Published in The Wall Street Journal, 8 January 2016
Most countries regard themselves as better than others, not just different. But there are few, if any, with a greater sense of manifest destiny than the United States and China.
Ronald Reagan, echoing the Founding Fathers, used to express this by describing America as a “shining city on a hill” and as the “last best hope of mankind.” China, from time immemorial, has been accustomed to defining itself as the “middle kingdom” around which the rest of the world merely revolved. To the country’s current leaders, the prediction that China will soon be the world’s largest economy is merely the restoration of normalcy after a “century of humiliation” at the hands of various colonial powers.
Competition between these two immensely proud nations is inevitable. Yet the consequences of conflict between today’s strongest and best-armed powers would be catastrophic. Somehow, policy makers in Asia and the West have to accept the inevitability of tension while trying to channel it in ways that don’t plunge the world into prolonged crisis.
In “The End of the Asian Century: War, Stagnation, and the Risks to the World’s Most Dynamic Region” Michael R. Auslin, a Yale academic turned American Enterprise Institute fellow, argues persuasively that most predictions for Asia are unrealistically rosy. War between China and Japan is said to be unlikely because economic ties are too deep or the consequences too great; North Korea won’t launch a nuclear strike because it would be suicidal; if China’s growth falters, India will take its place; and so on. It’s impossible not to be wonder-struck at the economic miracle that has lifted hundreds of millions of the Third World’s poor into the middle class in scarcely a generation and has turned Singapore, Hong Kong and Shanghai into cities that rival New York and London.
Mr. Auslin acknowledges China’s remarkable economic transformation since elements of a market economy were introduced. Still, he says, China is a “fragile” superpower.
Yes, the country has 271 billionaires, but it has scarcely reached middle-income status. Its economy is still dominated by massively indebted and usually inefficient state-owned enterprises that engage in wholesale theft of intellectual property. The speed with which the country has modernized is astonishing, yet such progress has resulted in the world’s worst pollution: “the darkness of Chinese cities at noon, thousands of dead pig carcasses floating down major rivers, and towering garbage heaps reveal the almost inconceivable environmental harm,” writes Mr. Auslin. There are, on average, 180,000 reported demonstrations against the regime every year. And the fact that 50% of the country’s wealthier citizens say they plan to move overseas within five years is hardly a good sign. The more challenges China faces, the more tempted an insecure government might be to engage in brinkmanship abroad to prop up its position at home.
Provided China makes no attempt to disrupt naval navigation, a serious military clash over the disputed reefs and cays of the South China Sea is unlikely. Taiwan, though, is a different matter, especially if, unprovoked, China tries to take it back. Mr. Auslin concludes that possible Chinese military adventurism “remains the great security question of our time.”
Even a cold war involving America and China could mean a massive dislocation of trade and consequent dramatic drop in global living standards. A shooting war would mean widespread devastation on two continents. And the event of a full nuclear exchange, sparked, perhaps, by North Korea, could mean the virtual end of life as we know it.
What, then, is to be done? Of course, the United States should aim to contain China, writes Mr. Auslin, and there’s no point pretending otherwise. But the U.S. should be actively pursuing a policy of both containment and engagement. For one, argues Mr. Auslin, there should be more U.S. naval power in the region and beefed up defense cooperation with Japan, Korea, Australia and India “to address significant security issues and try to set regional standards and norms”.
It shouldn’t stop there, though. Freer trade and investment between the U.S. and Asia, especially China, is important to build trust as well as prosperity. Mr. Auslin cites a Japanese study suggesting that 60% of the real value in a “Chinese made” iPhone actually accrues to the U.S. via Apple and other American firms. According to Mark Perry, an economist Mr. Auslin cites, in 2010 America enjoyed a $32 billion a year “value-added” trade surplus with China, not a $133 billion deficit. President-elect Donald Trump and his administration would be well advised to consider such facts before any precipitate imposition of punitive tariffs.
“The long game in Asia”, Mr. Auslin writes, “is to promote and nurture liberalisation and democracy.” That should begin with trade but continue with people-to-people engagement. “True and enduring stability can come about only when a community of democratic nations is preponderant in the Indo-Pacific. No country can be forced to accept democracy, but the liberal states of Asia, in conjunction with America, should do all they can to encourage and assist democratisation. Eventually, that will lead to ties of interest, bonds of trust, and possibly even the preservation of the Asian century.”
As for my own country, America is Australia’s indispensable security partner. Australia has more and more common interests with China but—at least so far—few common values. More trade, more investment, more tourism and more two-way education and work exchanges with China has always been my country’s approach. As I hope Mr. Trump might note, there’s much to be said for it: It doesn’t guarantee peace but it’s certainly the best way to avoid disaster.