Why Third Parties Matter in the U.S.-China Relationship

Over the past two years, I’ve joined several Track II dialogues between the United States and China. I’m a firm believer that person-to-person dialogue is an effective means to build a floor under the bilateral relationship, which often feels cavernous between each side’s interests. One of my major takeaways is that it’s easy to disagree when there are only two stakeholders in the room. There is a plethora of areas of competition between the United States and China, including semiconductors, advanced technology, the South China Sea, Taiwan. Realistically, these big issues will not be solved overnight.

Finding Diplomatic Middle Space

But failure to reach agreement on those core areas of competition should not preclude the possibility of progress elsewhere, particularly cooperation with third countries. It is easy for the bilateral dialogues to reach gridlock when its only two competitors sitting that the table. However, this dynamic dramatically changes when a third-party stakeholder is added to the mix. Enter third countries. For many countries caught between China and the United States, their futures are directly tied to the ability or inability of the United States and China to find common ground, or at a minimum, a mutual understanding of the importance of helping developing countries reach a baseline of development, prosperity, and growth.

For many countries in the Global South, their futures are constrained by great power gridlock. When the United States and China are unable—or unwilling—to cooperate, countries caught in conflict or stalled in development are left without viable options. This paralysis is especially damaging when either power pressures third countries to avoid cooperation with the other. Even the basic, local-level development initiatives that allow countries to build roads, power grids, and public services, can be caught in the crossfire. When everything is framed as strategic competition, there’s no room left for coordination. This starves out developing countries from achieving their development needs.

Bringing third countries into the conversation changes this dynamic. Their inclusion raises the stakes for both Washington and Beijing, making continued gridlock harder to justify. When the costs of inaction fall most heavily on third parties, their crises become a form of leverage—pressing the great powers to explore alternative paths. In doing so, seemingly local challenges become central, shared concerns. And those challenges, if reframed, can offer a platform for practical cooperation even amidst the broader U.S.-China rivalry.

There’s also space to acknowledge that not every issue requires a grand bargain. The recent Iran-Israel escalation, for example, could have offered a narrow but meaningful opportunity for U.S.-China-Gulf Cooperation Council (GCC) cooperation to de-escalate tensions in the Persian Gulf. While Washington and Beijing hold divergent strategic objectives in the region, they shared a core interest: preserving the free flow of energy through the Strait of Hormuz, preventing regional conflict from triggering a global economic shock, and safeguarding the security of GCC countries. China does not want to see Iran acquire a nuclear weapon, but it strongly opposes a U.S. or Israeli strike on Iranian nuclear sites. U.S. officials, for their part, sought to blunt Iran’s nuclear ambitions but did not engage China as a partner in that process.

Rather than responding in isolation, this moment could have served as the basis for limited, practical cooperation. A more deliberate channel—perhaps convened by Gulf states—might have enabled contingency planning, maritime deconfliction, or coordinated diplomatic messaging to Tehran and other regional actors. Even modest signaling—such as a trilateral statement underscoring the importance of maritime security and uninterrupted energy flows—could have demonstrated that strategic rivalry need not preclude cooperation when vital global interests are at stake. While Secretary Rubio publicly urged China to dissuade Iran from closing the Strait of Hormuz following a parliamentary vote on June 22, more intensive quiet diplomacy—particularly involving GCC partners—might have helped contain the crisis before it escalated further.

The Strait of Hormuz offers a compelling example of a diplomatic middle space—a pragmatic, non-zero-sum arena where third parties need support, and where the United States and China can show that their rivalry need not come at the expense of others’ security, development, or stability.

Finding the Will to Cooperate

Building these spaces often requires a will to cooperate and reject the notion of the inevitability of conflict. In one exchange with Chinese and American colleagues, I remember reflecting on the perceived intractability of legacy disagreements between the Washington and Beijing—especially the constant belief that both sides were just weeks or months away from war over Taiwan. While I understand and believe that scenario felt real to both sides, I had just returned from the Middle East, where an active war in Gaza was creating a life-or-death crisis for millions of Palestinians unable to access the food they needed to survive. The difference struck me deeply: in the case of the United States and China, war is still a choice—something both sides can work to avoid and walk away from. In the Middle East, war is often thrust upon civilian populations with little warning. Great powers like the United States and China, who could play key roles in de-escalating these conflicts, often fail to do so.

My takeaway from these engagements is that great powers are not destined to spiral toward war. Rather, they choose to. What is the most striking is how deeply many Chinese and American counterparts have internalized the belief that conflict is inevitable. We have seen this rhetoric play out of decades between Israel and Iran, and war is continuously the outcome. Meanwhile, we saw similar Iran and Saudi Arabia hold similar beliefs, but both sides ultimately chose the off-ramp to de-escalate the relationship. For the United States and China, the differences are real and complex, but the more troubling assumption that both sides cannot accept is that no meaningful offramps exist over the long term. Diplomacy is treated as a tool for managing tensions, but not resolving them. The idea that strategic trust is beyond repair, and that escalation is the natural trajectory of competition reflects clear failure of imagination on both sides.

This is where backchannel dialogue and trilateral engagement with third parties become essential. They may not resolve the core disputes between the United States and China, but they can establish a floor beneath the rivalry and create a baseline of cooperation that prevents freefall. These channels create space for strategic restraint, enable relational diplomacy, and gradually shift the tone of bilateral interaction. They also send a crucial signal to regional and global partners that even in an era of intense competition, great powers can act responsibly, insulate third-party interests from confrontation, and deliver tangible outcomes. Most importantly, they show that even limited cooperation still matters for those third-party countries who stand to lose the most from gridlock.

So, we need to do the hard work of continuing to advance dialogue between the United States and China and key third-party countries and regions, like the Middle East and Southeast Asia. We cannot walk away from engagement just because the political climate makes it inconvenient. Dialogue does not always have to be public or loud. Often, trust is built in small, closed-door settings where policymakers, academics, and stakeholders can work effectively to find solutions to narrow problems. And these efforts, however modest, can serve as building blocks. They help build sufficient trust and mutual understanding to eventually take on the larger, legacy problems. But we must start with finding the narrow avenues of cooperation, namely the challenges facing partners of both the United States and China.

Anything short of this is a retreat from diplomacy. It is a retreat from responsibility. And it leaves the future—not just of U.S.-China relations, but of many countries around the world, particularly in the Middle East—to their own devices, thrust into the turbulent waters of great power rivalry without even a dinghy of cooperation on which to cling.