Over the past several months, tensions between Washington and Beijing have steadily grown worse. Relying again on the incremental approach that has thus far served it well, China dragged a deep sea-drilling platform into Vietnamese-claimed waters, shouldering aside protesting Vietnamese vessels. Then on the 21st of May, President Xi Jinping proposed a new Asian security pact with nations such as Russia and Iran, a pact that pointedly excluded the US and seemed to be a club for authoritarian states. Then in June, Beijing refused a request by a UN court of arbitration at The Hague to provide evidence of its claims in a case brought by the Philippines. Days later, a video released by Vietnam showed a heavy Chinese fishing vessel slowly crushing a Vietnamese counterpart; the moment seemed to perfectly symbolize China’s new diplomatic strategy towards the region and one could almost see the phrase “Chinese soft power” slipping under the waves with it. If one thought it couldn’t get worse, it did. As the West has continued to look for ways to exert pressure on Russia over its actions in Crimea, China finally revealed where its cards lay: Beijing inked a $400 billion natural gas deal with Moscow and now looks set to sign another. None of it good news for those who think China ought to be a status quo power, upholding the rules of the global system.

All of this must have been uppermost in President Obama’s mind in late May as he toured the region on what allies called a “reassurance tour” and Beijing called a “containment tour.” The tour failed to make any headway on the White House’s touted trade group, the Trans Pacific Partnership (TTP), but was overall a success by showing US allies and regional partners that the rebalance has the support of the White House. However, despite this brief show of US soft power diplomacy in the region, China’s rise has gradually shifted from being a welcome to an unwelcome event. One can almost see the exam question at some future university:

“Were American leaders right to believe that economic liberalization and heavy investment in China would eventually lead to political liberalization, and make China into a responsible stakeholder?”

Until recently, the preferred answer in Washington was yes.

It seemed certain to say that the economic liberalization of China was inherently a "good" thing, that raising millions out of poverty demonstrated once and for all the benefits of free market capitalism. The 1991 collapse of the USSR may have proven the failure of the communist economic model, but a successful China had demonstrated to the world capitalism’s strengths. And as every liberal knew, economic success brings with it a rising middle class, the vanguard of a pluralistic system.

Success, partly…

No one disputes that the first part of the story has been a triumphant success: China’s rampant growth as a state capitalist regime has dominated Western headlines for nearly two decades. An unprecedented influx of US, Japanese, Taiwanese and EU investment turned the Chinese economy red hot in less than a decade after Deng’s Southern Tour, with many becoming blasé about China’s double digit growth figures. Surely, Mao turned in his grave during the 2008 financial crisis, when many were calling China the savior of the global (capitalist) economy. Who could have predicted in his time that Chinese leaders would one day lecture their North Korean counterparts on the benefits of the free market? If anyone fretted that the second part of the story had not yet happened - China had not added political reforms to the mix - optimists would always add ‘yet’ sotto voce. It was only a matter of time before China’s growing middle classes began clamoring for political as well as economic rights, they said, and saw signs of this in China’s growing online forums, which became miniature town meetings on corrupt officials and abuses of power.

And as Washington has watched with dismay, this Western notion that China would gradually liberalize politically has been dissipated more and more. Not only does President Xi show no signs of loosening Party control at home or of adopting liberal values abroad, his security proposal in Shanghai reveals an inclination to defend and augment authoritarianism. That brief spring felt before the 2008 Beijing Olympics quickly froze over as the regime reasserted control over television stations, bloggers and netizens, threatening three-year sentences to those who spread "internet rumors." In early May, prominent journalist Gao Yu was detained as part of targeted campaign against activists in the run up to the 25th anniversary of the Tiananmen Square incident, an anniversary that was eerily silent in Beijing. Contrary to expectations, Xi has also consolidated and centralized power with the party and the military quickly, with the Economist calling him the most powerful Chinese leader since Deng.

Turning the Tide

Is a new Cold War between China and the United States inevitable? Obama’s foreign policy for the region has sought to avoid definitively answering that question, as well, he might. The consequences of radically changing direction when it comes to China policy would be a dramatic shift in US grand strategy, the greatest perhaps since the fall of Soviet Union. Many in the West have claimed that China cannot be “contained,” pointing to Beijing’s role in servicing US debt as well as its place as a major trade partner to so many pivotal US allies. While there is some truth to this, it is not quiet as unthinkable as it once was. Michael Pettis, a renowned economist at the Peking University, along with many others predict a debt crisis for China in the next 4-5 years, in which Chinese growth rates will all but come to a halt. He argues that the Third Plenum reforms promoted by President Xi (raising savings rates for homeowners, raising the currency, dealing with land ownership and the internal passport system) are bound to come into stiff resistance from Chinese elites, happily profiting from the current system. The stakes are quite high: should Xi fail to push these reforms through, China could hit the growth wall suffered by Japan in the late 1980s. As with Japan in the 1980s, China is called the engine for the global economy, but as Japan stagnated in the early 1990s, the West experienced one of the biggest booms in recent memory. This doesn’t mean that China is a paper tiger, it does cast doubt on the idea that China will is destined to inherit the earth.

Both Washington and Beijing realize this; that China only has a narrow window before it hits this recession, a recession that would begin to be extended by deeper structural problems like its graying population and social services crisis. Because of this, Obama’s strategy has been to continue hedging Chinese regional assertiveness, balancing Chinese attempts to expand its periphery at its neighbors expense with enhanced bilateralism. Many claimed that the Obama “pivot” was a sea change in strategy: that’s not quite true. In fact the Obama administration has picked many useful tools for hedging China from the Bush administration, it merely gave them more resources. One such tool has been the various security trilaterals. Such groupings connect the US-Japan Alliance with Australia, South Korea, and India have all the makings of a possible alliance structure - even an incubator for a future NATO for the Pacific and/or Indo-Pacific region. They are more than just talk-shops about China; the trilateral with Australia has seen huge progress in intelligence-sharing, expeditionary capabilities and defense industrial cooperation and has served as a template for the other two. Additionally, the US has sought to bolster the capabilities of the states that are bearing the brunt on China’s expansionism. It has provided coast guard vessels to the Philippines, and committed $18 million to Vietnam’s coast guard with Japan joining in this effort, promising further vessels.

Has US grand strategy been successful? Overall, this is debatable. On the one hand, the US and its allies have helped China raise millions of its citizens out of poverty, an incredibly historical achievement. But while the US sought to make China into a responsible power by making it rich, it has only made it rich. Indeed, China has merely utilized its wealth to develop hard power capabilities to preserve and defend authoritarianism and defend questionable territorial claims over vital shipping lanes. If anything, this is the legacy of the 1994 Clintonian decision to delink trade with China from progress in human rights. Was the West wrong to engage China? To paraphrase Mao on the French Revolution, it is still too soon to tell, but certainly, the signs are not great. What is now important is how to manage a rising power with a brief window intent on refashioning the regional order to suit its own interests. Certainly, we all know the answer to that. As China pushes ever outward, it will find itself contained - not merely by the United States, but by all regional states who have vested interests in the current rules-based system. Of course, there will be those who say that conflict is unthinkable, who will counsel neutrality when Chinese naval forces clash with their Vietnamese, Philippine or Japanese counterparts. But as we know from history, we must all hang together or we’ll hang separately. In his final years in office, Obama must decide with regional allies and partners, what the red line is for China. And then he must act if that line is crossed.