvenation set forth in Xi’s cherished “China Dream.”
In late 2019, Kissinger warned that the US and China were already in the “foothills of a new cold war.” The plot has since thickened with the emergence of a new triangulation strategy. The Xi-Putin gambit reinforces the conclusion that this cold war will be very different from the last one. Sadly, America appears to be asleep at the switch.
Stephen S. Roach, former chairman of Morgan Stanley Asia and the firm's chief economist, is a senior fellow at Yale University's Jackson Institute of Global Affairs and a senior lecturer at Yale's School of Management. He is the author of "Unbalanced: The Codependency of America and China."