Speaking in Australia last fall, U.S. President Barack Obama pledged that "American leadership in the Asia-Pacific will always be a fundamental focus" of his administration. And the United States will make use of every element of its influence to strengthen it, he said, including military, economics, diplomacy, development, and soft power.
Since the United States formally announced its rebalance to the Asia-Pacific three years ago, however, crises outside the region—ranging from the rise of the Islamic State to the turmoil in Ukraine—have sapped the initiative’s momentum. The United States’ regional approach has also notably diverged from China’s. Washington has focused on strengthening diplomatic and military ties with China’s neighbors, recognizing that most of them are wary of Beijing’s growing geopolitical assertiveness. China, meanwhile, has taken a tack that leverages its geographic centrality—it borders 14 other countries—and economic heft by launching an impressive roster of initiatives. Beijing is working to establish a Free Trade Area of the Asia-Pacific, has funded the newly launched Asian Infrastructure Investment Bank, and has pumped $40 billion into a Silk Road infrastructure fund that it hopes will build “comprehensive connectivity” in Asia. A recent column in The Wall Street Journal warned that “by the time China has hooked the region into its expanding economic grid, America’s position in the region will have shrunk without a shot being fired.”
While this prognosis may be overly grim, it suggests an important reality: the United States will likely find it difficult to sustain its rebalance if it does not step up its effort in the economic arena. For all their security fears, most of China’s neighbors strongly depend on their trade with, and investment from, the mainland—and this reliance is deepening. They cannot afford to favor strategic relations with the United States, particularly on issues that China sees as bearing on its core interests. To strengthen its position in the Asia-Pacific, therefore, the United States must convince countries in the region that it is