China’s Rise and the Durability of US Leadership in Asia (ARI)

China’s Rise and the Durability of US Leadership in Asia (ARI)

(Text of the lecture given by the author in a meeting organised by Casa Asia and Elcano Royal Institute on July 18, 2007 in Madrid).

Theme: In this paper the author claims that the strength of China as a rising power in Asia has been overemphasised, while overall US power and influence in the region has not declined.

Summary: This paper reacts to the wide range of media, specialist and scholarly assessments and commentaries that depict an emerging Asian order led by a rising China, with the US –the longstanding regional leader– playing an increasingly secondary role. It shows that these assessments and commentaries tend to follow a pattern of emphasising the strengths of the rising power, China, and emphasising the weaknesses of the US. This pattern was followed in recent history and led to very wrong assessments of the challenge posed by the Soviet Union to US leadership in Asia in the latter 1970s and of the challenge posed by Japan’s rise to power to US leadership in Asia during the 1980s.

Analysis: The emphasis on China’s strengths as a rising power in Asia –and on US weakness in the region– is unbalanced. A more balanced and comprehensive assessment of China’s rise and US leadership in Asia, that also considers China’s weaknesses and US strengths, shows that China’s rise is a less serious challenge to US leadership in Asia.

China’s Advances and Accomplishments
In much of the post cold war period, the foreign trade of China’s export-oriented economy grew at about twice the rate of China’s impressive overall economic growth. The result in Asia was that China became the leading trading partner –or one of the leading– trading partners of its Asian neighbours.

Asian producers of energy and raw materials found China to be a ready market for their goods. Asian manufacturers of consumer products and industrial goods often found it difficult to compete in international and domestic markets with low cost and good quality Chinese manufacturers. They tended to integrate their enterprises with China by joining the wave of foreign investors that made China the largest –or one of the largest– recipients of foreign direct investment in the world.

What resulted were webs of trading relationships characterised by so-called processing trade, which accounted for half of China’s overall trade each year. Led by foreign-invested enterprises in China, consumer and industrial goods would be produced in China with components imported from foreign enterprises in other parts of Asia. It was often the case that the developing product would cross the Chinese border, sometimes several times, before it was completed. Also, China would often be the final point of assembly and the value added in China would be relatively small in relation to the total value of the product. And the final product would frequently be exported to advanced Asian economies or even more frequently to China’s largest export markets, the US and the EU. Overall, the result was that China’s importance as a recipient of Asian investment, a leading trading partner and an overall engine of economic growth rose dramatically in Asia.

Adroit diplomacy that followed the lines of China’s evolving ‘good neighbour’ policy towards Asian countries greatly improved Chinese relations with most of their Asian neighbours. High-level Chinese leaders were very active and attentive in frequent bilateral and multilateral meetings with their Asian counterparts. Their ‘win-win’ diplomacy held that China and its Asian partners should seek mutual benefit by focusing on developing areas of common ground while putting aside differences. Apart from Taiwan, China made few demands on Asian countries. China’s approach was greeted positively by its Asian neighbours, many of whom remembered and sought to avoid a repetition of the assertive and disruptive Chinese policies of the past.

China’s diplomacy emphasised its willingness to trade with and to provide some aid, investment and military support to countries with ‘no strings attached’. This approach was well received by Asian governments in Burma, Cambodia and elsewhere.

Another feature of Chinese diplomacy has been its emphasis on Chinese language, culture and personal exchanges. This has included Chinese support for Confucius Institutes and otherwise promoting the teaching of Chinese language and culture and facilitating ever larger numbers of Chinese tourist groups travelling to neighbouring countries. Chinese efforts to reassure neighbouring countries that rising China does not threaten them saw public statements of Chinese officials and those of most Asian states play down the significance of China’s impressive military build up.

Chinese Limitations and Weaknesses
Heading the list of limitations and shortcomings in China’s rising influence in Asia were its relations with both Japan and Taiwan. The negative record in recent years showed that China was unsuccessful in winning greater support in either country, despite many positive economic and other connections linking it to each of these states. The negative record also had an adverse effect on China’s overall influence in Asia.

Strong Chinese nationalism and territorial claims complicated its efforts to improve relations with its Asian neighbours. South Korean opinion of China declined sharply from a high point in 2004 because of nationalist disputes over whether an historic kingdom controlling much of Korea and north-east China was Chinese or Korean.

Chinese nationalism and territorial claims underlined a tough Chinese position regarding its differences with Japan. Chinese diplomacy endeavoured to play down Chinese territorial disputes in South-East Asia and with India, but clear differences remained unresolved. On balance, the continued disputes served as a drag on China’s efforts to improve its relations with these countries.

China’s remarkable military modernisation and its sometimes secretive and authoritarian political system raised suspicions and wariness on the part of a number of its neighbours. They sought more transparency regarding Chinese military intentions. They were not reassured by China’s refusal to join at a senior level with the US and other Asian defence leaders at an annual conclave known as the Shangri-La Forum meeting in Singapore.

China’s past record of aggression and provocative assertiveness towards many Asian countries remained hard to live down. It meant that China had few positive connections on which to build friendly ties with its neighbours. As a result, and also reflecting the state-led pattern of much of China’s foreign relations, its interchange with its Asian neighbours depended heavily on the direction and leadership of the Chinese government. Non-governmental channels of communication and influence were very limited.

An exception were the so-called Overseas Chinese communities in South-East Asia. These people provided important investment and technical assistance to China’s development and represented political forces supportive of their home country’s good relations with China. At the same time, however, the dominant ethnic, cultural and religious groups in South-East Asia often had a long history of wariness of China and sometimes promoted violent actions and other discrimination against the perceived rising economic and political power and influence of their ethnic Chinese communities.

The areas of greatest Chinese strength in Asia –economic relations and diplomacy– also showed limitations and weaknesses. Chinese trade figures were exaggerated because of double counting associated with processing trade, which was estimated to account for 30% of China’s trade with South-East Asia. That half of Chinese trade was conducted by foreign-invested enterprises in China, that the resulting processing trade saw China often add only a small amount to the product and that the finished product often depended on sales to the US or the EU also appeared to undercut China’s image in Asia as a powerful trading country.

The large amount of Asian and international investment that went to China did not go to other Asian countries, harming their economic development. China invested little in Asia apart from Hong Kong. Its aid to Asia was very small, especially compared to other donors, with the exception of North Korea and Burma. China’s large foreign exchange reserves served many purposes for the authoritarian Chinese administration that was trying to maintain stability amid massive internal needs. They did not translate into big Chinese grants of assistance abroad. China’s attraction to Asian producers of raw materials was not shared by Asian manufacturers, who tended to relocate and invest in China and appeared to do well; but their workers could not relocate to China and appeared to suffer.

By definition, China’s ‘win-win’ diplomacy meant that it would not do things that it ordinarily would not do. The sometimes dizzying array or meetings, agreements and pronouncements in the active Chinese diplomacy in Asia did not hide the fact that China remained reluctant to undertake significant costs, risks or commitments in dealing with difficult regional issues.

US Weaknesses and Strengths
The weaknesses of the US position in Asia have been well publicised. Prevailing discourse on the US in Asia focused on its widespread negative image in public and elite opinion and among many government officials in the region. The main cause of the negative image was the US government’s foreign policy. Heading the list was the US war in Iraq, which was strongly opposed by popular and elite opinion throughout the region. Until recently, the hard-line US stance towards North Korea was widely criticised. US support for Israel and its stance in dealing with the Palestinian Authority and the Middle East peace process has been widely criticised as has US unilateralism in other international affairs. The US government has been seen as narrowly focused on the war on terrorism, and reluctant to join Asian multilateral groupings.

In this atmosphere of negativism, it was sometimes hard to discern evidence of US strengths in Asia. Several of these strengths were publicly noted in the media and in specialist and scholarly assessments and they are duly cited below. More important for this assessment were private interviews conducted with 175 Asian affairs experts in the governments of eight Asia-Pacific governments during three trips to the region in 2004-06.

These interviews –reinforced by the author’s public speeches and briefings in over 30 Asia-Pacific cities in 2004-06– underlined twin pillars of US security and economic strength in the Asian region. The US continues to undertake major costs, commitments and risks that are viewed by Asian officials as essential to the region’s stability and well-being. No other power, including rising China, is even remotely able and willing to undertake these responsibilities, in the view of these officials. America thus remains the indispensable leading power in Asia.

Asian government officials interviewed during the 2004-06 research trips were almost uniform in emphasising the positive importance of the US’s leading role as Asia’s security guarantor and vital economic partner. The few exceptions included a Communist Party of India (Marxist) official and, to a degree, some Chinese officials who criticised the US security role in Asia.

Regarding security concerns, Asian government officials hold the view that Asian governments generally do not trust each other. And yet Asian governments need stability in order to meet their nation-building priorities. Economic development associated with effective nation building is seen as critically important to the legitimacy of most Asian governments. In this context, the US looms very large in their calculations. Unlike their Asian neighbours, the US does not want their territory and does not want to dominate them. It too wants stability and, in contrast with the inability or reluctance of China and other powers to undertake major risks and commitments, the US is seen to continue the massive expenditure and major risk of its military presence in Asia. This US role is viewed as essential in stabilising the often uncertain security relationships among Asian governments.

The US also plays an essential economic role in the development priorities of Asian governments. Most of these governments are focused on export-oriented growth. The US continues to allow massive inflows of Asian imports essential to Asian economic development despite an overall US trade deficit over US$700 billion annually. Against this background, when asked if overall US power and influence in Asia was in decline, Asian officials were uniform in saying it was not.

The interviews in Asia are in stark contrast with the widely-held perception of decline of US power and influence in world affairs evident since the string of setbacks and failures of the US military occupation of Iraq. However, more detached assessments consider the consequences of the Iraq failure for US security commitments and power in Asia as limited.

Meanwhile, evidence of US economic difficulties and decline is widely seen in the US, notably in the massive US trade and government spending deficits. The argument here is that these problems will cause the US to move in a decidedly protectionist direction that will significantly curb imports from Asia. Additional evidence was provided with the election of the Democratic party-led 110th Congress in 2006. Nonetheless, more detached assessments showed Democratic Party divisions and weaknesses that made the adoption of significant protectionist measures unlikely, especially during a period of US economic growth and prosperity. This suggested that the leading US role as Asia’s economic partner of choice would continue.

Other strengths in the US position, in comparison with China and other powers in Asia, were noted in the media and in specialist and scholarly assessments. They included the following:

  • Unlike China, the US has not depended so heavily on government connections and government-led initiatives to exert influence in Asia. It has developed an ample network of non-government connections developed over many decades that underpin US influence in Asia. They have involved widespread business, educational, religious and foundation connections. They have also involved an extensive web of personal connections that followed the US decision in 1965 to end discrimination against Asians in its immigration policy. This step resulted in the influx of many millions of Asians who settled in the US and entered the mainstream of society while sustaining strong connections with their countries of origin.
  • The US military in recent years were by far the most active US government component in Asia. They followed quiet and methodical ways to develop ever closer working relations with most Asian governments, while endeavouring to reinforce the US alliance structure in Asia. The ability of the US military to quickly and effectively take the lead in the multilateral effort to bring relief to the millions of Asians afflicted by the Tsunami disaster of December 2004 was based on the groundwork of connections and trust developed by US military leaders among Asian governments in recent years.
  • The US government continued to be seen in Asia as responsible for managing and ensuring that the three major hot spots in the region do not lead to war. The hot spots are the crisis caused by North Korea’s nuclear weapons programme, the conflict between Taiwan and China, and the conflict between India and Pakistan over Kashmir. The US record was seen in overall positive terms.
  • The US government developed a more active and positive stance towards multilateral groups in Asia, especially with ASEAN. It strongly supported the ASEAN Regional Forum (ARF), the primary regional forum for security dialogue. The Bush Administration also supported Asia-Pacific economic cooperation (APEC). In November 2005 President Bush began to use the annual APEC leaders’ summit to engage in annual multilateral meetings with attending ASEAN leaders. At that meeting, the leaders launched the ASEAN-US Enhanced Partnership, involving a broad range of economic, political and security cooperation projects, and five-year Plan of Action to implement the partnership was signed in July 2006. In the important area of trade and investment, the US and ASEAN ministers endorsed the Enterprise for ASEAN Initiative (EAI) in 2002, that provided a road map to move from bilateral trade and investment framework agreements (TIFAs), which are consultative, to free trade agreements (FTAs), which are more binding. The US already had bilateral TIFAs with several ASEAN states and in August 2006 the US and ASEAN agreed to work towards concluding an ASEAN-US regional TIFA. Meanwhile, the Bush Administration announced in 2006 that it would appoint an ambassador to ASEAN.
  • The Bush Administration’s success in improving relations with the great powers in Asia has added to the strength of US leadership in the region. The fact that the US has good relations with Japan and China at the same time is a very rare occurrence, while being the dominant power in South Asia and having good relations with both India and Pakistan is unprecedented, as is the current US maintenance of good relations with both Beijing and Taipei.
  • Effective US policy towards China, emphasising positive engagement while continuing to balance and ‘hedge’ against the negative implications of China’s rise, has helped to reinforce China’s emphasis on peace and development and to constrain past Chinese objections and pressure against Asian governments interacting with the US in sensitive areas. The prevailing circumstances in US-Chinese relations have allowed the US and Asian countries that are highly sensitive to Chinese preferences and pressures (eg, Vietnam and Mongolia) to develop closer relations involving such delicate areas as military cooperation and related intelligence and information exchanges.

Asian ‘Hedging’
There appears to be a contradiction between assessments of an emerging China-centred order in Asia and the prevailing post-cold war regional pattern characterised by many proud and nationalistic Asian governments seeking greater prominence and hedging warily against powers and trends, including a rising China, which might curb their independence and nationalistic goals. The post-cold war Asian order has witnessed a tendency on the part of most Asian governments to emphasise nationalistic ambitions and independence. They eschew the tight and binding alignments of the past in favour of diverse arrangements with various powers that support security and other state interests in the newly fluid regional environment. On the one hand, China’s generally constructive and accommodating approach to its Asian neighbours is welcomed by Asian governments seeking to diversify their international options and integrate rising regional forces in ways that accord with their national interests. On the other hand, Asian governments respond to China’s rising influence by taking steps to work with one another and with other non-Asian powers, notably the US, to ensure that their interests and independence will be preserved in the face of China’s growing role in regional affairs. Both tendencies –to integrate and cooperate with China on the one hand, and to work with one another, the US and other powers to hedge against the possible negative implications of China’s rise on the other– have strengthened as China has become more prominent in regional affairs in recent years. One conclusion to be derived from this is that few Asian leaders or Asian states appear to be ready to adhere to a Chinese-led order in Asia, and that China’s rise adds to reasons for them to sustain and develop close relations with the US and other powers useful in hedging against China’s greater influence in Asian affairs.

Asian government officials consulted in private interviews during 2004-06 agreed that China’s rise adds to incentives for most Asian governments to manoeuvre and hedge with other powers, including the US, in order to preserve their independence and freedom of action. Asian officials made clear that their governments hedge against the US and other powers as well, but their recent focus has been on China’s rise. The governments tend to cooperate increasingly with China in areas of common concern, but they work increasingly in other ways, often including efforts to strengthen relations with the US, to preserve their freedom of action and other interests in the face China’s rise. In an Asian order featuring continued strong US security and economic power and influence, such hedging by Asian governments adds to factors that are seen to preclude Chinese leadership or dominance in Asia and that reinforce US leadership in the region.

Conclusion: The key findings of this assessment are as follows:

  • China is rising in influence in Asia, the part of the world where it has always exerted greatest influence; but China also has major limitations and weaknesses and has a long way to go to compete for regional leadership.
  • The power and interests of the US and most Asian governments work against China ever achieving dominance in Asia.
  • The US image in Asia has declined in recent years and US foreign policy continues to be widely criticised. However, US ability and willingness to serve as Asia’s security guarantor and its vital economic partner remain strong and provide a solid foundation for continued US leadership in the region. Overall US power and influence in the region has not declined according to Asian officials interviewed 2004-06.
  • Most Asian governments manoeuvre and hedge against China’s rise, and they find a strong US presence in Asia fundamentally important and reassuring.

Robert G. Sutter
Professor, Department of Asian Studies, School of Foreign Service, Georgetown University