The term ‘diplomacy’ originates from the ancient Greek word diplōma, meaning “an object folded in two,” referring to a document granting travel or special privileges to diplomats. Statecraft is defined as the art of governing state affairs, encompassing diplomacy, economic statecraft, military strategy, and intelligence. Economic statecraft is defined as “the use of economic means to pursue foreign policy goals,” including foreign aid, trade, sanctions, tariffs, and investment to achieve foreign policy goals. While diplomacy relies on negotiation and alliances to further foreign policy, economic statecraft, on the other hand, relies on economic power to achieve foreign policy objectives.

In early human history, relations between groups were often conflictual, with armed confrontation serving as the primary means for achieving strategic advantage. Yet, even in antiquity, diplomacy emerged as a vital tool for negotiation and conflict resolution. The rivalry between the United States and China, unlike ancient rivalries, did not evolve solely due to military power; rather, it is a hybrid of trade, investment, alliances, and military strength.

China has rooted its diplomacy in trade and economics, stretching its relationships from Asia to Africa and reviving the old Silk Road that was once a symbol of China’s economic dominance. By using economic diplomacy as its foreign policy tool, China can open new markets and build alliances. Elsewhere in the Western Hemisphere, China is becoming the most important trade partner, with the likes of Argentina, Brazil, and Colombia now shifting towards China despite being traditional allies of the United States.

The United States’ current diplomacy is evolving in the use of economic statecraft as well, through sanctions, tariffs, and foreign investment based on coercion and compliance. If that can be successful in achieving the U.S. foreign policy objective and the interest of the U.S. national security, it is apparent that the strategy is limited, as it does not have global reach. While states may comply with the U.S. policy based on fear of retaliation, success from this method can be limited; as in international relations, states can balance or bandwagon. By analyzing the global politics of small states in the south, the U.S. economic statecraft and boat diplomacy may push them towards balancing towards China.

Robert J. Art and Robert Jervis, in International Politics: Enduring Concepts and Contemporary Issues, argue that “force can be used to take or to bargain. If you can take what you want, you do not need your adversary’s cooperation and do not have to bargain with him. A country may use force to seize disputed territory just as a robber may kill you to get your wallet. Most of the things people and nations want, however, cannot be taken in this way. A nation may want others to stop menacing it; it may even want others to adopt its values. Brute force alone cannot achieve these goals.”

Coercion has been a tool of U.S. economic statecraft in foreign policy for a long time. However, history shows that it has clear limitations, especially in great power rivalry. In the U.S.-Japan rivalry leading to World War II, Japan achieved early military successes, but its overextension and limited industrial base prevented long-term strategic victory. Rather than deterring Japan, U.S. sanctions intensified its aggression, illustrating again that economic pressure can provoke escalation rather than prevent it. Coercive tools such as economic sanctions and tariffs, while a game-changer, cannot alone secure a strategic victory.

For deterrent purposes, economic sanctions historically have not prevented rogue states from changing their behavior. It did not prevent North Korea from developing long-range ballistic missiles, just as it was not successful in changing Iran’s human rights behavior and nuclear ambitions. Rather than punitive deterrence, what ultimately works in Iran is deterrence by denial, as initial punitive measures did not suffice highlighting the limitations of economic statecraft in power competition. Punitive deterrence will not prevent a new power from rising, as described by Alison in Thucydides’ Trap, nor will it prevent weaker states from balancing against strong ones. It did not prevent the rise of China, and it will not prevent the rise of other future powers. What has and will make deterrence effective is the innovation of the U.S. nuclear triad, extended deterrence, and international cooperation through diplomacy.

Contemporary politics reflects the same pattern. Russia’s military power has not secured a decisive victory in Ukraine, and economic sanctions, either targeted or sectoral, have not changed Russia’s posture. As noted by the Council on Foreign Relations, “The United States began its 2022 barrage of sanctions by freezing $5 billion of the Russian central bank’s U.S. assets, an unprecedented move to prevent Moscow from using its foreign reserves to prop up the Russian ruble.” While sanctions in other sectors, such defense and energy, have been seriously targeted, the war is still ongoing. In the same vein, the U.S.–China competition and tariffs imposed on Beijing have failed to change China’s behavior as described by Global Trade Magazine, “China’s annual trade surplus passed $1 trillion, a record high, with a GDP growth remained steady at around 5%.”

It is paramount that the United States develop a hybrid strategy, combining diplomacy and other tools of statecraft to keep its leadership on the global stage, as opposed to relying on power.

While coercion and deterrence are important in great power rivalries, the current global landscape does not favor such a posture. There is a need to consider economic diplomacy as the main tool of U.S. foreign policy and economic statecraft as a second, as a future war will not be determined by military strength but by the mixture of both economic and military might.

Hafiz Ibrahim is a Ph.D. student at Virginia Tech’s School of Public and International Affairs, specializing in political economy, global security, and African-U.S. affairs. His professional experience includes serving as a Defense Trade Analyst government contractor at the U.S. Department of State, as well as working previously at Deloitte Consulting as a Sanctions Analyst. Views expressed in this article are the author’s own. 

Diplomacy in Great Power Competition and the Limits of Economic Statecraft was originally published on Global Security Review.

In this complex environment, world leaders are facing sanctions, isolation, and strategic setbacks that send a clear message—the long peace may soon end. Whether China’s supreme leader, Xi Jinping, will play a positive or divisive role in the future is uncertain.

It is certain that China seeks to move from the role of “model student” to that of leader, all despite depending heavily on Western markets and technology. The United States and the European Union remain China’s largest trading partners and any disruption in these relationships could push its economy toward stagnation. How China’s ambitious transition addresses major paradoxes and limitations in three key areas deserves further discussion.

The Alliance Paradox 

At first glance, dissatisfied countries may appear a united front against the West, with China, Russia, North Korea, Iran, and, to some extent, India in alignment. A closer look shows deep-rooted tensions. Russia inherited the legacy of empire and finds it difficult to accept a subordinate role to China. While Moscow relies on Beijing’s support in Ukraine, China’s growing economic and security influence in Central Asia and the Caucasus is seen as a direct threat.

India, another key player, sits with China in forums like BRICS, but remains a strategic rival. Border disputes in the Himalayas, competition for influence in the Indian Ocean, and strong ties with the United States and the West prevent any real constructive partnership between the two Asian powers.

Iran and North Korea also face serious internal and international constraints. Iran struggles with deep domestic cleavages, while North Korea remains unpredictable, at times even complicating China’s strategic plans. On a broader level, there is no shared set of values among these countries; their primary connection is opposition to the West.

As Henry Kissinger noted, such alliances often reflect disorder rather than creating a new order. This coalition is more capable of disrupting the existing system than building a replacement. None of its members, individually or collectively, possesses the institutions or tools required to reshape global order.

Xi Jinping’s presence alongside this coalition primarily serves as a symbolic display, signaling dissatisfaction, demonstrating power, and marking the end of a unipolar world. But this performance does not equate to practical ability to establish a new order. While China wields significant economic power, it lacks the instruments to replace the West in security and international politics; it has no NATO-like network, no universally trusted currency, and no capacity to reshape international legal institutions to its advantage.

The Contradiction between Experience and Ambition 

One of China’s main challenges is its lack of practical experience in major global tests. Since World War I, China has not been involved in any large-scale wars and has not faced a real-world military crisis. This gap highlights China’s inexperience in handling major international conflicts. Even considering Russia, with its weakened military and struggling economy, and Iran, facing deep domestic and regional crises, the pillars of this alliance do not appear particularly strong.

Ambition without experience, combined with an alliance lacking shared values, risks creating instability rather than a new order. This coalition sends an important message to the West, especially the United States: global dissatisfaction with American hegemony is real and even temporary alliances can exert significant pressure on energy markets, financial systems, and peace negotiations. China and its partners, despite their fundamental weaknesses, can disrupt Western calculations across many regions—a capability that should not be underestimated.

At the same time, China’s lack of hands-on experience in managing major military and economic crises leaves its foreign policy vulnerable to miscalculation. Ambition without real-world testing can thus be both an opportunity and a threat to regional and global stability. Moreover, global leadership is not possible by economic or military power alone; it also requires a compelling culture and a large consumer base capable of attracting goods, technology, and lifestyles from other countries. The United States built its hegemony precisely on these foundations. China possesses none of these.

Message to the World and the West

Xi Jinping’s alignment with countries opposing the existing global order sends a dual message to the world. First, it signals widespread dissatisfaction with the current system. This shows the world, particularly the West, that the liberal international order is no longer uncontested and that the hegemony of the United States faces a challenge. Second, it exposes the weaknesses and contradictions within the anti-Western coalition. The alliance lacks the intellectual, institutional, and operational foundations needed to create a new order. Internal divisions and the absence of security and political tools indicate that China and its partners, at least in the short term, cannot replace the existing global order.

Nevertheless, China’s stance against the liberal international order marks a new phase in global politics—one that may not produce a new order but could intensify instability and geopolitical complexity. Henry Kissinger even considered such disorder a threat greater than war. This situation shows that China is simultaneously trying to display power, secure advantages, and strengthen its global position, yet it still faces significant constraints and challenges on the path to genuine global leadership.

Conclusion

China’s transition from the “model student” to “global leader” faces three key obstacles. First is the alliance paradox in which coalitions of dissatisfied countries reflect disorder more than they create new order. Second is the gap between experience and ambition in which ambition without major practical tests leaves China vulnerable and its foreign policy prone to miscalculations. Third is the alliance/coalition’s message to the world, where China loudly signals its dissatisfaction with the current order but has no attractive alternative to offer. In other words, China seeks a larger share of the global order, yet it lacks the capacity to host it.

Today, the world is entering a new phase—one that may not produce a new order but will likely heighten instability and geopolitical complexity. In this environment, conflict remains the most probable scenario.

 Dawood Tanin is a researcher, freelance writer, and professor of political science at a private university in Afghanistan. Views expressed in this article are the author’s own. 

What Does Xi Jinping’s Engagement in Conflicts Reveal to the World? was originally published on Global Security Review.