China’s Economic Reckoning
The Price of Failed Reforms
Over the past few decades, as China’s economic and military power has increased, the world has faced the possibility that power in the Asia-Pacific will shift decisively away from the United States. Since his 2008 presidential campaign, Barack Obama has acknowledged the region’s importance to the United States’ global position, and since 2011, when Secretary of State Hillary Clinton announced the United States’ “pivot” to Asia, it has been enshrined as a central focus of U.S. foreign policy. “In the Asia-Pacific in the twenty-first century,” as Obama put it in a speech to the Australian parliament in 2011, “the United States of America is all in.”
As Obama’s presidency approaches its close, it is time to take measure of what has come to be known as the “rebalance” to Asia. On the one hand, the United States has successfully redirected official attention to important, overlooked issues in a region that is both potentially unstable and crucial to the world economy. Washington has strengthened its relationships with regional allies and partners; expanded the United States’ engagement with regional institutions, such as the Association of Southeast Asian Nations (ASEAN); and developed a broader and deeper relationship with China. This increased attention, however, has not been accompanied by a new, forward-looking U.S. strategy for the Asia-Pacific. Instead, the United States has sought to maintain elements of a status quo that has already passed into history. During Obama’s last year in office and as the next administration takes shape, the U.S. government needs to put the resources of the rebalance to work toward policies that meet the challenge of the changes already under way in East Asia.
The United States’ attention to the Asia-Pacific has dramatically increased over the course of Obama’s presidency, not least with regard to China. Over the past seven years, Beijing and Washington have woven a thick web of bureaucratic contacts around the U.S.-China Strategic and Economic Dialogue, the high-level bilateral forum enlarged by Obama and then-Chinese President Hu Jintao in 2009. Bilateral military contacts have been resilient and productive, establishing new crisis prevention mechanisms despite political speedbumps. The U.S. government also took the initiative to cultivate ties with Xi Jinping, both when he was China’s vice president, from 2008 to 2013, and after he took power as the country’s president in 2013. And after butting heads with their Chinese counterparts at the Copenhagen climate summit in 2009, Obama administration officials managed to work with the Xi government to co-champion the deal that negotiators reached at the Paris climate conference last year—all while U.S.–Chinese disagreements over the South China Sea and cyberspace surged.
Elsewhere in East Asia, the Obama administration has similarly deepened the United States’ role, through efforts ranging from an intense focus on ASEAN and the broader multilateral forums it facilitates, to a renewed defense relationship with the Philippines, strategic coordination with Vietnam, and a cautious embrace of a rapidly changing Myanmar (also known as Burma).
Nevertheless, the Obama administration’s policy toward the region has been only a partial success. The rebalance was necessary but not sufficient to meet the challenges confronting U.S. policymakers in the region, chief among them the pressures produced by China’s growing influence.
To begin with, the rebalance has lacked a clearly communicated purpose, beyond making up for earlier U.S. inattention and reassuring allies. In January, the Center for Strategic and International Studies published a congressionally mandated report noting that “there remains no central U.S. government document that describes the rebalance strategy and its associated elements”—a striking absence, given that the rebalance and related initiatives have been a central component of Obama’s foreign policy.
The rebalance has lacked a clearly communicated purpose.
A coherent strategic approach has been even harder to detect. If the Obama administration has a grand strategy for the Asia-Pacific, it might be described as a commitment to defend the status quo, under which the United States and its allies enjoy military preeminence and favorable economic arrangements. Its two main tools to this end have been military balancing against China through a shift in deployments and new arrangements with allies such as Japan and the Philippines, and a diplomatic commitment to what U.S. officials call a “rules-based international order”—in other words, the existing system of international law and norms that the United States has played a leading role in establishing. Even the administration’s most proactive regional policy initiative, the negotiation of the Trans-Pacific Partnership, has been sold publicly as an attempt to maintain U.S. influence in economic rulemaking. “With TPP,” Obama said in his most recent State of the Union address, “China does not set the rules in that region; we do.”
So far, Washington’s defense of the status quo has nonetheless failed to meet the challenge of China’s increased capabilities and influence. Two policy mistakes, one largely resolved and the other ongoing, are illustrative. First was the administration’s failed effort, in 2015, to undermine the establishment of the Chinese-led Asian Infrastructure Investment Bank (AIIB). As Beijing sought to gain support and recruit founding members for the new multilateral bank, the U.S. government had legitimate concerns—among them, that the Chinese-led institution might not enforce high enough environmental and labor standards. But instead of simply expressing those worries, U.S. officials reportedly tried and failed to convince friendly states to stay away from the Chinese initiative. Ultimately, many of those countries, including the United Kingdom, became founding members of the bank, and observers have almost universally declared the U.S. opposition misguided and ineffectual. The episode was important because it strengthened the impression, held especially by Chinese observers, that the U.S. government uncritically opposes all Chinese initiatives, regardless of their likely effects and of whether U.S. opposition might be effective. That can undermine the legitimacy of Washington’s pushback when Chinese actions do in fact conflict with important interests. (Rhetorically, at least, the Obama administration has since backed off from its opposition to the AIIB.)
Second, the Obama administration’s approach to the contest over sovereignty and maritime rights in the South China Sea, which has purportedly been guided by a defense of international law and norms, has in fact sent mixed messages about Washington’s real motivations. U.S. officials have appeared divided about whether and how to undertake so-called freedom of navigation operations (FONOPs), which are ostensibly designed to demonstrate the United States’ interpretation of the UN Convention on the Law of the Sea (UNCLOS) and to contest maritime practices that Washington considers illegitimate. Hawks claimed that failing to undertake FONOPs would tacitly recognize Chinese jurisdiction over disputed territory, whereas others argued that the missions could be unnecessarily provocative and undermine bilateral efforts on other issues, such as climate change. The apparent internal division, along with the confusion surrounding the legal message of the October FONOP in the Spratly Islands, undermined Washington’s claim to a principled stance in the South China Sea. Indeed, if advocating for a particular interpretation of international law is the United States’ primary objective in the region, it is by no means clear that FONOPS are strictly necessary: so far, the U.S. missions have made some relatively subtle legal points and some completely unsubtle shows of force.
Another prong of the administration’s policy in the South China Sea—promoting the use of the compulsory dispute settlement under UNCLOS, in which courts or tribunals apply the convention to areas of disagreement—has its own problems. If, as many expect, China refuses to comply with a ruling in favor of the Philippines in an arbitration case that Manila brought against Beijing over its behavior in the contested waters, then the United States’ public support for dispute settlement under UNCLOS might have indirectly undermined the law of the sea regime.
GET WITH THE TIMES
With respect to the U.S.-Chinese relationship, this defense of the status quo does not comport with the fact that the power dynamics between the two countries have already changed. Nor is it a principled stance, since there is no inherent virtue in the way things are today. It is time for the Obama administration to take a more proactive approach.
To begin with, the U.S. government should assume that the geopolitical situation in the Asia-Pacific will continue to change—whether because China’s power will grow or because its domestic challenges lead to a crisis. With this in mind, U.S. officials should work with allies and regional partners to identify those areas in the current international order where U.S.-Chinese competition has produced the greatest stress and discuss ways to better manage them with Chinese leaders. (The Obama administration has already made some progress on economic issues in this respect, supporting reforms at the International Monetary Fund to increase China’s representation there and championing the G-20, which includes China, over the G-8, which doesn’t.)
The South China Sea would be a good place to start, especially since the Philippines’ legal case against China has set up a crucial test for the current law of the sea regime and may ultimately demonstrate its failings. Even if it doesn’t, the fact remains that international law is insufficient to resolve the disputes in the South China Sea, since UNCLOS does not provide the tools to address the underlying contests over sovereignty. China has favored bilateral negotiations where its relative size and economic power give it an advantage and has opposed bringing questions of sovereignty to third-party adjudication, as is its right. As other claimants have sought multilateral solutions or third-party adjudication, the result has been a stalemate.
The existing rules-based international order does not provide a solution to the disputes in the South China Sea.
The existing rules-based international order, in short, does not provide a solution to the disputes in the South China Sea. The world needs to find a method that does, and the United States and its allies should be at the table to make that happen. The United States, for example, might back ASEAN or another grouping of regional states as it develops innovative proposals to resolve or set aside the question of sovereignty, providing much-needed assistance in the fight against overfishing and environmental devastation in the meantime. Under such an approach, several states could maintain their defense capabilities in the area, but they might agree to limit unilateral military expansion. By mutual consent, regional states could develop a South China Sea regime that provides clarity where UNCLOS does not. Most important is that China, the United States, and the other nations involved develop a path forward that does not privilege the status quo, which serves no one.
Of course, Beijing might refuse to participate in any attempt to solve the South China Sea dilemma, betting that it can eventually achieve its goals and that the ambiguity of the current situation ultimately favors China. But even if China refused to participate, making such an effort would still serve an important purpose: it would unseat the status quo from its unearned pride of place in U.S. policy, and it would force U.S. officials to set priorities and debate national interests with the understanding that not every goal is achievable.
The U.S.–Chinese approach to cybersecurity issues offers a positive model of how differences between the two states might be better managed. Although accusations of espionage and intellectual property theft have long clouded U.S.–Chinese relations on cyberspace issues, both countries, along with a number of others, are supporting a substantial effort at the United Nations to develop an international consensus on rules of the road for cyberspace. Part of the reason for this relative success is that cyberspace is not burdened by a well-understood status quo. Even as the U.S. government defends the current system of “multistakeholder” Internet governance against Chinese efforts to have rules set by governments alone, the lack of recognized international norms on security and conflict in cyberspace has created an ideological no-man’s land where neither China nor the United States is the established power. That vacuum, combined with a common interest in securing computer systems, has allowed China, the United States, and others to proactively develop new norms.
None of this is to suggest that the United States should surrender influence in the international system to China or abdicate global leadership in response to illegitimate and coercive behavior. On the contrary, a U.S.-led multilateral effort to reckon with the stresses that U.S.-Chinese disagreement places on the international system would allow the United States to pick its battles wisely, compromise on lower-priority issues, and avoid unnecessary antagonism with Beijing. Such an approach would allow the United States to campaign for principles, not simply for its current position. It would bring both China and the United States to a table where their considerable power does not outweigh the combined interests of other states. And it would answer for the world some of the many questions that remain about where the United States and China stand on the future of the global order.