The U.S. Strategy On China – Analysis
By Mehmet Yegin
Almost all sources are making statements on the US focus on Pacific region as foreign policy priority. What does this new Asia- Pacific strategy actually mean?
Hillary Clinton’s statement in the Foreign Policy Magazine of “America’s new pacific century” implies that the last century was primarily Atlantic. However, even then Asia – Pacific was not just a topic that stood in the background. It should be remembered that the beginning of the Cold War was marked by the Vietnam and Korea wars. Notwithstanding the fact, that it delimits the current US borders. A historical analysis illustrates that the Pacific has always been important to the United States and according to some experts; the US always had a dominant role in the Pacific. The existence of new emerging powers in the region re-focuses its attention on this region. In the next period, the road map for the US will be to intensify its role in the Pacific and thereby force emerging powers to follow its rules.
I’m here too
While as a result of the economic crisis, the US seems to have given up its role as a global player, China, interested to fill that gap, is taking its own steps in that direction. Although this causes some uncertainty for the Pacific states on whom to focus in the region, US Foreign Policy signals its continued presence. Even though the US had previously taken a neutral role in the Southern China sea disputes, this has changed. It attempts to tighten its relations with the Pacific states by showing its intentions to make new investments, engage in free trade agreements, strengthen its role in Asian – Pacific Economic Cooperation (APEC) and emphasize Trans – Pacific cooperation. Also in terms of natural disasters, the US’ soft power finds positive support. According to an article published in the International Public Policy Review, Luuk Nijman stated that together with its soft power elements and its military power, the US could enhance its influence over the region. Next to military support for Indonesia, the Philippines and India, the US has increased the number of troops in Japan and created a new military base in Darwin/ Australia. Plus the military expenses are exempted from the defence budgetary cuts. President Obama’s statement that the US will increase its role in Asia Pacific and that the budget cuts will not affect its role in the region presumes that there will be no decrease in US troops in the region.
Regional alliances and limitations
Amongst one of the US strategies is to find a comparable power to China so as to keep a balance of power in the region. In this context, two states are particularly in the forefront, namely India and Indonesia. Not only Obama has stressed the importance of these two nations, but also his former opponent Republican leader Mitt Romney did. However, although certainly India and China come face to face at certain points, according to RAND, a US think tank, India lacks far behind China with its economical, scientific, technological as well as military innovations. Indonesia on the other hand, the fourth largest country and with a developing economy seems to play a significant role for the US.
The second plan of the US strategy is to isolate China if it does not choose to play by the rules. Signing agreements with Pacific states is a method employed to keep a balance in the region. And by including Germany and Japan in its policies, the threat of competition vanishes.
Despite this, and as Hilary Clinton has already affirmed, the structure of the Atlantic and the dynamics in the Pacific are quite different. And disputes between many states do not seem to facilitate cooperation. As an alternative policy, Clinton has pointed out that its policy is to focus on bilateral relations, which then of course, although not all states may be encompassed, could give the US a platform to engage in a much broader cooperation in the region. Furthermore and as a matter of its new policies, Washington is attempting to re-structure its relations with its allies Japan, South Korea and Australia so that a new basis for its relations with China can evolve. It is also apparent that the US is engaging in efforts to improve its relations with Vietnam.
Whether the US policies will turn out profitable is a matter of time but difficulties might arise since China is equally engaged in efforts to pursue its policies. ASEAN + 3 (China, South Korea and Japan) is an alternative policy in this regard. According to the director of the Centre for Strategic and International Studies (CSIS), Ernest Power, the relative flexible Chinese policies could be more advantageous for these states than the US policies. In this sense, it is possible that while the US is trying to push China to the corner, it pushed these Pacific states towards China at the same time. Hence, while the US is trying to intervene in the Southern Sea Dispute, China is trying to tie the relation by offering more investments and low rate interest loans.
Reminding all parties that it will play an active role in the future of Asia – Pacific, it keeps an eye on China and seeks to integrate it in its own policies. By not trying to increase the tensions but solving issues, it leaves the door open for China to switch to its side. However, this of course would require that China is obeying to the US policies and does not act unilaterally as it actually does.
USAK Center for American Studies
2 thoughts on “The U.S. Strategy On China – Analysis”
As an empire, the US has always had a role to play in world affairs as all previous ones have. A powerful nation has many advantages, foremost its military power. However, history teaches us that abusing it may be contrary to its own interest. Time will tell, bearing in mind that nothing last for ever.Creation and destruction are complementary forces of our evolution. They are invariably associated with much bloodshed.
Well, much of that ongoing plan relies on the continued funding of American financial expansion through debt.
WHO is funding that debt? China and Japan. If there is a way to knock out the Japan peg, there would be decades of peace for China, allowing for continued peaceful development. All the stars are basically aligning. This is definitely the time to strike.
Japan is also the nation with the biggest national debt, at 240% of GDP. Some argue that it does not matter, as most of the debt is owed to JP nationals. Examine that: the JP banking industry as a whole averages JP goverment paper to the tune of over 900% Tier-1 capital. And these paper carry extremely low interest rates, with long term paper around 1% (0.77% for the 10 year JP sovereign bonds).
If the feud with China heats up, the next round could see a 25% surcharge on exports from China to Japan. Most of these exports are sold by JP ventures in China. Basically, by removing affordable Made in China, hyperinflation will take hold. Those bond interest rates can go to 7, 8, or even 10%. But short term, even just a doubling of the interest rate means an immediate HALVING of the value of the GSE held by the JP banks, basically wiping out their capital by 4 or 5 TIMES. That would also have the effect of dragging U.S. rates higher, and further devaluing the Yen.
Abe is now shooting for 2% inflation and a 90 Yen/Dollar exchange rate. Dollars to peanuts, the bet is that Japan WILL overshoot these targets, with the Yen ending at 120, or even 160, while jacking up import prices for the Japanese (since most of the Chinese exports to Japan are daily necessities, and are not really price sensitive). He is also demanding plans be drawn up for 200 Trillion Yen (about US$2.4 Trillion) of infrastructure work, all to be funded by new debt. By the time he is done, Japan’s national debt could be 3-4 times GDP, with resultant upward pressures on interest rates.
Put in that light, you can see that Abe is playing with fire, a fire that can drag the world down a peg or two with it (while Japan sinks into the ocean figuratively). That so called resurgent nation is on feet of clay. Yank out the Japanese peg, there is nothing to pivot about, and China shall have decades of peace.