POL 205Asian PoliticsDr. LairsonAsian International Relations

The power of Asian states rests firmly on an economic base:

Since the 1970s trade across the Pacific has far outrun the Atlantic sort. China, for instance, has taken its hunger for high-protein food and raw materials to Latin America and become the biggest trading partner of distant Chile. By one estimate, in 2010 it promised more loans to Latin America than the World Bank, the Inter-American Development Bank and the United States Export-Import Bank combined.

There are complex counter-currents. Many East Asian countries worry that America’s commitment to the region could be put at risk by more immediate threats in the Middle East and Ukraine. At the same time they do not want America to provoke China by becoming too involved.

“One of the most critical tests facing the region is whether nations will choose to resolve disputes through diplomacy and well-established international rules and norms or through intimidation and coercion. Nowhere is this more evident than in the South China Sea.” In his own speech a day later, Lieutenant-General Wang Guanzhong, head of the Chinese delegation, retorted: “Assertiveness has come from the joint actions of the United States and Japan, not China.”

Recently the tensions have spread to the economic sphere, too. China has interrupted investment and trade with neighbours who stand up to its territorial assertiveness, such as Japan, the Philippines and Vietnam. China and America each have their own plans for turning the Pacific into a giant free-trade area that both see as a test of their influence in the region—and in the wider world. The Obama administration says it wants to forge a trade pact with the world’s most sophisticated rules in the Pacific: the Trans-Pacific Partnership. It characterises China as wanting to perpetuate a model of state capitalism.

Yet this special report will argue that even when values clash, shared interests in the region tend to prevail. East Asia, like America, is a place where power is judged first and foremost by wealth. “In East Asia, with the exception of North Korea, growth far more than any abstract political theory is the primary means by

which governments legitimate their rule,” says Bilahari Kausikan, Singapore’s ambassador-at-large. “This does not guarantee peace. But East Asian governments at least have a strong self-interest to minimise actions that would disrupt growth.”

Such is the pull of China within this new “Factory Asia” that the currencies of most countries in the region now track the Chinese renminbi more closely than they do the American dollar, reckon Arvind Subramanian and Martin Kessler, formerly of the Peterson Institute. Yet for all its power, China is still only a part of the spider’s web, not the centre of it. “What makes the region unique is that you have a tight fit between regional and global integration. The supply chain is linked to final-goods markets in the United States and the EU,” says Razeen Sally of the Lee Kuan Yew School of Public Policy in Singapore.

Bonnie Glaser of the Centre for Strategic and International Studies, a think-tank in Washington, says China may even be pursuing economic integration to strengthen its leverage. “China’s strategy is to weave together a network of economic interdependence. It is using the centrality of its power to persuade other nations that to challenge China on territorial issues is simply not worth it.” But its neighbours are not sitting placidly by. Last summer Chinese businesses in Vietnam were attacked by locals after a Chinese state-owned oil firm put an oil rig in waters that both countries lay claim to.

Since then, American officials say, its allies in the region have become somewhat keener to move into America’s economic orbit to keep China in check. Japanese investment in China fell to $9.1 billion in 2013, from $13.5 billion the year before. At the same time Japan’s investment in ASEAN more than doubled, to $23.6 billion. Myanmar, until recently a satrap of China, is opening up to the West.

Even in Singapore, which has a big ethnic Chinese community and sees itself as a cultural bridge between east and west, China’s conduct has raised eyebrows. Simon Tay, chairman of the Singapore Institute of International Affairs, says its treatment of countries such as Vietnam shows that political integration has failed to match the economic sort. “The post-war period has provided a sense of stability that has enabled Asians to mind their own business—literally the business of business,” he says. “There is unease about a China-centric region.”

Some economists say China’s assertive behaviour may also be a way of testing whether America’s economic power in the region is waning, as many of its leaders believe. They think that the Chinese may want to re-establish the old hierarchical system in which they were clearly in control but at the same time felt a sense of noblesse oblige.

Two striking hints of this came during Xi Jinping’s first visits as China’s president to ASEAN countries last year and to the Indian Ocean in September this year. On both tours he spoke of his desire to create a “maritime Silk Road” that would build port infrastructure and establish shipping co-operation with smaller, friendly nations like Cambodia and Sri Lanka along ancient trade routes established when China was the undisputed hegemonic power. He also announced the creation of the Asian Infrastructure Investment Bank,

a rival to the Japan-driven Asian Development Bank but with deeper pockets—at least $50 billion in startup funds.

This is China as a Pacific power, a commercial rather than a naval one. According to statistics gathered by Michael McDevitt, a retired rear-admiral at America’s Centre for Naval Analyses, it is now the world’s largest shipbuilder; has the third-largest merchant marine, and by far the largest number of vessels flying its own flag; and boasts a 695,000-strong fishing fleet. It accounts for about a quarter of the world’s container trade. And almost all the steel boxes shipped on the world’s oceans are made in China, too.

Much of the security of that trade across the Pacific is the gift of America. China “free-rides” on the protection provided by the United States Pacific Fleet, based in Pearl Harbour, Hawaii, so it benefits from America’s enforcement of the rules of sea-based activity. But in the western Pacific China has behaved provocatively towards some staunch American allies, testing the bounds of international maritime law.

However, as Henry Kissinger writes in his new book, “World Order”, China does not necessarily see the rules the way America does: “When urged to adhere to the international system’s ‘rules of the game’ and

‘responsibilities’, the visceral reaction of many Chinese—including senior leaders—has been profoundly affected by the awareness that China has not participated in making the rules of the system.”

Mr Kausikan of the Singapore foreign ministry goes further. He says that all Chinese are aware of the 100 years of invasion by Western powers and Japan that their country suffered before 1949. “It was never very realistic to expect China to be a ‘responsible stakeholder’ in a regional and global order that it had no say in establishing and which it holds responsible for a century of humiliation,” he says.

American officials acknowledge that China plays by many global rules, especially the trade ones it signed up to when joining the World Trade Organisation in 2001. But especially in its own neighbourhood, it is challenging rules and norms—including some it has explicitly agreed to—that have kept the seas safe since the second world war.

For instance, in 2002 it signed a treaty with its neighbours in ASEAN agreeing to settle maritime disputes in the South China Sea peacefully and according to international law, such as the 1982 United Nations Convention on the Law of the Sea (UNCLOS). Yet it is in often tense disputes with ASEAN countries such as Vietnam and the Philippines over control of three sets of islands and rocks in the South China Sea—the Paracel Islands, the Spratly Islands and Scarborough Shoal—and with Japan over the Senkaku/Diaoyu Islands. When the Philippines took its opposition to China’s maritime claims to UNCLOS in March, China huffily refused to accept the arbitration.

It has also sought to stop American naval and air-force vessels operating in its exclusive economic zone (EEZ), 200 nautical miles from its shoreline (see map), which America and many of its allies consider a violation of UNCLOS. In August this year a Chinese fighter intercepted an American Navy P-8 maritime patrol in international airspace about 135 miles (216km) off Hainan Island, which the Department of Defence described as “very, very close, very dangerous”.

This EEZ dispute could have profound implications for the stability of trans-Pacific sea routes, overseen for generations by America’s navy. “It may sound arcane,” writes Bill Hayton, author of “South China Sea: The Struggle for Power in Asia”, published earlier this year, “but the legal debate over what one country’s military vessels can do in another country’s [EEZ] has already brought the United States and China to the edge of conflict. It’s a battle between American demands for access to the ‘global commons’ and China’s search for security. It’s a struggle that will define the future of Asia and possibly beyond.”

Built loosely on “Mare Liberum”, UNCLOS established the EEZ concept which gave coastal nations exclusive rights over natural resources within a 200 nautical-mile limit but allowed for free navigation and overflights outside territorial waters extending to 12 nautical miles from the coast.

Ironically, China has ratified UNCLOS whereas the American Senate has not—though in practice the American navy follows and attempts to enforce it.

But China’s interpretation (and that of a small group of large developing countries such as India and Brazil) differs from that of most states: it requires naval vessels to seek its permission before entering its EEZ. In 2013 a Chinese navy ship cut directly across the path of the United States Navy cruiser Cowpens, forcing it to change course abruptly to avoid a collision. Such incidents are red rags to the Americans. Their navy still regularly sends spy ships into China’s EEZ.

In its island disputes, security analysts say China is picking fights with American allies that test the United States’ commitment to upholding the law by proxy, in steps small enough to make retaliation hard. But in the process it is gradually establishing “facts on the ground” in its own back pond. Euan Graham of the Singapore-based S. Rajaratnam School of International Studies says that eventually these could enable it to thicken its EEZ into a robust coastal buffer. He notes that Chinese history—such as Britain’s shameful Opium wars of the 1840s and 1850s—makes the country particularly sensitive to maritime threats.

That dashed line

All the disputed territories fall within what China calls its nine-dash line, which covers virtually all of the South China Sea and more than half of its neighbours’ own EEZs. Since it took over Mischief Reef in 1995, China has quarrelled with Vietnam over the Spratly Islands and installed some garrisons. It also occupied Scarborough Shoals after a stand-off with the Philippines in 2012. This year drilling by a big Chinese oil firm in waters 120 nautical miles (222km) from the Vietnamese coast sparked anti-Chinese riots in Vietnam. Tensions over the Senkaku/Diaoyu islands have been hurting relations with Japan since 2010.

Mr Haddick refers to China’s tactic of gradually enforcing these island claims as “salami-slicing”. It is “the slow accumulation of small changes, none of which in isolation amounts to a casus belli, but which can add up over time to a significant strategic change”. Ronald O’Rourke, a naval analyst for the United States Congressional Research Service, says Chinese officials have called it a “cabbage strategy”. The islands are wrapped, cabbage-like, in successive layers of protection formed by fishing boats, Chinese coast guard ships and finally naval vessels. China rarely deploys its armed forces in these creeping encroachments. Instead, says Ian Storey of the Institute of South-East Asian Studies, it uses maritime law-enforcement agencies. “Even the name implies China already feels it has jurisdiction.”

The tactic makes it harder for any claimant to launch a military response without appearing to raise the ante. “The Chinese are pursuing a pretty clever strategy and the rest of us haven’t figured out a good response,” says Admiral Dennis Blair, former head of America’s forces in the Pacific and now chairman of the Sasakawa Peace Foundation USA. He reckons that countries threatened by China’s “administrative aggression” should settle their territorial disputes with each other first and then present a united front to China. Mr Russel says “it is a good thing that China is not deploying the People’s Liberation Army’s navy.” But he points out that “whatever is driving the behaviour, the point is that it risks escalation and confrontation, so the exercise of restraint is necessary.”

What of the new strategic order in Asia?

Chinese on South China Sea

Letter to The Economist

Going to Scarborough is fair

“Sunnylands and cloudy waters” (February 20th) fails to reflect basic facts about the South China Sea. As the oldest country in the region, China’s sovereignty over the South China Sea islands has solid historical and legal basis. Ample historical documents and literature found all over the world show that China was the first country to discover, name, develop and exercise continuous and effective jurisdiction in this area.

China has always exercised maximum restraint in disputes over maritime territory, seeking peaceful resolution through negotiation and consultation. Instead of stopping encroachment on China’s sovereignty, the Philippines insisted on initiating and pushing forward an international arbitration on the South China Sea thus violating international law, including the UN Convention on the Law of the Sea (UNCLOS) and its agreement with China that the two sides shall settle their disputes through negotiation and consultation, an agreement confirmed by the Declaration on the Conduct of Parties in the South China Sea.

The essence of the Philippines’ claim relates to the sovereignty of some of the maritime features of the Nansha (Spratly) islands, which is beyond the scope of UNCLOS, and maritime delimitation, which is excluded from arbitration through a declaration of the Chinese side in 2006 pursuant to Article 298 of UNCLOS. The Philippines have failed to observe the fundamental international principle that agreements must be kept and has undermined the integrity and authority of UNCLOS. It is a downright political provocation disguised as a legal process.

China is the last of the countries in the South China Sea to engage in construction on its islands and reefs. These construction efforts will benefit and reinforce freedom and safety of navigation in the South China Sea. Ironically, in the name of protecting freedom of navigation, American naval ships and military aircraft have been making frequent visits to areas close to or even inside the maritime and air space of some Chinese territories in the Nansha islands. That not only threatens China’s sovereignty and security but also gravely imperils peace and security in the South China Sea.

China pursues peaceful development and firmly safeguards peace and stability in the South China Sea and is ready to work with the countries in the region to safeguard peace and stability. Peace, friendship and co-operation are what China wants for the South China Sea.

ZENG RONGSpokesperson of the Chinese Embassy in the United KingdomLondon

A new report for the Council on Foreign Relations, an American think-tank, by two analysts who have worked in government, Ashley Tellis and Robert Blackwill, calls for a new “grand strategy” for dealing with China, including strengthening America’s army and stepping up military co-operation with its allies. It argues that “the American effort to ‘integrate’ China into the liberal international order has now generated new threats to US primacy in Asia—and could eventually result in a consequential challenge to American power globally.”