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China on Asia's Mind

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China on Asia's Mind BRIEF POLICY CHINA ON ASIA’S MIND François Godement SUMMARY Talk of an “Asian century” is increasingly overshadowed by This brief is based on a study trip to Tokyo in speculation about the prospect or risk of a “Chinese century”. June 2014, during which a group of ECFR’s China, India, Indonesia, and Japan will make up half of the Council members met with a wide and world’s GDP by 2030. The continent is becoming the global distinguished group of interlocutors from Japan, South Korea, and elsewhere in Asia, price maker for oil, iron ore, copper, and aluminium – China and discussed how they see the future of the and South Korea alone make up 67 percent of the world’s continent and its implications for Europe. iron ore consumption. Speculative bubbles from China’s What had often been predicted to be an “Asian currency reserves and runaway lending now drive global century” is turning out to be one in which property markets and their excesses. China has amassed China is foremost in Asia’s mind. Tensions in $4.5 trillion of currency reserves – an amount that seems East Asia are becoming the new normal and immense until one compares it with the estimated cost of it is increasingly clear that trade does not Korean reunification – estimated at around $5 to 6 trillion.1 guarantee peace and stability. Europe can Its defence budget, which is becoming four times as large neither take Asia’s stability for granted nor every 10 years, looks set to approach America’s by 2030. afford to be complacent about Asian security. Europe would be implicated in a conflict in However, the Asia-Pacific region is deeply and increasingly Asia, whether it likes it or not. In the short divided – including in economic terms. In particular, a term, it risks being driven from one statement reordering of regional economic relations seems to be to the next as circumstances dictate without separating North-East Asia from South-East and South a deeper consensus between member states. Asia. While South Korea and Taiwan are increasingly France and the UK are particularly engaged in drawn into China’s trade orbit, Japan is seeking to reduce political and security co-operation with Japan, a similar dependence on China by diversifying its foreign while some other member states uphold a direct investment (FDI). Meanwhile, the Association of view of European “neutrality” in Asia. Europe Southeast Asian Nations (ASEAN) is moving closer to a can no longer limit its role in Asia to that of a customs union, with a quarter of its trade now between commercial or “soft” power. Instead, it must member states (compared to 45 percent for intra-EU support negotiations within the framework of international law and play its role to maintain trade). China is ASEAN’s largest trading partner with a a stable security balance in the region. 1 Other estimates give lower figures. For instance, Peter Beck, a researcher at Stanford University, argued in 2010 that it would cost $2–5 trillion to raise the income level of North Korea up to 80 percent of South Korea’s for 30 years. 15 percent share but does not dominate the picture. The Why is China exhibiting such confidence that it can annoy United States, Japan, and the European Union trade twice its neighbours and on occasions bully them? There are only as much with ASEAN.2 More generally, the proliferation of two possible answers. The first is that China does so because free-trade pacts between Asian countries still hides some it can. To a large extent, China calibrates its challenges trade discrimination, focused especially on agriculture and according to the perceived strength or alliance status of light industry. the other party. As one participant said: “With Japan in the East China Sea they send unarmed fishermen; with the It is when listening to Asians discussing their economic Philippines they send patrol boats; with Vietnam they send CHINA ON ASIA’S MIND CHINA ON ASIA’S relationship that one realises how much the region has the PLA Navy.” In other words, this is calculated risk-taking moved away from the vision of an “Asian century” dominated by Beijing, which knows that the other parties, given their by trade liberalisation and globalisation – formerly the basis own divisions, have no way of uniting around a resolution. for new regional institutions. This brief is based on a study trip to Tokyo in June 2014, during which a group of ECFR’s The second possible answer to the question of why China Council members met with a wide and distinguished group feels able to annoy and even bully its neighbours is that it – of interlocutors from Japan, South Korea, and elsewhere along with its neighbours – actually believes in the territorial in Asia, and discussed how they see the future of the claims it is making. China, South Korea, and Vietnam have continent.3 What came out most forcefully is that Asians see grievances based on their perception of history. This leads not so much an “Asian century” as the possibility or risk of each of them to mistrust international arbitration and a “Chinese century”. Thus, China is foremost in Asia’s mind. to think that even a legal solution would only reflect the Asians are uncertain about America’s future role in the unfairness of the colonial era, post-1945 settlement and region and wonder what it will take to live with China and the Cold War. Perversely, this is also fodder for politicians – what it will take to ensure this remains an “Asian century”. whether in authoritarian set-ups or in elected democracies. There are no gains, and only losses, to be made by appearing Above all, it is increasingly clear that trade does not guarantee to be wobbly on symbolic issues. peace and stability. Our interlocutors saw the territorial disputes in Asia as driven not primarily by competition for In this context, other powers such as Europe, Russia, and energy or resources but by a mixture of historical legacies the US are sought for their influence, one way or another, and domestic politics. Not just in China but throughout on China’s future policies. Above all, there is a deep and Asia, nationalism seems to be on the rise even as economic growing anxiety about the US. How long will it live up to its interdependence increases. Thus, Asia faces not just one but security commitments, which are ambiguous in some cases? two issues: the open-ended and ambiguous nature of China’s There are widespread doubts about the sustainability of the rise above its neighbourhood and the nationalism that is a post-war Pacific order, which occasionally chime with more general ingredient of domestic political cultures in European fears of neo-isolationism in mid-America. “Either Asia. This makes regional integration along European lines the US implements the alliance, or the alliance is dead,” a distant dream. said one interlocutor. Others drew parallels between the positions in which Europeans and Asians found themselves. “Europeans and Asians must be conscious that they may “China! China! China!” share a security deficit in the near future, including traditional and non-traditional security,” said one. Discussion about the future of Asia is dominated by the question of China’s rise and the region’s response. “China! Most in Asia recognise that it is the US that keeps the peace China! China!” – as one of our interlocutors put it – is and there are few who welcome the chance to fill the vacuum the focus of the continent’s expectations and fears. Since being left by the US. Yet nearly everyone sees a move in 2008, China has above all targeted Japan but it has also this direction as inevitable. “We should not compete for challenged other maritime neighbours as well as India on US resources that are not infinite in any case, we should its land border. It alternates between seeking to detach the instead engage our own and increase them,” said one US from its commitments to Asian allies and probing the interlocutor. There is much mistrust regarding President weak points of the US hub-and-spoke alliance system. But Barack Obama’s shifting pronouncements on Asian security, www.ecfr.eu Asians reject the idea that China seeks to challenge the US apprehension at any sign of American acquiescence to the globally. “China doesn’t want to rule the world, it wants to “big power relationship” that China is promoting, and fear rule us,” one participant soberly said. China “has the luxury about the long-term sustainability of the alliance system. of focusing on us,” said another. One interlocutor worried that if the US did not deliver on its commitments, South Korea and Taiwan would move closer to China. SEPTEMBER 2014 Expectations of Europe are less clear. Its contribution 2 ASEAN Statistics, Table 19, ASEAN trade by selected partner country/region as of 24 July 2014, available at http://www.asean.org/images/resources/Statistics/2014/ to hard power in the region is limited to arms sales or to ExternalTradeStatistics/Aug/table19_asof24Jul14.pdf. the denial of such sales. Its claim to soft power is largely ECFR/112 3 The discussions were held under the Chatham House Rule. We have therefore quoted participants anonymously. Unless otherwise stated, quotes are from discussions held ignored – whether we see this as unfair or not. On the one 2 in Tokyo. hand, Asians welcome European trade with China – after Koreans are too emotional and the Chinese too strategic – all, more than 60 percent of China’s exports are achieved they will never cede ground, however much the Japanese by foreign subsidiaries or firms with foreign participation, may apologise.” so China’s foreign trade, the world’s largest, is really a front for the Asian global factory.
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