China's Plan to Obliterate American Supremacy

China is chipping away at the very foundations of the decades-long U.S.-led order in Asia.

America’s strategic primacy in Asia is at stake. China’s astute economic diplomacy—aimed at challenging the Bretton Woods system (BWS) of global governance—and accelerated construction activities in the South China Sea, an artery of global trade, are chipping away at the very foundations of the decades-long U.S.-led order in Asia. And a whole range of U.S. partners, from the Philippines to Vietnam to Japan, are anxiously watching China’s ever-expanding shadow across the Asia-Pacific theater.

On the economic front, the United Kingdom’s early-March decision to join the China-led Asia Infrastructure Investment Bank (AIIB) has irreversibly cracked the U.S.-led siege against the proposed financial body. The participation of the United States’ closest (European) ally as a founding member of the AIIB has paved the way for long-standing European partners, from Germany to Italy to France, and leading Asia allies, particularly Australia and South Korea, to jump on the China economic bandwagon. Even Japan, which sees the AIIB as nothing less than a direct challenge to the Asian Development Bank (ADB), is considering its options.

Prior to London’s strategic mutiny, Washington delicately managed to successfully stage a collective boycott against the AIIB, leaving the China-backed bank stacked with mostly developing countries with limited capital to spare. At some point, Chinese officials began wondering whether the AIIB would make any commercial sense at all, shifting their attention to more financially viable options, such as the proposed Maritime Silk Road initiative. Formally, Washington has raised concerns over the AIIB’s compliance with existing good governance, transparency and environmental-sustainability standards embodied by the World Bank, the ADB and the IMF.

In reality, however, the key concern is whether China will use the AIIB as a Trojan horse for its broader strategic interests in Asia, utilizing the prowess of its financial resource to buy the loyalty of its neighbors. After all, if China was really interested in bridging the infrastructure spending gap in Asia, it could have simply increased its contribution to the (Japan-dominated) ADB. As prominent Chinese scholar Yan Xuetong, bluntly puts it: “The policy now is to allow these smaller [neighboring] countries to benefit economically from their relationships with China. For China, we need good relationships more urgently than we need economic development. We let them benefit economically, and in return we get good political relationships. We should ‘purchase’ the relationships.”

What we are witnessing today is President Xi Jinping’s “Peripheral Diplomacy” initiative in action, a strategy that gained pace after the Chinese Communist Party’s Foreign Affairs Leading Group meeting in late-2014, the first in eight years. The key challenge, however, is with respect to China’s unabated effort at consolidating its strategic depth in adjacent waters, particularly in the South China Sea, where it is clearly winning the scramble for bitterly contested islands and marine resources.

American Isolation

In light of the AIIB fiasco, which clearly marks a major symbolic victory for Chinese soft power, the United States has responded with sound and fury. Senior American officials have bluntly expressed their outrage over the UK's decision, stating how Washington is "wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.”