James Laurenceson Debates “Great Power Competition”

Speaking at the recent China Business Summit in Auckland, Professor James Laurenceson argued that the standard media narrative - a transition from a US-led order to one defined by US-China rivalry -is “an overly simplistic, and  ultimately misleading version of what is unfolding.”

He doesn’t dispute the shift was real. “In 2014, the size of China’s economy reached parity with the US,” he said, and that prosperity bankrolled a military build-up that arguably saw the US lose military superiority in the Taiwan Strait as early as 2010. “Beijing assessed that it no longer needed to accept being subordinate in its own region to a country located nearly 10,000 km away,” Laurenceson said. “And so, it started behaving as great powers do: might makes right.”

Professor James Laurenceson in Wellington last week / Image AMC

The US response was somewhat predictable, and came down to AUKUS, and China-free critical minerals supply chains. But Laurenceson’s real argument is about where this all ends up. “Over a three- to five-year time horizon, there’s another strategic future that New Zealand businesses need to contemplate,” he told the summit audience.

“The transition in the regional order may be characterised by strategic competition, but where we end up may not be.” The coalition trying to constrain China could instead drift toward “strategic accommodation” .. an outcome he suggested “would require different instincts, different judgements, and different commercial strategies.”

Why containing China is harder than it looks

Any anti-China coalition runs into two problems, Laurenceson said: mass, and cohesion. “Today China’s economy is not on par with the US. It’s 37% larger. By 2031, the IMF expects it to be 50% larger,” with double America’s manufacturing capacity.

Citing John Culver, a former senior CIA China analyst, he noted it’s now “hard to point to an area, other than submarines and undersea warfare, and say the United States still has an advantage.”

“Even independent sources estimate that China is spending no more than 2% of GDP on defence” - far below what the Soviet Union needed to spend in the 1980's to approach parity with the US, and a financial burden that helped sink it.

On cohesion, Laurenceson suggest the evidence is thin. “India won’t sign up to a US-led strategy of strategic competition against China. It will contest Chinese power, but on its own terms,” he said.

Most of Southeast Asia has stayed out too. “Even Australia, that most faithful of US regional allies, is not fully on board, despite AUKUS and all the joint statements and MOUs, and Canberra’s own trade minister says Australia wants to trade more with China, not less.”

“It is impossible for New Zealand or Australia to go all-in on a US-led coalition when its democratic system has twice elected a President like Donald Trump, who often seems more interested in pressuring allies than confronting rivals,” Laurenceson said, pointing to a recent Asia New Zealand Foundation survey showing more New Zealanders now hold warm feelings toward China than toward the US. That result was mirrored in a very recent poll released by the Lowy Institute across the Tasman.

Washington may already be settling

Laurenceson sees signs Washington’s appetite for an open-ended contest with China is fading. “The US will need to bear most of the burden - and for what?” he asked, arguing Beijing’s real objection is to Washington dictating terms on core interests like Taiwan, not to trade itself: “It is quite happy to trade, to invest, and to be focused on Asia, while the US focuses on the Western Hemisphere.” When Washington escalated the trade war last year, Beijing matched it and Washington backed down; last month Xi told Trump their relationship should aim for “constructive strategic stability - and Trump agreed.” He said.

Coercion that didn’t work

Laurenceson’s scepticism is grounded partly in watching Beijing’s main coercive tool fail. Its 2020 pressure campaign against Australian wine, barley, coal, cotton, timber and beef - and the near-total loss of Australian rock lobster access to China, worth roughly a billion dollars and 90 percent of the industry’s sales overnight, was ultimately a failure as economic coercion.

He’s equally blunt about the reverse case. “If you ask me whether US export controls against China are a smart move in the long run, I would feel quite confident in telling you, no, I don’t think it is. I think it’s pretty dumb, actually,” he told the Pacific Polarity podcast. “There is some satisfaction in China that those export controls around rare earths caused Washington to blink, sure. But longer term, at least amongst the academic community, I think there is some scepticism about whether that’s actually a smart course of action.”

The deeper point is that interdependence cuts both ways, and it’s businesses and households that trade, not politicians and officials. New Zealand watched Australia’s experience closely and has, if anything, been more cautious about letting security concerns override commercial pragmatism, which was reflected in the 2008 China FTA, and maintained through periodic Five Eyes friction.

None of this is a case for complacency. China’s beef tariffs at the start of 2026 — 55 percent on Australian exports above quota - showed Beijing’s trade behaviour can still be abrupt, and New Zealand beef exporters watched closely given their own exposure, albeit from behind an FTA.

But Laurenceson argues the risks that should worry exporters most aren’t dramatic scenarios - a Taiwan crisis, a sudden embargo, a forced choice between Washington and Beijing — but quieter ones: softening Chinese demand as the economy rebalances, slow substitution of Chinese production into categories where New Zealand currently holds an edge, or erosion of WTO-based rules.

What this means for strategy

“In 2030, firms that spent the past decade diversifying away from China may find themselves structurally disadvantaged in the region’s most important market - while their competitors never left,” Laurenceson warned. “China capability that some NZ firms allowed to atrophy may become a decisive competitive advantage.”

He’s pointed but not deferential about government advice. “I’ve sometimes heard from Australian MPs and officials that businesses can be naïve about geopolitics,” he said. “Well yes, but generally speaking, that hasn’t been my experience… if businesses get geopolitical risk wrong, they pay the price , directly. In contrast, if Canberra gets the geopolitics wrong, the job security of an MP or official won’t be affected.”

His advice: “Listen carefully to what Wellington is saying. It has access to classified intelligence that you don’t”, but he also warns that officials in established elite circles “can be slow to recognise when the world is changing.”

He’s careful to note his own framing is a simplification too and sees a third possibility as the region getting “stuck for an extended period in ambiguity and disorder.”

His bottom line for New Zealand firms: build strategies “robust enough to survive ongoing great power competition - but flexible enough to thrive if it gives way to something else.”

As the Professor put it: “In geopolitics, as in markets, the biggest losses rarely come from the risks you hedge, but from the future you prepare for that never arrives.”

Professor James Laurenceson is Director of the Australia-China Relations Institute at the University of Technology Sydney.'

Asia Media Centre