Feng Liu. International Affairs. Volume 96, Issue 1. June 2020.
In response to the changing geopolitical landscape in Asia, both China and the United States attempt to alter the regional order in their own favour, both in the economic and security realms. This article shows how diverging views on future arrangements are leading to strategic shifts and increasing tension between these two Great Powers. As part of its quest for Great-Power status, China has been actively pushing its regional initiatives such as the Belt and Road Initiative (BRI) and the Asian Infrastructure Investment Bank (AIIB), as well as adopting assertive security policies towards its neighbours. In contrast, in order to counter China’s growing influence America’s regional strategy is undergoing a subtle shift from ‘rebalancing to Asia’ to focusing on the ‘Indo-Pacific’ region. However, amid an intensifying trade war and other challenges facing the region, China has chosen to moderate its proactive foreign policy-orientation in the past few years. In particular, China has made attempts to downplay its domestic rhetoric, rebuild strategic relationship with India and Japan, and to reassure ASEAN states in the South China Sea. In response to the Indo-Pacific strategy, it would be more effective for China to articulate a more inclusive regional vision and promote an institutional framework that also accommodates a US presence in the region.
Recent years have witnessed the disruption of the Asia-Pacific regional order. An important driving force behind this trend has been the dynamics between China’s pursuit of Great Power status and America’s maintenance of its regional dominance. Since 2012, China’s leadership under Xi Jinping has shown great interest in using its newly accumulated capabilities to reshape the regional order. It is widely perceived that China has abandoned the ‘keeping a low profile’ strategy introduced by Deng Xiaoping in the early 1980s and has turned to a more proactive approach to its place in the world. Moreover, Beijing’s rapid military buildup, coupled with its tough rhetoric and behaviour in territorial, diplomatic and economic disputes with its neighbours, is widely perceived as an expression of Chinese assertiveness.
In response to the changing geopolitical landscape in Asia, US security strategy for the Asia-Pacific region has also undergone adjustment. Beginning in the autumn of 2011, the Obama administration took a series of actions to promote its newly adopted policy of a ‘pivot’ or ‘rebalancing’ towards Asia. This conceptual shift entailed a commitment by America to strengthening its military presence and defence ties in the Asia-Pacific region, while engaging in regional affairs through various multilateral and bilateral channels. Since the inauguration of Donald J. Trump’s presidency in early 2017, America has shown greater hostility and has gone on the strategic offensive towards China. This changing strategic relationship was given official recognition in December 2017, when the Trump administration named China as a ‘strategic competitor’ and shifted the US strategic focus to the ‘Indo-Pacific’ region.
In both the economic and the security realms, China and America alike are attempting to shape the regional order to their own advantage. For the first time since the end of the Cold War, Asia has become the centre of competition for a preferred regional order between a rising power and an established power. International Relations (IR) scholars debate what concepts can best describe the emerging order in Asia. One view holds that America will retain its dominance in the Asia-Pacific region because its preponderant material capabilities cannot be surpassed by China in the near—or indeed any foreseeable—future. Another perspective suggests that America and China are about to establish, or have already formed, a new regional bipolarity in both economic and military terms. A third view is that the regional order has moved towards a dual structure, wherein America and China have unique leadership advantage in the security and economic realms respectively, so that small and medium-sized states in the region rely on China for their economic prosperity and on America for security. These conceptualizations capture some elements of the picture; however, there are still large gaps where concepts do not fully account for reality. Asia now is not in a typical hegemonic order because China and some small states are clearly not part of that order. Nor is the situation one of US-China bipolarity, because China has not accumulated enough strength in the security realm to come anywhere close to that of America. Moreover, the region is not dualistic. The economic dependence on China of the region’s small and medium-sized states has been exaggerated. China may be the biggest trading partner for most states in the region, but it does not have any dominant advantage in terms of other economic indicators. As the regional power structure undergoes transformation and the major actors conduct their strategic adjustments, the current east Asian order is also going through a transitional phase, with different actors investing resources in their own favoured order while engaging in strategic competition.
Why does China-US competition emerge in the form of competing concepts and practices for the regional future? How does China view the strategic turn of America in the Asia-Pacific region and its impact? What changes has China made in response to American regional strategy under the Obama and Trump administrations? How will these adjustments in turn affect US implementation of the Indo-Pacific strategy and US-China competition more broadly? In seeking to address these questions, the article proceeds as follows. The first section provides an overview of the increasingly intense Sino-US competition and its impacts on order transition in Asia, putting the two powers’ strategic adjustments in a broad regional context. The second section assesses Chinese views on the Indo-Pacific strategy and on its implications for China’s regional diplomacy. The third section provides a detailed analysis of China’s strategic adjustments in responding to the challenges posed by the new developments. The conclusion highlights the findings and their implications.
Sino-US Competition and Order Transition in Asia
Within the shifting geopolitical context, the Sino-US bilateral relationship has become the most consequential in the regional landscape. Not surprisingly, China and America are clashing more frequently over a series of issues such as trade, disputes in the South China Sea and cyber security. Some are wondering whether these two Great Powers will fall into a new Cold War or the ‘Thucydides trap’—a collision course to war between a rising power and a dominant power. Order transition, however, is far more complex than such a simplistic assertion suggests. As the distribution of power is shifting, so the roles of America, China, Japan and other actors are also changing. Various conceptualizations of the regional order, such as east Asia, Asia-Pacific and Indo-Pacific, have emerged. Intensifying strategic rivalry in Asia is underpinned by these competing conceptions of regional economic and security arrangements.
American and Chinese understandings of the status quo and the future of the regional order diverge significantly. Their respective strategic adjustments and interactions have driven dramatic changes in the political, economic and security conditions of the Asia-Pacific region. In the economic domain, China is promoting its Belt and Road Initiative (BRI), while supporting the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) negotiations on multilateral trade arrangements. America has shifted from its ‘Asia-Pacific rebalancing’ to a ‘free and open Indo-Pacific’ strategy, abandoning the Trans-Pacific Partnership (TPP) economic agreement for a unilateral approach that gives it freedom to exert trade pressure on regional countries, with no exception even for close allies such as Japan and South Korea. In the security arena, China is actively pursuing development of its anti-access/area denial (A2/AD) capabilities, while simultaneously advocating adoption of the ‘new Asian security concept’ in multiple institutional forums. Meanwhile, the Trump administration is laying emphasis on an increasing US military presence in the Asia-Pacific region while demanding greater responsibility from its allies and promoting multilateralization and networking of bilateral alliances and security partnerships in the Asia-Pacific region within the framework of the Quadrilateral Security Dialogue or ‘Quad’. The Indo-Pacific strategy, as illustrated by the Pentagon report released in June 2019, aims to sustain US influence in an emerging centre of Great Power rivalry through ‘preparedness, partnerships, and promoting a networked region’.
Beijing’s growing role in the regional order is inextricable from competition and cooperation with Washington. For a long time, America has been a stable strategic presence in the Asia-Pacific region, and has greatly influenced China’s development and its relations with its neighbouring states. Therefore, Chinese policy-makers have been closely observing America’s regional presence and performance. As revealed in various official documents, there are three major elements of the US regional presence over which China is seriously concerned. Beijing’s primary concern is the US military presence in east Asia—particularly its forward-deployed troops and military bases in Japan and in South Korea. China is seriously concerned about the development of US regional missile defence systems, which are detrimental to the viability and credibility of its own nuclear forces. Evidence of this was seen in 2016, when the deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea prompted strong diplomatic opposition and economic coercive measures from China, whose nuclear deterrence capability would be undermined by the system.
Second, the tightening of America’s relations with its allies and security partners in Asia has been perceived as an indicator of the US strategic attitude towards China and is therefore seen as a threat to China’s national security. Recent moves to enhance US security commitments in the region have increased suspicions among Chinese policy-makers and scholars alike of a US intention to balance or contain China.
Third, US positions on a variety of regional hot-spots, including Taiwan, the Diaoyu/Senkaku Islands and the South China Sea, pose serious concerns for China’s defence of its national security and maintenance of territorial integrity. From the Chinese perspective, America’s position as a third party in these disputes endows it with great responsibility and relevance, because its implicit and/or explicit involvement can cause other parties to provoke or resist China. Indeed, according to some Chinese officials and analysts, it is the US rebalancing strategy that should be blamed for the intensifying of disputes in the South China Sea.
America’s changing involvements in Asia do not result exclusively in constraints on China’s rise. In some instances, US involvement also entails an opportunity for China to gain more strategic room for manoeuvre in its periphery. The terrorist attacks of 11 September 2001, for example, shifted the US strategic focus from Asia and created a relatively favourable regional environment in the first decade of the twenty-first century, wherein China was able to develop its national capabilities without many serious challenges, notwithstanding President George W. Bush’s intention to treat China as a ‘competitor’ and the aircraft collision incident of April 2001. At the 16th national congress of the Chinese Communist Party (CCP) in October 2002, President Jiang Zemin officially articulated the idea of a 20-year ‘period of strategic opportunity’ for China, during which it would concentrate on accelerating its development and modernization. Subsequently, China acceded to the WTO, thereby integrating itself into the international trading system and stimulating economic development, while concurrently adopting a ‘good neighbour’ policy and actively supporting ASEAN-led regional security institutions. Guided by its central task of promoting economic development, the Chinese government began to engage with America by integrating itself into the existing Asia-Pacific regional system and by adopting a policy of reassurance and self-restraint towards its neighbours.
Since 2012, China’s role in the Asia-Pacific order and its strategic behaviour have changed drastically owing to its growing national power. China has shown greater willingness to shape the regional order and to display its strength through practical actions. To enhance its security leverage, for example, China has begun to acquire stronger military capabilities, a blue-water navy and power-projection assets. In dealing with territorial disputes, China has also changed its practice of unilaterally shelving such disputes to take advantage of opportunities to alter the status quo. For instance, in 2012, using Japan’s announcement of ‘nationalization’ of the Diaoyu/Senkaku Islands, Chinese law enforcement vessels began to conduct regular cruises around them. During the Scarborough Shoal standoff in 2012, Chinese ships came to effectively control the reef.
In addition, China has carried out large-scale island reef construction and land reclamation projects throughout the South China Sea. In the economic realm, China put forward the BRI in 2013 and within half a decade has transformed it into a global strategic plan. Similarly, the Asian Infrastructure Investment Bank (AIIB) became the first China-led regional financial institution when it was established in 2015, and in just four years thereafter garnered the support and participation of more than 100 countries. Before the Trump administration pulled out of the TPP in January 2017, Beijing decided to support the ASEAN-led RCEP negotiations in order to offset the potential negative impacts of TPP.
During Xi Jinping’s tenure as president, China has adopted the more ambitious goal of national rejuvenation; Xi believes that China ‘has achieved a tremendous transformation: it has stood up, grown rich, and is becoming strong’. In other words, the pursuit of economic development is no longer Beijing’s primary goal. To become stronger, China is attempting to assert its Great Power status and transform its accumulated economic power into regional and global influence. In May 2014, President Xi observed that ‘it is for the people of Asia to run the affairs of Asia, solve the problems of Asia and uphold the security of Asia’. This assertion was interpreted by some analysts as a ‘Chinese Monroe Doctrine’ that seeks to exclude America from Asian security affairs and to establish a China-led security architecture. The statement illustrates China’s growing ambition to play a leading role in Asia. However, the claim that China wants to drive America out of Asia exaggerates not only China’s intentions, but also its practical capabilities. On the one hand, the US security presence in the Asia-Pacific region is strong and stable, and its exclusion is far beyond China’s current and near-future capabilities. On the other hand, other Asian states’ attitudes towards China’s rise are mixed. Although these actors seek to engage China economically, they do not regard Beijing as a fully reliable partner in terms of security, nor do they see it as a strategic substitute for America. The US presence in the region leaves room for these small states to manoeuvre and to maintain a policy of hedging between the two powers.
The severity of Sino-US competition reflects the (in)compatibility of these two powers’ vital interests. As stated by various official documents, America’s primary strategic objective is to defend its hegemony against the rise of regional powers. For example, the national defence strategy reports released by different administrations in Washington have always emphasized the importance of preserving America’s strategic superiority in every domain. In contrast, China is eager to pursue Great Power status in its neighbouring regions and beyond through the use of its newly accumulated economic power, as illustrated by President Xi’s vision for Asia. Certainly, there are contentious issues at stake in these explicitly stated objectives. But that does not mean such conflicts are not reconcilable. It is, rather, a matter of choice: how do these two powers perceive each other’s intentions and capabilities? How will their respective objectives be pursued? And how will each power seek to accommodate, or resist, the other’s pursuit of its interests? The Trump administration has presented some answers to these questions in its efforts to promote the Indo-Pacific strategy. It is important to explore China’s perceptions and reactions to this latest development.
Chinese Perceptions of the Indo-Pacific Strategy
Beijing views US strategic moves in its neighbouring regions as targeted directly at China. After more than three decades of rapid economic growth, China is eager to translate its accumulated material capabilities into effective influence and favourable outcomes in Asia and beyond. However, the US presence poses a formidable constraint on Beijing’s ambition.
China’s official response to the Indo-Pacific strategy has been to persist in references to the Asia-Pacific. Several official remarks regarding whether Beijing will endorse the concept of the ‘Indo-Pacific’ at all, or whether it will even develop a Chinese version of the ‘Indo-Pacific strategy’, have shown its reluctance to use the term. In March 2018, the Chinese foreign minister Wang Yi told reporters that the Indo-Pacific concept is ‘like the sea foam in the Pacific or Indian Ocean’—that it ‘may get some attention, but soon will dissipate’. Chinese foreign ministry spokespersons persist in referring to the ‘Asia-Pacific region’ even when they are responding to questions concerning the ‘Indo-Pacific’ concept.
One of the major problems in assessing China’s regional strategy is that, aside from official statements and policy reports, there are few direct ways to gauge Chinese leaders’ perceptions and opinions. One solution to this lack of direct primary source materials is to use Chinese IR scholars as a proxy to assess Chinese leaders’ perceptions on Asian security. Chinese IR scholars serve as intermediaries between Chinese leaders and the Chinese public and therefore, at least implicitly, influence or reflect the policy preferences of Chinese decision-makers. As Linda Jakobson and Dean Knox note, ‘the public and internal writings of academics, intellectuals and journalists not only offer expertise on specific issue areas, but also provide a window through which foreign ideas and both international and domestic debates are channelled to top decision makers’. Although Chinese academics are less involved than their US counterparts in the making of foreign policy, their opinions to some extent both reflect and influence the viewpoints of the decision-making policy circle, to which they are transmitted through both formal and informal channels. It is with these connections in mind that this section examines China’s perceptions of the Indo-Pacific strategy through an examination of the positions of the Chinese government and of a few government officials as they are reflected in academic journals and in the media. In contrast to the official reticence, Chinese scholars have provided numerous policy analyses and media commentary on the concept of an Indo-Pacific strategy.
Although Washington claims that ‘the free and open Indo-Pacific Strategy is not just about China’, most Chinese observers believe that this strategy is simply the most recent US response to China’s rise and to the consequential changes in the regional landscape. As such, Chinese analysts find more continuities than differences in the goals and instruments used in the US regional strategy before and after the announcement of this new concept. According to the 2019 Defense Authorization Act, US Congress requires the Trump administration to formulate a ‘whole-of-government’ strategy for China; that is, to win the strategic competition with China through comprehensive use of economic, political, diplomatic, military and information tools as well as other means at its disposal. The response of many Chinese scholars to the titular shift from ‘Asia-Pacific’ to ‘Indo-Pacific’ is contingent on the implications such a shift will have for China. If America’s goal of constraining China’s rise remains unchanged, why substitute ‘Indo-Pacific’ for ‘Asia-Pacific’? Lin Minwang, a south Asian expert at Fudan University, argues that ‘with the development of China and India’s maritime interests and navies, the growing strategic competition has led to the integration of the separated Indian and Pacific Oceans’, and that the concept ‘demonstrates the strategic importance of Australia and India to the United States’.
Chinese scholars generally take the view that the Indo-Pacific strategy will have negative implications for China’s security environment. For some, increasing US involvement in China’s neighbourhood has created a so-called ‘four-seas linkage’ dilemma, bringing together the disputes concerning the South China Sea, the Taiwan Strait, the East China Sea and the Yellow Sea (the Korean peninsula). Whether America strengthens its diplomatic relations with key regional actors or its military capabilities in Guam and Diego Garcia, China will nevertheless feel less secure, further intensifying the strategic uncertainty between the two powers. Also, America’s promotion of the Indo-Pacific strategy will lead to continuous and intensified regional arms races, particularly with respect to building up naval arms. Regional maritime disputes between China and other regional states will be exacerbated, possibly magnifying issues of legitimacy in China’s maritime claims, thereby undermining its attempts to resolve island disputes. Most importantly, countries with pre-existing maritime disputes with China may receive mixed signals from America as it adopts a more hard-line stance towards Beijing.
Some Chinese observers tend not to attribute much actual impact to the Indo-Pacific strategy. In their view, the current strategy is still at the conceptual level, without much substantive content. These scholars identify three inherent defects in the implementation of the strategy. First, some contend that America lacks the strength and resources to implement the Indo-Pacific strategy unilaterally. To state that America has fallen into the ‘decline trap’ may be an overstatement, but it is no exaggeration to say that America’s ability to expand its hegemony and support the cost of that dominance has waned. Thus, America will increasingly expect its regional allies to take on more of the costs associated with maintaining the regional order. If the US fiscal revenue and military budget can support the Indo-Pacific strategy militarily, it may elect to strengthen its military presence in the region. However, given the Trump administration’s intention to cut US ‘logistical, opportunity, and operational costs’ in the region, the best option is to optimize its military presence and share more defence burdens with its allies.
Second, the Indo-Pacific strategy is a regional strategy that lacks both an economic dimension of its own and the capacity to resist China’s growing economic influence. After Trump took office, he pursued his ‘America First’ policy by successively withdrawing from multiple multilateral institutions, among which was the TPP, negotiated over a long period by the Obama administration. This US-led Asia-Pacific trade circle would have excluded China. It was considered by Chinese scholars as one of the pillars of the rebalancing strategy, posing a very serious threat to China during the Obama administration. One Chinese scholar goes so far as to argue that ‘Trump’s unilateral pursuit of more “fairness and reciprocity” in the economic realm … and Trump’s decision to abandon TPP poses a problem to the logic of this “continuation” thesis—without TPP, the so-called “Indo-Pacific strategy” lacks any economic pillar’.
Washington is, of course, aware of the importance of economic pillars to its regional strategy. On 30 July 2018, when National Security Advisor Mike Pompeo attended the Indo-Pacific Business Forum held by the American Chamber of Commerce, he announced that America would invest US$113 million to promote interconnectivity between India and the Pacific, of which US$25 million would be used for digital interconnectivity, US$50 million for energy development, and US$30 million for infrastructure development. In response to this US plan, a spokesman for the Chinese foreign ministry commented that ‘such a pledge by the US side, out of what purpose notwithstanding, will help the development of regional countries … Meanwhile, we … will watch if and how the US fulfils its promises’. Shortly thereafter, the Japan Bank for International Cooperation, the Overseas Private Investment Corporation (the US government’s development financial institute), and the Australian Ministry of Foreign Affairs and Trade issued a joint statement announcing that the three states were ‘currently negotiating a framework for cooperation’. Chinese scholars believe that while America is attempting to bring life to the military facet of the Indo-Pacific strategy, it is also trying to piece together an economic version to restrain China’s expanding influence.
Third, other states in the region are not necessarily staunch supporters of the Indo-Pacific strategy. They differ in their understandings of the future of the regional order, their abilities and their willingness to participate. Among the members of the Quad, India takes the most unresolved stance. Despite its willingness to balance against China, India is unwilling to offend Beijing. Chinese scholars perceive India as a weak party in the Quad coalition. Owing to their relatively long history of trilateral talks, the relationships between America, Japan and Australia are stronger than those with India, making it the weakest link in the Quad coalition. For its part, India openly opposes the idea of forming an exclusive club in the Indo-Pacific region. Instead, as Prime Minister Narendra Modi has said, ‘[By] no means do we see it directed at any country … New Delhi’s engagement in the area will be inclusive.’ Since the Doklam standoff in 2017, partially because the Trump administration failed to support India’s position, New Delhi has expressed a strong desire to rebuild its ties with China.
However, against a background of intensified US-China strategic competition, some Chinese scholars indicate that China needs to calmly reformulate its overall strategy. Between 2012 and 2017, China showed a strong tendency to attempt to realize preferred objectives in excess of its capability, usually by promoting Sino-centric initiatives and coercing its neighbours. These proactive tactics successfully conveyed China’s image as a ‘stronger’ power; however, they also resulted in a series of sharp quarrels with its neighbours, including Japan, Vietnam, the Philippines, South Korea, Singapore and India, among others. Whether explicitly or implicitly, America was a relevant party in some cases because its allies and security partners were involved. But in that period, the Obama administration continued to declare its intention to maintain the stability of bilateral relations with China, stressing cooperation on bilateral and multilateral issues. As the administration’s final National Security Strategy report stated, America ‘welcomes the rise of a stable, peaceful, and prosperous China … While there will be competition, we reject the inevitability of confrontation.’ By contrast, President Trump has effected a disruptive change in America’s China policy, adopting highly confrontational tactics ranging from bullying to bluffing and threatening.
It would be gravely detrimental to China to encounter containment from America coupled with widespread balancing from its neighbours. Some experts have expressed their concern about such a worst-case scenario. As early as 2015, Chinese academics were discussing the problem of ‘strategic overstretch’ in Chinese diplomacy. For example, Renmin University Professor Shi Yinhong warned that China had become overstretched by undertaking too many concurrent initiatives and projects in Asia and beyond. He suggested that China needed to maintain a balance between two ‘priorities’: Sino-American relations and its neighbourhood diplomacy. This idea triggered a debate among Chinese scholars on whether China was truly experiencing strategic overstretch or not. According to another prominent academic, Yan Xuetong, it is more accurate to describe a rising China’s potential predicament as ‘strategic rash advance’, overstretch being a phenomenon typically associated with hegemonic powers. Whether ‘strategic overstretch’ or ‘rash advance’ is the better description, the very discussion shows that some scholars are worried about the rapidity of China’s expansion of its global influence, which will lead to a lack of resources internally and counterbalancing externally. Some scholars go so far as to suggest that China should return to its ‘keeping a low profile’ strategy. As the next section will show, this debate on China’s strategic posture does not stop at the academic level; it has been transmitted into policy-making channels and contributes to the current adjustment of China’s foreign policy.
A Moderation of Chinese Assertiveness
The Chinese leadership’s perceptions of its external environment are among the primary determinants of China’s overall external strategy. Undoubtedly, America’s shifting strategic presence and influence in its neighbourhood play a significant role in shaping those perceptions. In response to the Trump administration’s ‘Indo-Pacific strategy’ generally, and to its changing policies towards China in particular, we can identify some important shifts in China’s regional policies. In general, Beijing has recently begun to moderate its assertive policies in order to sustain its rise and alleviate external pressures imposed by the Indo-Pacific strategy. It should be noted that China’s subtle change in policy since 2017 has been prompted not solely by America’s efforts to promote that strategy, but more substantially by the Trump administration’s overall China policy. However, the two policy agendas are closely interrelated and interact with one another. Given that the Indo-Pacific strategy has underlined an apparent US intention to counter China’s growing regional influence, this section focuses on Beijing’s shifting strategic behaviour at the regional level.
Reverting to Prudence and Restraint
Between 2012 and 2016, China displayed a strong tendency to exaggerate its capability to achieve its preferred objectives by promoting Sino-centric initiatives and coercing its neighbours. Chinese official discourse, diplomatic actions and academic discussions in this period all reveal a high degree of self-confidence. However, this new strategic posture in Asia and beyond prompted negative feedback from a growing number of detractors. In recent years, China has had to deal with deteriorating relations with many neighbouring countries, including Japan, South Korea, India and some south-east Asian countries, but the most serious challenge clearly comes in the form of its relations with America.
Washington’s present perception of China is generally negative. The consensus within the administration is that America has misjudged the direction of China’s development since the establishment of US-China diplomatic relations. It has not developed in accordance with US expectations over the past four decades, that is, through gradual integration into the US-led international system. The focal point of the Trump administration’s China policy is that America must abandon its illusions, realistically face the challenges that now exist, and adopt practical measures to balance against China’s rise. Trump’s tariff wars have been perceived as attempts to suppress China’s technological development, and thereby stifle its long-term economic growth. Such an aggressive US stance has highlighted the vulnerability associated with China’s heavy reliance on US high-tech imports and has consequently sparked discussion among scholars about the gradual decoupling of the two economies. The continuing trade disputes with America indicate the weaknesses of China’s economy and its apparent inability to decouple itself from America without damaging its domestic development.
In recent months, Chinese academics, think-tanks and media have continued to emphasize the importance of managing the mixed cooperative-competitive relationship with America and altering the position of passivity in which China has found itself since Trump’s trade war was launched. Taking into account China’s military and economic inferiority to America, direct confrontation would be costly and even harmful for Chinese long-term economic development. Many senior Chinese experts suggest that China must strive to strengthen relations with US elites and business circles to stabilize bilateral relations. According to Yuan Peng, a senior researcher in a government think-tank, ‘China should guard against arrogance and rashness’, given the persistence of ‘considerable strength gaps’.
Faced with various pressures from America, China has not taken the tough approach it would have formerly done in dealing with external conflicts. Since late 2017, Beijing has been sending a clear signal that it is toning down the domestic rhetoric of exaggerating China’s capability and achievements. In the media, official sources quickly put an end to extravagant domestic claims of China’s strength. The slogan ‘Made in China 2025’ is now rarely mentioned in official statements. When faced with US sanctions on Chinese science and technology giants ZTE and Huawei, Beijing did not follow the traditional route of adopting political means to suppress US enterprises operating in China to the same extent; nor did it mobilize nationalist tools to rouse anti-American sentiment in China as it had done in Japan, South Korea, Canada and other countries. This low-key diplomacy contrasts sharply with China’s hard-line diplomacy before 2017.
The BRI is considered to be the most obvious embodiment of China’s ‘strategic overstretch’ or ‘rash advance’ in diplomacy. Some BRI projects are attracting a great deal of criticism in heavily indebted countries such as Sri Lanka, Djibouti and Myanmar (Burma), with detractors accusing China of obtaining financial and diplomatic influence over these countries via a ‘debt trap’. Recently, there have been shifts in the way China promotes the BRI, with Chinese leaders repeatedly stressing the need for refinements in BRI construction projects over the next few years. In particular, there needs to be a greater emphasis on developing high-quality and high-standard infrastructure projects to enhance the actual effects, and a greater focus on risk management and control of cooperative projects, both to strengthen the sustainability of financing and to enhance the openness and transparency of international cooperation. At the same time, Beijing has begun attaching significance to the financing risks of BRI projects, the Chinese ministry of finance approving ‘BRI Financing Guidelines’ jointly with the finance ministries of 26 countries. Concurrently, China has also begun to establish third-party market cooperation with some developed economies, including some EU member states, Japan and America. Transnational corporations from these developed countries have already been heavily involved in China’s projects in south-east Asia, Africa and central Asia.
A Wedging Strategy Towards the Quad
The security dimension of the Indo-Pacific strategy relies primarily on Australia, India and Japan (the Quad members); and there are elements in the security dialogue among these countries that are targeted at China. For example, the joint ministerial statement released by the Australia-Japan-US Trilateral Strategic Dialogue in August 2018 expressed ‘serious concerns about developments in the South China Sea’. Thus, if China were to drive a wedge between America and its allies and its partners in the region, the pressure from this coalition would be reduced. The use of bilateral means to disrupt relations between these nations is regarded by China as an efficient way of undermining the Indo-Pacific strategy. In order to divide and disrupt US alliances and partnerships in the region, China actively adopts both coercive and reassuring tactics against specific countries.
The previous section noted the belief among some Chinese scholars that even though India is embracing the ‘Indo-Pacific’ framework, it is not willing to change its own established tradition of balanced diplomacy. Beijing has thus tried its best to maintain a relatively benign relationship with New Delhi. In the summer of 2017, the Chinese and Indian armies faced off at the Doklam plateau, bringing to a head a border dispute between the two Asian giants that had lasted for several decades. The Doklam standoff ended in August 2017 after the two sides agreed to disengage. The peaceful ending of this crisis could be attributed to the imminence of the BRICS summit involving Brazil, Russia, India, China and South Africa, hosted by China; however, it appears that Beijing and New Delhi decided to restore their relationship after an informal summit between Xi Jinping and Narendra Modi in April 2018. Since the Doklam confrontation, China has taken measures to appease India, including condemning terrorist attacks in Pakistan at the 2017 Xiamen BRICS summit, resuming the provision of hydrological information in the upstream section of the Yaluzangbu river to India, and agreeing to reopen the Nathu La route for the annual Indian pilgrimage to Tibet. However, even though negotiations on border disputes between the two states have resumed, these issues continue to undermine China-Indian relations. For instance, India maintains that it will not take part in the BRI as long as the road from China to Pakistan’s Gwadar Port passes through territory disputed by India and Pakistan. However, India’s policy of maintaining a balanced approach to the Great Powers poses less of a threat to China than a policy choice to side definitively with the United States.
Similarly, China has already begun to mend its relations with Japan after years of strained bilateral relations owing to the escalating confrontation over the Diaoyu/Senkaku Islands from 2010 onwards. In May 2018 the Chinese premier Li Keqiang visited Tokyo, where he declared the resumption of mutual visits by Japanese and Chinese leaders. In the security realm, the two sides agreed to launch an ‘air-sea liaison mechanism’ to prevent clashes between the Japanese Self Defence Force and the Chinese military and to ease tension in the East China Sea. In October 2018, Prime Minister Shinzo Abe travelled to Beijing, making the first official visit to China by a Japanese leader in seven years. While there, Abe expressed his hope of ‘usher[ing] in a new era of China-Japan relations where competition is transformed into coordination’. Following the visit, China and Japan signed a number of cooperation agreements in the areas of third-party market cooperation, maritime crisis management, bilateral currency swap arrangements and the safeguarding of the multilateral free trade system, thereby marking the revival of bilateral relations.
Does China’s adjustment of its relations with Japan and India represent a merely opportunistic move or a fundamental turning point? Is this initiative to ease relations sustainable? Definitive answers to these questions require the passage of more time. Given doubts about the credibility of the Trump administration’s commitment to regional countries, as well as trade pressures on its allies and security partners, China still has room for manoeuvre. Both India and Japan face strong trade protectionist pressure from President Trump. These concerns have prompted New Delhi and Tokyo to adjust their policies towards China and to seek rapprochement and cooperation on economic and trade issues. Moreover, in the context of long-term strategic competition with America, Beijing will not blindly adopt tough policies towards major Asian countries but will adopt a strategy of engagement through practical action.
Reassuring ASEAN States
The ‘Indo-Pacific’ concept stands in direct contrast to the Asian-Pacific system in which ASEAN holds a central position, and has left some south-east Asian states feeling abandoned by America. ASEAN wishes to put forward its own ideas for the construction of regional order in the Indo-Pacific, which differ in some respects from Washington’s conceptualization. The South China Sea arbitration case between China and the Philippines caused great damage to the relationship between China and some ASEAN countries, but the conclusion of the arbitration in 2016 presents a positive opportunity for the parties involved to improve their relationships. Because China’s construction of artificial reefs in the South China Sea has given it effective capacity to control the area, continued escalation of regional territorial disputes would not benefit China’s national interests. Accordingly, China has moderated its behaviour towards the South China Sea issue with the intention of actively improving relations with ASEAN member states, easing consultations with ASEAN on a code of conduct (COC) and stabilizing the situation in the South China Sea.
Reaching a more binding COC with China has long been ASEAN’s goal. ASEAN has actively promoted discussion on the COC with China on many occasions as a way to express the Association’s and its member countries’ apprehensions about China in the security realm, and to explain its approach to the South China Sea issue. Following China’s island and reef construction, which has substantially changed the geographic situation of the South China Sea region, and its resolute rejection of the arbitration ruling, ASEAN countries recognize that direct dialogue and consultation with Beijing will be the only effective way to deal with the issue. In order to alleviate ASEAN countries’ concerns over China’s rise, Beijing began to seriously explore the possibility of coming to an agreement on a South China Sea COC. In August 2017, China and ASEAN adopted a negotiating framework for the COC and formally initiated consultations in November the same year. At the China-ASEAN leaders’ meeting on 14 November, the leaders of China and eleven ASEAN countries agreed to complete the Single Draft Negotiating Text of the COC negotiating text guidelines by the end of 2019. The first reading of the single draft has already finished ahead of schedule in July 2019, a positive move towards the goal of concluding the consultations by the end of 2021 as promised by China.
At present, there are still some significant points of divergence between China and ASEAN on the COC. ASEAN countries expect a legally binding COC; China has not responded positively to ASEAN’s request on this point. If China is willing to give a clear timetable for reaching the guidelines and to push forward negotiations, this will indicate that it will maintain restraint and refrain from escalating any issues in the South China Sea in the meantime. In October 2018, the joint ASEAN-China Maritime Exercise 2018 was held in Zhanjiang, Guangdong province, China. This is the first maritime exercise held by the navies of China and the ten ASEAN members, marking a significant point in ASEAN-China relations and demonstrating the willingness of both sides to establish strategic trust.
The analysis above suggests that Beijing has retained some essential elements of its pre-2013 policy towards its neighbours. That strategy, adopted in the early 1990s, stressed the importance of reassuring neighbouring countries in an attempt to build a benign external environment for China’s economic development. The reassurance in that period was marked by several distinguishing features, including a tendency towards restraint in territorial disputes, active participation in regional institutions, and projection of a responsible image through close economic engagement. After a brief period of assertive foreign policy, it seems that President Xi has turned back to embrace some of those traditional policy features once again. It would be going too far to argue that China’s regional diplomacy under Xi Jinping exhibits a fundamental change from that of previous governments. But it is also unrealistic to expect China to revert to its ‘keeping a low profile’ strategy.
Conclusion
The Indo-Pacific strategy proposed and pursued by America under the Trump administration is a continuation of the Obama administration’s rebalancing strategy to maintain US dominance in Asia and hedge against China’s rise. The potential ramifications of US-China competition for the countries of the region are very wide. With the two major powers pursuing contradictory regional strategies, the likelihood of a bipolar Asia could increase. When China and America engage in comprehensive competition in both the economic and the security realms, small and middle powers in the region have ample strategic flexibility, and hedging strategies are more likely to be the predominant choice. Clearly, a moderate degree of security competition between these two powers provides small and middle powers with the space to swing between them, offering the potential to obtain greater benefits. If the current pattern of intense US-China competition continues or becomes even stronger, regional states will increasingly feel the pressure to align with either America or China; this will reduce their chances to exploit the strategic space created by a benign major power relationship, perhaps ultimately fuelling regional conflict. As Singapore’s prime minister Lee Hsien Loong recently warned, ‘the circumstances may come when ASEAN may have to choose’ between being friends with America and being friends with China.
Competition surrounding the Indo-Pacific order has just begun. In international politics, the pursuit of exclusive spheres of influence (whether economic or security-oriented) is a source of Great Power rivalry that leads to intense competition and conflict. While US officials have repeatedly defined the Indo-Pacific strategy as a comprehensive initiative to advance a ‘free and open’ region in cooperation with all allies, partners and regional institutions, there are still concerns that it may in fact be nothing more than an exclusive regional security arrangement to counter China. In response to the Indo-Pacific strategy, it would be more effective for China to articulate a more inclusive regional vision and promote an institutional framework that also accommodates a US presence in the region.
Considering that China is still an emerging power, and that regional countries do not want to be involved in intensifying US-China security confrontations, Beijing needs to use more flexible means to offset the security challenges that Trump’s strategic shift may generate. China’s economic leverage is clearly insufficient to supplant regional small and medium-sized states’ security relations with America. It will be relatively preferable for China if regional states continue to maintain a balance between it and America, and are not forced to choose sides, thereby possibly intensifying Sino-American competition.
Over the past several years, China’s hard-line diplomacy has had negative effects for its neighbours, deepening their concerns about the country’s rise. To avoid a deterioration of its overall security environment, China has recently comprehensively adjusted its foreign policy to ease tense relations with neighbouring countries, including Asian powers (such as Japan and India) as well as small and medium-sized states (such as the Philippines and Singapore). Restoring or improving diplomatic relations is also a way to avoid pushing them towards the United States, with the concomitant risk of their becoming part of a balancing coalition against China. At present, China’s moderation of its diplomatic stance is just beginning to unfold. To encourage more and more regional states to support and participate in China’s regional initiatives, Beijing needs to put together a package of political, economic and military measures to signal its benign intention. A strategy of restraint and reassurance would serve this purpose best.