Trans-Pacific View

The US and China in East Asia: Leadership and Influence

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Trans-Pacific View

The US and China in East Asia: Leadership and Influence

Insights from Evelyn Goh

The US and China in East Asia: Leadership and Influence
Credit: The White House

The Rebalance author Mercy Kuo regularly engages subject-matter experts, policy practitioners and strategic thinkers across the globe for their diverse insights into the U.S. rebalance to Asia.  This conversation with  Evelyn Goh – Shedden Professor of Strategic Policy Studies at the Australian National University, where she is also Research Director of the Strategic and Defence Studies Centre, author of The Struggle for Order: Hegemony, Hierarchy and Transition in Post-Cold War East Asia (Oxford University Press, 2013); ‘Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies,’ International Security 32:3 (Winter 2007/8):113-57; and Constructing the US Rapprochement with China, 1961-1974 (Cambridge University Press, 2004), and editor of Rising China’s Influence in Developing Asia, published by Oxford University Press in May 2016 – is the 47th in “The Rebalance Insight Series.”

Assess the positive and negative impacts of U.S. rebalance to Asia.

As far as East Asia is concerned, the chief benefit of the rebalance has been the reassurance of sustained U.S. strategic attention to the region at a time when Washington has remained deeply engaged in the Middle East. For the vast majority of East Asian states, the United States plays a crucial role as an offshore regional stabilizer or security guarantor, but because the United States is a superpower with forces and interests spread around the globe, there tends to be concern about U.S. strategic attention being over-stretched or focused elsewhere. Rhetorically at least, the Obama administration portrayed the rebalance as an unprecedented elevation of Asia to being Washington’s “primary global regional priority.”

At the same time, the main negative impact of the rebalance may have been too much U.S. attention to the region. In the important maritime realm, for instance, the rebalance has exacerbated the regional security dilemma. In the process of reassuring its allies like Japan and the Philippines and boosting support for its security partners like Vietnam, the Obama administration has appeared to embolden these states in pursuing their rival claims on territory and resources vis-à-vis China, especially in the South China Sea. Thus far rather than deterring Chinese assertiveness, these policies have helped create an insecurity spiral of tit-for-tat escalatory measures, seen most recently in U.S. FONOPS and Chinese responses. In such a climate, every action or policy is read as part of a zero-sum strategic contest. The Trans-Pacific Partnership is analyzed more for its potential to exclude China than as a highly ambitious trade deal that most East Asian states will have significant domestic difficulties acceding to, for example. This climate seriously complicates regional efforts to meet their shared imperative of keeping the U.S. security umbrella while not alienating China.

How is China using its growing influence in East Asia and to what ends? 

To the extent that influence is the ability to impact upon the strategic considerations of others, there is no doubt that China enjoys very significant influence across the economic and security realms in East Asia today. However, if we consider influence to be the effective exercise of power, to cause others to behave in ways that would bring about outcomes that China wants, then the picture is less clear. As my co-authors and I show in our new volume Rising China’s Influence in Developing Asia, China has notably relied on what I call “preference multiplying” – leveraging on shared preferences with other states regarding say, state intervention, aid conditionality, or human rights to mobilize policies or joint actions – as a key mode of influence in the region. When it has resorted to inducement, persuasion or coercion on issues in which there are conflicting preferences – such as territorial conflicts in the South China Sea – China has had very limited ability to change the stances of its neighbors. We find that there are two significant blindspots in Chinese approaches especially to the developing parts of East Asia: first, an apparent difficulty perceiving the dissonance between some of its own assertive actions and its benign rhetoric and “win-win” policies; and second, a tendency to ascribe agency only to major powers. The latter results in blaming the United States, for example, for “stirring the waters” and emboldening regional states like Japan, the Philippines and Vietnam, which would otherwise not antagonize China.

My sense is that China’s aims in the region have not changed in recent years – Beijing seeks first, a stable regional environment that would be conducive to its economic development and political security; and second, a region that is more accepting and reflective of China’s renewed power and status in international society. To achieve these aims though, China’s main challenge will lie in how to empathize sufficiently with the vulnerabilities as well as sensitivities of the non-great power states so as to persuade and induce them fully to support China’s power and position in the region and the world. 

According to a recent survey 47 percent of large Chinese corporations identified Southeast Asia – specifically Malaysia, Singapore and Indonesia – as the top investment destination over the next three years. Explain the significance of this trend.     

This survey finding suggests that Chinese corporations share the large international corporations’ optimistic projections about the Southeast Asian economies, the most sanguine of which see the sub-region developing as an “economic powerhouse” of 600 million people with a combined GDP of $2 trillion, presenting one of world’s fastest growing consumer markets over the next two decades. As the Southeast Asian economies grow, their diverse mix of natural resource and manufacturing sectors, along with their significant infrastructure development opportunities, present trade and investment opportunities for Chinese businesses. As their mutual consumer markets are mobilized, China will also no longer be an exporting competitor but rather become the most important new consumer market for these economies. If these projections come true, Asian consumer markets will provide a significant global alternative to those in the West over the coming decades, and investment flows between China and Southeast Asia will increase significantly.

The question is what type of investment? China is keen to export its infrastructure building-based model of initial economic development to the surrounding developing countries. However, fulfillment rates can be low: for instance, only 7 percent of promised infrastructure investment to Indonesia is reportedly fulfilled, while up to four out of five proposed Chinese mining projects are not implemented. The negative externalities – controversial labor and socio-environmental practices – associated with some Chinese infrastructure projects overseas have been well reported in recent years. Perhaps most importantly, East Asia’s economic challenges are much broader and deeper than can be addressed by Chinese investment alone. In the increasingly urgent issues of regulatory governance and financial systems reforms at the domestic and global levels, China and regional countries will need to work with each other, but also the global financial institutions and the western economies.

What does this trend portend for China’s role in regional economic integration?

Regional integration will continue to be a relatively “open” process rather than being confined to exclusive East Asian groupings dominated by China. Having said that, the reality is that China is already integral to East Asian economic integration – key examples of China’s ‘preference multiplying’ influence include the ASEAN-China Free Trade Area, the Regional Comprehensive Economic Partnership (RCEP) and myriads of financial cooperation mechanisms in ASEAN Plus Three, and now the Asian Infrastructure Investment Bank. These mechanisms constitute groundwork that has been laid and is being built upon, institutionally and concretely (such as roads, railways, and pipelines).

How should the next U.S. president exercise strategic leadership in East Asia?        

First, with good reason for fundamental optimism – because there remains very significant regional demand for U.S. leadership in East Asia.

Second, with empathy for allies and supporter states. It is crucial for the next U.S. president to recognize that, unlike the United States, East Asian states have to live permanently in China’s shadow. Very few regional leaders will choose – or be able to stick with – policies that actively antagonize China. This is because their relationships with China stretch beyond maritime disputes to encompass economic and security interdependence. In this context, U.S. strategic leadership means enabling these states to keep supporting U.S. leadership without forcing them to make zero-sum choices vis-à-vis China.

Third, with resolve towards China. This resolve can cut two ways. The new president can choose to play hardball, upholding U.S. interests and principles clearly and firmly and responding in kind to Chinese assertiveness. This may work: Chinese leaders may continue to be deterred by the specter of a potential military conflict with the U.S. that they might not be able to win. But I would recommend applying resolve in a different way: Persuade China to become the world’s most important supporter of a regional and global order that the U.S. wants to uphold. This is a more difficult enterprise because it will involve a change of mindset in Washington, from the current take-it-or-leave-it attitude towards some negotiation with China about reforms it wants to see and the role it wants to play in the international order.

To begin with, the new U.S. administration will want to consider initiating a workable framework for cooperation with China in key regional maritime issues, such as navigational safety, zones. It seems to me that the only viable short- to medium-term means of managing the South China Sea disputes is the tried and tested one of China and the other rival claimants agreeing to put aside the territorial disputes, possibly in favor of selected projects of joint resources protection, exploration and development. While these agreements will not directly involve the U.S., which is a non-claimant, Washington can lead in creating more propitious “weather conditions” for such an outcome, by shifting the current dynamic away from the deadlock over international arbitration and freedom of navigation.