The COVID-19 pandemic accelerated the international order transition, featuring intensified strategic competition between the United States and China, especially in the Indo-Pacific region.1 A prevailing view of US–China competition is the ‘Thucydides trap’—rooted in power transition theory and suggesting that strategic competition between a rising power and the hegemon will inevitably lead to conflict in the international system.2 Challenging this pessimistic and alarmist view, we propose a soft balancing argument—institutional balancing for peace—to emphasize the positive outcomes of the strategic competition between the US and China.3 We argue that hard balancing—military-orientated alliance-building and arms races—is just one side of the story of the strategic competition between the two nations.