The U.S. relationship with China will be one of this generation’s defining foreign policy challenges. A key part of the challenge will be discussing the issues without falling back on simplistic, outdated, or inaccurate generalizations.

There are few historical parallels of great power rivals as deeply integrated as the United States and China. They have the world’s two largest economies; they are the world’s largest military spenders; and they both are increasingly in competition with each other. As the world’s two largest exporters, their two-way trade exceeded $750 billion in 2022, even as commercial ties frayed and (not coincidentally) the multilateral trading system came under deep stress.

Indeed, on issue after issue—from AI to social media and from Taiwan to Ukraine—sharp differences in values and interests create friction between Washington and Beijing. These frictions will play out in how we trade; how our technological ecosystems interact; and how we manage military competition. At the same time, U.S.-China relations cannot and should not be based solely on competition. On a range of critical issues—from climate change to illegal narcotics—cooperation will have tangible benefits for Americans and, often, for people in China and the rest of the world.

Smart U.S. policy toward China needs to be based on principles that align with the interests of people and the values of our system. As Washington formulates our approach to competition with the People’s Republic of China (PRC), we should look to policies that are:

• Progressive: Our policy should advance the interests of ordinary Americans by improving their opportunities, wages and working conditions and reducing the risk of conflict and military involvement abroad—burdens of which they would disproportionately bear.
• Principled: We should have confidence in our values and be forthright in speaking when China violates basic human rights. We should not try—and would fail if we did—to emulate the fear and coercion that are the hallmarks of autocrats. We will succeed by being better Americans, at home and abroad.
• Pragmatic: China does many things at home; around the world; and in its relations with the United States that don’t align with our values or are contrary to our interests. But the United States has limited time, attention, and money, so we have to focus on the truly vital. No matter its provenance or pedigree, if a policy has not worked, we should do something else.
• Farsighted: Our children would not forgive us if our approach to China results in a world devastated by climate change or war; U.S. workers immiserated by a race-to-bottom economics; or American values eroded by racism or undemocratic actions.
• Collaborative: Our partners around the world are a major source of American strength. Sustaining that influence requires that we listen to their views, understand their needs, and take into account their concerns.
• Evidence-based: The United States should base our policies on facts rather than fear, hope, or ideological assumptions.
• Humble: Humility about the limits of American power is a hedge against unsustainable commitments abroad. The United States spent 20 years, a trillion dollars, and more than 2,000 American lives in Afghanistan and had little impact on its direction. We have far less influence on China. The United States brings its strongest influence to itself, so that is where we should focus our energies and our resources.

The extraordinary breadth of the U.S.-China agenda means policymakers need a wide range of tools to respond. But certain themes run through each of the eight baskets:

• U.S. work starts at home. If we are serious about competing with China, we need to get serious about making the investments that will allow us to do so.
• There is no conflict between strong and smart. Even as we compete vigorously, we should not seek confrontation. Indeed, preventing conflict should be a major focus of U.S. diplomacy with Beijing.
• We should be confident in our system. Our democratic values set us apart from China; make us stronger at home; and more attractive as an ally and partner abroad.
• Our concern is the behavior of the Chinese government and Communist Party. As we pursue policies to address Beijing’s actions, we must make clear—in word and deed—that our focus is not ordinary Chinese or people of Chinese heritage.
• We need to talk. Our preeminent positions in the global economy; the complexity of the issues before us; and the consequential risks of misunderstanding require direct, regular U.S.-China senior-level exchanges by the administration and Congress.

What follows is not an effort to assess every aspect of the U.S.-China relationship; map out every connection between every issue; or respond to every headline. Instead, it is an attempt to define the overarching challenges we face in eight broad areas: trade, technology, climate change, military competition, Taiwan, human rights, China’s role in the world, and a cooperation agenda.

Trade: Decades of U.S. trade diplomacy aimed to right the impacts of China’s unfair trade practices have done little to correct the commercial imbalances, which contributed to deindustrialization in the United States and a hollowing of the American middle class

• China has a long legacy of conducting unfair trade practices such as massive export subsidies and state-sponsored intellectual property theft, as well as illegal activities like its use of forced labor. And we must take those on. But just blaming China obscures the impact of bad U.S. trade and economic policy decisions over the last several decades.
• We must make transformational investments in the U.S. industrial base and workers, focusing on sectors where we want to establish or maintain global leadership.
• Experience shows that China will not “play fair” or change its ways, so modernized enforcement tools will play a key role in a long-term, strategic competition.

Technology: Technology will be at the heart of U.S.-China competition, as semiconductors, AI, and other technologies reshape our economies and our militaries.

• The U.S. government needs to make transformational domestic investments in key technologies and our tech workforce. In addition, the United States needs tools and other resources to protect our existing advantages in critical technologies.
• The United States needs new general technology regulations and must work with foreign partners to set rules for the digital economy in line with democratic values.

Taiwan: Washington can manage Taiwan Strait tensions, even as China’s actions raise risks and concern—through military deterrence; direct engagement with Beijing; and continued diplomatic efforts to pull third countries into the conversation.

• We have an interest in Taiwan’s success given its status as a fellow democracy. Its dominance in advanced semiconductors also means we have a significant economic stake in Taiwan’s security.
• We should reinforce an equilibrium in which Taiwan improves its resiliency even as Beijing continues to believe there is a long-term path to “reunification.” This may leave all sides somewhat dissatisfied, but it is far preferable to the alternative.
• In concrete terms, that means the U.S. government—both the executive branch and Congress—should prioritize effectiveness and impact over symbolism and stunts.

Military competition: China is the only competitor to the United States with the intent and—increasingly—the capacity to reshape the global order. The United States faces the challenge of a rising China from a position of strength, even as China’s military grows.

• We can meet the military challenge without increasing the defense budget by capitalizing on existing strengths, spending smarter, and rethinking procurement.
• We must reinforce our alliances—a key security and geopolitical advantage.
• The United States needs to manage risks by maintaining dialogue with China’s military, including on emerging issues such as cyber and AI.

Human rights: China’s human rights situation has deteriorated markedly under Xi Jinping, even as China touts its “model” of autocratic governance abroad.

• We should shine light on China’s human rights abuses—as our values require us to do—while recognizing our influence on how Beijing treats its citizens may be limited.
• We need to push back firmly against the increasing incidence of transnational repression by Chinese officials, particularly when it happens in the United States.
• If the United States does not lead on human rights internationally, we cede the field to Beijing’s profoundly different—and illiberal—vision.

China’s role in the world: As China’s economic power has grown, so has its ambition to shape the global order to its liking. The United States needs to provide (and invest in) an alternative vision and help our allies and partners resist Chinese bad behavior.

• The United States is right to be concerned about China’s vision for the world and should push back against a Chinese model that makes people less free; drives up debt in the developing world; and undermines American interests.
• Our alliances multiply our influence and reduce the risk of conflict. We should help our partners resist coercion and strengthen their democratic institutions.
• The United States cannot just warn countries not to borrow from China; we need to offer real alternatives. It is impossible to beat something with nothing.

Climate change: The world will not avoid catastrophic climate change if China and the United States—the world’s largest greenhouse gas emitters and technology leaders—do not lead by accelerating climate action. This requires cooperation, even as we compete.

• The United States, with its international political heft, technical expertise, and climate history with China needs to employ all levers to press China for stronger action.
• Policymakers will need to weigh climate, economic, and security benefits and risks of allowing Chinese products in the U.S. clean-energy transition. We need to prioritize the interests of American workers but full decoupling is not an option given China’s dominance over key technologies and supply chains.
• U.S.-China competition can be a positive force if we “race to the top” to meet our domestic—as well as the rest of the world’s—clean energy needs.

Cooperation: As the two most consequential countries in the world—and with certain shared interests—the United States should be confident in cooperating with China, especially when it advances U.S. interests, even as we compete in many areas.

• We cannot allow U.S.-China relations to be defined solely by competition. On issues such as stopping the flow of fentanyl and other illegal drugs, we need to cooperate when we can to advance U.S. national interests and the interests of ordinary Americans.
• Cooperating is a way to advance mutual interests—not to do favors for the other. It is against our interests to refuse to cooperate because we disagree with China about many things.

Meeting the central foreign policy challenge of the 21st century will require the United States to be smart and strong, to invest in itself, and to be ready to talk as well as to compete with China. CAP lays out a framework for policymakers and the public to rally around.

The authors would like to thank Joanna Lewis, Neysun Mahboubi, Ryan Mulholland, D.L. McNeal, Anna Ashton, Leo Banks, Will Beaudouin, Emily Benson, Robert Benson, Scott Busby, Jessica Chen Weiss, Vivek Chilukuri, Adam Conner, Courtney Federico, Laura Kilbury, Leland Lazarus, Maggie Lewis, James Millward, Samm Sacks, Megan Shahi, Cecilia Han Springer, Yun Sun, Erica Thomas, Mike Williams, and others for their contributions to this report.