America and China: Strategic “Competition” in the Pacific Escalates

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America and China: Strategic “Competition” in the Pacific Escalates

by Michael Liebig


The American sociologist Immanuel Wallerstein has recently noted that most politicians and media have a strange habit: debating intensely geopolitical developments which turn out to be non-events. Wallerstein listed some recent examples of this geopolitical myopia: „Israel is not going to bomb Iran. The euro is not going to disappear. Outside powers are not going to engage in military action inside Syria. The worldwide upsurge of popular unrest is not going to fade away. “

Conversely, Wallerstein wrote, critically important geopolitical changes are routinely cast aside. A list of current geopolitical shifts which do have serious and far-reaching consequences, would include:

  • The new strategic direction of the United States in the Asia-Pacific region
  • The opening of the „North Stream“ gas pipeline, which runs through the Baltic Sea from Russia to Germany
  • The creation of the “Eurasian Union” between Russia, Kazakhstan and Belarus

Here, we limit ourselves to analyzing what has happened in the Asia-Pacific region.

“America’s Pacific Century”

November 11-19, 2011, President Barak Obama, accompanied by Secretary of State Hillary Clinton, hosted the APEC Summit in Hawaii, then he went to Australia, and finally he participated in “East Asia Summit” in Bali, Indonesia. APEC stands for “Asia Pacific Economic Cooperation” and is a forum of 21 Pacific Rim countries including the USA, China, Australia, Russia and Japan. The “East Asia Summit” was attended by the leaders of the ten ASEAN countries (including Indonesia, the Philippines, Malaysia, and Thailand) and the heads of state of the USA, Russia, China, India, Australia, New Zealand and South Korea.

At the APEC Summit in Honolulu, Obama declared: „The United States is a Pacific power and we are here to stay… there’s no region in the world that we consider more vital than the Asia Pacific region.“ The day before, Secretary of State Clinton had said: „It is becoming increasingly clear that in the 21st century, the world’s strategic and economic center of gravity will be the Asia Pacific region, from the Indian subcontinent to the western shores of the Americas. And one of the most important tasks of American statecraft over the next decades will be to lock in an essentially increased investment – diplomatic, economic, strategic, and otherwise – in this region.“

At the center of America’s new Asia-Pacific strategy stands undoubtedly China. Over the next two decades, China will become the biggest economic power in the world. In terms of political clout, China and USA will be on an equal footing. Also, the military strength of China is gradually getting closer to that of the United States. In view of this development, the United States wants to prevent China from dominating the Asia-Pacific region. Because America can’t do that alone, it is upgrading its relations to the other countries in the region which are wary of China’s growing strength. Washington wants to create a „strategic cluster“ of countries in the Asia-Pacific region to “counterbalance” China – under American leadership. In simple words, China is to be “contained.” However, the term „containment“ is consistently avoided. With respect to the new American Asia-Pacific strategy, White House National Security Adviser Tom Donilon said in Bali: „This has nothing to do with isolating or containing anybody.“ In reality, of course, it’s all about China’s containment.

Will we see between the USA and China a replay of the 1945-89 bipolar system between the USA and the Soviet Union? That’s unlikely, because since the mid-1990s a multipolar system in the world economy and world politics has emerged. In addition to the „old superpower“ USA and the „new superpower“ China, there are now other big powers, which played no significant role in world politics during the Cold War. On the one hand, from the defunct Soviet Union a resurgent Russia has emerged. On the other hand, India and Brazil have become “real“ great powers. And then there is the European Union whose actual strength tends to be starkly underestimated. Thus, a global-strategic duopoly US-China is not in sight.

Nevertheless, in the context of multipolar world system, the power rivalry between the USA and China will play a crucial role. And in the Asia-Pacific region, this rivalry is most clearly manifest. In Honolulu, Obama used the rather undiplomatic term „competition“ to describe American-Chinese relations. No other major power is designated „competitor“ by the US government.

„Containment“ was the key concept of American strategy during the Cold War in Europe. Exactly on this strategic concept draws the new American strategy for the Asia-Pacific region. In Honolulu, Clinton stated explicitly that the American Asia-Pacific strategy is based on the „model“ of transatlantic relations, which was designed and implemented 1945-89. The trans-Atlantic model aimed at the containment of the Soviet Union through a system of close bilateral relations – on the political and economic level – between the USA and the individual (western) European countries – framed in the NATO military alliance.

The Military Dimension

It is unlikely that in the Pacific region a formal, multilateral military alliance – a kind of „Pacific NATO“ – could be formed under American leadership, but there is already an informal “cluster” of bilateral military alliances, most notably with Japan and South Korea. It is of great strategic importance that Australia – for the first time since World War II – has made military bases available to the USA. On November 16, 2011, an agreement was signed by Obama and Australian Prime Minister Gillard that provides for the establishment of an American military base in Darwin on the northern coast of Australia. 2.500 U.S. soldiers will be stationed there. In addition, the U.S. Navy and Air Force were granted the right to use airfields and ports in northern and western Australia.

Close military cooperation exists between the Philippines and the United States. In 1992, the official U.S. bases in the Philippines were closed down. However, it is assumed that – on an informal basis – U.S. troops are permanently stationed in the Philippines. Tensions between the Philippines and China over respective territorial claims in the South China Sea – with its oil and gas resources – have boosted the military cooperation between the USA and the Philippines. Such a dispute over the South China Sea also exists between Vietnam and China resulting in a rapprochement between the former arch-enemies USA and Vietnam, which could possibly involve even bilateral military cooperation.

For the last decade, military cooperation between India and the United States has increased significantly, especially between the navies of both countries. India has recently made major arms purchases in the USA (C-17 transport and P-8 maritime patrol aircraft). However, India will not commit itself to a military alliance with the USA. India wants to be an world power on its own right – including the possession of nuclear weapons with intercontinental range.

And then there is the U.S. Pacific Command with 325.000 American troops stationed across the Asia-Pacific region. Besides the big bases in Hawaii and Guam, about 50.000 U.S. troops are stationed in Japan and South Korea. The 3rd and 7th U.S. Fleet dominate the Pacific Ocean. During his Pacific trip, Obama has repeatedly and explicitly stated that the U.S. Pacific Command and its naval, air and land forces will remain exempt from any cuts in the U.S. defense budget. To sum things up: The military-strategic “cluster” under American leadership for containing China is not a „project“, but reality.

The Economic Dimension

In the economic sphere, however, the U.S. containment policy towards China is still very much a „project“. Unlike its military capabilities, America’s economic and financial strength has enormously declined. The recent media hype over the „euro crisis“ has sidelined the fact that America is drowning in debt and has a massive and chronic trade deficit. The export performance of the USA lags behind China and Germany, whose GDP is only about 40% and 20% of America’s. The USA imports a lot more than they export – and by far the largest trade deficit is with China.

At the APEC Summit in Honolulu, Obama attacked China in unusually strong terms regarding monetary and trade policy. He attacked the Chinese government for administratively keeping its currency renminbi low in order to promote Chinese exports at the expense of the United States. This accusation is not new, but new is that it is articulated by the U.S. president himself – and in unusually stark terms: „There are a range of things that they [the Chinese] have done that disadvantage not just the United States but a whole host of their trading partners and countries in the [Asia-Pacific] region… It throws the whole world economy out of balance… But the United States and other countries, I think understandably, feel that enough is enough … [China] has to play by the rules of road.“

In the realm of diplomacy, Obama’s formulations are really crass. In the U.S. Congress, „China bashing“ is almost normal, but not so in diplomatic exchanges – the more so as Chinese President Hu Jintao was attending the APEC Summit. Obama’s predecessor George W. Bush had never used such formulations vis-a-vis China. Obama is blaming China for the lack of competitiveness of American industry and for the fact that American consumers are buying Chinese products en masse – including Apple gadgets “made in China.” In American “polit-speak,” this is called „scapegoating“.

Obama didn’t constrain himself to – undiplomatic – words. The Obama administration wants to create an Asian-Pacific free trade zone – excluding China. This project is called Trans-Pacific Partnership (TPP) and includes the U.S., Australia, New Zealand, Vietnam, Singapore, Malaysia, Brunei, Chile and Peru. Japan has declared its intention to join TPP. In Honolulu, these countries agreed to create the TPP free trade zone by 2012. This would mean that between the TPP member States trade barriers (import tariffs, import quotas and other administrative restrictions) would be abolished – but China would stay out.

It is doubtful, however, that the containment of China in terms of trans-Pacific trade will actually work. The economies of the Asia-Pacific region, including those of TPP member countries, are already too closely intertwined with the Chinese economy. China has become the largest trading partner for all major Asia-Pacific countries, including Japan, South Korea, India or Indonesia. There are clear indications that most Asian-Pacific government do not want to “choose” between the USA and China. At the “East Asia Summit” in Bali, the ten ASEAN countries reached a consensus that they want free trade agreements with both the USA and China.

America’s TPP project is reminiscent of the attempt of Britain in the 1950s to create – against the then-European Economic Community (Germany, France, Benelux and Italy) – its own free trade zone. This European Free Trade Assosciation (EFTA) included the UK, Sweden, Denmark, Norway, Switzerland, Austria, Finland, Portugal, Iceland and Liechtenstein. But after a few years, EFTA fell apart. Vis-a-vis the economic strength of (West)Germany and the other EEC countries, EFTA was simply no match.

In addition, China has enormous financial leverage in respect to the United States. About 10% of America’s $15 trillion government debt is held by the Chinese government. The Chinese will not permanently finance a U.S. government policy that is directed against them – either economically or militarily. China could, hypothetically, wreck the American financial and economic system within a few days by selling off a fraction of its giant holdings of US dollars and US treasury bills. However, doing so would have devastating consequences for China’s own economy (and political stability). China would loose a key export market and its vast dollar-denominated financial assets would collapse in value. But the United States is facing a worse predicament, were it to go on a confrontation course against China: state bankruptcy, dollar collapse and exploding prices for consumer goods. Thus, we have a new type of a “Mutually Assured Destruction” regime between China and the United States.

This “MAD” stalemate is surely the main reason why the reaction of the Chinese government to the new American Asia-Pacific strategy has been muted so far. But sooner than later, the Chinese will respond. How they will do this, we don’t know yet – except that American-Chinese relations will become more testy. However, a military confrontation is the least likely prospect. The Chinese are patient and think in the long term. They know that there is a gap between the intentions and the capabilities of the Obama administration. To sum things up: the limits of the American containment strategy against China will become obvious rather soon.

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