In his second term, President Barack Obama faces three choices in the Asia-Pacific: to pivot, poison, or make peace. So far Obama’s contribution to regional strategic discourse has been the word “pivot”. After some reflection, his administration wisely decided to drop the use of the word. But the policy behind the word seems to continue, without much reflection. The key goal of this essay is to encourage the Obama administration to engage in even deeper reflection about the Asia-Pacific. In a world where America faces rising constraints on its power and influence, the Asia-Pacific offers some easy opportunities for plucking.
To grasp these opportunities, the Obama administration needs to engage in some radical new forms of geopolitical thinking. The main problem with most American strategic thinkers in Washington is that they assume that 19th century assumptions will continue to work in the 21st century. In short, relations among great powers will always be zero-sum games: if one wins, the other loses. In practice, American administrations have been careful and nuanced in dealing with China. Nonetheless, as America struggles to retain its number one position in the world against the rapidly rising number two power, China, every gain for China is seen as a loss for America and vice versa.
The main reason why America is pushing for the Trans-Pacific Partnership is to balance China’s growing economic clout in the region. Let me be clear about one point: competition among great powers will always continue. The grain of human history does not change overnight. Yet, in the relations among all great powers, there will be a mix of competition and collaboration, with the pressures to collaborate growing ever faster day by day.
In my book, The Great Convergence: Asia, the West, and the Logic of One World, I use a simple analogy to explain how the world has changed fundamentally. Before the era of modern globalisation, humanity sailed in 193 separate boats, steered by 193 captains and crews. The 1945 rules-based order existed to prevent these boats from colliding on the high seas. Now humanity lives on the same boat but in 193 different cabins, each with a different captain and crew looking out only for their own cabins. Sadly, the world does not have a captain or crew to take care of the global boat. As a result, if America and China are sailing on the same boat, they have a common interest not to sink the global boat, and to collaborate in managing it. This is why both collaborated closely at the height of the global financial crisis in 2008–2009. At the same time, China’s rise has been achieved by accepting and integrating into, rather than challenging, the US-led international order. This strategic decision also demonstrates a recognition that we are sailing on the same boat.
Despite this critical common interest, it will be impossible to remove overnight the enormous distrust that has developed between America and China. Over the past decade or so, the gap between American and Chinese power has narrowed considerably. And China may overtake America sooner than any American has imagined. Sadly, few Americans have psychologically prepared themselves for this major power shift. I learned this when I chaired a panel in Davos in January 2012 on “The future of American power”. The panellists were all highly distinguished Americans, including two senators, a congresswoman, and a former deputy national security advisor. I asked them whether America could adjust to being the number two power in the world and I was shocked that none could even consider the possibility or dare to discuss it publicly. It is politically suicidal for any American leader to suggest publicly that America could become number two.
According to IMF statistics, in 1980, in PPP terms, America’s share of global GDP was 25 per cent while that of China was 2.2 per cent. In 2017, barely three years from now, America’s share will shrink to 17.9 per cent while that of China will rise to 18.3 per cent. As Americans gradually begin to realise they are becoming number two, there will be an instinctive desire by some policymakers and strategic thinkers to look for ways, consciously and unconsciously, to thwart China’s rise. Many in China fear that America could mount a containment policy similar to the one that it mounted against the Soviet Union. These Chinese fears may be seen by some as unfounded but the extent of Chinese distrust towards America should not be understated. Wang Jisi and Ken Lieberthal have described well the gap in the understanding between America and China. They say:
“On the Chinese side these doubts stem more from Beijing’s application of lessons from past history, while on the US side the doubts tend more to derive from Washington’s uncertainties as to how a more powerful China will use its growing capabilities. In each case, differences in political systems and values significantly exacerbate both the inherent distrust of the other side’s motives and the inability to understand fully what shapes the other side’s attitudes and actions.”
Similarly, in their brilliant Foreign Affairs article last September, Andrew Nathan and Andrew Scobell pointed out that “whether they see the United States primarily through a culturalist, Marxist, or realist lens, most Chinese strategists assume that a country as powerful as the United States will use its power to preserve and enhance its privileges and will treat efforts by other countries to protect their interests as threats to its own security.”
With this massive distrust, China’s suspicions of America will not disappear overnight. And some of the suspicions may well be justified. While an explicit containment policy against China will clearly not work (in part because America as well as China’s neighbours have developed highly interdependent relationships with the Chinese economy), America can mount a much more subtle and indeed much more dangerous policy of “poisoning” the well for China. A colleague of mine, Professor Huang Jing, has observed in the China Economic Quarterly that even though most of China’s challenges are internal, the “levers” to trigger these internal challenges are external. Some obvious examples are Tibet, Taiwan, the Muslim separatists in Xinjiang, the internal dissenters like Liu Xiaobo, and the blind activist Chen Guangcheng.
America can also cleverly exploit the recent mistakes that China has made with its neighbours. In September 2010, China overreacted when the Japanese arrested the captain of a Chinese fishing boat in disputed waters, demanding an apology even after the Chinese captain was released. In November 2010, China reacted too passively after the North Korean shelling of a South Korean island, which killed two civilians and two South Korean Marines. In response, South Korea sent an envoy to the award ceremony of the Nobel Peace Prize to Chinese dissident Liu Xiaobo. China’s ambiguous positions on the South China Sea have also troubled its Southeast Asian neighbours that have maritime claims there, including Vietnam and the Philippines. No one knows for sure what China’s real position is on the “nine dash line” it has drawn across the South China Sea.
If America chooses to be truly Machiavellian in its approach to China, as some neo-conservative intellectuals would like it to be, there is no shortage of subtle levers America could pull to destabilise China. In the list above, I have focused on political levers. But there are equally powerful economic levers in America’s hands. The several rounds of quantitative easing that America has carried out have threatened to increase inflation in China. This is why a leading Chinese figure, Chinese central bank governor Zhou Xiaochuan, cautioned that “inevitably, some emerging economies will suffer too much capital inflow” from American QE.
One geopolitical reason China kept buying US Treasury bills was to increase America’s economic dependence on China. This would give China some economic leverage to balance its dependence on the American market for its manufactured products. At the height of the global financial crisis in 2008–2009, both President Bush and President Obama sent envoys to quietly and discreetly solicit assurances that China would continue buying US Treasury bills to avoid any loss of confidence in them. China was happy to give these assurances. Unfortunately, one major negative result of this episode was that China became over-confident.
Foolishly, China decided to treat Obama shabbily when he went on his first state visit to China in November 2009. Obama felt humiliated in several ways. For example, his town hall meeting with Chinese university students was not broadcast on national television. Instead, it was only shown on Shanghai local television and streamed online in poor quality with no advance notice for viewers.
This poor treatment of Obama was an unwise move by China. It stiffened Obama’s back and convinced him that America has to show its “tough” side to China. It is no coincidence that Hillary Clinton’s decision to use the South China Sea issue to embarrass China at the ASEAN Ministerial Meeting took place at the ASEAN Regional Forum in Hanoi in July 2010.
Given this slightly negative trend in US–China relations in the final years of the first term of the Obama administration, it would be foolish to believe that we will experience smooth sailing in US–China relations in the second Obama administration. It is more than likely that there will be more road bumps. Each time a bump occurs, both sides will naturally assume the worse of each other. Hence, US–China relations could easily slip into a troubled road over the next few years.
Yet Obama also faces a unique opportunity to emerge as one of the greatest American Presidents of the 21st century by working hard to forge a relationship between America and China that benefits both countries and also brings stability to the Asia Pacific region and the world at large. Most observers agree that Obama did not deserve to win the Nobel Peace Prize in October 2009. He had done nothing to deserve it then. In the subsequent years, while he promised to bring peace to the troubled relationship between Islam and the West, especially in his brilliant speeches in Istanbul in April 2009 and in Cairo in June 2009, he has left most of the Islamic world disillusioned with his lack of follow-through on those speeches. He hasn’t delivered on any of his great promises, especially on the Israel–Palestine issue.
With China, Obama should neither try to give great speeches nor make great promises. Any great speech by Obama will be badly received by China’s leaders because, to protect himself domestically, Obama will have to push for democracy in China. American rhetoric on the need for political transformation in China has not been helpful and is received with great suspicion, even by the Chinese people. Nor should he pronounce a “grand strategy” towards China. In the West, it is politically unfashionable to admit that cultural differences exist. But in the 21st century, as we move from a mono-civilisational world of Western domination to a multi-civilisational world, we need to understand that cultural nuances matter. In the West, great speeches are admired. In the East, great deeds are admired. This is why Obama should try to build a strong, mutually beneficial relationship with China by following Deng Xiaoping’s method of “crossing the river by feeling for stones”.
The key philosophy that Obama should adopt in working with China is pragmatism. There are many areas where America and China can work together to develop a mutually beneficial relationship. And there is an equal number of areas where both can work with each other to reduce distrust. The best way to explain is to look at the three critical dimensions of the US–China relationship: economic, political and military. In all three areas, a significant upside exists.
In the economic sphere, Obama and Xi share a vital common interest. Both face a common challenge of trying to reinvigorate their economies. The American challenge is obvious: there is a political gridlock preventing a solution to America’s sharp fiscal problem. And the American economy is no longer generating as many jobs as before.
Fareed Zakaria recently warned that “without a strategy to revive growth, all of our problems get worse, especially long-term debt.” He adds that the key to reviving growth is structural reform “as well as investments in human and physical capital”. One of the most capital-rich countries in the world is China. Indeed, China is ready to invest more in the American economy, if Obama can help to create a political environment that welcomes Chinese investments.
China’s economic challenges are less obvious, as it is likely that China will continue to grow at around 8 per cent a year. But China also faces the need for structural reform. Yasheng Huang warned in a recent Foreign Affairs article that “if China continues with its political status quo, conflicts are likely to escalate sharply, and the pace of capital flight from the country, already on the rise due to declining confidence in China’s economic and political future, will accelerate. If not stemmed, the loss of confidence among economic elites will be extremely dangerous for the Chinese economy and could trigger substantial financial instabilities.” If both Xi Jinping and Li Keqiang want to increase confidence in China’s long-term future, they should encourage more foreign private investment, especially from American multi-national corporations who remain among the most competitive in the world. Hillary Clinton and Tim Geithner used to carry out a high-level strategic and economic dialogue with Dai Bingguo and Wang Qishan. This dialogue can carry on and focus on delivering concrete results in economic collaboration. It is a no-brainer that if the American and Chinese leaders do intensive studies on how the two largest economies in the world can leverage their respective strengths to boost their economic growth, they will find many opportunities to do so. Political distrust has held back deeper economic collaboration. If Obama and Xi focus on their personal priorities to reinvigorate their national economies, they will discover quickly how much both can benefit from greater economic collaboration.
On the political side, there will be a natural temptation to exploit each other’s mistakes. In my previous book, The New Asian Hemisphere, I explained how the American invasion of Iraq was a geopolitical gift to China. Similarly, any American or Israeli bombing of Iran would be an even greater geopolitical gift to China. At the same time, aggressive Chinese postures towards Japan or the South China Sea issues would be China’s geopolitical gift to America. Several Southeast Asian leaders have already began whispering quietly to visiting American leaders that they would like to see a stronger American military and economic presence in Southeast Asia to balance the growing Chinese presence.
It is easy to slip into a simple tit-for-tat strategy. However, it is not certain what the long-term benefits would be for either America or China. As Mahatma Gandhi once quipped: “An-eye-for-an-eye-for-an-eye-for-an-eye ... ends in making everybody blind.” One does not have to adopt Gandhian virtues to avoid falling into the habits of zero-sum geopolitical games. Simple common sense will dictate that both America and China will lose if these games get out of control.
Take Japan as a case study. Superficially, it would serve American geopolitical interests to see rising tension between China and Japan. Japan can then serve as a geopolitical thorn in China’s side. Yet, if the tension escalates, and if right-wing populist nationalist tendencies rise in Japan, the danger of Japan developing nuclear weapons will rise. Most informed observers believe that Japan can develop them in a matter of months, if not weeks, since it has all the necessary components needed to develop them, from stocks of plutonium to advanced rocket technology. A nuclear-armed Japan is a potential threat to both China and America. In short, both Obama and Xi share a common interest in calming the political waters in Japan. Clearly, this is one issue where Obama can demonstrate that he deserved to win the Nobel Peace Prize. By quietly trying to calm the relations between China and Japan, Obama will also win over the trust of the Chinese leaders. Hence, it was wise of Obama not to receive Shinzo Abe in Washington, DC immediately after Abe became Prime Minister.
Similarly, while both the American-encouraged TPP process and the Chinese-encouraged Regional Comprehensive Economic Partnership are seen to be a zero-sum competition, the reality is that economic connectivity across the Asia Pacific is following economic logic, not political logic, generating greater and greater economic interdependence across the Asia Pacific. Hence, it would be clearly wiser for both Obama and Xi to stop pursuing their separate trade initiatives and instead focus on the common APEC processes that both can participate in. A simple step like this could significantly enhance the level of political trust between America and China.
Finally, and ironically, it is actually on the military front that it may be easier to make concrete progress towards reducing strategic distrust between America and China. If both of them could do some hard-headed rational cost-benefit analysis of what they would gain from a new arms race, they would discover both would lose and lose handsomely. On America’s side, it only needs to pose a simple question to itself: if it continues its aggressive naval patrolling 12 miles off China’s shores, does it want to live with a world where China’s naval vessels carry out aggressive naval patrolling 12 miles off California or New York? It would be sheer strategic folly for America to create such a world. A new win-win arrangement for America and China in the area of naval patrolling will not be difficult to work out.
Similarly, on China’s side, the stupidest thing it could do to itself would be to engage in a new arms race with America. Deng learned some valuable lessons from the collapse of the Soviet Union. One big lesson was that it was a major strategic mistake for the Soviet Union to develop a strong military at the expense of economic growth. Like the heavy armour worn by knights in the feudal era, the heavy cost of maintaining this military establishment was one reason why the Soviet Union collapsed. Equally importantly, as demonstrated by the failed Soviet invasion of Afghanistan and the failed American invasion of Iraq, a strong military capability leads to military misadventures as much as positive dividends. Indeed, as it is now virtually unthinkable for any two major powers to have a direct conflict with each other, any major power that tries to invest more than necessary in developing a military capability is dooming itself to a venture that will produce no real dividends.
One great advantage that the world has today is that Obama and Xi do not look at the world through the lenses of Roosevelt or Stalin, Churchill or Mao. In the era of World War II, it made perfect sense to focus on military strength. But the world has changed fundamentally in the past 70 years. As middle classes explode around the globe, they are converging in their perception of what is really important in their societies. Few want to send their sons and daughters to fight in battle. Major inter-state wars are becoming a sunset industry. In this new global setting, it is sheer folly for any two major powers to engage in any major arms race. Obama and Xi can demonstrate this by carefully and stealthily guiding their countries away from any such arms race. Even if they could do just this and nothing else, they could well go down as two of the wisest leaders of this century.