China’s rise has put it on a trajectory to overtake the international system’s dominant powers – the United States of America (US) and the European Union (EU) – at some point this century. Some observers conclude that the historical pattern of such transitions catalysing great power conflict is likely to continue with China’s ascendancy. Power-transition theory (PTT) anticipates that the established powers will strive to maintain the status quo by extending their relative power advantage over the rising challenger and curtailing its power where possible. Yet the actual responses of the US and the EU have not conformed to these expectations; instead, they have both largely welcomed China’s rise and sought to integrate it into the international system. We can see that policymakers continually express interpretations of China’s rise which we would not expect to find if the logic of PTT prevailed. This raises a question: How have different interpretations of the ‘rise of China’ influenced the foreign policies of the US and the EU towards China? I argue that varied perceptions of the implications of China’s rise have shaped policy preferences in ways that are inconsistent with concerns over the threat of an impending power-transition. Policy discourse at key junctures in bilateral relations revealed that ‘China’s rise’ is actually a contested notion and that the different interpretations in play at that point in time affect the policymaking process in ways that cannot be accounted for from state-centric perspectives. While China’s growing power and relations with these actors have been widely studied, little attention is paid to how competing interpretations of China’s rise impact upon policymakers’ preferences and the eventual responses. Despite the growing prevalence of threat rhetoric (at least in the US), China’s rise is often conceptualised by key policymakers as presenting considerable economic and political opportunities. In the EU, perceptions of economic and political opportunities have not been challenged by threat interpretations and thus its overall approach has been informed by the former with little substantive debate amongst key actors.

This thesis examines America's post-Cold War relations with China in the context of the neoliberal vs. neorealist debate. It concludes that neorealism - the dominant school of thought in the international relations literature - is incapable of explaining America's response to China's rise in the post-Cold War era. Because America was the leading global power and China was its most obvious potential rival, a neorealist theory that prioritized the distribution of relative power would anticipate this relationship to be a most-likely case for American policymakers to pursue containment and prioritize relative gains. However, I leverage insights from more than 100 personal interviews to demonstrate that in reality American leaders have overwhelmingly preferred a strategy of neoliberal engagement with China that has remained decidedly positive-sum in nature. My explanation for this consistent, bipartisan preference is that American policymakers have not adopted the neorealist assumption that conflict is inevitable between existing and rising great powers. As a result, policymakers have not focused exclusively on how to minimize the relative costs of a potential conflict with China by trying to contain China's relative power and limit America' exposure to China (as they did with the Soviet Union in the Cold War). Instead, policymakers have subscribed to the neoliberal belief that conflict can be avoided, and that increasing engagement and interdependence is the best strategy to maintain peace. They have pursued this strategy despite acknowledging that engagement and interdependence have increased the costs of a potential conflict by helping to facilitate China's rise in both an absolute and relative sense, and by increasing America's exposure to China. This thesis helps to define the differences between hedging and containing strategies. It argues that while relative material power is often important in deciding whether to hedge or not hedge, these purely material calculations play no role in decisions of whether to pursue containment or engagement. Instead, the decision to contain or not hinges on the target state's behavior and what that reveals about the regime's underlying intentions. Within this new framework, I argue that American policymakers' strategy has been to engage China economically while simultaneously hedging militarily. Furthermore, to the extent that American policymakers have expressed increased concerns about China in recent years, this has been primarily a consequence of China's increased assertiveness - not changes in its relative power.