For the past decade, reaping the benefits of the dynamic Chineseeconomy has dominated Asia's China strategies. This is hardlysurprising. While China's real GDP in 2004 was well below the GDPsof the United States and Japan, if one uses purchasing power parityfigures, China became the world's second-largest economy with a$6.4 trillion GDP in 2003, according to recent data published bythe World Bank. Of course, China still confronts a litany ofeconomic problems such as endemic corruption, mismanagement ofstate-run firms and banks, widening underemployment and theprospect of colossal environmental disasters. But this has notprevented Japan and South Korea from becoming China's first- andfourth-largest export markets and its first- and fourth-largestimporting partners. Meanwhile, since 1999, trade with thePhilippines has grown by 565 percent, with Malaysia by 258 percentand with Vietnam by 281 percent.

Yet the more ominous face of China cannot be ignored. Beijingcontinues to downplay its increasingly sophisticated forcestructure and insists that its defense budget of $30 billion palesin comparison to the Pentagon's $420 billion budget. But externalestimates, including U.S. intelligence assessments, place China'sactual defense budget in the range of $50 billion to $80 billion.Over the past decade, China's official defense budget has increasedat an average of around 11 percent per year. The People'sLiberation Army's (PLA) emphasis on key force modernizations,including more robust submarine forces, a new generation of fighteraircraft and an array of asymmetrical capabilities, means that overthe next two to three decades it will come close to becoming aso-called "theater peer" of the United States.

In turn, for the past decade, the United States has attempted tore-engineer its key alliances in the Pacific. While the revampingof "America's Asian Alliances" began in the mid-1990s, an importantshift is now occurring: Washington is trying to push Japan,Australia, South Korea and various ASEAN states to consider"unnamed over-the-horizon" threats, clearly implying China.

Given the dramatic growth of the Chinese economy since the late1980s and the continuing surge in northeast Asian and SoutheastAsian trade with China, it is not surprising that most of China'sneighbors have concentrated their attention on managing theircommercial ties with China. How a rising China might affect theirgeopolitical and strategic position has received much lessattention, however. Crafting policies that are essentially devoidof effective responses to China's geopolitical ambitions or arevariations of "pre-emptive accommodation" will have serious andpotentially negative consequences for Asian security and stability.The full spectrum of China's strategic capabilities and intentionsmust be taken into account to ensure more realistic and effectivepolicies toward China.

The leading Asian states find themselves in three strategicquandaries produced by the rise of China. First, Asia's relativestrategic weight in the global balance of power is once againbecoming equated with that of China's own strategic disposition.While China's longer-term ascendance as the next superpower isreplete with significant hurdles, so long as Asia's future pathsdepend increasingly on China's own trajectory, the blurring of"Asia" and China will accelerate, which in turn is going to poseprogressively higher-threshold dilemmas for Asia and theinternational system.

Second, rarely (if ever) has the rise of a great power posedsuch promises and hazards at the same time. The continuing rush tojoin the Chinese economic bandwagon means that most of China'smajor trading partners have tended to downplay sensitive politicaland military issues. While understandable in the context ofsubstantial economic incentives, it vitiates efforts tocounter-balance China's strategic ambitions.

Finally, the forging of viable coalitions to deny, delimit oreven contain China's power projection capabilities and potentiallyirredentist strategies has so far proven illusory. While pressurescan be mounted on China from various corners, no Asian countrytoday or in the foreseeable future is likely to contest Chinadirectly at the cost of trade ties. As China moves in earnest tobuild a blue-water navy, only two other regional navies--India'sand Japan's--would have the wherewithal to constrain China'smaritime forays. None of the Asian powers, with the notableexception of India, has indigenous nuclear forces to matchChina's--and whatever nuclear capacity India bears will beconstrained by its primary emphasis on deterring Pakistan.

Proponents of active engagement often point out the absence ofviable alternatives when dealing with China. Moreover, theymaintain that once the People's Republic becomes "a large Taiwan"(that is, when China becomes a full-fledged market economy andpolitical democracy), Beijing will be highly unlikely to contestthe status quo. But it is not clear whether a fully democratizedChina will necessarily become less nationalistic and shedpotentially aggressive geopolitical aspirations. To the extent thatChinese elites feel that the weakened China of the past 300 yearsis an aberration when seen from the perspective of the past 3,000years, China's Asian neighbors can ill afford to ignore China's21st-century strategic ambitions. Much depends on whether Chinapursues less threatening and more pragmatic policies. For instance,in Southeast Asia even long-time adversaries such as Vietnam andIndonesia have shifted their policies to accentuate economiclinkages--but patently aggressive Chinese moves in the South ChinaSea could shift Hanoi's and Jakarta's strategies. Nevertheless, itis clear that China is set to expand its influence in and aroundits own near abroad.

The major Asian states, therefore, have seemingly contradictorygoals in their policies toward China. They want to exploit thebenefits flowing from China's rapid economic expansion whileensuring that China's increasingly robust diplomatic and militaryforays are kept in check or even denied on a case-by-case basis.This dilemma is perhaps most evident in the context of U.S.strategy toward China. Some of America's allies seem to have chosenaccommodation, while Japan and India appear to be pursuing a policythat might be labeled "stealth constrainment", rather than overtlyattempting to contain China's enlarged strategic footprints.

But as China becomes more powerful with matching influence overevery major sector--from energy excavation to selective seacontrol--the U.S.-led security template, in addition to the Chinastrategies of key actors in the region, cannot but change. Seenfrom this perspective, four key actors bear closer observation:Japan, South Korea, India and Indonesia.

The View from Tokyo

For Japan, the primacy of its alliance with America continues todefine its overall foreign and national security postures,including Tokyo's broader ties with China. Specifically, Japaneseelites believe that, notwithstanding the growing importance ofChina as a key trading partner and Japan's single-most importantmarket in Asia, other core security interests necessitate a robustalliance with the United States.

In virtually all major security issues after 9/11, Tokyo hassided decisively with the United States. While this particularfacet of Japanese foreign policy is downplayed for obvious reasons,there is little doubt that the Japanese security community sees noviable alternative to the U.S.-Japanese alliance. So far, Japan haschosen not to overemphasize the China threat, although those whostress this factor have increased steadily. At any rate, an overttilt toward China is unthinkable.

The overwhelming importance that is attached to theU.S.-Japanese alliance has resulted in growing criticism in Japan,particularly in the aftermath of the significant erosion inSino-Japanese and Korean-Japanese relations. Key commentators andforeign policy experts continue to question the viability of PrimeMinister Junichiro Koizumi's seeming emulation of Tony Blair asWashington's "indispensable ally" in East Asia. That said, a broadconsensus exists in Japan that doesn't question the fundamentaltenets of the U.S.-Japanese alliance. Indeed, it remains highlydoubtful that, even if the opposition Democratic Party (Minshuto)were to gain power, there would be any significant change in theU.S.-Japanese relationship.

Despite the public's growing unease over Koizumi's handling ofSino-
Japanese relations (a recent poll by the Asahi Shimbun noted that48 percent of the respondents believed that Koizumi was mishandlingSino-Japanese relations), most Japanese also feel that Chinacontinues to exploit historical issues to strengthen nationalism ata time when the Chinese Communist Party is coming under increasingchallenge at home. While most Japanese believe that any long-termerosion in Sino-Japanese relations should be avoided, they alsobelieve that Japan should not buckle under Chinese nationalism or,more importantly, downgrade Japan's relationship with the UnitedStates.

Since the end of the Cold War, Japan's core security choiceshave continued to irritate Beijing. Japan's decision to join inpreliminary Theater Missile Defense (TMD) studies, itsparticipation (although limited) in the Proliferation SecurityInitiative (PSI) and its on-going efforts to stem North Korea'sillicit hard currency earnings are but some of the core examples ofclose U.S.-Japanese collaboration. In the post-9/11 era, theSelf-Defense Agency has adopted a range of policies designed tomeet "unpredictable threats" such as terrorism and ballisticmissile attacks. In 2005 the National Defense Program Outline brokeprecedent by identifying both China and North Korea as key securityconcerns. While these steps have been welcomed by Washington,Beijing has continued to air its discontent over the"normalization" of Japan's security postures.

Japanese officials and experts agree that the rise of China isnot containable and that over time Beijing's economic status willvery likely eclipse Japan's. In this context, Japanese policymakershave emphasized the need to strengthen bilateral trade ties withBeijing through a free trade agreement, although Tokyo remains waryof China's longer-term role as a core pillar of an emerging "EastAsian community."

As a long-term policy objective, Japanese officials believe thatthe least costly way of moderating China's external behavior is toincrease the web of economic linkages with China so that China'sgrowing economic interdependence with the global economy (and byextension, Japan's) results in more pragmatic Chinese policies. Butas preventative measures, Tokyo has begun to emphasize theimportance of expanding Japanese-Indian economic and securitycooperation on a case-by-case basis and also to revamp itsSoutheast Asia policy so that growing Chinese influence inSoutheast and South Asia does not adversely affect Japan's keyinterests.

Last but not least, Japanese policy toward the Korean Peninsularemains a critical facet of Tokyo's balancing posture vis-Ã -visBeijing, in that the maintenance of a robust Washington-Tokyo-Seoulstrategic triangle serves not only to coordinate policies towardNorth Korea but also as a counterweight to China's increasinglydominant posture in northeast Asia.

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