Author: Stanislav Matějka (IMS FSV UK)

There are several areas to explore when trying to evaluate the so-called American “pivot” to Asia in the context of Sino-American relations. First of all, there are economic ties of these two nations. Secondly, there are military affairs and the related security issues that need to be considered. Then there is the question whether the rise of the People’s Republic of China (PRC) will be peaceful and how the PRC itself will cope with the role of a prospective global superpower and an integral part of the existing international system.

Evidently, there are many areas in which the USA and China are competing, but the economy is arguably the most important of these areas. It is therefore reasonable to analyze how do United States and China perform, cooperate and compete in economic terms.

The question is whether China will rise steadily to eventually outperform the United States. The debate of such renowned experts on China as Niall Ferguson, Fareed Zakaria or Henry Kissinger when assessing the Chinese capabilities provides interesting arguments.

Niall Fergusson, a prominent historian, cites demography and economy as the main arguments when proving that the 21st century will belong to China. China has a population of one fifth of the entire humanity; its size is forty times that of Canada. There are eleven cities with a population over six million. These are all overwhelming numbers. In economic terms China is the region with the biggest potential for future growth. It has already taken over the United States as a manufacturer of cars and its overall demand will rise at an incomparable rate due to the current demographic and economic growth.[1]  To some extent this potential can be paralleled to that of the Soviet Union in the interwar period. A populous nation with a state controlled economy and with an appetite for power is a formula for enormous growth potential. But as the case of the USSR demonstrated, this growth has its limits – and what happens when this growth is not enough for the people used to it, is internal turmoil and an eventual downfall.

Fareed Zakaria argues that the Chinese economic growth may not be ideal and moreover its population growth is in fact about to reverse in about 20 years from now. The economic growth has some serious flaws and even if China did become the leader of the world in economic terms, it would still lack the political capacity for such a position.[2] Being a Great Power in an economic or military sense bears both advantages and challenges. In the case of China the challenge is the tension between economic growth and democratization. If the Chinese political system does not adjust to the changing society, the eruption of these tensions may eventually cause the downfall of the China as a Great Power. The formation of a middle class aspiring to gain more political influence may in the long term cause trouble for the political system and subsequently halt its growth.Obama_in_Forbidden_city

For Henry Kissinger, the challenge is not whether the PRC will dominate the 21st century, but whether the international community will be able – for the first time in history – integrate the rising power. Trade relations, economic ties and geopolitical issues involving multiple actors play a big role in these integration efforts.

The concept of economic interdependence dictates that mutual economic relations between the PRC and the USA will prevent these two great powers from major armed conflict. For the Chinese economy the United States presents an important market for massive exports, while the U.S. investments in PRC play an important role in the American economy. Important for this economic interdependence was year 2006, when the Chinese holdings of U.S. dollars passed the trillion dollar mark.[3] These mutually beneficial economic relations should, according to the concept of economic interdependence, prevent conflict. Niall Fergusson even writes about “Chimerica”, a Sino-American economic “marriage”.[4] Investment of billions of dollars of Chinese savings in U.S. treasury bonds enabled the U.S. Federal Reserve to keep money cheap for quite some time. But the historical example of symbiosis of Great Britain and Germany before the First World War gives a different perspective. Good trade relations will not necessarily prevent war. It is difficult to predict whether ties between the U.S. and the PRC may be broken by political tension over Senkaku islands, Taiwan, Tibet or some other issue. During a recent tour of Asia, president Obama during a press conference with Japanese Prime Minister Shinzo Abe confirmed that the USA stands firmly on the side of its allies in the issue of territorial disputes. On the other hand Obama also called on countries dealing with the PRC not to provoke Beijing and to abandon nationalist rhetoric. These remarks and the visit of president Obama itself are one of a few signs that his pivot to Asia is still alive. It remains to be seen whether economic ties will prove more important than alliances in the region.

After the financial and economic crisis hit in 2008, this “marriage” experienced some bumps when discussions were under way whether to call the PRC a currency manipulator. It even became part of the last presidential campaign picked up by candidate Mitt Romney.[5] Obviously economic troubles may also deteriorate the ties.

Whatever the outcome of these economic ties will be, the economy will always play an important role in Sino-American relations. The U.S. rebalance to Asia is after all very much influenced by trans-Pacific trade. If the pivot is rather rhetorical than practical in geopolitical, security or foreign policy areas, in terms of economic aspects the importance of Asia for the U.S. is unquestionable.

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Another area that is vital to the U.S. interests in the region is the rising military power of the PRC and its security consequences. This is not important only with regards to regional U.S. allies, but also to the global security environment as a whole.

The rising Chinese military spending is a cause for concern in the Pentagon for several reasons. The first reason is ultimately connected to the economy. The U.S. has a huge debt to pay for two very expensive interventions in Iraq and Afghanistan. Combined with the economic crisis that affected the U.S. military gravely, the picture of China expanding its military budget can be frustrating for U.S. military officers. The threat of additional sequestration of the defense budget in 2016 is still present and the Department of Defense is trying to avoid the worst case scenario by warning that the U.S. could “lose its role of guarantor of global security.”[6] These warnings may be exaggerated but the fact that the U.S. military uses such language is symptomatic.

Other issues with Chinese military spending are its lack of transparency, military modernization and the shift of military strategy from securing territorial defense to protecting maritime interest. All these factors so far do not pose direct threat to the American position in the region. But they surely put U.S. regional allies in a difficult position. And this is where the U.S. rebalance seems to fail. If the pivot is truly about the Asia-Pacific region, then what it should do is to make sure that U.S. allies feel safe and that American presence ensures that no matter what China decides to do the U.S. will be there to weigh in. While the pivot claims that the Asia-Pacific region is vital to American interests, Washington’s attention is still with the Middle East or lately with Europe. Moreover the acts of current administration in Syria or Ukraine are important signals for its allies in Asia. Red lines drawing and not acting upon it in Syria is a reason for serious concerns in Japan or Taiwan.

China is expanding its naval capabilities well beyond its coastal waters. Chinese military leadership called this effort a new “far sea defense”. There are several reasons for this action. First of which is caused by the rising demand for energy in China, which requires securing sea lanes used for transport of most of the energy sources. Most of these sea lanes are currently policed by the U.S. Navy. Another reason is that China managed to conclude agreements over borders with their neighbors. These settlements made Chinese territorial defense more secure and therefore Beijing turned to the high seas.

Clinton_and_Biden_meet_Xi_JinpingChina has to work out its energy security strategy and building a blue water navy suggests it is exploring the option of limiting the influence of the west, particularly that of the United States in the areas of Chinese interests. The South and East China Seas are the most prominent of those. The desire of the Chinese government to protect its supply lanes of vital energy resources is legitimate and although it may be seen as a threat to U.S. interests and its allies in the region, it should be taken into account.

Most of the energy resources that are imported to China are located in the area of U.S. hegemonic influence, the Persian Gulf region.[7] Vital sea lanes to deliver these resources to Mainland China pass through the Indian Ocean and South East Asia. This factor is increasingly influencing foreign policy and diplomacy in this contested region. The United States has quite a complicated role to fulfill as it is an ally to a number of countries involved in territorial disputes in the region of PRC’s vital interests. On the one hand, the United States does not wish to be dragged into these disputes, on the other hand Washington will not abandon its allies as this may deteriorate its position of guarantor of peace and order. The effort should at least project by the sole presence of U.S. forces – not only in terms of fleets deployed, but by incorporating the region into the framework of U.S. vital interests.

U.S. officials often make numerous statements about the Middle East, Syria, Ukraine, but very little is ever said about the issue of rising concerns of U.S. allies in the Asia-Pacific region. There were even fears that if the U.S. was to get too involved in Libya or Syria the rebalance would end before it even started.[8] The U.S. military on the other hand is the other side with often exaggerated comments about the Chinese military rise. If the pivot to Asia should mean at least something, it could be about finding the balance between White House not saying anything at all and military causing panic. The rise of Chinese military will be a long process and there is no use for the escalation of an arms race, nor is it wise to ignore or tolerate China’s aggressive policies.

Espionage and cyber warfare is one of the main drawbacks in Sino-American relations. Capabilities of Chinese hackers and the scope of industrial and military-related espionage is overwhelming. It seems that while neither side is willing to escalate the competition to an open conflict of conventional means of warfare, modern warfare is providing a fertile ground for unconstrained competition. The construction of aircraft carriers, the development of various unmanned systems with design and technology very similar to that of the United States is just the tip of the iceberg. While an armed conflict between the PRC and the U.S. may seem unlikely, cyber warfare is an area where the capabilities of both powers are already tested in direct competition.

The American society, tired after the Iraq and Afghanistan wars, is becoming more isolationist. The will and appetite of China to enhance its military and secure its vital interests is on the rise. This should be taken into account in any analysis of Sino-American relations and their standing in the international system.

There are two basic questions analyzed thoroughly in the last couple of years. Is the United States a superpower in decline and is the Chinese rise a threat? Those two questions are interconnected and it may as well be the case that the answer to one of them answers also the other one. If the answer is yes, the U.S. is indeed in decline and the rise of China should be seen as a threat to the international system as it operates now. If the U.S. is able to keep its position and the role of guarantor of peace, it may be that the rise of China will become a vital part of the international system. China, as a competitor in economy, military, science and other areas challenging the U.S., may become a major contributor to a new, more contested international system. The pivot to Asia should then focus on keeping the U.S. strong enough to compete with China and to integrate it into the existing system.

The question of China becoming a Great Power in international relations is dividing analysts in the west into two camps – those considering China to be a threat and those believing it could be a partner and it is proving so by integrating into the existing system and institutions.

Chinese energy policy is one proof that the Chinese government is moving away from neo-mercantilism and is on the path of accepting the rules of the international market. National oil companies (NOCs) for example are behaving more and more independently. They are not obliged to sell all their equity oil back to China but often sell it on the international market instead. Also, the leadership in China realized that military escalation could only endanger China’s energy security. Chinese leaders often cite that territorial disputes or other geopolitical disputes should not stand in the way of trade of vital energy resources.[9]

Economic interdependence pushes the U.S. and the PRC to cooperate; the military rise of China and its aggressive nationalistic policies are seen as a grave threat by both regional allies and the U.S. military but somewhat ignored by the White House. The ability of the PRC to sustain its growth without social turmoil and the ability of the U.S. to balance the influence of the PRC will be decisive in efforts to integrate China into the existing international system. Obama’s pivot to Asia should be about making sure that U.S. allies in the region feel safer, that the PRC is dealt with as an economic partner, military competitor and most importantly as a key player in international affairs. Finding a balance in these areas should be the core of any U.S. policy in this region. So far the rebalance of U.S. interests from other areas towards Asia has proven to be idle talk rather than real policy. The Chinese establishment of an Air Defense Identification Zone (ADIZ) and rising tensions concerning the Senkaku Islands is clear evidence. Similarly to the United States’ relations with Russia, it seems that Washington is in reactionary mode when it comes to global politics. Both the establishment of a Chinese ADIZ over East China Sea and the Russian actions in Ukraine are evidence that the position of the U.S. is gravely tested and Obama’s pivot is not doing anything about that. Announcing a rebalance of policy of the sole superpower in these times is really not a wise decision. First of all there is a risk of rising discomfort of those feeling abandoned. Moreover if U.S. policy is more reactionary than pro-active, then the rebalance loses its power. In this case it seems that both of these scenarios took place – Europe expressed its discomfort right after the announcement of the pivot, while allies in Asia would appreciate more action than talk.

 

 

Literature

Dannreuther Roland, “China and global oil: vulnerability and opportunity”, International Affairs 87: 6, 2011.  

Does the 21st Century Belong to China?: Kissinger and Zakaria vs. Ferguson and Li. The Munk Debate on China (The Munk Debates), available at: http://bookza.org/book/1251714/ea92dc (last accessed 2.4.2014)

Garamone Jim, Sequestration Would Cripple U.S. Military Strategy, Hagel Says, American Forces Press Service, Department of Defense, available at: http://www.defense.gov/news/newsarticle.aspx?id=121832 (last access 22.4.2014)

Lowrey Annie, A Tightrope on China’s Currency, New York Times, October 22, 2012, available at: http://www.nytimes.com/2012/10/23/us/politics/romney-pledge-to-call-china-a-currency-manipulator-poses-risks-experts-say.html?_r=0 (last access 23.4.2014)

Morrison Wayne M., Marc Labonte, “China’s Holdings of U.S. Securities:

Implications for the U.S. Economy”, Congressional Research Service, August 19, 2013, available at: http://www.fas.org/sgp/crs/row/RL34314.pdf (last access 22.4.2014)

Skidelski Robert, Can You Spare a Dime?, Review of The Ascent of Money: A Financial History of the World by Niall Fergusson, The New York Review of Books: http://www.powells.com/review/2009_01_05.html (last access 22.4.2014)

Walker Dustin, Is America’s “Rebalance” to Asia Dead?, The National Interest, April 24, 2014, available at: http://nationalinterest.org/commentary/americas-rebalance-asia-dead-10330 (last access 24.4.2014)

 

 

 

[1] Does the 21st Century Belong to China?: Kissinger and Zakaria vs. Ferguson and Li. The Munk Debate on China (The Munk Debates), available at: http://bookza.org/book/1251714/ea92dc (last accessed 2.4.2014)

[2]Ibid.

[3]Wayne M. Morrison, Marc Labonte, “China’s Holdings of U.S. Securities:

Implications for the U.S. Economy”, Congressional Research Service,  August 19, 2013, available at: http://www.fas.org/sgp/crs/row/RL34314.pdf (last access 22.4.2014)

[4] Robert Skidelski, Can You Spare a Dime?, Review of The Ascent of Money: A Financial History of the World by Niall Fergusson, The New York Review of Books, http://www.powells.com/review/2009_01_05.html (last access 22.4.2014)

[5] Annie Lowrey A Tightrope on China’s Currency, New York Times, October 22, 2012, available at: http://www.nytimes.com/2012/10/23/us/politics/romney-pledge-to-call-china-a-currency-manipulator-poses-risks-experts-say.html?_r=0 (last access 23.4.2014)

[6] Jim Garamone, Sequestration Would Cripple U.S. Military Strategy, Hagel Says, American Forces Press Service, Department of Defense,  available at:http://www.defense.gov/news/newsarticle.aspx?id=121832 (last access 22.4.2014)

[7] Roland Dannreuther, “China and global oil: vulnerability and opportunity”, International Affairs 87: 6, 2011.

[8] Dustin Walker, Is America’s “Rebalance” to Asia Dead?, National Interest, April 24, 2014, available at:http://nationalinterest.org/commentary/americas-rebalance-asia-dead-10330 (last access 24.4.2014)

[9]Roland Dannreuther, “China and global oil: vulnerability and opportunity”, International Affairs 87: 6, 2011.