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China May Be Rising, But America Is Not in Retreat

October 20, 2016 Topic: Security Region: Asia Tags: ChinaUnited StatesForeign PolicyDefenseCold War

China May Be Rising, But America Is Not in Retreat

Cold War–era Asia was a dangerous and often bloody place. But its alignments were predictable and its problems readily identifiable. No longer.

SEEN IN historical perspective, a Western-dominated world represents a recent phenomenon. Not until the fifteenth century did the gap between the West and the rest start widening dramatically, with the Industrial Revolution, which followed much later, serving as the critical accelerator. For centuries before that, the centers of cultural splendor, wealth and scientific achievement lay in the East. Asia accounted for nearly 60 percent of global economic output as recently as 1700. Its position declined steadily thereafter, but started regaining ground in 1980. China’s remarkable post-1978 economic resurgence, along with rapid growth in South and East Asia, ranks among the most significant changes in the international system in the last three decades. This does not necessarily betoken the West’s marginalization. Still, the change in Asia’s relative standing has ended the long era of unrivaled Western preponderance—and the trend will persist.

In the near term, the United States will continue to possess the world’s largest economy, and by an overwhelming margin: a $17.95 trillion GDP in 2015, according to the World Bank. China, its putative challenger for global primacy, registered a second-place GDP of $10.87 trillion. Japan occupied third place with $4.12 trillion—less than one-fourth of the American economy. The disparity favoring the United States becomes starker still in the military realm. Its 2015 defense budget totaled $596 billion; China’s, the world’s second largest, was $141 billion. The same picture—American preeminence—comes into relief if one turns to venture-capital investment (the global share of the United States is 70 percent), social-media use (about 60 percent) or spending on research and development (about 25 percent). While American foreign policy raises hackles in many parts of the world, attitudes toward the United States remain positive in several respects. In Asia and elsewhere, America still retains considerable appeal as a place to live. The allure of its culture and lifestyle in other countries is readily apparent (if not always aesthetically pleasing), and its universities remain peerless in quality and reputation, attracting thousands of students (975,000 over the last two years) annually from across the world. The American model of liberal democracy does not lack for critics, at home and abroad, and its failings have occasioned much comment lately, but its worldwide influence remains undeniable nevertheless. It does not face a challenge from an alternative political model with global appeal, whether Chinese, Russian or Japanese. In short, America leads in the fuzzier, soft forms of power as well.

To be sure, the United States does not dominate across the board in power-relevant indices. In some, its relative position has declined since the middle of the last century; in others, China has emerged as a competitor. The U.S. share of global GDP has fallen from about 20 percent to about 17 percent in the last decade, whereas it was around 30 percent in 1950 and 25 percent in 1970. But the loss of relative standing was unavoidable as Europe and Japan, demolished by World War II, recovered—and, in no small measure, because of American protection, aid and investment. For decades, technological innovation was an American preserve, and in many ways that remains true; but the picture has changed of late. Consider one indicator: annual patent filings. China led the United States in 2013, though the latter reclaimed first place, and by a sizable margin, in 2015. With start-ups mushrooming, a massive internal market and consumers with growing purchasing power, and generous government financing for research and development, China now makes products once monopolized by the West, Japan and South Korea. India seems poised to follow suit, albeit at a slower pace.

Given the magnitude of its effect on the international order, China’s economic transformation merits special attention. The breakneck pace of Chinese economic growth since the 1978 Deng Xiaoping revolution—on average 10 percent annually—has eroded the advantage the United States enjoyed in East Asia for more than half a century. This trend will continue unless China experiences a prolonged economic crisis or deep political upheaval. If the GDP comparison is made in purchasing power parity (PPP) terms, China ($19.5 trillion) edged out the United States ($17.9 trillion) in 2015, a significant achievement given that Chinese GDP (based on PPP) was less than $1 trillion in 1980. Measured in constant 2000 U.S. dollars, Chinese per-capita income soared from $165 in 1978 to almost $7,000 in 2013. It is difficult to deny the shift in the economic balance of power in China’s favor. Yes, China’s growth rate started to slow in 2014, but most countries would envy even the lower growth rate, 6.8 percent in the first quarter of 2016.

In 1980, China accounted for only 4 percent of global economic production, the United States for 22 percent; the present proportions are 16.3 and 16.1 percent respectively. As recently as 2006, the United States was the top trade partner for 127 countries, China for seventy. By 2012, the figures had flipped: China, 124; the United States, seventy-six. By 2013, China had surpassed the United States as the world’s top trading country, with $4.2 trillion (exports plus imports) to America’s $3.8 trillion. China, which has the world’s largest foreign exchange reserves ($3.3 trillion in 2016), holds $1.2 trillion in U.S. Treasury notes, 7 percent of America’s staggering national debt (close to $18 trillion). And U.S. dependence on Chinese credit does not look poised to abate. The Congressional Budget Office estimates a 2016 U.S. government budget deficit of $544 billion.

Though America’s defense budget dwarfs China’s, the gap has been narrowing. China’s military spending (again, the world’s second largest) exceeds Russia’s (the fourth largest) twofold. Its military budget was just 2 percent of GDP in 2015, compared to 3.3 percent for the United States. Though there is a vast disparity between Chinese and American defense spending, personnel costs in the United States are higher, accounting for a much larger proportion of military spending than in China. And the United States has a global military presence, which China still does not. The flip side of the United States having many more valuable strategic partners than China is a multitude of far-flung commitments. A comparison of aggregate defense spending may therefore obscure the extent to which China—by purchasing vast quantities of Russian weaponry starting in the early 1990s, modernizing its own defense industries and investing in electronic- and cyber-warfare capabilities—has, at minimum, increased the price the United States must pay to prevail in a confrontation with Chinese forces in East Asia.

 

POWER HAS many facets and is not a singular asset that can be applied successfully across differing contexts. Some forms of it matter in some situations (bombers are important in war), but not in others (bombing potential trade partners during negotiations tends not to advance your cause). Economic and military dominance, no matter how impressive, are not panaceas; contingent circumstances can reduce, even nullify them. And advantages that are hard to measure, such as morale in war, can prove crucial. Were GDP and military muscle consistently decisive, the United States would have won the Vietnam War quickly; instead it lost to a country far weaker in all the principal measures of power. Those same limitations are evident in Afghanistan and Iraq.

Nevertheless, to the extent that quantifiable sources of power matter—and they do—America’s international position seems unlikely to be surpassed for a decade, if not longer. China still faces a steep, long climb and must surmount daunting obstacles along the way. Its aging population will reduce its tax base while requiring increased expenditures for programs that support retirees and the infirm. The already-apparent dissonance between a dynamic Chinese economy and society and a restrictive political order will increase. China’s state companies are debt laden. Its debt-to-GDP ratio now approaches 282 percent, total national debt having ballooned from $7 trillion in 2007 to $28 trillion in 2016. The ill effects, including public health costs, of pervasive pollution, are mounting. Severe water shortages will persist.

 

China will also be forced to jettison its staple economic strategy of adding labor (from the countryside to factories) and capital to achieve high growth rates in favor of one based on innovations that increase output per composite unit of labor and capital—what economists call “total-factor productivity.” But China does not fare well on this particular measure: its total-factor productivity growth has dropped steadily from an average of 2.7 percent in 2007–12 to -0.1 percent in 2014. Prognosticators expect that China’s GDP will exceed that of the United States in the years ahead; but in per-capita terms, China will remain a middle-income country at best. The slowdown of Chinese economic growth since 2014 makes for additional uncertainties, economic and political.

While GDP has become a standard index of power, a relatively new measure, inclusive wealth, weighs the full array of assets—financial, manufactured, natural and human—germane to the quality and sustainability of life in a given society. The United States has nearly more inclusive wealth than Japan, China, France, Britain and Germany combined, and close to 32 percent of the global total compared to China’s 8.1 percent. Besides, the other major centers of global economic power, Europe, Japan and South Korea, are American allies (so, potentially, is India); so the standard United States versus China comparisons are limited by their narrowness. China lacks partners with comparable economic heft, a reality that won’t change anytime soon.

 

 

STILL, CHINA is thinking ahead and seeks to leverage its newfound economic power through the ambitious economic integration project, “One Belt, One Road” (OBOR). The overland portion will start in Xi’an and extend to Rotterdam, connecting Europe, Central Asia, Iran, Turkey and Russia, through multiple roads, railways, modernized ports and pipelines. The maritime complement will originate in Fuzhou, pass through the Straits of Malacca to Nairobi and Athens, and end in Venice. Beijing has earmarked $1 trillion to implement this initiative, which covers sixty-five countries, and seeks simultaneously to develop China’s interior and West, reduce its dependence on sea-lanes, and integrate the Chinese and Eurasian economies. Similar goals underlie other projects. Beijing has allocated $46 billion for the China-Pakistan Economic Corridor, which will commence in Kasghar, traverse Pakistan from north to south and extend to Gwadar port (on Baluchistan’s coast), which China has been expanding and modernizing. Likewise, China has built pipelines—one for oil, another for gas—extending 2,400 kilometers from the Kyaukphyu Special Economic Zone in Rakhine State in western Myanmar, to Kunming in Yunnan province. Beijing also hopes to construct a deepwater port in Kyaukphyu, overlooking the Bay of Bengal.

The Russian Far East will also likely be pulled toward China economically, as well as politically. This 2.4-million-square-mile (nearly a quarter of America’s land area), resource-rich region shares a 2,600-mile border with China and is remote from Russia’s western centers of power. The adjoining three Chinese provinces (Liaoning, Jilin and Heilongjiang) alone contain 109 million people. That compares to approximately 6.2 million individuals in the Russian Far East, about two million fewer than in 1991, with emigration accounting for a large chunk. Russian strategists understand the vulnerabilities presented by this mix of geography and demography. So does the Kremlin, which, amidst an increasing Chinese economic presence, has been providing Russians inducements, including land rights and even outright grants, to move east.

Even as Moscow looks to Chinese investment to develop its eastern extremity, it has positioned substantial forces in the Eastern Military District—the Thirty-Sixth Army, the Twenty-Ninth Army, the Thirty-Fifth Army and the Fifth Army, moving west to east. The September 2014 “Vostok” (east) maneuvers in the Eastern Military District, Russia’s largest, involved one hundred thousand troops. Of course, not all of these forces are deployed solely with China in mind; nevertheless, notwithstanding the Sino-Russian strategic partnership and convergent views on important international issues, Russia has been careful to hedge its bets and secure its vast eastern frontier.

China has also been spreading its influence on Russia’s southern flank. But in Central Asia, Russia remains a force to be reckoned with. Millions of Central Asian migrant laborers work in Russia and send remittances home. In 2014, before the plunge in oil prices took its toll, these remittances amounted to over $500 billion, accounting for between 16 and 52 percent of GDP in some countries. Moreover, Russia alone possesses the military means to project power into the region. It maintains bases in Kyrgyzstan and Tajikistan. Kazakhstan, Kyrgyzstan and Tajikistan are members of the Russian-led Collective Security Treaty Organization (CSTO). Yet since the early 1990s, China has steadily undercut Russia’s position in this region, which Moscow annexed in the mid-nineteenth century and later incorporated into the Soviet Union. Since the collapse of the USSR, China’s economic presence in Russia’s historic backyard has soared. China replaced Russia as the key trade partner in the region as of 2009, with trade reaching $50 billion by 2014, compared to $35 billion for Russia. Since the five Central Asian states gained independence at the end of 1991, their trade with China has increased one hundredfold in dollar terms. The data on investment highlights this same Chinese ascendency. As recently as 2001, China had virtually no investment in Central Asia; by 2013 it had invested $50 billion, followed by a multibillion-dollar deal with Kazakhstan in 2015. Pipelines built and financed by Beijing that originate in Turkmenistan will convey up to fifty-five billion cubic meters of natural gas eastward, about one-third of China’s total consumption. This energy project will also liberate Turkmenistan from its once-total dependence on the pipelines of Gazprom, Russia’s energy behemoth. Russia remains Kazakhstan’s major route for oil exports via the 1,500-kilometer Caspian Pipeline Consortium, which runs west through Kazakh and Russian territory, terminating at the Black Sea port of Novorossiysk. Still, the 2,600-kilometer Atyrau-Alashankou pipeline connecting Kazakhstan’s Atyrau field (on the Caspian Sea’s north shore) to Xinjiang could convey as much as four hundred thousand barrels a day to China.

The Russia-China “strategic partnership” gets considerable coverage, but given Russia’s various problems—an economy tethered to energy prices, a shrinking and aging population, and a public health crisis that corrodes its human capital—it will not be an effective partner in counterbalancing America and its allies in the long run. Russia, for its part, does not relish the prospect of becoming Beijing’s adjutant in a Pax Sinica, a sentiment evident in “Russia Strategy: 2020,” a 2012 study by a group of Russian experts, which rules out a lasting China-Russia alliance. As the balance of power continues to shift in the China’s favor, Russia may well hedge further and look to the West, making its current estrangement from Europe and the United States a passing phase.

 

CHINA’S GROWING power and assertiveness will trigger other new Asian alignments—ones starkly different than those of the Cold War—and changes in its strategic landscape. One of them will result from the slow change in the minimalist defense policy of Japan, which for a generation following World War II could count comfortably on America’s capacity to defend it against all major powers. Any dramatic changes in Tokyo’s national-security strategy spurred by China’s rise will perforce spark controversy and encounter resistance within Japan. Prime Minister Shinzo Abe has pushed through legislation that permits Japan to participate in collective self-defense in its neighborhood (in particular, defending American forces that come under attack) and perhaps beyond.

In 2014, Tokyo ended the ban on military exports, which originated in 1967. In February 2016, Japan and the Philippines signed a defense-cooperation agreement. The lease by the Philippines of Japanese TC-90 maritime surveillance aircraft represented the first step in arms sales.

Japan has also deepened its ties with Vietnam, which, too, looks askance at China and has been embroiled with Beijing on disputes over the South China Sea. Since the early 1990s, Japan has expanded trade with Vietnam and increased its economic aid. The two states signed a security-cooperation accord in 2006, which was upgraded in 2014 to an “Extensive Strategic Partnership,” and commenced annual defense consultations in 2011. In 2016, Japan decided to supply Hanoi with used maritime patrol vessels. Vietnam, in turn, agreed to allow ships from Japan’s Maritime Self-Defense Force (the euphemism for its navy) to make port calls at Cam Ranh Bay.

These and other steps have already provoked opposition from Japan’s political class and citizenry. The crux is whether domestic opposition will be trumped by national-security exigencies created by the shift in the U.S.-China balance of power. Japan’s changing defense policy has already produced disquiet in certain regional capitals, particularly Beijing and Seoul. Tokyo will have to strike a balance between ensuring adequate deterrence against its adversaries, on the one hand, and reassuring its neighbors and building the domestic consensus required to beef up its military capacity, on the other.

The proposition that Japan’s defense posture and national-security strategy will remain frozen in place because of the potency of post–World War II pacifism amounts to oversimplification. Dramatic defense-policy changes have occurred repeatedly since the Tokugawa era, with external challenges playing a major role in initiating them. Given the size of its economy and its technological capabilities, a Japan that casts off minimalism could reshape Asia’s strategic landscape.

In the early 1990s, Asia’s other giant awoke from a twenty-five-year slumber. India, now poised to surpass China in population, has become one of the world’s fastest-growing economies. As the pace of China’s economic expansion started to slow in 2014, India pulled even, recording a 7.4 percent growth rate. During the Cold War, the relationship between India and the United States was often distant, even frosty at times; in the post–Cold War years, Washington and New Delhi have steadily increased their military cooperation. The United States has since entered the Indian arms market, which the USSR virtually monopolized. During his 2010 visit to India, President Barack Obama announced that the United States would sign a nearly $5 billion defense deal with India. By 2014, India had become the second largest buyer of American weaponry, trailing only Saudi Arabia. Additional deals will doubtlessly materialize, given New Delhi’s plan to spend $100 billion on weaponry over the coming decade. On another front, Washington has gone from slapping economic sanctions on India—punishment for becoming a nuclear power in 1999—to accepting its nuclear status and even, under the 1-2-3 Agreement, supplying its civilian nuclear sector. In June 2016, President Obama and Prime Minister Narendra Modi agreed to move ahead with the construction of six nuclear reactors in India by Westinghouse Electric.

India’s post–Cold War pivot toward military cooperation with Washington has not gone unnoticed in Moscow. That, in part, accounts for changes in Russia’s policy toward Pakistan, which include the 2016 Russia-Pakistan military exercises (the first ever) and Russia’s 2014 decision to end its ban on arms sales to Pakistan. The latter step set the stage for renewed Russian arms exports to Pakistan (there were some in the late 1960s), which started with the sale of Mi-25 attack helicopters and continued with discussions on selling Su-35 fighters. On the economic front, Moscow and Islamabad have discussed boosting bilateral trade (which remains miniscule), and Pakistan has sought a free-trade agreement with the Russian-led Eurasian Economic Union.

In contrast to much of East Asia, India has welcomed the changes Abe has made in Japanese military policy. Defense and intelligence cooperation between New Delhi and Tokyo has increased substantially. Under a deal agreed upon in 2015, but not yet implemented due to unresolved differences related to technology transfer and India-based production, India would purchase two Japanese ShinMaywa US-2 naval patrol aircraft and produce ten more under license. India also expressed interest in Japan’s Soryu-class submarines, seeking, albeit unsuccessfully, to encourage Japan to bid for a $12 billion contract as part of India’s Project 75-I, which aims to add six diesel-electric submarines to the Indian undersea fleet for prolonged stealth missions.

India has also been active on China’s western flank, notably in Afghanistan. New Delhi has invested in the training and equipping of Afghan security forces. The two signed a strategic cooperation agreement in 2011, and in 2016, for the first time, India supplied offensive weapons to the Afghan armed forces: Russian-made Mi-25 attack helicopters. Of greater long-term strategic significance is the $100 million-plus, Indian-built highway running from Delaram to Zaranj, near the Afghanistan-Iranian border, and thence (in a joint venture with Tehran) to Chabahar, Iran. India has committed some $100 million to expanding Chabahar, with the view of creating a deepwater port that would reduce Afghanistan’s dependence on routes through Pakistan and provide India access to markets in Central Asia, Russia and Europe—all while bypassing Pakistan.

India still faces a raft of problems, including a significant, though decreasing, percentage of people living in poverty, antediluvian infrastructure and a school system unsuited to twenty-first-century demands. Yet India’s economic resources are increasing, and so, in consequence, is its military power. India’s defense budget ($51.3 billion) ranks sixth in the world. Even though Indian military expenditure trails that of the United States and China by a massive margin, its armed forces are highly professional and capable.

India and the United States began joint naval exercises in 1992, which since 2007 have expanded into the Malabar exercises and include Japan, Australia, India and the United States. In 2015, India and Australia commenced their own (AUSINDEX) maritime maneuvers. As part of its “Act East” policy, India has deepened security ties with Vietnam and has begun supplying it with coastal patrol boats. In 2005, India signed a strategic partnership with Indonesia and has since trained Indonesian pilots to fly Russian-made Sukhoi jets. In 2016, India bid for a contract to build frigates for the Philippines. Such cooperation will enable India to become an increasingly important player in the Asia-Pacific.

The U.S.-Vietnam relationship offers another example of changing alignments in Asia produced by China’s rise. Gone are the enmity created by America’s Vietnam War and the acrimonious period—two decades or so—that followed, a time when Washington viewed Hanoi as an antagonist and Moscow’s ally to boot. Since President George W. Bush outlined a process for normalizing the relationship, bilateral ties have blossomed. Diplomatic relations were reestablished in 1995. In 2008, the United States and Vietnam held the first Political, Security and Defense Dialogue between their foreign ministries and in 2010 commenced a Defense Policy Dialogue between their defense ministries. Both conclaves will be held annually at the vice-ministerial level. During Secretary of State Hillary Clinton’s 2012 visit, the two countries discussed a “strategic partnership”; during Secretary of Defense Ashton Carter’s trip to Hanoi, they issued a “joint vision statement,” which included a commitment to deepening military cooperation. Having eased restrictions on the sale of certain nonlethal military equipment to Vietnam in 2007, the U.S. government partially lifted the ban on selling lethal weapons in 2014, and then lifted it completely during President Obama’s 2016 visit. Further evidence of security cooperation between Hanoi and Washington emerged during Secretary of Defense Leon Panetta’s visit. The United States expressed interest in access to Cam Ranh Bay, which during the Cold War years gained notoriety in Washington as a Soviet naval base, though American officials have debunked reports that it seeks a permanent presence.

 

CHINA’S CONDUCT in recent years has done little to reassure its neighbors. It has claimed ownership of much of the South China Sea, backing it up with frequent and bold maritime patrols near the Senkaku/Diaoyu islands and the Spratly and Paracel (Nansha and Xisha) archipelagos. Never mind that Japan also asserts rightful ownership of the former and various Southeast Asian states parts of the latter. Undeterred, China has reclaimed land; built ports and military installations on the Spratlys (notably, on Fiery Cross Reef, Subi Reef and Mischief Reef); opened numerous offshore energy fields to foreign investments, despite their being within Vietnam’s two-hundred-mile Extended Economic Zone (EEZ); and moved a deepwater drilling rig into the area in 2014. Amidst rising tensions with Vietnam, which have led to confrontations between Chinese and Vietnamese vessels in 2014 and 2016, China has continued to unilaterally declare bans on fishing—north of 12 degrees latitude, no less—in the South China Sea. In 2013, the Chinese government proclaimed an Air Defense Identification Zone (ADIZ) in the East China Sea that cuts into those of South Korea, Japan and Taiwan, and also encompasses disputed islands (Ieodo/Suyan, claimed by South Korea and China as well as the Senkaku/Diaoyu cluster). Close encounters between Chinese and Japanese military aircraft have occurred within China’s ADIZ. In June 2016, Indonesia’s navy fired warning shots at Chinese fishing boats operating in its EEZ off Natuna Island—China recognizes Indonesian ownership over the island, but the maritime economic zones of the two countries overlap—and detained their crew in what was the third confrontation within six months. Similarly, through displays of air and naval power and construction on site, China has asserted ownership of the Scarborough Shoal, which the Philippines also claims. In July 2016, the Permanent Court of Arbitration at The Hague, to which the Philippines had turned, rejected China’s claims to these and other South China Sea islands and reefs. Beijing summarily dismissed the tribunal’s ruling as “a farce.”

These moves have made for worry in East, South and Southeast Asia—and have drawn the attention of the United States. Even in South Korea, whose suspicions and ill will have traditionally dwelt on Japan, apprehension over China’s rising power and assertiveness has started to shape public opinion, notably among younger people. Seventy-three percent of South Koreans surveyed regarded China as a military threat in 2012 and a still-high 66 percent did so in 2014. South Koreans may not yet see China as a direct threat to the homeland (though Beijing’s backing for North Korea comes close to posing one), but they do worry that its growing power will trigger arms races and conflicts in East Asia. Despite Chinese protests, South Korea has proceeded with plans to deploy the American Terminal High Altitude Area Defense (THAAD) system and joined Japan and the United States in a missile defense exercise off the coast of Hawaii, marking its first participation in such a tripartite venture. The naval maneuvers occurred against the backdrop of North Korea’s 2015 ballistic missile tests, but that did not stop China from condemning them.

For its part, the United States will face pressure to increase its military presence in East Asia and to assure its allies that it remains a dependable source of security—the vacuous catchall of credibility will doubtless be trotted out at home and abroad. Yet more likely than not, American leaders will have to take these steps amidst adverse economic circumstances, reduced public support for far-flung military commitments and growing Chinese military capabilities.

This combination—China’s increasing confidence and capabilities and America’s need to demonstrate its continued credibility and resolve—could set the stage for three classic, and dangerous, dynamics that are common in international politics: the security dilemma (tensions ratchet up as adversaries regard each other’s defensive moves as offensive gambits that must be countered), conflict spirals (isolated incidents that escalate and lead to unintended clashes) and misperception (hardening stereotypes and worst-case calculations that distort the processing of information about the actions of rivals and, as a result, produce crises).

 

THOUGH INCHOATE, an Asian countercoalition has begun to emerge around China’s vast perimeter. The United States will play a major role in its future, working with Asian states, some of whom it previously regarded as adversaries.

Should China manage to avoid economic upheavals at home and continue its ascent, the strategic interests of India, Australia, Japan, the United States, Vietnam and Indonesia will continue to converge. China’s challenge will be to keep increasing its power and influence while simultaneously convincing Asian states that they have nothing to fear. Beijing will try to prevent the rise of a cohesive opposing coalition by attempting to reassure and co-opt its members, using trade, investment and aid, and by addressing territorial and maritime disputes with individual states rather than with a group, making selective concessions.

China’s bilateral trade agreements with various Asian states, its creation of an Asian Infrastructure Investment Bank (AIIB), its enthusiasm for the Regional Comprehensive Economic Partnership (launched by ASEAN in 2012), and the loans made by China’s Export-Import Bank and the China Development Bank (which together lend more to the region than the World Bank and the Asian Development Bank) to Asian states exemplify Beijing’s strategy of combining strategic reassurance with economic co-optation. For its part, Washington has tried (unsuccessfully) to persuade countries to shun the AIIB and support the Trans-Pacific Partnership (TPP), which excludes China.

China will have to tread the fine line between greater regional ambition and reassuring its neighbors so as to avert an encircling coalition. The United States and its Asian allies and partners will also confront new obstacles. For a generation, several Asian states entrusted their security to Washington. But China’s growing military capabilities will surely lead them to consider the extent to which the United States will be willing to take risks to defend them. That, in turn, will lead these states toward new strategic calculations—some of which are already visible—that have far-reaching consequences.

The United States has sought to reassure its Asian allies that it remains dependable. Thus, to counter China’s military strategy of Anti-Access/Area Denial (A2/AD), the Pentagon has developed its own counterdoctrine: the Joint Concept for Access and Maneuver in the Global Commons (JAM-GC), which supersedes the Air-Sea Battle plan. The United States will have to consider the dangers of being drawn in on behalf of states that are far weaker than China yet engaged in increasingly intense quarrels with it over the ownership of minor island groups in an area in which sheer geography provides Beijing with major advantages. (As for gargantuan India, it still has little to offer Washington, or Japan, as a strategic partner in East Asia and itself remains exposed to preponderant Chinese power on its northern flank.) An American guarantee could provide much-needed reassurances to these weaker countries while deterring China. But it could also encourage risk-taking by allies that implicates the United States without reducing China’s resolve: the familiar engagement-entrapment problem, which, in this particular manifestation, could lead to reassurance unwittingly encouraging recklessness.

A commonplace argument holds that China’s island grabbing and saber rattling reflect Beijing’s larger strategy of eventually controlling local sea-lanes. But seaborne trade that moves through the Malacca Straits to and from northeast Asia supplies the Chinese economy’s lifeblood. OBOR will never replace, nor even substantially reduce, the sea route’s essentiality for China; rail and road transport to Europe will remain significantly more expensive. Hence, China would face crippling costs—to say nothing of major military risks—by disrupting access to such Asian maritime passages. Such a gambit would provoke American countermoves in places, such as the Malacca Straits and the Indian Ocean, where China’s advantages attenuate sharply. It is hard to imagine how blocking critical sea-lanes would further China’s interests, save within the context of a major war. Even then the economic consequences would prove catastrophic given Beijing’s dependence on trade; in 2011–15 trade accounted for between 42 and 51 percent of Chinese GDP. China relies heavily on energy flows from Africa and the Middle East, which together accounted for nearly two-thirds of Chinese oil imports, which in turn, account for roughly 60 percent of total consumption. For energy and other forms of trade, Beijing cannot place its bets on the land routes it has been building (or planning) to reduce its reliance on the Malacca route.

Should Asia become riven with conflict, leaders will be even more hard-pressed to muster the trust and cooperation needed to address serious collective challenges. These include climate change and the water-shortage-induced disputes festering between upstream and downstream states in Asia. Similarly, while arms control and confidence-building measures—especially in such flashpoints as the Sino-Indian border, the Taiwan Straits, the East China Sea and the South China Sea—may help reduce tensions, they too will be harder to negotiate. Finally, freewheeling political-military rivalries reduce trust among states and consequently their capacity, even willingness, to develop procedures for managing crises that could spiral into armed confrontations, even war.

 

ASIAN COUNTRIES will not lack for opportunities to benefit from the economic resurgence of their continent, home to three of the world’s largest economies. Many of them, China included, have acquired a stake in economic interdependence—finance, trade and foreign direct investment—substantial enough to make military recklessness a costly choice. All of them understand that a regional conflict will have catastrophic consequences. Still, one cannot assume that Asia’s growing wealth and interdependence will guarantee stability—that the logic of what Richard Rosecrance called the “trading state” mentality will win out. There is scant historical evidence for such an optimistic inference, which verges on economic determinism and overlooks, for example, how deeply economically intertwined the countries that went to war in 1914 were. States are not motivated by economic calculations alone; they are not bankers or accountants. Pride, fear, hubris, misperception, nationalism and sheer stupidity shape what they do and how they do it. As Asia’s power balances shift, there will inevitably be occasions when these noneconomic influences drive decisions, overriding economic logic.

The Asia of the Cold War was a dangerous and often bloody place. But its alignments were predictable and its problems readily identifiable. That is no longer the case. North Korea’s recent nuclear tests offer further evidence of the volatility of the region. That volatility, however, underscores why America is becoming a coveted partner for smaller regional powers. China may be rising, but an American retreat is not in the cards.

Rajan Menon is Anne and Bernard Spitzer Professor of International Relations at the Powell School, City College of New York/CUNY and senior research fellow at the Saltzman Institute of War and Peace Studies, Columbia University. His most recent book, The Conceit of Humanitarian Intervention, was published in June.

Image: U.S. Navy and Japan Maritime Self-Defense Force ships underway in formation as part of a photo exercise on the final day of Keen Sword 2011. Wikimedia Commons/U.S. Navy