Source: MacroPolo
At the end of 2016, as Donald Trump prepared to take office as President, I penned an essay for Foreign Affairs magazine on “China and the World.” The editor, my friend Gideon Rose, had asked me to respond to two straightforward questions: Is China a “revisionist” power? And in particular, does not Beijing’s championing of a new Asian Infrastructure Investment Bank (AIIB) demonstrate its revisionism?
Well, much has happened since I published that essay in December 2016.
For one thing, the Trump Administration has developed its own answer to these questions. In White House and Defense Department strategy documents, the Administration has made clear that it views China not just as a “revisionist” power but as the world’s principal champion of alternative rules, principles, and structures.
In this telling, Beijing has eschewed the institutions and rules that have prevailed since World War II, especially those preferred by the United States. Instead, it aims to lock in a Sinocentric vision of the world through parallel institutions, disruptive bilateral initiatives, and a rewriting of global rules.
Some administration officials have gone further in their public statements. Take former Secretary of State Rex Tillerson. He displayed a reasonable grasp of history, but absolutely zero sense of irony, when he praised the Monroe Doctrine in a speech about Latin America, then warned the region to beware the “imperial” ambitions of you-know-who.
Treasury Secretary Stephen Mnuchin, meanwhile, has cautioned pretty much every country against taking China’s money. Chinese infrastructure lending, he (correctly) notes, lacks transparency. But Mnuchin extends that argument about transparency into something more like a rap sheet: take Beijing’s money, he warns, and risk being trapped in a debilitating cycle of debt—something that has led to asset-stripping by Chinese practitioners of what the National Defense Strategy calls “predatory economics.” This, in turn, could undermine governance principles championed by the International Monetary Fund (IMF).
In recent weeks, the administration’s nominee for Pacific Command, Admiral Philip Davidson, has taken that argument to its logical conclusion. In testimony to Congress, Davidson came pretty close to calling Chinese infrastructure plays a tool of anti-democratic subversion.
In this changed context, it seems like a good time to take a long look back at my 2016 essay. I still see a lot more complexity than these many strategies, statements, and speeches do.
Here are six important things Washington is missing.
Thinking through the implications of these could help the United States to compete more effectively.
1. It’s tough to critique another country’s obvious revisionism when you’re a revisionist yourself.
China is moving in some very troubling directions. But in the 16 months since I wrote my essay, the United States—and for that matter, some of its trans-Atlantic partners—has also changed in at least three notable ways:
First, while much of the pushback against Chinese activism has been framed as a conservative defense of prevailing rules and institutions, there is nothing either conservative or defensive about the political sentiment that now prevails in some Western capitals. Trump’s Washington. Brexit London. A potential Five Star government in Rome. A Berlin that now has the far-right AfD as the third-largest party in the Bundestag. These signal not a doubling down on prevailing institutions, modes, and rules but an underlying desire by some governments—and many more in their electorates—to actually change them.
Second, the United States has long been the principal champion of trade multilateralism and, in recent years, of regional approaches to liberalization too. Now, the US is moving briskly away from both of these, favoring instead a firm preference for bilateral agreements and managed trade. In fact, the politics of trade in Washington now raise serious questions about whether the US can ever again undertake a large-scale multilateral deal.
Bluntly put, this has changed Washington’s trade policy—and perceptions of and reactions to it—very considerably from 16 months ago. It is often noted that the administration has abandoned the Trans-Pacific Partnership (TPP) in a probably fruitless pursuit of bilateral agreements in Asia. But that isn’t the only thing that has changed. Washington is also re-emphasizing pre-WTO instruments (sensibly, in my view, but nonetheless to the chagrin of most of its partners). And it seeks to impose penalties and offer incentives in a mostly bilateral, not multilateral, context.
Third, this has meant a return to managed trade—a throwback resented by many and encapsulated, most recently, by the multiple separate bilateral negotiations that Washington has conducted with its allies for tariff exemptions. And here’s the irony: the US is pursuing throwback approaches with the very partners it seeks to enlist against Chinese rule breaking. Take Japan: Tokyo shares American concerns about China but has seen the US withdraw from TPP in favor of a managed approach to trade that looks eerily similar to the US-Japan structural impediments initiatives of the 1990s. Nor does Washington favor other approaches that its Japanese ally now champions.
2. China is a revisionist power but not a revolutionary one. This distinction is being blurred but actually matters.
This distinction may sound too cute by half, but it is a distinction with a difference.
China is emerging as a disruptive force on the international stage. For thirty years, it was encouraged to join international institutions and subscribe to their norms. Now, having joined them, it seeks, like most major powers, to leverage its seat at the top table to support its national interests.
But this is not even one iota surprising.
As China’s military, economic, and financial power have grown, it has been patently obvious that Beijing would not accept all global institutions, rules, standards, and norms exactly as they are configured today. And importantly, this would be true even without Xi Jinping in power. China’s sheer size, weight, and self-perception of its interests will invariably lead it to expect changes in the governance of international institutions and, in some cases, to their underlying rules.
Yet the proposition that China aims to construct a “parallel” order of competing institutions, rules, and initiatives to subvert, and perhaps even replace, the postwar international system both misstates and understates the challenge China actually poses.
It misstates the challenge because it lacks historical perspective and institutional memory. A “disruptive”China is not, after all, a “revolutionary” China. And we know this because we have seen precisely such a China in the very recent past.
Less than fifty years ago, in the 1960s, Mao Zedong’s China actually did seek to overturn the architecture of the international system. Beijing opposed nearly every global institution. It promoted internal, often violent revolution against established governments from Bolivia to Borneo. It argued for an “anti-capitalist” order. When it entered the United Nations in 1971, the West’s biggest fear was that Beijing would disrupt and undermine the organization. And China isolated nearly every aspect of its own economic and social systems from outside influences and global trends, restricting flows of goods, capital, people, technologies, and information almost completely.
Americans have largely forgotten what the world was like when China sought—and in many areas, achieved—a functional autarky. But today’s China is, quite obviously, not that China. And in the case of the AIIB, a China-backed institution has, in many ways, ended up aping and adapting practices from existing institutions.
But if many critics overstate what China is not, they also understate what China actually is—a stakeholder in existing institutions and rules but a habitually reluctant, seldom satisfied, and frequently ambivalent one, at best.
This means the challenge to Washington is far more complex than if China actually did seek to overturn the international order wholesale.
To put this pithily, China accepts most forms but not necessarily our preferred norms. And that disconnect between forms and norms means that Beijing’s revisionism and demands for change often play out within the existing international framework.
This, in turn, means we risk misidentifying the problem.
China’s strategy is actually one of portfolio diversification, not the replacement of institutions and systems. Beijing aims to give itself options—and by extension, leverage—not least to push for reform of these various groups and a larger role for itself and its preferred outcomes and standards.
To illustrate, look at the multilateral development banks: Beijing has not only joined but supports with financial muscle all of the prevailing development institutions, both globally and in Asia. It is the number-three shareholder in the Asian Development Bank—the very institution it is said to be “destabilizing” with its sponsorship of the AIIB. When China has endorsed new structures, such as the New Development Bank and BRICS contingency reserve arrangement, it has simultaneously made sizeable replenishment contributions to the IMF, where it now has nearly three times the voting weight of Canada, about a third more than Britain and France, and only a whisker less than Japan. Beijing has joined regional development banks in Europe, Latin America, and Africa. It has transitioned from a net borrower to a net contributor in the International Development Association (IDA) and other institutions. And then there is the AIIB, where China wields a veto—there, Beijing’s “alternative” institution has struck up partnerships and co-finance arrangements with every other leading MDB, including the Islamic Development Bank, African Development Bank, Asian Development Bank, World Bank, and European Bank for Reconstruction and Development.
To put this somewhat pointedly, China is a revisionist power but one that is both highly strategic and carefully selective in its revisionism.
In the maritime domain, for example, it seeks to advance its territorial claims by challenging international law and customary practice. In the cyber domain, it is promoting a distinctive vision of cyber sovereignty. But in the majority of instances and institutions, Beijing pursues structural change by demanding changes to the existing framework.
And a more ambitious China cannot, by definition, be a “status quo” power, in any case. The same could be said of some other emerging powers. Merely by seeking a greater role, heftier voting weight, extra chairs and expanded shares, Beijing is, by definition, attempting to force structural changes and achieve gains relative to the established powers, especially America’s European partners.
China is no revolutionary, then, yet it is determined to gain leverage in almost every prevailing institution and rule-making body.
3. American policy did not “mistake” the implications of China’s rise.
Frankly, “portfolio diversification,” as opposed to wholesale replacement, will make it harder for America to simply get its way. Washington needs strategy and foresight, above all. But in recent months, I’ve read three-dozen articles that claim America has compounded its own problem by “failing” to anticipate this Chinese challenge and, in effect, missing the boat on China’s desire to undermine and replace the existing order.
Frankly, that, too, is ahistorical.
China’s brand of revisionism is not at all surprising—first, because leveraging structures and rules to own advantage is among the most predictable behaviors of major powers, but second, because China’s intensifying demands were not, in fact, unanticipated by prior administrations. The United States has seen precisely such a Chinese challenge coming. And in the decade of the 2000s, when I served in the George W. Bush Administration, I saw firsthand how Washington tried to get out in front of it.
Let me illustrate with some examples from my own experience:
In September 2005, I was responsible for East Asia on Secretary of State Condoleezza Rice’s Policy Planning Staff. My then boss, Deputy Secretary of State Robert Zoellick, delivered an important conceptual speech that came to define much of the debate about China’s global role in the ensuing decade, but which has sometimes been misconstrued or misinterpreted.
Zoellick began his so-called “responsible stakeholder” speech by noting that US policy, through seven presidents from Richard Nixon to George W. Bush, had sought to “integrate” China into the international system. But with China having acceded to the World Trade Organization (WTO) in 2001, that process was largely complete. Structurally speaking, Zoellick argued, China already was “in.” Beijing had joined most of the major institutions, and, on paper, subscribed to the major treaties and protocols from ozone depletion to chemical weapons.
Zoellick’s conclusion was that American rhetoric about China lagged at least five years behind the new realities of Chinese power. So US policy, he argued, needed to change dramatically as a result.
The shift Zoellick advocated was to deemphasize structure and instead emphasize Beijing’s conduct and behavior. The proper question for US policy, he implied, was no longer whether China was “in” or “out”of this or that institution or rule, but rather whether Beijing supported and sustained through its actions, even as it might demand to adapt, those aspects of the international system that had enabled its own success.
Zoellick put this point pretty bluntly, deploying a now famous catchphrase: “It is time to take our policy beyond opening doors to China’s membership into the international system. We need to urge China to become a responsible stakeholder in that system.”
From my vantage point, at least, the Bush Administration clearly sensed from its earliest days an impending challenge from Beijing. So it tried to get in front of, shape, and steer China’s emerging energies.
One reason for this was that Washington faced a gathering problem with China in the mid-2000s: Beijing’s power and capacity for action were growing, yet China was, in many areas, taking a big fat free ride as a consumer of the security and stability the US was working to provide.
One way to think about this challenge is to turn Zoellick’s catchphrase on its head. The logical opposite of a “responsible stakeholder” is an “irresponsible free rider.” And since the administration had no interest whatsoever in encouraging China to be an irresponsible free rider, it made sense to encourage its logical opposite.
By late 2005, as President Bush swung into his second term, China was developing a truly global footprint for the first time since its revolutionary foreign policy of the 1960s. So Washington had every good reason to push Beijing to act as a stakeholder in the system it had joined, not continue to free ride on its benefits.
Operationally, the US confronted specific examples of this challenge from Beijing nearly every day throughout the decade of the 2000s. And since I worked on quite a few of these, I saw how debilitating they could become at the ground level:
In 2001 and 2002, for instance, my boss on the Policy Planning Staff, Richard Haass, was dual-hatted as the US coordinator for Afghanistan policy. As a neighboring country that shared a continental border with Central Asia and was a member of the Six-Plus-Two group on Afghanistan, China derived security and counterterrorism benefits from the war against the Taliban and al Qaeda.
But while China made modest financial contributions at international donors conferences in Tokyo and The Hague, it contributed little to the effort when weighed against its capacity and interests. And it tended to make its contributions unilaterally rather than in coordination with us and other donors.
But because Washington pressed, changes happened. So where Beijing had made its Afghanistan pledges unilaterally, its initial pledges to Iraq, by contrast, were made multilaterally and in coordination with the US and others donors, as was Beijing’s participation in the process of Iraqi debt forgiveness.
By 2006, I had become the Deputy Assistant Secretary of State for Central Asia, the principal day-to-day official for the region. Among other challenges I inherited was the bitter taste left by China having most unhelpfully joined Moscow and fellow members of the Shanghai Cooperation Organization (SCO) in a 2005 statement that called for a “final timeline”to end coalition operations in Afghanistan.
From Washington’s perspective, this highlighted Beijing’s propensity to mouth empty slogans while enjoying the benefits of a free ride on the security and stability America was spending blood and treasure to provide. In that instance, too, Washington sat on Beijing (and countries in Central Asia), urging them never again to repeat this statement—and, better yet, to step up to the plate with tangible or enhanced contributions to the international effort.
A third example from this period was Beijing’s quixotic effort to “lock up” energy supplies through equity hydrocarbon investments in Africa and Central Asia by Chinese state-owned firms. China was hardly the first power to embrace neo-mercantilist energy investments overseas. But amid volatile global oil and gas markets, it held the potential to disrupt global stability—a point Zoellick specifically highlighted in his speech.
4. Domestically, China’s Leninism matters. Externally, its traditionalism may matter more.
Looking back on all this a decade later, this adjusted way of thinking about China still strikes me as ahead of trend.
For one thing, Zoellick’s speech focused on China’s global role before that role grew exponentially in the late 2000s and the decade of the 2010s. In that sense, he was prescient.
But China today is a changed country. It has more problems, but also a lot more capacity. Despite a growth slowdown and a crying need for structural reform, its $1 trillion economy upon entering the WTO in 2001 has become a $14 trillion behemoth (measured in nominal GDP). Its $220 billion in foreign exchange reserves in 2001 have ballooned over the same period to a staggering $3 trillion. Xi Jinping has injected a sharper edge and greater ambition to Chinese statecraft, not least through his advocacy of new institutions, such as the AIIB, and the massive “Belt and Road” infrastructure scheme.
In this context, US efforts to adapt—but also defend—the existing architecture are surely going to be more difficult than many in Washington presume:
One reason is that China rejects the trans-Atlantic preference for a liberal bias to the existing system but not “international order” per se. In other words, it subscribes to much of the existing order but not our desire to lock in a liberal bias.
It is often argued that China rejects these liberal norms internationally because it has an illiberal, Leninist government at home. But that is just one part of the story.
In fact, the Communist government’s skepticism of the application of liberal ideas internationally reflects not just its Leninism but also its deep-seated foreign policy traditionalism. The roots of this lie squarely in the 1990s—fully two decades before Xi Jinping, a committed Leninist, took power.
Post-Cold War shifts, especially the NATO intervention in the Balkans, caused China and the West to diverge on many of the bread-and-butter issues of international relations: How should the international system be organized? Can states legitimately intervene militarily in another state—as for instance, the US and NATO did through humanitarian interventions in the Balkans and elsewhere? What is the proper role of security alliances in a post-Cold War world? Does globalization erode the role of the state and, especially, of sovereignty? Who gets to decide how to interpret and apply international law?
On these questions, Beijing’s preferences in the 1990s began to diverge sharply from the American view of international statecraft, especially in its post-Cold War variant. And one issue in particular shaped and defined these evolving Chinese preferences—Beijing’s preoccupation with its territorial claims, especially to Taiwan.
When the US intervened in the Balkans, Panama, and Haiti, Beijing’s preoccupation with its own territorial claims hardened into a view of sovereignty and non-intervention that many in the US and Europe view as antique. Likewise, when the US relied on NATO in the Balkans, bypassing the UN Security Council where China (and Russia) could wield the veto, Beijing’s inherent skepticism of alliances seemed to grow.
Much of China’s revisionism, therefore, is aimed squarely at a trans-Atlantic version of international order. But on sovereignty and territoriality China is speaking the language of many other countries, particularly the “global south.”
A second example of China’s traditionalism is what I earlier termed “portfolio diversification.”
The decade of the 2000s was an inflection point. By 2010, China had begun to embrace a handful of “parallel” structures, such as the SCO and the BRICS. These groups assembled members, such as China, Russia, and the Central Asian states, that lack a commitment to liberal values at home. But these countries are also suspicious of it as an organizing principle abroad. And in that particular aspect, they are joined by some democracies, including, I would argue, even democratic India, that do not view it as the singular organizing principle of international statecraft.
And yet ironically, even as Beijing embraced these parallel structures, its enthusiasm for the more traditional groups—groups that are core institutions of the liberal order—actually grew, not lessened.
China pursued bigger stakes in the World Bank and IMF at the 2009 Pittsburgh G20, and joined more of regional multilateral developments banks in Latin America and Africa. Beijing developed a $2 billion co-financing fund with the Inter-American Development Bank and ramped up its role in UN peacekeeping operations.
As I argued in 2016 in Foreign Affairs, China’s goals in shifting to this more diverse approach are presumably fourfold: to (1) hedge its commitment to existing groups and rules lest they turn against Beijing; (2) give China leverage to demand faster and deeper reforms to existing structures; (3)“democratize” international governance by working with India and other emerging powers to establish groups not led by the G7 industrialized democracies; and (4) put Washington on notice that Beijing has the capacity and will to generate alternatives if its calls for reform and change are not respected.
The AIIB, in some sense, exemplifies this more diverse Chinese strategy.
A third example of Beijing’s traditionalism is its frequent argument that institutions should reflect current power realities, not the legacies of decades past. It is obvious enough that China and India have risen while Belgium and the Netherlands have declined in relative terms. But here’s the rub: enhancing China’s role while reducing the “Western” footprint has significant implications for the effort to lock in a liberal bias within structures and rules.
The fact is, by reducing the European footprint to ensure that various groups better reflect the power realities of 2018 not 1948, they inevitably become less reliant on the trans-Atlantic powers.
As a result, Washington has faced a growing contradiction between its strong preference for liberalism and its growing need for functionalism—the more “Western” an institution, the more liberal it is but the less representative and thus potentially less functional it may be. The transition from the G7 to the G20, and the failure to adjust the membership of the International Energy Agency (IEA) (whose voting shares have been weighted to 1973 consumption) well illustrate this challenge.
5. China has leveraged pan-Asian ideas that others actually invented first. That makes it harder for Washington to push back.
So much for global institutions. Then, there is Asia, where the US has withdrawn from TPP and rejected regional approaches even as efforts have been underway for decades to organize some of those approaches on a pan-Asian basis, excluding the United States.
China is not the only country to have been implicated in that effort. Asia has repeatedly flirted with preferential trade and financial arrangements, as well regionally based regulations and standards, without American participation.
It has become fashionable to ascribe efforts to build pan-Asian groups to rising Chinese assertiveness—or, more precisely, to Chinese ambition. But once again, that captures just one part of a more complex story.
China’s advocacy of pan-Asianism has been effective precisely because it draws off a deep well of sentiment and experience across Asia. The region boasts long traditions of pan-Asian ideas, ideologies, pacts, and negotiations—the subject of a Council on Foreign Relations monograph I co-authored with my friend, Bob Manning, in 2009. And this was well underway before China is said to have become “assertive” in Asia, indeed when Xi Jinping himself, that great champion of assertiveness, had only recently been promoted up from the provinces.
Contemporary Asian regionalism—the desire to forge at least some cohesion out of the region’s enormous diversity—has deep roots. It has found expression across Asia, in many countries, and over several decades.
Japan, for instance, is a close US ally, suspicious of the rise of Chinese power, and has a strong trans-Pacific identity. Still, Japan’s bureaucracy has incubated a variety of pan-Asian ideas, especially with respect to monetary integration. Before there was an AIIB, there was Japan’s proposal of an Asian Monetary Fund, which helped give rise to today’s Chiang Mai Initiative of bilateral currency swaps among Southeast and Northeast Asian countries.
In the 1990s, the US could squash such incipient regionalism. But relative power balances have changed considerably since then. Worse, the US withdrawal from TPP has fueled perceptions across Asia of American protectionism. Viewed through this frame, Beijing’s proposal of the AIIB (and probably other ideas yet to come) cannot be so easily squashed since they lie squarely in a longer pan-Asian tradition.
American policymakers make much in speeches today about indebtedness to China and the potential for Beijing to exact a steep price in exchange for its loans. But the IMF itself was hardly popular in Asia not long ago. Many in the region, especially in Southeast Asia, reacted badly when Washington refused to bail out Thailand in 1997, just three years after bailing out Mexico. And for many Asians, the most enduring image of the crisis is a photograph of IMF managing director Michel Camdessus standing, arms crossed over a seated Indonesian president Suharto, his head bowed, as he was compelled to sign onto the IMF’s terms for financial support.
The biggest takeaway is that when Washington absents itself (or merely shows disinterest in the region’s concerns), Asians will grope for their own solutions.
This is precisely what happened with the TPP after American withdrawal. The US frequently argues that Asia will pay a big price for failing to confront China. Actually, the US stands to pay a far steeper price for creating, and then abetting, a vacuum. It is no surprise that the eleven remaining TPP parties completed the agreement without Washington: for all their tensions with one another, forging agreement on pan-Asian rules beats both “Chinese” rules and no rules.
6. Whining isn’t competing.
Finally, that brings us to the Belt and Road (BRI) infrastructure initiative that has become the principal target of Mr. Mnuchin’s and Admiral Davidson’s ire.
BRI is widely viewed as an attempt to foster dependence on China’s economy, with potential strategic and even military effects. And there is something to that argument. Still, Beijing is succeeding, in part because it is borrowing and adapting ideas long advocated by others, including the United States.
Ironically, in the 2000s, the other foot wore the shoe. Instead of the US condemning China’s BRI, it was Beijing that bombastically condemned Washington as a “schemer.” America’s “crime”? Daring to envision a “Greater Central Asia” and making efforts to connect Asia’s sub-regions through infrastructure, policy coordination, and project finance.
This context strikes me as very important. The regrowth of economic connections across Asia’s disparate sub-regions is a function of the choices, actions and capabilities of many states, including Japan, South Korea, and India. It is not a Chinese invention, did not begin only in 2013, and did not spring from Xi Jinping like Athena from the head of Zeus. Indeed, China was part of this connectivity effort even before it launched the Belt and Road, breaking Russia’s monopsony on Central Asian oil and gas with pipelines from Kazakhstan and Turkmenistan, an onshore production sharing agreement in Turkmenistan, and dozens of projects around the world.
Why do others’ efforts matter? Well, the ADB and the World Bank, for instance, have undertaken longstanding efforts on roads and power lines in Asia. The ADB’s CAREC program (which happens to include China) has been promoting six connectivity corridors—”linking the Mediterranean and East Asia”—for two decades. Does the idea of “linking the Mediterranean and East Asia” sound anything like Beijing’s sloganeering on behalf of the BRI? It does.
Here’s another example from my own experience: The Bush Administration actually reorganized the State Department around a connectivity concept in 2005, when it moved the countries of Central Asia out of a westward-facing European bureau into an Asian-facing bureau that included India, Pakistan, and Afghanistan. During those years, Secretary of State Condoleezza Rice and her team developed a variety of US-backed ideas for regional infrastructure integration, most of them premised on leveraging the strengths of the international financial institutions and the ongoing efforts of many partners.
This included Japan, whose role remains notable—it has been Tokyo, not Beijing, which is playing the dominant role in project finance in India, for example, including building the Delhi-Mumbai Industrial Corridor, the Delhi Metro and the development of high-speed rail for Indian Railways.
Then there is the sheer “Asianization” of Central Asia, which owes as much to the retreat of Russian economic power and relative ebbing of Moscow’s primacy as it does to the arrival of Chinese trade and capital.
What I’m trying to say is that the “challenge of China’s new activism” is more complex than the BRI being some sort of binary counterpoint to the United States. Rather, we need to enlarge our framing of the strategic problem:
The United States risks being marginalized by an organic process through which numerous Asian states, including but not limited to China, are reintegrating East, Central, and South Asia through the direction of trade, capital flows, infrastructure, and new pan-Asian pacts and agreements. More often than not, this is happening without American involvement.
Gradually, but inexorably, the region is becoming more Asian than ‘‘Asia-Pacific,’’ especially as Asian economies look to one another, not just the trans-Atlantic West, for new economic and financial arrangements; more continental than sub-continental, as East and South Asia become more closely intertwined; and, in its continental west, more Central Asian than Eurasian, as China develops its western regions and five former Soviet countries rediscover their Asian roots.
Insufficiently, in my view, the US response to this has mostly been to complain about the Belt and Road. Even without the Belt and Road, the US was already increasingly out of the picture.
My own view is that Washington can and must do better.
For one thing, American policymakers need greater discretion and better judgment about when and where to pick their fights. In the case of the AIIB, for example, the US went to the mat, contesting a Chinese initiative in a functional area where existing structures were clearly insufficient and the US itself offered no distinctive model. It turned China’s proposal of a multilateral bank into a bilateral test of wills but without the leverage to stop Beijing from moving forward. Worse, Washington badly misread the sentiment of some of its allies.
Here are some final takeaways:
One, like Don Quixote tilting at windmills, it is futile for the United States to try to write China out of Asia’s story. And this would be true of any China, not just Xi Jinping’s assertive and nationalistic China.
One reason for this is cartographic: China borders every sub-region of Asia—Northeast, Southeast, Central, and South. The United States does not. Neither does any other big Asian player.
Another reason is financial: even if China cannot ultimately deploy the billions of state-backed project finance it has pledged to the Belt and Road, it can still drop plenty of meaningful money into countries all over Asia where the United States and its firms are largely invisible. To reject and battle against every instance of China’s effort to foster connectivity, then, would require Washington to fight both geographic and economic gravity.
A more realistic way to counterbalance the spread of Chinese power, especially in Asia, is to be more successful at bolstering America’s own power, presence, initiative, role, relationships, and arsenal of military, economic, and technological tools. And it can best do this in concert with other partners who have stepped into the vacuum created by US absence, disinterest, protectionism, and worse.
That is why the recent Trump Administration effort to coordinate infrastructure priorities among the US and Japan and the US, Japan, and India is so welcome. So, too, is a development finance reform bill making its way through Capitol Hill, which aims to make it easier for US firms to manage and mitigate risk in tough business environments.
To compete in geopolitics—as in sports, business, and life—one needs to actually compete. Washington has to outperform the Chinese competition, not just belittle and whine about it.
There is certainly a deep suspicion of Chinese intent across Asia today. But I have seen enough from every sub-region of Asia to know that the US will not get far by telling third countries that they should forestall deepening their economic relationships with China. For nearly every country, and especially the smaller ones, that is an impractical choice, and therefore will be rejected.
And that is not all. Trashing China’s initiatives while failing to counter and compete with them signals other capitals that their countries are of little interest to the United States on their own terms. Their takeaway will surely be that the United States pays attention to them only in the context of its strategic competition with China. That is a poor message indeed.
The recent US approach, whether to BRI or to AIIB, risks inviting comparisons, both implicit and explicit, between what Washington is offering and what Beijing is offering. The US is diplomatically challenged and commercially weak in around two-thirds of the Eurasian continental landmass—including many countries in Central Asia, South Asia, and mainland Southeast Asia. Sadly, then, the comparison will often benefit Beijing not Washington.
I have written elsewhere about how the US could be more proactive in Asia, not reactive. But in responding to BRI, at least, it’s important when designing US policies not to compare American apples to Chinese oranges. America isn’t China. For instance, it doesn’t have state-backed firms that it can leverage through billions channeled through state-backed policy banks.
So Washington should be better leveraging its uniquely American strengths—technology, innovation ecosystems, STEM education, connections to the global capital markets, best in class services and other firms, and so on.
It will be harder to deploy that leverage in the context of messages that say “America First.” American business remains crucial, especially in East Asia. US companies have invested more than $200 billion into the ten ASEAN countries of Southeast Asia alone. But what is at stake is not just business but rules, norms, standards, and strategic momentum.
Ultimately, at the political level, Washington spends far too much time playing defense against Beijing. As Asia becomes more integrated, the US will become progressively less relevant in many parts of the region—in Central Asia, in most of South Asia except India, and in mainland Southeast Asia, as noted above.
Within a generation, Americans could find their firms at a competitive disadvantage in a part of the world that will constitute as much as half of the global economy. Americans could become bystanders to the economic and strategic dynamics quickly reshaping this region.
The fact is, China is going to continue proposing initiatives like the Belt and Road. So the US needs to get off its back foot and onto the initiative.
The US can work with China but that needs to happen in the broader context of strategy and policy in Asia. And this includes leveraging the many initiatives and partnerships from Japan to Singapore that should also aim to promote economic expansion and connectivity.
I wrote in 2016—and I still believe—that the best adaptation to China’s new activism is a stronger offense, not perpetual defense.