In early May, I gave an interview to the Chinese state-run Global Times newspaper arguing that China was probably ‘the loneliest rising great power in world history’. Not aiming for hyperbole, the assessment was based on the fact that China has few trusted allies in Asia even as it became the second largest economy in mid 2010. While its allies in North Korea, Burma and possibly Pakistan are as much strategic liabilities than assets, Beijing has not convinced even one major Asian capital to bandwagon with it as it rises. Although China is now the central trading hub in the most dynamic economic region in the world, all major powers in East, Southeast and South Asia are hedging against China’s rise by deepening its strategic and military relationships with America and each other. Indeed, if China continues to rise, the challenge could be to manage the growing strategic frustrations of a formidable but inhibited power.
China’s absolute size means that its presence and capabilities are formidable. As an indispensable economic power, Beijing is rightly offered a seat at every significant forum in the region. Viewed as a legitimate great and rising power, it is much more difficult to dictate policy to the Chinese. Yet, even if entering a period of relative decline, America enjoys some enduring advantages over China that will help Washington remain the decisive strategic actor in the region. Moreover, there are reasons why China’s economic size will not translate into proportionate strategic leverage in the region.
Even as China rises, key Asian powers balance and bandwagon amongst themselves to ensure that America remains the preeminent strategic actor. There are several reasons why almost all Asian powers want America to remain the preeminent power in the region rather than China (or any other Asian power.)
First, there is the simple reason that China has land and maritime disputes with a number of Asian countries such as India, Japan, and several states in the South China Sea. In contrast, America does not.
Second, free and open trade (which is the lifeblood of growing prosperity in the region) has depended on American naval power and the hub-and-spokes structure for over five decades. In contrast, China quite correctly sees this security structure as a ready-made one to inhibit its strategic options.
Therefore, even though it has benefitted from it, most countries suspect that it wants to eventually revise and even dismantle such a security structure. Other states fear the revisionist tendencies of China in this context, and fear the implications of a Chinese-led region.
Third, the fact that America is not geographically based in Asia works to its advantage. As a foreign leader, it requires greater levels of acquiescence from Asian partners to retain its presence in the region (such as basing rights.) If asked to shift its bases – as occurred in the Philippines in 1992 – America will do so peacefully. Even if there was resentful in Washington, America is in no position to punish Manila. In contrast, a dominant Asian power would not need the same level of regional acquiescence to maintain its military footholds. America has to constantly negotiate the terms of its presence in Asia and is structurally bound to provide public security goods. In contrast, there would be much less incentive for a dominant Asian power such as China to do so.
The corollary is that America requires the acquiescence of key states and regional groupings such as ASEAN when it comes to the former’s security relationships. There is subsequently broad-based regional approval of US alliances with Japan, South Korea and Australia, as well as with partners such as the Philippines, Singapore, Thailand and India. The key to the effectiveness of these bilateral relationships is that they enjoy widespread support (and thus legitimacy) in the region as stabilizing and hedging arrangements.
Even so, there are a number of strategists putting forward the seemingly plausible argument that the importance of China as a trading partner will eventually compel key states to shift their strategic alignment. But these arguments are less convincing on closer inspection.
The fact that China is the central hub for trade in Asia can be overplayed. Over half of Chinese trade is processing trade meaning that parts come in from other places in Asia, are assembled in China, and shipped out again to non-Asian OECD countries where the lion-share of consumption takes place. China’s domestic consumer market is about the size of a country like France’s which is large but not overwhelming.
But it is access to domestic markets rather than the size of processing trade that is the true source of leverage. Even now, there is a political consensus within China that access to the Chinese consumer ought to be reserved for indigenous rather than foreign firms in the most important and lucrative sectors of the economy.
Beyond the issue of protectionism, until China becomes the dominant centre of regional and global consumption, Beijing’s capacity to exercise leverage by denying foreign firms and countries access to the domestic Chinese consumer market is limited. Yet, because of China’s currency policies and its state-led model which encourages fixed investment at the expense of domestic consumption, it will be decades before China can hope to reach comparable consumption levels seen in Western developed giants.
Besides, Beijing can ill-afford to do too much damage to an export sector that generates 150-200 million jobs in an attempt to twist the arms of strategic competitors. The lack of Chinese leverage is confirmed by the fact that even as China became the biggest trading partner for countries such as Australia, Japan and South Korea, all of these capitals are simultaneously hedging against Beijing by moving closer in strategic and military terms to Washington rather than further away.
None of this is to deny that China is already a formidable foreign policy and strategic actor. But its ability to shape strategic outcomes is determined by occasional bluster and intimidation, but most of all by size. Such an inefficient ability to exercise leverage means that the Chinese economy and military would need to reach an enormous size and capability to achieve the aim of ‘easing’ America out of Asia and taking Washington’s place as the dominant strategic player.
Dr. John Lee is a research fellow at the Hudson Institute in Washington and the Centre for Independent Studies in Sydney. He is author of “Will China Fail”?