Balancing Acts: Deterrence and Reassurance in U.S.-China Strategy

This month, we’re zeroing in on a core tension in U.S. strategy toward China: how to strike the right balance between deterrence and reassurance. As Washington strengthens military postures, deepens coalitions, and hardens supply chains, it also faces the challenge of managing escalation risks and preventing unintended conflict. The dual imperatives of signaling resolve while maintaining bilateral stability have become central to U.S. strategy in the Indo-Pacific.

Does U.S. resolve to confront other competitors in other regions of the world impact Beijing’s deterrence calculus? Proponents of robust action to defend Ukraine or remain engaged in the Middle East argue against the “Asia Firsters” in the administration that upholding U.S. credibility elsewhere is necessary for deterring China and reassuring U.S. partners in the Pacific.

I believe that China—as well as other states in the region—use a more nuanced metric. The first is to assess how quickly and with what level of force the United States could pivot to a major crisis in the region. The expenditure of resources and munitions has raised doubts as to what the United States could assemble in the short run and has incentivized Beijing to send components (just below the level of assembled weaponry) and extend economic lifelines to both Russia and Iran to keep them able to remain active.

The second is to determine the strategic calculus by which Washington determines its priorities. Since the “rebalance” to Asia was announced sixteen years ago, the United States has been pulled back to deal with fires in the Middle East and Europe—and it is not clear at what point Asian developments would get first billing.

In spring 2022, the U.S. hope was that a decisive defeat handed to Russia on the Ukrainian steppes would show U.S. resolve, bring Russia to the table, and permit the United States to then hand off primary responsibility to European partners to allow for a return to a focus on Asia. In 2025, both Beijing and U.S. partners in East and Southeast Asia have seen that Washington still does not have a clear response to the “simultaneity” challenge (as laid out by Dov Zakheim in the pages of Orbis in 2022)—and that, in the event of a crisis in Asia, with ongoing commitments in Europe and the Middle East, the United States may not be willing or able to shift its attention. It is that ambiguity that introduces doubt about U.S. deterrence against China and reassurance for its regional partners.

U.S. Secretary of Defense Pete Hegseth articulated Washington’s intent to “reestablish deterrence” at the 2025 Shangri-La Dialogue. As I previously suggested on these pages, it takes two to tango to make deterrence work. Different states have fundamentally distinct conceptions of deterrence, and hence, missteps could lead to a classic security dilemma that further fuels tensions, resulting in unintended confrontations through miscalculations. What areas deserve attention to effectively maintain stability in the western Pacific through deterrence?  

First and foremost, deterrence concurrently requires assurance through active diplomacy to facilitate communication to avoid misunderstandings. While backchannel talks between Washington and Beijing are crucial for this endeavor, it would also be productive if the United States could encourage diplomatic contacts between Beijing and Taipei. Cross-strait relations are essentially a political question stemming from the Chinese civil war. Any rhetorical deviation from the status quo could inadvertently undermine Taiwan’s security and political autonomy despite deterrence success. While denying Beijing a quick and decisive victory in a potential war, policymakers in Washington also need to tread carefully in stating and defining their political objectives across the Taiwan Strait to consistently clarify U.S. intentions. 

On the other hand, there are cases where reassurance could potentially be counterproductive. Gray zone operations, in parallel with covert wars, are means for escalation control to avoid catastrophic and protracted wars. In fact, Chinese military writing has a heavy emphasis on controlling escalation in a conventional war. In other words, gray zone operations could be seen as Beijing’s way of deterrence that also assists them in achieving their political goals with minimal cost through non-kinetic means, especially by preventing U.S. intervention. The main dilemma is that gray zone operations thrive when a state is explicitly hesitant to take escalation risks, which complicates the task of balancing the show of strength with reassurance. To further complicate matters, gray zone operations are often a result of deterrence success. Therefore, there is a need to develop a comprehensive strategy that treats gray zone operations as part of the overall escalation dynamic when considering effective deterrence measures. 

China’s expanding reach around the world is often invoked as evidence of revisionist ambitions that must be deterred. However, the global dimension of competition between the United States and China also provides an opportunity for balancing deterrence and reassurance to help avoid unnecessary conflict. The United States should look for regions where it can reassure China that it does not seek conflict to offset the risk arising from tenser regions where greater deterrence may be necessary and the two countries’ interests are not necessarily reconcilable. 

The Middle East is a good candidate for a region of reassurance. China has significant and growing interests there, including energy, export markets, and supply chains. These do not directly conflict with vital American interests or the vital interests of American allies and partners. Existing tensions have proven manageable. For example, China has long imported Iranian oil in violation of American sanctions and traded with and invested in American security partners including Saudi Arabia and Egypt. Some in Washington insist that China is part of an anti-American “axis of upheaval” together with Iran and other countries, but Beijing’s limited support for Tehran during and after the recent Israeli and American strikes reveals the limits of Sino-Iranian cooperation. It also speaks to Beijing’s pragmatic aversion to joining what might be the losing side of a conflict.

The configuration of power in the Middle East is rapidly shifting, from the debilitation of Iran and its allies to the emboldening of Israel and Turkey. This is an opportunity for the United States to signal that it does not seek to harm China’s regional interests and would welcome Chinese contributions to the region’s stability and prosperity. President Trump’s recent declaration on social media that he will allow China to continue to import oil from Iran has led to unhelpful confusion about sanctions enforcement, but it also suggests a potentially constructive impulse to avoid multiplying fronts of conflict.

Reassurance and openness to cooperation in regions where great power competition is less conflictual could help stabilize relations in regions where they are more prone to conflict.

The Taiwan Strait is the most dangerous flashpoint in U.S.–China relations. Both sides claim to seek stability, yet their actions are increasingly shaped by worst-case assumptions. The dynamic resembles a classic Prisoner’s Dilemma: each fears the other will act first—so they choose preemption over patience, escalation over engagement.

In this uneasy environment, deterrence without reassurance risks reinforcing mistrust. The United States rightly seeks to prevent aggression through stronger military postures, freedom of navigation operations, arms sales to Taiwan, and deeper regional partnerships. But when deterrence signals are overtly aggressive, they risk appearing provocative rather than stabilizing. This is the essence of the security dilemma.

Avoiding this trap requires clarity of intentions and the restoration of reliable communication channels. In moments of crisis, ambiguity invites escalation. The current breakdown in military-to-military dialogue between the United States and China is dangerously short-sighted. Without hotlines, shared protocols, or real-time deconfliction mechanisms, routine maneuvers can spiral into crises neither side intended.

At the same time, reassurance is not acquiescence. It is a way to communicate norms, signal stability, and create opportunities for diplomacy. These are not just abstract talking points; they are functional platforms for engagement that demonstrate cooperation is still possible—and preferable.

Opportunities:

In game theory, the Prisoner’s Dilemma only leads to mutual defection when players cannot communicate or trust the rules. But with transparency, coordination, and repeated interaction, cooperative outcomes emerge. U.S. policy must be calibrated to reduce fear, not just project strength. Deterrence will always be part of the equation. But unless paired with meaningful reassurance and efforts to expand common ground, the United States risks hardening the very conflict it seeks to prevent.

Semiconductors are colloquially referred to in China as “the rice of the 21^st century.” This metaphor reflects both the sense of geoeconomic indispensability with which the PRC government views the rapidly developing technology as well as its civilizational importance for the Chinese people. As the world’s inventor of the transistor in 1947 and as the leader subsequently in the global development of the computer revolution (and its new front in artificial intelligence build-out), the United States has tried to strike a balance between keeping the most powerful chips and semiconductor applications out of the reach of the People’s Liberation Army while also maintaining access for U.S. companies to sell their products in the world’s second-largest and still robustly growing market.

These U.S. government–led efforts to deter Chinese indigenous development of advanced semiconductor capabilities while simultaneously offering reassurance so that the advanced technology markets in the United States and China do not become entirely de-coupled has been episodic in practice and inconsistent as policy. The first Trump administration singled out individual Chinese companies—ZTE, Huawei and others—for targeted action but failed to align its approach with the legal foundation for export restriction actions developed during the Cold War, which involve categories of companies developing a specific technology and groups of countries posing a threat to U.S. national security. The Biden administration took on the task of articulating and systematizing a broad-based program of export restrictions to hobble Chinese advanced chip production often referred to by its “Small Yard, High Fence” moniker. The current Trump administration has pointedly refused to endorse this Biden program and initially attempted to use a tariff cudgel to put its own stamp on semiconductor-related trade involving China, both direct and indirect. PRC advance planning for this contingency, Xi Jinping’s refusal to cede ground, and the unsheathing of a strengthened rare-earths weapon have now all forced the Trump administration to recalibrate its approach.

This fitful and inconsistent U.S. government approach has created uncertainty and market risk for U.S. companies. It has also hardened PRC resolve and accelerated PRC efforts to develop indigenous capabilities to exclude U.S. companies from the China market and to better compete with U.S. companies in global markets.

China’s economic challenges create a strategic opportunity for the United States to shift from a reliance on military deterrence toward reassurance and economic statecraft. With Chinese leaders fixated on finding ways to boost the domestic economy, the United States can reduce the possibility of unnecessary conflict in the region by emphasizing the shared goal of stability and using its economic leverage to influence Beijing.

Chinese leaders’ number-one priority is how to drive new economic growth. Incomes are declining, college graduates are struggling to find jobs, and businesses are hesitant to invest. During my most recent month-long trip to the region, which included visits to six cities across China, people across industries agreed that the economy this year was among the worst in recent memory. The government has implemented a wide array of measures to boost consumption and investment, ranging from subsidies for household appliances to public announcements of support for the private sector. (Whether these are effective is a separate question.) Discussion of redistribution—which dominated headlines a few years ago—has been sidelined in favor of an all-hands-on-deck effort to find sources of economic growth.

Chinese leaders are unlikely to change the status quo with Taiwan or initiate new trade frictions with the United States because doing so would put already fragile economic construction efforts at risk. The United States should thus focus on reassuring Beijing that it seeks stability—which provides a basis for Chinese leaders to engage with U.S. demands—combined with the strategic deployment of economic tools to prevent further regional conflict. China still relies heavily on exports, which means the prospect of sanctions or further trade escalation can deter Chinese policymakers whose primary concern is generating economic growth. The power of military deterrence, meanwhile, is declining: Pakistan’s successful deployment of Chinese weapons in its recent conflict with India has boosted domestic confidence in China’s military capacity, raising the specter that U.S. military pressure could stoke tensions rather than act as a deterrent.

De-escalating regional tensions and preventing conflict require responding to China’s domestic political imperatives. Reassurance and economic carrots and sticks are better suited to meet the current moment.

U.S. strategy toward China should combine increasing diplomatic restraint with growing hard power. Such a strategy may offer the best opportunity to avoid conflict while the two superpowers adjust to a changing international system.

The United States cannot benefit in the short or long term from increasing tensions with China. 

In the short term, the United States faces a complex international situation: while it recognizes China as its most important strategic competitor, it cannot easily disengage from the rest of the world. The United States is currently overstretched, variously engaged in conflicts in Eastern Europe and the Middle East. Attempts to focus instead on the Pacific can be disrupted by factors outside its control: regional powers can increase pressure on allies or declared U.S. interests and draw American attention, and valuable military assets, from the Pacific. The United States needs time to adjust its posture worldwide while avoiding a conflict with China that could be disastrous.

In the long term, the United States faces challenges regarding relative rates of technological development, with Chinese advances in important fields potentially giving that country advantages on the battlefield. America needs time to invest in cutting-edge technologies, strengthen its domestic civilian and military industrial base, and build hard power capabilities that will enhance security and deterrence whatever the challenge Chinese technologies may eventually pose.

As a result, it is in the United States’ best interest to actively reduce tensions with China. In the short term, emphasizing dialogue, showing flexibility, and publicly recognizing China’s legitimate interests as a great power could help reduce the probability of inopportune conflict. American concessions in certain areas may gain it concessions in others and enable the two countries to define lines that are defensible in the long term. Meanwhile, the United States should heavily invest in technology and enhance its hard power capabilities into the future.

Such a strategy would align with President Trump’s existing “peace through strength” direction and support his public image as a dealmaker. Most importantly, it would provide breathing room for the United States, and China, to better adapt to a shifting international system.

The second Trump administration inherited a strong hand when it comes to deterring major aggression by the People’s Republic of China (PRC) in the Indo-Pacific. Despite some suggestions to the contrary—that Washington needs to “reestablish deterrence” vis-à-vis Beijing—the reality is that the Biden administration bolstered deterrence, strengthened regional alliances and partnerships, and won bipartisan backing for these efforts.

To ensure that deterrence in Asia remains strong, the new administration—particularly the Department of Defense—can take several early steps. First, the next National Defense Strategy (NDS) should meet Secretary of Defense Pete Hegseth’s demand that deterring PRC aggression in the Indo-Pacific remains the Pentagon’s top priority, as first established by the Biden-era NDS. This would send an important signal, including to Beijing. Second, in addition to other investments, the new administration’s first defense budget should accelerate upgrades to U.S. force posture across the Indo-Pacific as part of several agreements with allies and partners during the last administration.

To convey to Beijing that these actions seek to prevent conflict, the Pentagon should remain committed to open lines of military-to-military communication with the People’s Liberation Army (PLA). It is important that working-level military representatives held Military Maritime Consultative Agreement (MMCA) talks in April—but the recent failure of the PRC Minister of National Defense to attend the Shangri-La Dialogue also marked a missed opportunity to meet with Hegseth. In his next engagement with PRC President Xi Jinping, President Trump can underscore the importance of exchanges at multiple levels between both countries’ defense establishments.

The PRC has maintained its objectives and invested heavily in its abilities to potentially absorb Taiwan, subjugate the South China Sea region, and dominate the wider Indo-Pacific. As long as these ambitions and activities persist, U.S. policymakers and most Americans will prioritize deterring conflict with Beijing. Senior defense officials from both the Biden and Trump administrations have stated publicly that this requires Xi to conclude—daily—that conflict is never worth the cost. By both strengthening deterrence and maintaining open lines of communication with the PLA, the Pentagon can help prevent unintended escalation between Washington and Beijing.