What Useful Roles Can Middle Powers Play Amidst Intensification of US-China Conflict?

Online lecture by Wing Thye Woo, Distinguished Professor Emeritus at the University of California, Davis (UC Davis) and an expert on East Asian economies, particularly those of China, Indonesia and Malaysia, at the Paris IAS for a one-month writing residency in September 2026, as part of the ‘Paris IAS Ideas’ series.

The "Paris IAS Ideas" online talk series features short and stimulating presentations from fellows of the Paris Institute for Advanced Study, marking the beginning of 1-month writing residencies.

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Presentation

The growth of China into an equal economic power to the US has produced the bipolar disorder of paranoia about triggering the Thucydides Trap. As both superpowers envisaged co-existence in the nuclear age to take the form of a Yalta-type division of the world into spheres of influence, they are racing to expand their spheres of influence before the eventual negotiations to define the boundaries of these spheres and buffer zones. This rush to regional consolidation is dismantling the international architecture to manage multilateral trade, contain contagious diseases, undertake peacekeeping, and protect the natural environment.

US-China tension is spiraling upward because of the vicious cycle generated by the interaction of three kinds of US-China competition – geostrategic, technological, and trade. US and China could end this vicious cycle by decoupling geostrategic competition from the other two with an arms-control agreement and by decoupling technological and trade competition with a WTO agreement on unfair industrial policy practices. Unfortunately, the level of mutual trust is too low to enable successful negotiations on these two agreements.

The upward drift in US-China tension is increasing collateral damage on the rest of the world e.g. increased fragility in the supply chains and reduced benefits from the trade restrictions on goods from countries in other spheres of influence. Additionally, the sovereignty of these countries is diminished by the leaders of the spheres. The best outcome for a country is to be nonpartisan and trade with every sphere of influence. Neutrality, however, is not achieved through self-declaration but through recognition by the superpowers. A country is more likely to be accorded neutral status if it is a member of a neutrality coalition that can project collective force that matches those of the superpowers. As the superpowers would be vigilant in preventing the formation of this strong neutrality coalition in the first place, such a coalition must be formed relatively quickly, which means that the number of founding members must also be small. Furthermore, to soothe the discomfort of the superpowers, this coalition must have members which have close ties with the US, and some members with good relations with China.

The Rest of the West (consisting of the 27 members of the European Union, UK, Canada, Japan, South Korea, Australia and New Zealand) and ASEAN should form the Atlantic-Pacific Sustainability Partnership (APSP) to maintain multilateral free trade, uphold the United Nations principles of peace and human rights, and protect global ecosystems, with the rich APSP members assisting the development and green transformation of poor APSP members. As the collective GDP of APSP will be significantly larger than that of USA and China in a decade from now, both superpowers would have an increasing incentive to join APSP to seek alliance against the other. If one joins, the other would quickly follow to avoid inevitable defeat from self-isolation. When this happens, APSP would have crowded out the US-China Cold War.