E DITE D BY

DAVID A R A SE
CH INA ’ S R I S E A N D
CH A NG ING O R D E R
IN E A S T A S I A
Politics and Development of Contemporary China

Series Editors

Kevin G. Cai
Renison University College
University of Waterloo
Waterloo, Canada

Guang Pan
Shanghai Center for International Studie
Shanghai Academy of Social Sciences
Shanghai, China

Daniel Lynch
University of Southern California
Los Angeles, California, USA
As China’s power grows, the search has begun in earnest for what super
power status will mean for the People’s Republic of China as a nation as
well as the impact of its new-found influence on the Asia-Pacific region
and the global international order at large. By providing a venue for excit-
ing and ground-breaking titles, the aim of this series is to explore the
domestic and international implications of China’s rise and transforma-
tion through a number of key areas including politics, development and
foreign policy. The series will also give a strong voice to non-western per-
spectives on China’s rise in order to provide a forum that connects and
compares the views of academics from both the east and west reflecting
the truly international nature of the discipline.

More information about this series at

http://www.springer.com/series/14541
 David Arase
Editor

China’s Rise and

Changing Order in
East Asia
Editor
David Arase
Johns Hopkins University
School of Advanced International Studies
Nanjing University
Nanjing, Jiangsu, China

Politics and Development of Contemporary China

ISBN 978-1-352-00022-1    ISBN 978-1-352-00023-8 (eBook)
DOI 10.1057/978-1-352-00023-8

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 Contents

Part I  Introduction1

  1 The Question of Regional Order in East Asia3

David Arase

Part II  China Rising35

  2 China and East Asian Cooperation: Fundamental

Bottlenecks, Recent Problems, and New Orientations37
Yinhong Shi and Caizhen Han

  3 Remapping Asia’s Geopolitical Landscape:

China’s Rise, US Pivot, and Security Challenges
for a Region in Power Transition49
Jingdong Yuan

  4 Sino-US Strategic Convergence and Divergence

in East Asia63
Bin Shi
vi  Contents

  5 The USA and Challenges to East Asia’s Security Order89

Zongyou Wei

  6 How Stable Is China’s Economy?107

Paul Armstrong-Taylor

Part III  Northeast Asia123

  7 US-China Rivalry and South Korea’s Strategy125

Chaesung Chun

  8 Formation of Regional Community in East Asia:

A Japanese Perspective145
Kazuhiko Togo

  9 Rebuilding Sino-US Cooperation Over North Korea

Nuclear Issue161
Jishe Fan

10 Pathways to a Northeast Asian Energy Regime173

Gaye Christoffersen

Part IV  Southeast Asia197

11 The Meaning of ASEAN in the Regional Security

Architecture199
Quang Minh Pham

12 South China Sea Disputes: Litmus Test for

China’s Peaceful Rise—How US Scholars View
South China Sea Issues217
Li Xue
 Contents  vii

13 The ASEAN-Centred Cooperative Security

Regime in Asia225
Daljit Singh

Part V  Indian Ocean Region241

14 The China-India-USA Engagement in the Asia-Pacific:

Security Implications for East Asian Regionalism243
Li Zhang

15 India’s Growing Role in East Asia259

Mahendra Gaur and Sylvia Mishra

Index277
 Note on Contributors

David Arase  is resident professor of international politics at the Hopkins-­

Nanjing Center of the Johns Hopkins University—School of Advanced
International Studies. The Hopkins-Nanjing Center is located at Nanjing
University, Nanjing, China.
Paul  Armstong-Taylor is resident professor of economics at the
Hopkins-Nanjing Center of the Johns Hopkins University—School of
Advanced International Studies. The Hopkins-Nanjing Center is located
at Nanjing University, Nanjing, China.
Gaye Christoffersen  is resident professor of international politics at the
Hopkins-Nanjing Center of the Johns Hopkins University—School of
Advanced International Studies. The Hopkins-Nanjing Center is located
at Nanjing University, Nanjing, China.
Chaesung  Chun is professor in the Department of International
Relations at Seoul National University and director of the Asian Security
Initiative at the East Asian Institute in Seoul, South Korea.
Jishe  Fan  is director of the Division for Strategic Studies and deputy
director of the Center for Arms Control and Non-proliferation Studies at
the Institute of American Studies of the Chinese Academcy of Social
Sciences in Beijing, China.
Mahendra  Gaur  is director of the Foreign Policy Research Centre in
New Delhi, India.
x  Note on Contributors

Caizhen Han  is professor in the Department of International Relations

at Renmin University in Beijing, China.
Sylvia Mishra  is editor of the Foreign Policy Research Center Journal in
New Delhi, India.
Quang Minh Pham  is vice rector of the University of Social Sciences and
Humanities in the National University of Vietnam in Hanoi, Vietnam.
Bin Shi  is professor at the Hopkins-Nanjing Center and in the School of
Government at Nanjing University, Nanjing, China.
Yinhong Shi  is a member of the State Council of China as well as profes-
sor and director at the Center for American Studies in the Department of
International Relations at Renmin University in Beijing, China.
Daljit  Singh  is the coordinator of the Regional Strategic and Political
Studies Program in the Yusuf Ishak Institute of Southeast Asian Studies in
Singapore.
Kazuhiko  Togo  is director of the Institute for World Affairs at Kyoto
Sangyo University in Kyoto, Japan. He is a former ambassador and retired
Japan Ministry of Foreign Affairs official.
Li  Xue  is director of the Strategic Research Office in the Institute of
World Economy and Politics of the Chinese Academy of Social Sciences in
Beijing, China.
Zongyou Wei  is professor and vice dean of the Institute of International
and Diplomatic Affairs at the Shanghai International Studies University in
Shanghai, China.
Jingdong  Yuan  is associate professor in the Centre for International
Security Studies at the University of Sydney in Sydney, Australia.
Li  Zhang  is professor in the South Asia Research Institute of Sichuan
University in Chengdu, China.
 List of Figures

Fig. 6.1 Growth in credit and shadow banking in China 109

Fig. 6.2 International comparisons of China’s shadow banking system 110
Fig. 6.3 Structure of shadow banking of China 111
Fig. 6.4 Exports to China as percentage of GDP 117
Fig. 6.5 Financial exposure to China 118
 List of Tables

Table 7.1 US-China relationship in different power games 135

 PART I

Introduction
 CHAPTER 1

The Question of Regional Order

in East Asia

David Arase

The New Regional Agenda: Adjusting to China

as a Great Power

Every state in East Asia desires continuing peace and development. But
all of them must deal with conflicts of interest that touch their vital inter-
ests. The successful management of such conflicts has maintained regional
stability and permitted the region to share growth and development. The
key has been a regional order that finds its origin in the post-World War
II era of US hegemonic power. From the start of the Cold War, the USA
constructed a liberal international order for its allies and friends based on
free trade for all within the sphere of US strategic dominance.
China defected from the Soviet block from 1971 and, after setting
out on reform and opening up under Deng Xiaoping, it gained inclusion
into the liberal free trade order. After the Soviet Union collapsed and left
the USA predominant in a unipolar global structure of power, the lib-
eral international order accommodated the former communist states. This
globalized liberal order gave the USA an integral economic and strategic

D. Arase (*)
Hopkins-Nanjing Center for Chinese and American Studies, Nanjing, China

© The Author(s) 2016 3

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_1
4  D. ARASE

presence in every world region. Not all states accepted this US-sponsored
global order, but very few chose to directly challenge it.
However, the rise of China to great power status is transforming
the international structure of power from unipolarity to bipolarity, first
of all at the regional level, which is the concern of this book. Some
might argue that China is not yet fully qualified as a global power
(Shambaugh). But there is no denying that China now wants to be
recognized as a great power, and that all of its neighbors already treat it
that way. China’s GDP has already surpassed that of the USA in terms
of real production (measured in purchasing power terms); and though
its growth is now dipping below 7 percent, its growth remains at least
twice as fast as US growth, so its margin of superiority will widen in
the foreseeable future. It is already without doubt the predominant
economic and military power among Asian nations, and not only does it
envision a new regional order, which it calls a “Community of Common
Destiny,” but it also offers to provide public goods to realize it, such as
its One Belt-One Road (OBOR) initiative to build economic corridors
radiating out from China to integrate all of Eurasia with the Chinese
economy; and the Asian Infrastructure Investment Bank designed to
help finance the OBOR.
The new rise in power of China restructures not only the world and
greater East Asia, but also each of East Asia’s subregions, where parties
locked in local conflicts must now adjust their respective strategies. This
kind of change occurring at all levels simultaneously can be destabilizing.
Contributors to this volume look at the effects of China’s rise, examine
the implications for regional order, and assess the future outlook at three
levels, that is, the greater East Asian region; relevant Asian subregions; and
regional institutions. Each contributor is an internationally recognized
expert, and together they present a variety of regional perspectives on
how China’s rise is affecting the prospects for stability.

Region, Regionalism, and Regional Order

in East Asia

We think of the East Asian region as a network of states with interdepen-

dent economic and security relations. At its core are the ten member states
of the Association of Southeast Asian Nations (ASEAN) and the Northeast
Asian states of China, Japan, and the two Koreas. But the network of criti-
cally interdependent relations extends outward to include countries such as
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  5

the USA, Australia, and India, whose strategic and economic links to East
Asia are so deep that any discussion of East Asian security and prosperity
cannot exclude them.
Other names for this network of regional interdependence could be
chosen. For example, Americans prefer to use the term Asia-Pacific to
place themselves as actors in a trans-Pacific framework of interdependent
economic and security relations. India, Australia, Indonesia, and, increas-
ingly, other actors use the term Indo-Pacific to focus on trade and security
relationships that are quickly integrating the Indian Ocean and East Asian
littoral areas into a vast belt of economic growth and development. These
names are not so much mutually exclusive as indicative of different per-
spectives on the same underlying reality, of critically interdependent rela-
tions knitting together states in contiguous geographical space anchored
in geographic East Asia.
Of course, in a globalized world any network of regional relations is
actually part of an integrated globalized system of interdependent rela-
tions. But we can analytically frame and linguistically name a regional
focus in a way that is appropriate to our interests. In this case, our interest
is the impact of China’s rise on regional stability and how this impact will
work itself out through this network of relationships. The rise of China
to great power status will be felt first and foremost in East Asia. No one
doubts the historic significance of China’s rising economic and military
power. It is creating asymmetries in regional relations that empower China
in qualitatively new ways.
Political adjustments are inevitable, and the fundamental question is
whether the norms and values that provide the basis for the existing East
Asian regional order can accommodate changes that China might like to
see. China wants a leadership role in Asia to match its regional power rank-
ing, but the current order has been built under, and is still reliant upon,
US leadership. Almost all regional states belong to the Bretton Woods
institutions and the World Trade Organization (WTO), which provide
global rules for economic interaction. Treaties, conventions, international
organizations, and customary international law provide norms that gov-
ern the relations between states. Regional stability is underwritten by the
hub-and-spoke system of US bilateral military alliances with Japan, South
Korea, the Philippines, Thailand, and Australia. This has allowed the US
Navy to guarantee freedom of navigation in the global commons, which
supports economic dynamism and the growth of trade, which is the func-
tional core of the East Asian region.
6  D. ARASE

Some suggest that China’s “peaceful rise” has been a “neo-Bismarckian”

strategy to promote power accumulation without triggering a competi-
tive, counterbalancing response from actual and potential rivals (Goldstein
2003). Analysts used to say, “The U.S.-China security dilemma is in large
measure a function of the Taiwan question.” (Johnston 2004, p. 81) Today,
however, the security dilemma is becoming rooted in the question of who
will determine the norms that govern the regional order. Yan Xuetong
(2014) argues that it is time for China to openly “strive for achievements”
and compete with the USA for predominance in Asia.
Prior to the rise of a more assertive China, many looked at the
regionalization of East Asian relations, that is, the growing intensity of
intra-regional trade and investment relations centered in East Asia, and
anticipated the growth of regionalism, that is, the effort to construct
regional institutions, whether informal or formal, to consolidate stabil-
ity and manage intensifying regional interdependence (Pempel 2005).
Regionalism is a political process that aims to produce a convergence of
interests and norms among states to gain greater security and prosperity
through mutual accommodation. Thus, regionalism aims at least to pro-
duce stability, and it aspires to produce institutions that permit members
to achieve shared goals. Whether or not regionalism succeeds is the test
of its relevance.

East Asia’s Soft Regionalism

East Asian regionalism has taken on “soft” informal institutional forms,
where actors meet regularly to discuss prospects for regional cooperation.
This soft form of regionalism leads to flexible, ad hoc deliberations and
agreements on specific issues where gains through cooperation can be eas-
ily achieved. It was hoped that soft regionalism would produce converging
interests that develop into harder mechanisms with professionally staffed
and legally chartered institutions that have the authority to make binding
decisions and impose sanctions for noncompliance. This would create an
institutionalized basis for regional stability and collective action.
The soft regionalism goes back to the late 1960s, when Japan’s depen-
dence on exports to the USA, Australia’s desire for economic engagement
with North America, and the desire of the USA to consolidate and spread
a free trade order in Asia created a demand for trans-Pacific ­economic
cooperation. The rise of US-Japan trade friction also meant that insti-
tutional mechanisms to manage trade informally would be useful. The
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  7

informal initiatives supplied to meet these demands were the Pacific

Basin Economic Community forum (PBEC) and the Pacific Trade and
Development Conference (PAFTAD). The trans-Pacific economic coop-
eration concept later expanded in 1980 to incorporate developing coun-
tries in the Pacific Economic Cooperation Conference (PECC) forum.
The trans-Pacific PECC proposed the creation of the intergovernmen-
tal Asia Pacific Economic Cooperation (APEC) forum, which became a
reality in 1989. APEC was intended to liberalize Asia-Pacific trade, and
the USA used a prospective Asia-Pacific trade block as leverage to bring
the Uruguay Round to a successful conclusion. In 1990, Malaysian prime
minister, Mahathir bin Mohamed, reacted to the APEC agenda by pro-
posing an exclusively East Asian regional institution. It was called the East
Asian Economic Group and it would be composed of the ASEAN mem-
bers with China, Japan, and South Korea joining the group. The idea was
to focus on trade facilitation and industrial policy coordination rather than
on trade and investment liberalization under uniform and legally binding
treaty obligations. The idea failed when it met with resistance from the
USA. But the idea of an exclusively “Asian” regionalism reemerged after
the Asian Financial Crisis. High-level meetings among the ASEAN mem-
bers, China, Japan, and Korea led these countries to form the ASEAN Plus
Three (APT) summit process in 1999. APT created a nexus of bilateral
currency swaps called the Chiang Mai Initiative that became a formal mul-
tilateral agreement in 2010.
In response to multinational corporations looking to set up regional
production networks in Asia, the ASEAN countries produced the ASEAN
Free Trade Agreement (AFTA) in 1992. This set of binding tariff and
nontariff barrier reduction targets was intended to turn ASEAN into
an integrated production base. In a further bid to boost trade and draw
foreign investment, ASEAN began negotiating individual free trade
agreements (FTAs) with China, Japan, India, Australia, New Zealand,
and South Korea. By 2010, all these FTAs were signed. Then, in 2012,
ASEAN launched formal talks on the Regional Comprehensive Economic
Partnership (RCEP), which would consolidate ASEAN’s bilateral FTAs
with China, Japan, South Korea, Australia, New Zealand, and India into a
single multilateral arrangement. Negotiations were scheduled to finish by
the end of 2015. Thus, we see that ASEAN has been the center of FTA
construction in the region.
Failure to move the trade agenda forward at the global level has led
to new macro-regional trade initiatives currently under negotiation, but
8  D. ARASE

political and institutional differences found within such a wide array of

actors make it uncertain whether any will go much beyond the status
quo. The above-mentioned RCEP is one major example. The other is
the Trans-Pacific Partnership (TPP). In 2008, the USA joined an exist-
ing four-way FTA between Brunei, Chile, New Zealand, and Singapore
called the Trans-Pacific Strategic Economic Partnership Agreement. Since
then, Australia, Peru, Vietnam, Malaysia, Mexico, Canada, and Japan have
followed suit and the name has been simplified to TPP. This has become
a vehicle for the USA to revitalize trans-Pacific trade liberalization.
However, in contrast to APEC’s inclusive soft cooperation that requires
little of participants, TPP members self-select on the basis of their willing-
ness to negotiate legally binding guarantees that go well beyond current
WTO spheres of trade and investment liberalization. The TPP excludes
China because the nature of its socialist economy prevents it from mak-
ing the necessary commitments to deregulate and guarantee new kinds of
property and contractual rights.
East Asia’s soft regionalism was built on economic interdependence,
which in turn relied upon the global stability, freedom of navigation, and
free trade rules provided by the US-sponsored liberal international order.
In this sense, East Asia’s soft institutional arrangements implicitly affirmed
the US hegemonic order (Katzenstein 2005). This is not to minimize East
Asian regionalism, because this process aimed to shift the basis of regional
order to law-based multilateral governance institutions. However, the rise
of an assertive China that questions structural elements of the existing
regional order forces us to remember that East Asian regionalism remains
far from achieving its aspirations. If China, as a newly risen great power,
defects from the existing liberal hegemonic order, it cracks the very foun-
dation on which East Asian soft regionalism is built.

The Transformation of Regional Structure

When Deng Xiaoping led China into the era of reform and opening up,
he wanted access to Western markets, capital, and technology on favor-
able terms. China agreed to side with the USA against the Soviet Union
and stop challenging US leadership, and it endeavored to meet WTO,
World Bank, and IMF rules as best as it can, while maintaining “socialism
with Chinese characteristics.” The USA welcomed China and felt confi-
dent that over time, China would drop its distrust of the USA, democ-
ratize, and become fully socialized into the US-led ­liberal ­international
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  9

order. This historic deal, which might be described m ­ etaphorically as

“same bed, different dreams,” was marked by the normalization of
China-US relations in 1979. The world remained bipolar at the global
strategic level until the fall of the Berlin Wall in 1989. But at the East
Asian regional level, East Asia consolidated under the liberal hegemonic
order by 1979.
Today, however, China’s rise to great power status has changed the
structure of regional economic and military power from unipolarity back
to bipolarity, only this time with China as the other great power pole.
One notes that today, the USA no longer has critical military or economic
leverage over China, and other countries will do anything to avoid having
to choose between these two powers.

Hegemonic Order Versus Balance of Power Order

When the world is unipolar, the predominant (hegemonic) power can cre-
ate rules that lesser powers must follow or face possible consequences.
This creates a system-wide, hegemonic order. Lesser powers gain ben-
efits by joining this order, and incur costs by remaining outside of it.
Hegemonic order can be relatively peaceful and cooperative, at least until
another great power arises to challenge the authority of the hegemonic
power (Gilpin 1981).
When the world is multipolar, a balance of power order develops. When
two or more great powers disagree over a matter of vital interest, war is
always an option. Because disagreements over vital interests between great
powers inevitably arise, when the rule of law is absent, insecurity is chronic
and distrust is rational. Therefore, prudence dictates that each great power
should seek an advantage over the other(s). Such prudent behavior in the
military sphere creates an action-reaction cycle of arms acquisition that
leads to more distrust and less security. In the economic sphere, prudence
dictates reduced economic dependence on a rival, if not an avoidance of
trade altogether.
However, in an insecure world lesser powers need the association with
a great power not only for protection from other lesser powers, but also
from other great powers. The result is that competing great powers acquire
followers and divide the world into competing orders (Waltz 1979). We
saw the consequences of this balance of power logic in the Cold War: the
world was divided into two hostile camps.
10  D. ARASE

How Will China’s Rise Affect Regional Order?

The structural transformation of regional order suggests that, other things
being equal, the two great powers will begin to compete in the ways out-
lined above with the worst-case scenario being sharp strategic competition
between China and the USA (Mearsheimer). Nevertheless, great powers
have in the past agreed to limit unbridled competition and avoid war.
One example is the Concert of Europe dated from the Treaty of Versailles
(1815) that stabilized Europe for a century following the Napoleonic
Wars. Another is the peaceful transition of international economic and
naval predominance from Britain to the USA in the 1914–1945 period.
So the question is, Can China and the USA prevent strategic competition
and the polarization of the region into hostile camps?
What is lacking between the USA—a champion of democracy and
human rights—and the Chinese party-state regime, which remains
avowedly illiberal, is agreement on fundamental liberal principles such as
free trade, open global commons, human rights, democracy, and rule of
law that applies impartially and equally to those who make the law. From
this values-oriented perspective, it is difficult to see how a cooperative
regional order can be agreed upon.
Could shared material interests provide an alternative basis for coop-
erative order? Because China “grew up” to achieve great power status
within the liberal international order, it is heavily invested in cooperation
regimes and economic relations with the USA that would be difficult and
incredibly costly to destroy. A liberal institutionalist might argue that, even
after hegemonic decline produces a return to multipolarity, it is theoreti-
cally possible that a self-interested desire to protect existing multilateral
cooperation regimes could negate the logic of great power competition
to maintain the status quo of international order (Keohane, Ikenberry).
So, on the one hand, structural realism predicts a region divided between
competing great powers. On the other hand, liberal institutionalism sug-
gests that an open cooperative regional order can be sustained after the USA
loses its hegemonic power status. With the rise of China ending unipolar
US predominance, we face an empirical test of these competing hypotheses.

US Proposals for Strategic Partnership

The Bush administration proposed a “responsible stakeholder” role to
China. Deputy Secretary of State Robert B. Zoellick explained that, “From
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  11

China’s perspective, it would seem that its national interest would be much
better served by working with us to shape the future international system”
(Zoellick 2005). However, subsequent bilateral discussions were incon-
clusive. Soon after the Obama Administration entered office in 2009, it
offered China “mutual strategic reassurance”—some observers nicknamed
it a G-2 global governance scheme—to cooperatively manage the existing
international order across the full spectrum of issues (Steinberg 2009). It
also began an expanded annual bilateral dialogue, the US-China Strategic
and Economic Dialogue, to work out the details. However, the timing of
this initiative coincided with the global financial crisis that plunged the
USA into negative growth and fiscal crisis, as well as with the start of US
troop withdrawals from Afghanistan and Iraq. The USA did not appear to
be offering strategic partnership from a position of long-term strength. In
contrast, China continued its high GDP growth, almost unaffected by the
economic travails besetting the USA.

China Rejects US Overtures of Strategic Partnership

China’s negative response was implicit in its challenges to the status and
interests of the USA in selected areas. In the midst of US attempts to
coordinate a response to the global financial crisis, Chinese officials openly
called for a new global currency regime to replace the US dollar-centered
system (The Telegraph 2009). And at the 2009 Copenhagen climate
change summit, Premier Wen Jiabao failed to attend a leaders’ meeting to
hear the Western call for shared commitment to cut carbon dioxide (CO2)
emissions. Later during the summit he called a meeting of non-Western
leaders—to which the USA was uninvited—to counter the US agenda
(The Guardian 2009).
At the regional level, China began asserting disputed jurisdictional
claims in surrounding seas. In the South China Sea, China registered
its imprecisely drawn 9-dash line jurisdictional claim with the United
Nations (UN) in 2009. The line was originally drawn by hand by a KMT
official in 1947 to make a notional claim of historical ownership of the
South China Sea. The line is not derived from customary international
legal principles that draw maritime ownership lines carefully projected
from the shoreline of national territory. Because these legal norms make
the claim problematic, China continued to rely on the idea of histori-
cal ownership to justify the shape and extent of the 9-dash line (Gao
and Jia 1998; Jacobs 2014). China also rejected the use of impartial
12  D. ARASE

i­nternational adjudication mechanisms to settle maritime boundary

­disputes with other coastal states that have exclusive economic zone
(EEZ) rights in the South China Sea because China believes that its
historical claim is “indisputable” (Foreign Ministry of the PRC 2014).
China challenged international legal norms in its neighboring seas in other
ways. It asserted a right to regulate foreign militaries operating in China’s
EEZ, even though the United Nations Convention on the Law of the Sea
(UNCLOS) states that the EEZ remains the high seas for purposes other
than economic development (Thayer 2011). Finally, China put great effort
into the rapid modernization of Chinese weapons designed to neutralize
naval bases and fleets operating in the Western Pacific. This “area access/area
denial” (A2/AD) capability gave China strategic dominance over neighbor-
ing maritime states, and it challenged the US Navy’s ability to guarantee open
sea-lanes and the security of US friends and allies in East Asia (Cheng 2014).

US Strategic Rebalancing Toward Asia

At the July 2010 ASEAN Regional Forum meeting, Secretary of State
Hillary Clinton indicated that the USA had a “national interest” in main-
taining peace and stability, respect for international legal norms, and free-
dom of navigation (FON) in the South China Sea. She took a neutral
stance among the territorial disputants, and offered to mediate among
the rival claimants. Chinese officials angrily refused to entertain any such
notions (The New York Times 2010).
The Obama administration signaled commitment to regional allies
and international norms threatened by China’s assertiveness with the so-
called strategic “pivot” or “rebalancing” toward Asia. President Obama
used the APEC summit, a visit to Australia, and the East Asia Summit
in late 2011 to announce this initiative. The strategic rebalancing had
six elements: (1) more diplomatic engagement; (2) better relations with
Asia’s rising powers, including China, India, and Indonesia; (3) stron-
ger military deterrence and new security cooperation partners; (4) a
new TPP regional trade and investment initiative; (5) more support for
regional multilateral forums; and (6) continuing support for democracy
and human rights.
Strategic rebalancing promised more of a two-track approach
toward China, that is, more engagement and more strategic hedg-
ing. The ­difference between strategic rebalancing and an effort to
“contain” China is that the USA seeks engagement with China at all
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  13

l­evels and across all issue areas so that differences can be worked out.
Strategic hedging preserves US alliances and reassures allies while
the USA engages China. Nevertheless, commentaries in the Chinese
media about strategic rebalancing accused the USA of trying to “con-
tain” China’s rise.

China Offers a “New Type of Great Power Relationship”

Shortly after Obama announced the strategic rebalancing, Xi Jinping, the
designated successor of Hu Jintao as secretary general of the Communist
Party of China (CPC) and president of China, visited Washington, DC, in
February 2012. He called for “a new type of great power relationship” (
新兴大国关系) (Cui and Pang 2012). This called for mutual respect and
win-win cooperation to avoid strategic competition of the sort that struc-
tural realists predicted. As an Asian great power, China seemed to want
everyone, including the USA, to respect its paramount rights and privi-
leges in Asia, which China indicated would not be unreasonable. Then
in early spring 2012, China initiated a lengthy maritime campaign led
by civilian vessels to gain administrative control of Scarborough Shoal/
Huangyandao in the South China Sea, where the Philippine coastguard
had been protecting claimed EEZ fishing rights.
After succeeding in this effort, China initiated a similar campaign in the
East China Sea to gain control of the Senkaku/Diaoyu islets administered
and claimed by Japan. This campaign peaked just as Defense Secretary
Leon Panetta stopped in Tokyo and headed to Beijing in September 2012
with a message of reassurance for both Japan and China. But China wanted
its claims to disputed territories, even those involving close US allies, to be
respected by the USA.

Xi Jinping Articulates China’s Great Power Agenda

Xi Jinping assumed leadership in November 2012 and immediately
called for the “great rejuvenation of the Chinese nation” (中华民族伟
大复兴) (Xinhuanet 2012). He also repeated his call for a new type of
great power relationship. When Xi met informally with President Obama
at Sunnylands, CA, in July 2013, he sought US respect for China’s core
interests in Asia (Lampton 2013; Li and Xu 2014). China wanted an end
to “Cold war thinking,” code language for US alliances that originated
14  D. ARASE

in the Cold War. “Mutual respect” would avoid the “Thucydides Trap”
of rivalry between a rising power and a declining hegemon that produces
war. Thus, as China rose to replace the USA as the world’s leading power,
it offered a way for both sides to protect their core interests and avoid the
risk of hegemonic war.
Xi Jinping has set an ambitious agenda that aims to realize China’s
great power (qiang guo) status and secure its “core interests,” which are
the continuing rule of the CPC in China; the sovereignty and territorial
integrity of the state; and the continuing development of the economy.
China seeks peace, but the “bottom line” is that it will use any and all
means to defend its core interests. Xi Jinping cultivates a Chinese identity
rooted in memories of past golden eras characterized by Confucian values
and a Sino-centric world order. China wants to recover from the century
of humiliation inaugurated by the Opium War, and it expects the USA to
accommodate its legitimate aspirations.
China began large-scale artificial island construction in several loca-
tions across the middle of the South China Sea from 2013. China denies
the right of foreign navies to operate inside the 9-dash line without
Chinese approval, and it denies “innocent passage,” that is, the right of
foreign warships to transit its territorial waters for peaceful purposes.1
And China appears to claim a territorial limit around its artificial islands
These claims would turn the high seas global commons in the South
China Sea into a Chinese administered possession that blocks the pas-
sage of the US Navy and threatens freedom of navigation (FON), the
right of vessels of all nations to free and unobstructed transit across
the high seas. China’s claims are not based on customary or treaty-
based (UNCLOS) international law, but rather on China’s self-declared
“indisputable sovereignty” over territories that belong to China by his-
torical right. All this indicates how China seeks to redefine regional
norms and the seriousness of China’s desire for Asian predominance.
However, China’s effort to secure its core interests in Asia comes up
against a US determination to preserve its influence and defend interna-
tional norms that maintain the liberal international order. For this reason,
the US Navy began FON patrols through the claimed territorial zones of
the artificial islands in October 2015. Both sides seem to be talking past
one another and the situation seems headed toward spiraling strategic dis-
trust and competition.
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  15

The Open Door Versus the Community of Common

Destiny
It would be useful at this point to indicate how the USA and China cur-
rently view the question of regional order. On the one hand, the USA has
a long-standing vision of regional order that dates back to the Open Door
Notes. On the other hand, China has only begun to articulate a vision of
regional order since Xi Jinping took over, but it has worked quickly to
outline something called the “Community of Common Destiny” (命运共
同体—mingyun gongtongti).

The Open Door

The Open Door refers to the Open Door Notes of 1899 and 1900 that
marked the arrival of a distinctive US vision for the development of the
Asian region. The original Open Door Notes stated the US desire for
nondiscriminatory free trade practices in China, and respect for China’s
sovereignty and territorial integrity. This definition of US interest in China
came to characterize the economic rationale for US engagement with the
rest of the world (Williams 2009; LaFeber 1963).
The US desire to expand its presence in Asia went beyond the material
desire for trade. Given its revolutionary origins as a place where religious,
economic, and political practices overthrew European feudal and monar-
chical traditions and developed a democratic republic, the USA has been
eager to share its vision of religious, economic, and political life with the
rest of the world (Smith and Leone 1995). The USA started its advance
into Asia first of all in the Philippines, which the USA acquired from Spain
after the Spanish-American War in 1898.
The essential aspects of this US vision include a trans-Pacific geographi-
cal dimension that links the USA to Asia; open markets free of govern-
ment regulation that impede business; stability and freedom of navigation
guaranteed by US bilateral alliances and naval power; and the promo-
tion of democracy and human rights. The USA has maintained this liberal
hegemonic vision to this day (Clinton 2011).
The USA has been contemplating the rise of China to peer competi-
tor status since the end of the Cold War. On the one hand, realists sug-
gest that China will seek regional hegemony in Asia, which requires the
removal of US strategic influence there. So the US interest would be to
contain and prevent China’s rise (Mearsheimer 2001; Friedberg 2005,
16  D. ARASE

pp.  90–102). On the other hand, liberal institutionalists suggest that

international cooperation regimes can cause states to desire the preserva-
tion of cooperation and long-term relations of mutual benefit with other
states. So China’s inclusion in the liberal international order and deepen-
ing economic interdependence with the USA will eventually induce China
to support the existing international order (Nye 1995).
The USA decided on a two-track approach to China: engage China to
deepen its stake in the existing liberal order and turn it into a “responsible
stakeholder”; keep US alliances in Asia intact as a hedge against the risk of
China defecting from the liberal order once it grew strong enough to chal-
lenge the USA. Now that China believes that it has achieved great power
status, it is time for China to show its hand.

China’s Community of Common Destiny

China has recently reframed its thinking about regional order. In the
past, China primarily supported the China-ASEAN axis of coopera-
tion. The APT framework of regional cooperation was next in impor-
tance. But now China under Xi Jinping’s leadership has inaugurated a
programmatic effort to construct a so-called Community of Common
Destiny (命运共同体—mingyun gongtongti) in Asia. This phenom-
enon represents a distinctively Chinese model of Asian regionalism,
and it comes in response to a new historical moment, that is, the end-
ing of America’s post-Cold War “unipolar moment” and the transition
back to structural bipolarity in the international system. With China’s
neighbors ever more dependent on China’s trade, capital, and GDP
growth—not to mention China’s strategic behavior—China wants
to craft a China-centric initiative that differs markedly from existing
approaches to Asian regionalism.
The term, “Community of Common Destiny” appeared in the latter half
of Hu Jintao’s reign, when he used it in connection with Taiwan and Shanghai
Cooperation Organization (SCO) members. Xi Jinping used it prominently
during his early October 2013 tour of ASEAN members to reference his desire
for much closer China-ASEAN security and economic relations based on
reciprocity (“win-win”) and mutual benefit (Xinhua 2013a). But during the
October 23–24, 2013 Chinese Communist Party Central Committee’s Work
Forum on Diplomacy toward the Periphery (周边外交工作座谈会) Xi used
the term to express a general vision of China’s future relations with neighbor-
ing countries, and it is often used in this wider sense in the media (Ministry
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  17

of Foreign Affairs of the People’s Republic of China 2013; Zhao 2013). He

said: “把中国梦同周边各国人民过上美好生活的愿望、同地区发展前景对
接起来,让命运共同体意识在周边国家落地生根,” which roughly translates
as: “Use the China Dream to give the peoples of each neighboring country
the prospect of achieving a beautiful life, link it to the region’s development
prospects, and let the idea of the Community of Common Destiny take root
in surrounding countries” (Xinhua 2013b).
To construct this community, China has advanced the OBOR con-
cept. The “21st Century Maritime Silk Road” builds a string of ports from
Fujian southward into maritime Southeast Asia, the Indian Ocean littoral,
and into the Persian Gulf and Mediterranean Sea. The “New Silk Road
Economic Belt” radiates overland rail, highway, and pipeline transpor-
tation corridors through Central Asia to ports on the Arabian Sea, the
Persian Gulf, the Black Sea, the Mediterranean Sea, the Baltic Sea, and the
Atlantic Ocean. It also sends corridors from Yunnan to India, Myanmar,
Singapore, and Vietnam where they terminate at Chinese-built Silk Road
ports. It envisions thousands of infrastructure projects, each one negoti-
ated between governments on a case-by-case basis.
Beijing’s approach relies on massive infrastructure investment to make
China the economic hub of Eurasia. It uses China’s geographical central-
ity, huge market, and ability to export prodigious quantities of capital,
build physical infrastructure, provide plant and equipment, and depend on
capable diplomacy. Whether or not China will be fully successful in realiz-
ing a Chinese dominated Eurasia, the effort to construct a Community of
Common Destiny has implications for other efforts to build regional order.
The OBOR approach to regionalism differs from the liberal order in
four key ways: it is not multilaterally negotiated, but bilaterally negotiated
between China and each linked state; it is not treaty-based liberalization
that removes legal barriers to economic exchange, but trade facilitation
that boosts economic using infrastructure corridors and state development
policy coordination; membership qualifications and rules are not objective
and nondiscriminatory, but negotiated with China on a case-by-case basis;
and it is not built by free markets and private sector initiative, but by
national development plans and policy coordination between states.

China-US Strategic Accommodation?

The first three chapters of this volume express Chinese academic perspec-
tives on the question of China’s rise and the adjustment of China-US
relations. They offer their own formulas for a reconciliation of Chinese
18  D. ARASE

and US interests that will permit a strategic partnership. They bear careful
reading for clues and insights into how China is thinking about this vitally
important question, and what, if any, compromise is possible. Before sum-
marizing them, we first might briefly indicate how Americans tend to view
the same question as of 2015.
Among the American public, recent media reports of cyber disputes,
human rights violations, and South China Sea conflict involving China
have produced a negative trend in US perceptions, with negative senti-
ments expressed by 54 percent of the public, up from 40 percent in 2012.
Favorable views were expressed by 38 percent, down from 40 percent
(Pewglobal.org 2015). There is among US experts today a shared con-
sternation regarding China’s apparent rejection of US overtures for stra-
tegic partnership. But there are different opinions regarding what to do
about it. Optimists such as Lyle Goldstein argue for persistence in coop-
erative engagement, suggesting that more time and effort, better policy
ideas, and the need for Sino-US cooperation to manage global problems
can produce “cooperation spirals” leading to cooperative strategic part-
nership (Goldstein 2015). Pessimists like Michael Pillsbury argue that
engagement was a flawed strategy because Beijing has always intended
to displace US power and influence in the world. Therefore, the USA
has to recognize that China poses a fundamental challenge to its values
and interests (Pillsbury 2015; Friedberg 2011). Pragmatists like Thomas
J. Christensen admit that engagement may not lead Beijing to embrace a
liberal world order, but cooperation must still be pursued to achieve what
positive outcomes it can. At the same time, military deterrence and a reso-
lute defense of US values and interests need to be maintained at acceptable
cost (Christensen 2015; Steinberg and O’Hanlon 2014).
In Chap. 2, Shi Yinhong and Han Caizhen are pessimistic about the pros-
pects for a regional order built on regionalism. They point to five obstacles:
(1) the large number and diversity of states in East Asia makes institution-
building problematic; (2) smaller powers cannot truly lead; while the region’s
big powers cannot agree on which of them should lead; (3) China and the
USA each regard the other as an “outsider” in East Asia; (4) parties to con-
flicts in the Korean peninsula, the Taiwan Strait, or the South China Sea will
not entrust their national security to regional institutions; and (5) growing
nationalism in the region makes existing conflicts more difficult to resolve.
Theoretically, Shi and Han believe that growing economic interdependence
can and should lead to a multilateral cooperative order. Practically speak-
ing, however, progress today is blocked by the above-mentioned obstacles.
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  19

Therefore, the way ahead for China is to focus more narrowly on improving
relations with neighboring countries through new Chinese cooperation ini-
tiatives as laid out by Xi Jinping in October 2013 (e.g., the OBOR i­nitiative),
while managing relations with the USA to maintain overall stability and exist-
ing levels of cooperation.
In Chap. 3, Shi Bin expresses China’s unwillingness merely to follow
US leadership in all global governance matters. A “trust deficit” between
the two countries is leading to “structural conflicts” in specific areas.
Questions include who will lead Asia; the validity of China’s sovereignty
claims; how much military power each side needs; trade and investment
access; whether or not liberal democracy and human rights are univer-
sal norms; China’s disputes with US allies; and different approaches to
regionalism. Shi suggests four principles to guide China-US partnership.
First, the USA needs to share power with China, and China needs to
assume responsibility for peace and order, with both sides limiting the
role of military force in the Western Pacific. Second, dispute resolution
and crisis management mechanisms are needed. Third, both sides need to
put aside ideological differences. Finally, both sides need to find the politi-
cal will and maturity to make an unconditional commitment to working
together for peace and prosperity.
In Chap. 4, Wei Zongyou dates the current East Asian order from
1972, when China accepted the US strategic role in East Asia. Today,
however, the balance of power has changed. He identifies four fundamen-
tal problems: an absence of shared values; US military bases controlling
China’s maritime environment; the absence of a regional security regime;
and unavoidable tension as China builds a strong navy. These factors lead
to specific conflicts that cannot be resolved so long as the underlying issues
remain unaddressed. Wei suggests a “grand bargain” resting on five com-
mitments: China recognizes US interests in East Asia relating to military
presence, alliances, and EEZ activities; the USA recognizes the legitimacy
of China’s need for maritime security in East Asia and the Indo-Pacific;
China agrees not to threaten or to use force to resolve maritime disputes;
the USA commits to restrain its allies in East Asia to prevent them from
provoking China; and finally, all agree to construct a multilateral security
architecture based on China, USA, Japan, and ASEAN cooperation and
coordination.
In Chap. 5, Jingdong Yuan, a Chinese-born naturalized US citizen cur-
rently teaching in Australia, suggests that China’s rise to near parity with
the USA has been accompanied by greater assertiveness and u ­ nprecedented
20  D. ARASE

challenges to US primacy. He warns that unless China moderates its

behavior, “it is likely to push the regional order into a bipolar structure,
resulting in instability and probably even confrontation between itself and
the United States.” As it waits for Chinese moderation, the USA should
restrain its allies and continue to engage China.
One assumption underlying the whole discussion of China’s rise is that
it will continue to grow. Indeed, it must continue for at least another
generation if Xi Jinping’s “China Dream” of a fully rejuvenated and truly
advanced China by the year 2049 can be realized. Yet, there is concern that
the historically unprecedented growth of total debt/GDP from 100 per-
cent to 250 percent in the 2008–2014 period will produce a financial crisis
and a “lost decade” of economic de-leveraging of the sort that afflicted
Japan in the 1990s. If it happened, what would be the consequences for
the region? And how sustainable is China’s growth over the longer term?
To assess the risk of a banking crisis, in Chap. 6 Paul Armstrong-Taylor
focuses on lending by the shadow banking sector. Bad loans that have
accumulated since 2008 are a serious concern, but he suggests that the
government is taking steps to reduce them, and it can manage banking,
monetary, and fiscal institutions to maintain stability. If a banking crisis hap-
pened, China’s relatively closed capital account would limit transmission
of a shock overseas, but collapsing import demand could transmit nega-
tive growth effects abroad. With respect to China’s investment-led growth
model, Armstrong-Taylor suggests it is the cause of the systemic risk that
China struggles to control today. China needs a more consumption-­led
growth model, which will produce slower but more stable growth in com-
ing years.

Northeast Asia
The Korean peninsula was divided between occupying Soviet and US
forces at the end of World War II, and each side set up provisional gov-
ernments that became permanent after the Cold War arrived in Asia.
North Korea attempted unification through armed invasion in 1950, but
it failed after the UN authorized and US-led armed intervention roughly
­reestablished the preinvasion border and resulted in an armistice in 1953.
North and South Korea periodically affirm that reunification is imperative,
but they cannot agree on the terms.
The end of the Cold War allowed South Korea to normalize relations
with China and Russia, but North Korea failed to normalize relations with
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  21

Japan and the USA due to its efforts to acquire nuclear weapons to ensure
its survival. The 1994 Geneva Framework Agreement froze North Korea’s
nuclear weapons development in exchange for energy assistance. However,
it broke down in 2002. North Korea restarted its weapons development
and successfully tested devices in 2006, 2009, and 2013.
The Six Party Talks (involving the two Koreas and China, the USA,
Japan, and Russia) were started by Beijing in 2003 to find a way to denu-
clearize North Korea. On September 19, 2005, the talks produced agree-
ment on a process of denuclearization that involved a nuclear freeze in
exchange for US security assurances. This was to be followed by energy
assistance and normalized relations with North Korea. Then a permanent
peace arrangement could be negotiated between North and South Korea.
This was to be done sequentially in steps.
Negotiations subsequently broke down, and North Korea suffered UN
authorized sanctions after testing nuclear devices, but its dysfunctional
economy is kept going mainly by China, which prefers the status quo,
uncomfortable as it is, to war or collapse in North Korea. However, time
permits North Korea to develop longer range ballistic missiles and addi-
tional nuclear bombs with which to threaten South Korea, the USA, and
Japan, and this growing threat raises the level of strategic tension. The
USA is unhappy that China seems unwilling to apply more pressure to
force North Korea to denuclearize despite the rising level of threat.
In Chap. 7, Fan Jishe summarizes North Korea’s nuclear weapons pro-
gram, and points out that no progress has been made toward denucle-
arization or stability on the Korean peninsula. He explains that: China
gives priority to stability, while the USA gives priority to denuclearization;
the USA believes that sanctions will force North Korea to negotiate, but
China believes that they will induce it to cling harder to its nuclear deter-
rent; China believes that North Korea’s security must be assured before it
will give up nuclear arms but the USA requires denuclearization before it
will address broader questions; and China believes that the USA is willing
to solve the nuclear issue without consulting China (e.g., denucleariza-
tion by regime change). Fan proposes that the USA agrees to normal-
ize relations with North Korea, after which its assured denuclearization
will become possible. He suggests that China would actively support this
effort, and would cooperate with the USA to ensure North Korea’s com-
pliance with the agreements.
Meanwhile, though South Korea remains dependent on the USA for
security, it has become critically dependent on China, which has become
22  D. ARASE

South Korea’s single largest economic partner by far. This puts South
Korea in the uncomfortable position of having to please two great powers
increasingly at odds with each other. China would like to pull South Korea
into its orbit, but so long as China sustains North Korea, South Korea will
remain reliant on the USA for security.
In Chap. 8, Chaesung Chun examines what the changing strategic rela-
tionship between the USA and China means for South Korea. He suggests
that no one knows whether the rivalry between the USA and China will
calm down or lead to war, and South Korea can do little to influence the
situation. His concern is that US alliance partners such as South Korea
will be expected to do things that will antagonize China, even as the US
ability to follow through with its rebalancing strategy is questioned in
some quarters. Chun suggests that South Korea needs to work with other
middle powers such as ASEAN, Taiwan, Australia, and arguably Japan to
move regional relations toward norm-governed behavior and multilevel
engagement to create more the stakeholders in regional peace and coop-
eration. Although the USA continues to defend South Korea, Chun sug-
gests that China is South Korea’s largest economic partner as well as the
key outside player influencing the peninsula’s future.
The situation in maritime Northeast Asia is also increasingly tense.
There are sovereignty disputes over small island territories linked to histor-
ical grudges and animosities that divide Japan from China, South Korea,
and Russia. The dispute between Japan and China over the Senkaku or
Diaoyu Islands in the East China Sea since 2012 has become militarized
with frequent encounters between civilian patrol vessels and military units
creating a new risk of armed conflict. Japan incorporated the unoccupied
islands in 1895, but China laid official claim in 1971, and after China
declared an Air Defense Identification Zone in November 2013 that
included the air space over the islands, today the air forces of both coun-
tries assert a right to patrol it.
This escalating territorial dispute is deepening the strategic and politi-
cal rift between China and Japan. This is inconvenient for Japanese busi-
nesses that have become heavily dependent on the Chinese market, but it
is helping those in Japan who wish Japan to become more autonomous in
its defense capability. The result is the passage of Diet laws in September
2015 that reinterpret Article 9 of the Japanese Constitution to permit lim-
ited collective self-defense, that is, Japan can now use a minimum amount
of military force to defend allies who come under attack when they are
defending a vital Japanese interest. Other results include closer coordina-
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  23

tion with the USA through revised Defense Cooperation Guidelines, laws
that permit weapons exports, expanded international security coopera-
tion, a reconfiguration of the Self Defense Forces to confront a maritime
threat from China, and revitalized defense industries.
In Chap. 9, Kazuhiko Togo suggests that the resolution of the East
China Sea conflict and the success of Asian regionalism require a peace-
ful reconciliation between Japan and China. He points out that the
Cold War created a divided Asia that did not promote or require histori-
cal reconciliation. Today the absence of reconciliation produces a nega-
tive Sino-Japanese dynamic that is weakening Japanese pacifism, feeding
anti-Chinese nationalism, and driving Japanese remilitarization in closer
association with the USA. This negative dynamic cannot be overcome by
economic interdependence. Togo turns to the example of the premodern
“Sino-centric World,” in which Japan participated in a China-centered
cultural milieu while maintaining its own cultural identity and political
autonomy. The “Asianist” APT process may permit the return of this kind
of arrangement, without rejecting other levels of regional association. So
China and Japan need a “civilizational dialogue” to begin the process of
historical reconciliation to construct a politico-cultural basis for long-term
peaceful association.
China, Japan, and South Korea are three of the world’s four largest
importers of fossil fuels, North Korea is starved of energy, and Russia
to the immediate north of these consumers is one of the world’s largest
exporters of fossil fuels. The potential for multilateral Northeast Asian
energy cooperation is obvious, and yet nothing substantial has materi-
alized. In Chap. 10, Gaye Christoffersen notes that is has not been for
want of trying. She summarizes the many proposals for regional energy
cooperation made since the end of the Cold War that have gone nowhere
because of distributional quarrels and high risk fear of financial losses and
supply interruptions caused by political factors. Nevertheless, these efforts
have developed a core of expertise and a variety of consultation mecha-
nisms that could quickly come together to organize a cooperation scheme.
She suggests that a “mini-lateral” joint project can work out sustainable
cost, benefit, and risk sharing.
24  D. ARASE

Southeast Asia
Southeast Asia is populated by smaller, more numerous, less developed,
and less militarized states than Northeast Asia. The nature of security
centers more on nontraditional areas such as domestic stability, piracy,
and disaster recovery and relief. Territorial disputes that divide several of
them do not threaten peace between Southeast Asian countries in any fun-
damental way. ASEAN, which was established in 1967 among Western-­
oriented states but expanded to incorporate Vietnam, Cambodia, Laos,
and Myanmar after the Cold War, has allowed its ten Southeast Asian
member states to develop norms of consultation, nonuse of force to settle
conflicts, and noninterference in each other’s domestic affairs that stabilize
their mutual relations. According to the ASEAN Charter signed by the
members in 2008, this group aims to realize a regional community pat-
terned after the European Union by the end of 2015.
Nevertheless, in the South China Sea there is a serious territorial con-
flict involving China’s 9-dash line claim and claims advanced by Vietnam,
the Philippines, Brunei, Malaysia, and Indonesia. It involves disagreement
over the ownership of small islands, the boundaries of maritime jurisdic-
tions, and the kind of rules that apply to national maritime jurisdictions.
The Southeast Asian states agree that in principle, UNCLOS provides a
basis for their claims as well as legal mechanisms for resolving their dis-
putes, should they choose to use them. Moreover, the ASEAN members
share norms that push them toward the peaceful resolution of disputes,
and several such disputes have already been peacefully resolved.
However, China believes its 9-dash line historical claim takes prece-
dence over the claims of other coastal states that are based on legal prin-
ciples. In China’s view, Vietnam and the Philippines directly challenged
this Chinese position in 2009 when they registered their claims with
the United Nations under UNCLOS provisions. Ever since, China has
been unilaterally advancing control within its expansive 9-dash line claim
against Vietnamese and Philippine protests and resistance. In theory, the
disputes are justiciable under the UN Convention on the Law of the Sea
for disputes dealing with maritime jurisdictions, and under general inter-
national law (e.g., by the International Court of Justice) for island owner-
ship questions. But unlike ASEAN countries, which have turned to the
International Court of Justice to settle land border and island ownership
disputes, China insists on direct negotiation with individual rival claimants
to resolve the disputes.
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  25

Because the South China Sea connects the Pacific and Indian oceans,
this conflict has implications for the wider Indo-Asia-Pacific region. It
affects the freedom of global commerce and the maritime rights and secu-
rity of other regional actors such as the USA, India, and Japan. It also
brings the Philippines, a US security treaty ally, into direct confrontation
with China over the possession of islands and the ownership of maritime
resources. This conflict also threatens to divide ASEAN members between
those involved in the South China Sea conflict, and those members
with nothing at stake and who wish to keep good relations with China.
This split inside ASEAN became all too real in 2012 when the ASEAN
Ministerial Meeting failed to produce a joint statement for the first time in
four years because the meeting chair, Cambodia, which is heavily depen-
dent on Chinese assistance, did not want to mention the South China
Sea dispute. If ASEAN falls into disharmony and irrelevance over this dis-
pute, the whole idea of “ASEAN centrality,” or ASEAN-centered efforts
to build East Asian regionalism, could collapse. Thus, we see in the heart
of Southeast Asia rising tension associated with China’s rise to great power
status.
In Chap. 11, Xue Li focuses on how US scholars believe the South
China Sea dispute between China and ASEAN should be resolved. As he
presents US perceptions, he summarizes how the various parties directly
involved in the tangle of disputes would like to find resolution. Assuming
that US policy roughly follows the consensus of academic foreign policy
experts, and based on interviews with 14 prominent US scholars con-
ducted at the end of 2012, he estimates that the US government will favor
the use of legal mechanisms and/or multilateral negotiations to resolve
the disputes. To limit rising tension and conflict, the USA will prefer a
legally binding Code of Conduct along the lines of the nonbinding South
China Sea Declaration of Conduct signed by China and ASEAN members
in 2002. With respect to the nature of China’s claim, the undefined nature
of the 9-dash line claim is problematic, as is China’s unilateral and exclu-
sive approach to developing oil and gas production in disputed maritime
jurisdictions. China should instead negotiate joint development before
moving to explore and develop disputed offshore resources. On all these
points, the USA is close to the position of the ASEAN claimant states.
According to the US scholars, the USA will try to maintain the principle
of freedom of navigation for both commercial and naval vessels, and the
peaceful resolution of disputes. The USA is not interested in the substance
26  D. ARASE

of territorial claims, but in their resolution according to international legal

norms. They also believe that in addition to the USA and ASEAN mem-
bers, neighboring powers such as Japan, India, and Russia will form judg-
ments on whether or not China as a leading power can be trusted to honor
previous commitments and abide by prevailing international norms. Xue
Li suggests that Chinese policy makers need to take all this into account in
formulating its approach to the South China Sea conflict.
In Chap. 12, Pham Quang Minh argues for the continuing relevance of
ASEAN, ASEAN centrality, and East Asian regionalism. He suggests that
the inability of China and Japan, as well as the inability of China and the
USA, to agree on a formula for regional order leaves ASEAN in the driv-
er’s seat by default. ASEAN enjoys good relations with all three powers,
and its inclusivity, outward looking orientation, and flexible pragmatism in
persuading members to settle disputes peacefully have given it a record of
success. This has also allowed ASEAN to play the central role in building
economic and security cooperation in wider East Asia. However, the rise
of strategic competition between China and the USA is a challenge for
ASEAN, which must be met by remaining united, sticking to the principle
of ASEAN centrality, and insisting that all parties abide by ASEAN norms.
In Chap. 13, Daljit Singh notes that cooperative security regimes such
as ASEAN feature discussion and voluntary cooperation that promote
confidence and the development of shared norms. However, cooperative
security regimes cannot substitute for bilateral diplomacy and military alli-
ances that remain more effective in maintaining peace and stability when
tensions run high. Nevertheless, he argues that ASEAN has played a useful
role in Southeast Asia, promoting the peaceful settlement of a number of
conflicts among ASEAN members.
After the Cold War, ASEAN assumed a wider role in the region by
bringing big powers such as China, Japan, India, and the USA into an
expanded ASEAN-centered cooperative security architecture that has
become the only inclusive macro-regional cooperative security mecha-
nism. This architecture consists today of the ASEAN Regional Forum, the
East Asian Summit, and the ASEAN Defense Ministerial Meeting Plus,
where big powers outside Southeast Asia have grown accustomed to and
are supportive of ASEAN-centered soft regionalism. “ASEAN centrality”
has meant that ASEAN decides the membership, agenda, location, and
chairmanship of the meetings. ASEAN also believes in inclusivity of mem-
bership and neutrality in disputes between individual members.
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  27

This formula has worked because the big powers are agreeable and
ASEAN has managed to stay united as a group. Singh suggests that the
ASEAN-centered process is likely to persist because ASEAN members will
not support regional governance by a concert of larger powers, even in the
unlikely event that India, China, Japan, and the USA could agree to one.
However, the rise of strategic competition between the USA and China is
a difficult challenge. There is suspicion that China’s assertiveness may be
directed toward the creation of a China-centered order and the exclusion
of US strategic influence. This would not be in line with the fundamental
interests of ASEAN, which seeks to remain central in East Asian regional-
ism and will benefit from a balance of big powers rather than the domi-
nance of one.

Indian Ocean Region

It is worth noting that the eastern zone of the Indian Ocean region encom-
passed by the Bay of Bengal is currently integrating with the East Asian
region as a result of several factors: India’s post-Cold War Look East agenda
of economic engagement with the Asia-Pacific; the opening of Myanmar
to foreign trade and investment; and China’s desire for a “Maritime Silk
Road” through the South China Sea and Malacca Strait across the Indian
Ocean to the Persian Gulf, Africa, and the Mediterranean. China also
seeks overland transport links from Yunnan province in western China to
the Bay of Bengal to speed up development in this landlocked region and
reduce China’s vulnerability to the disruption of ocean transport through
the Malacca Strait. Other factors pushing the growing linkage between the
Indian Ocean and Asia-Pacific include the spread of multinational produc-
tion networks in Southeast Asia into South Asia; and several Asia-Pacific
actors’ desire to boost ties with India as a counterweight to a rising China.
There also is a major territorial dispute in the Bay of Bengal littoral:
China claims that the Indian province of Arunachal Pradesh historically
belonged to Tibet and should be handed back to China. This conflict
remains dormant, though tensions on the western end of the shared Sino-­
Indian border near Kashmir and Pakistan remain active. Of more imme-
diate concern to India is China’s alliance with India’s archrival Pakistan,
China’s deepening ties with Sri Lanka, and China’s expanding naval pres-
ence in the Indian Ocean region that could be supported by Chinese-­
built port complexes in Myanmar, Bangladesh, Sri Lanka, Pakistan, and
East Africa. India looks forward to expanding its involvement in East Asia
28  D. ARASE

not only to defend its rapidly expanding trade in East Asia, but also to
gain strategic leverage to offset China’s advance into India’s home region.
Meanwhile, China is concerned about the growing defense cooperation
between India and the USA, as both of these powers view with concern
China’s moves in the South China Sea, the vital link between the Asia-­
Pacific and the Indian Ocean regions.
In Chap. 14, Zhang Li examines the strategic triangle formed by India,
China, and the USA. From China’s viewpoint, the troubling aspect is that
the USA and its close allies Japan and Australia seem to be reaching out to
engage India in regional strategic cooperation in order to balance against
China’s rise. The USA sees shared interests and values with India, and
it sees strategic competition and territorial disputes dividing India and
China. However, Zhang believes that India has a more nuanced view of
the situation. Because China offers certain benefits and can impose costs
if angered, India has compelling interests in long-term cooperation with
China. And India’s long-term interest is to promote a multipolar world
order rather than continuing American hegemony, because India has a
tradition of strategic autonomy and a desire to be seen as big power in its
own right.
At the same time, India can use the assistance of the USA and its allies
to help it modernize its military and gain the advantages of deeper engage-
ment in the Asia-Pacific. Therefore, India will further defense coopera-
tion with the USA but will shy away from endorsement of US efforts to
contain China or a formal alliance. India will use its strengthened stra-
tegic position to manage bilateral conflict and try to gain the benefits of
stable cooperation with China. The USA understands and can accept this
Indian stance. China should manage the situation by helping India meet
its developmental and nontraditional security needs; its global political
aspirations such as UN Security Council reform and membership in coop-
eration organizations; and its desire for strategic reassurance. At the same
time, so long as strategic rivalry divides China and India, China will focus
on China-ASEAN and APT regionalism because a larger grouping includ-
ing the USA and India could promote collusion against China’s rise.
In Chap. 15, Mahendra Gaur and Sylvia Mishra note that the Look
East policy initiated by Prime Minister Narasimha Rao in 1991 is a future-­
oriented policy of engagement that restores premodern India’s cultural
ties with Southeast Asia. India is irrevocably committed to participation in
East Asian regionalism because one-third of India’s trade is with East Asia
and strategic developments there will greatly affect India’s own security
 THE QUESTION OF REGIONAL ORDER IN EAST ASIA  29

and role in the world. Yet East Asia is now witnessing the rise of strategic
tension between China and the USA that puts at risk the entire region’s
peace and prosperity. In this context, India’s guiding strategic interest is to
build a peaceful multipolar Asia and a multipolar world.
Cooperative relations with China are a key to India’s future prosperity
and security. India does not want to be drawn into a formal alliance against
China, but it feels comfortable engaging with the USA and others in stra-
tegic consultations as a hedge against a Chinese “expansionist mindset.”
Though China resists India’s Look East efforts, the USA and its allies, as
well as many unaligned ASEAN members, welcome India. A very promis-
ing bilateral relationship exists with Japan, which shares fundamental inter-
ests and values with India, and whose economy is highly complementary
to India’s. India will seek to answer expectations of greater involvement in
maintaining Indo-Pacific maritime security and a stable balance of power
in East Asia, while remaining strategically autonomous and committed to
multilateral and bilateral means of regional management.

 Conclusion
China’s rise to great power status creates a fundamentally new dynamic in
East Asia that threatens to spark strategic rivalry with the USA, unsettle
East Asian subregions, and torpedo prospects for the further institution-
alization of soft East Asian regionalism. Both sides are advancing offers of
strategic partnership, but so far they each seem to be talking more than
listening.
Contributors to this volume make clear that the rest of East Asia does
not want to have to choose between China and the USA. Middle powers
such as South Korea and Australia are motivated to do what they can to
ease tensions. Smaller states in Southeast Asia want to maintain ASEAN
centrality and keep regionalism alive. But today’s soft regionalism cannot
be the sole hope to answer to the contemporary problem of East Asian
order. As indicated earlier, the present regional order is the legacy of the
post-World War II US hegemonic order. Most contributors to this volume
suggest that existing regionalism has been important in strengthening this
order in marginal ways, but it cannot resolve the problem of growing stra-
tegic tension in East Asia at both the macro-level and subregional levels.
The implications of this trend for the further development of soft region-
alism, and for ASEAN centrality in particular, are concerning. So, how
China and the USA decide to manage their relationship will most likely
30  D. ARASE

be the most decisive determinant of regional stability at all levels and the
prospects for normative order.
Nevertheless, this does not mean that East Asian regionalism pro-
cesses will be pointless. Given the importance of continuing development
to China and other still-developing Asian states, the discursive process
of securitization could elevate regional growth and development to the
level of national security concern. This would make the containment of
strategic tension a national security objective and change the direction
of regional security relations (Buzan and Weaver 2003, pp.  40–82). If
soft regionalism can securitize economic cooperation and nontraditional
security cooperation, this would help steer conflicting visions of regional
order toward a “normative and contractual conception of regional order”
(Alagappa 2003, pp. 70–105; pp. 76–78), that is, a norm-governed order.
But all this is only a theoretical possibility. In the end, the ideas and inter-
ests that great power actors choose to abide by will most likely determine
the actual outcome.

Note
1. Jim Gomez, “Chinese diplomat outlines limits to freedom of navigation,”
The Associated Press, August 12, 2015. http://bigstory.ap.org/article/37d
bcca730424f3c803ce38555c817ba/chinese-diplomat-outlines-limits-
freedom-navigation.

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 PART II

China Rising
 CHAPTER 2

China and East Asian Cooperation:

Fundamental Bottlenecks, Recent Problems,
and New Orientations

Yinhong Shi and Caizhen Han

Fundamental Bottlenecks of East Asian

Cooperation
Though they are exerting efforts to enhance regional and subregional
multilateral cooperation, especially in economic integration, East Asian
countries still are confronted with a series of bottlenecks and problems.

The Paradox of Scale and Efficiency

It is common sense that an organization with a wider reach includes more
members having divergent situations, interests, and standpoints, thus
reducing organizational efficiency. East Asian multilateral organizations

Y. Shi (*)
State Council of China, Beijing, China
Center for American Studies, Department of International Relations, Renmin
University, Beijing, China
C. Han
Department of International Relations, Renmin University, Beijing, China

© The Author(s) 2016 37

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_2
38  Y. SHI AND C. HAN

have expanded in geographic scope, membership, and topics covered due

to the agitation and pursuit of strategic/diplomatic interests of coun-
tries like the USA, Australia, Japan, and India. Overlapping, fuzziness,
and ambiguity increases accordingly (Cody 2005; Acharya 2009; Nojima
2005; Mydans 2005).1 Nearly comprehensive regional and transregional
multilateral organizations such as the Asia Pacific Economic Cooperation
(APEC), East Asia Summit, and ASEAN Security Forum are hardly effi-
cient due to the lack of specific regulations, rules, and procedures of policy
making. For instance, there are mostly only symbolic declarations, in lieu
of substantial achievements (such as formal treaties) or applicable common
policies, made in successive APEC Summits and East Asia Summits at the
same time, apart from the Association of Southeast Asian Nations (ASEAN)
and the ASEAN-­China free trade zone, the interference and opposition
of some countries have, compared to what was there earlier, hindered the
development of East Asian subregional cooperation that might be smaller
in scale but more effective and efficient.2

Imbalances Affect Regional Cooperation

The large scale of China surpassing that of any other East Asian country
constitutes one of the major imbalances in East Asia, and with regard
to regional cooperation, how to deal with this “natural” imbalance
is an unprecedented problem confronting local East Asian countries.
Furthermore, other interstate imbalances within this region are also an
issue. Limitations of strength, influence, and regional political ability
of the ten ASEAN countries, and the divergences and competition that
divide them on important issues leave ASEAN’s once-cherished wish to
become the “only driver” in the East Asian integration less likely to come
true. And if a big power (e.g., China, USA, and possibly India in future)
wanted to take on the leadership initiative, the suspicion of smaller pow-
ers and the resistance of equivalent big powers may intervene, and this
will suppress the efforts of any would-be big power to organize and lead
regional integration.3

“Insider” versus “Outsider” and the Strategies of Great Powers

Geographically speaking, China, a natural East Asian country just like
North and South Korea, Japan, Mongolia, and the Philippines, is an
“insider” of East Asia, while according to the unspoken or once-expressed
 CHINA AND EAST ASIAN COOPERATION: FUNDAMENTAL BOTTLENECKS...  39

opinion of one East Asian country, the USA across the Pacific Ocean of
being an East Asian country is considered doubtful.4 In the eyes of many
Chinese in particular, the purpose of its increasingly proactive interven-
tion into East Asian cooperation and its endeavors to lead it is to contain
the continuing rise of China so that China is deprived of its regional geo-
political strategy, including its geopolitical and economic rights (Calmes
2011b).5
Since the end of World War II, America has intervened often in East
Asian regional institutional cooperation. It sees itself or is seen by its East
Asian allies and diplomatic vassals as an East Asian leader, while regarding
China, which lies outside the US-led East Asian system of international
politics, economics, and military security, an “outsider” in East Asia. As to
China’s rise, this is deemed to be a first step in expansionism, and China’s
strategy and aspirations are assumed to want to expel American influence
from East Asia, though the Chinese government has been expressing its
welcome for a USA that plays a constructive regional role.6 In sum, and
with only a slight exaggeration, regardless of diplomatic parlance, it seems
that China and the USA each sees itself as the region’s “insider,” while
seeing the other as the “outsider.” This is the fundamental strategic doubt
and fear between China and the USA on East Asian regional multilateral-
ism. This mutual perception will shape the attitudes and policies of the
respective East Asian allies of the USA and China, adding even more hin-
drance to East Asia regional institutional cooperation.

Multiple “Prohibited Security Zones” and “Quasi-restricted

Areas”
With regard to creating and cultivating East Asian multilateral coop-
erative institutions, the biggest enduring problem exists in the area of
security. Hot issues of East Asia security are hardly ever brought into
the frame of multilateral discussion, let alone solved through this. For
instance, the Six-Party Talks on the North Korea nuclear issue have not
been rebooted since April 2008; China refuses to solve the Taiwan Straits
issue, Sino-­Japan East China Sea problems, and South China Sea ter-
ritorial disputes through multilateral negotiation; China and Japan are
reluctant to deal with and discuss the East China Sea issue within any
multilateral framework; the U SA never allows any East Asian multilateral
intergovernmental forum to debate its bilateral military alliance system or
to regulate it according to East Asian multilateral agreement. The above
40  Y. SHI AND C. HAN

are the “prohibited security zones” and “quasi-restricted areas” faced by

East Asia regionalism.7 If China and the U SA do not strategically nego-
tiate with each other, or clarify, adjust, and regulate the relationship of
their military presence in East Asia and West Pacific, which also involves
the Japan-USA and South Korea-USA military alliances, an East Asian
multilateral security system can hardly be built (Shi 2010).

“Renaissance” of Nationalism in East Asian Countries

With regard to nationalism, the contemporary experience varies signifi-
cantly from that of Eastern Europe. After the two world wars, European
people decided that arrogant and exclusive nationalism is and will be
negated, paving the way for the “postmodern” construction for the
European Community. What the two world wars, especially World War
II, brought to East Asian countries (except Japan) is modern nation-
alism. The emergence and liberation of modern nation-states originate
from the world wars. Modern nations are forming and thriving, and so
is nationalism in East Asia. But Japanese nationalism, causing disasters
to East Asia and the Japanese nation, is resurging markedly due to the
agitation of Japanese right-wing forces and international forces. This
has drawn the attention and concern of East Asian countries in vary-
ing degrees. The key to the existence of East Asian Community lies in
whether the confrontational and competitive nationalism of countries
or economic interdependence and common interest in security gets the
upper hand (Shi 2008).

China’s Recent Problems in East Asian Cooperation

Over so many years, apart from ASEAN, China has been the most impor-
tant propeller of East Asian regional and subregional multilateral coopera-
tion and the establishment of a multilateral economic institution. China
took the lead to form ASEAN-China Free Trade Area (ACFTA), ASEAN-­
China (ASEAN+1) cooperation on many economic projects in neigh-
boring Southeast Asian countries, and then has actively backed trilateral
institutional cooperation in Northeast Asia in discussions of a Northeast
Asian Free Trade Agreement between the three Northeast Asian countries
(China, Japan, and South Korea) as well as ASEAN+3 cooperation. What’s
more, in regional security issues, China is one of the leading players in
the ASEAN Regional Forum, which focuses mainly on and beyond the
sphere of Southeast Asia, and China participates actively in m­ultilateral
 CHINA AND EAST ASIAN COOPERATION: FUNDAMENTAL BOTTLENECKS...  41

c­onversations and diplomatic activities that aim at concluding a “South

China Sea Code of Conduct” in a similar role.8 However, coupled with a
series of important events lately, China is facing new and increasingly com-
plicated problems, some of which even paralyze multilateral cooperation
temporarily. The major problems are: the most tense confrontation since
World War II between China and Japan due to the illegal “nationaliza-
tion” of Diaoyu/Senkaku Islands by Japan; a salient and enduring South
China Sea dispute between China and a few Southeast Asian countries; the
Obama administration’s promotion of East Asian multilateralism, which
has deprived China of the initiative and advantage in this area; and the
Trans-Pacific Partnership (TPP), which is the major economic strategy
component in U SA “rebalancing” toward the Asia-Pacific, causing tricky
regional problems for China.

Fierce and Continuing Confrontation Between China and Japan

The stubborn and illegal announcement of the purchase of islands and their
nationalization of Diaoyu/Senkaku Islands by Japan, and Japan’s adoption
of confrontational diplomatic and defense policies directed at China have
resulted in the fiercest Sino-Japan rivalry since World War II.9 Such rivalry
has paralyzed the construction of ASEAN+3 and the China-Japan-South
Korea trilateral free trade area, and this inevitably will remain the case at
least in the near future. This is all the more likely considering that a con-
frontation with Japan will also be one of the foci and priorities of China’s
diplomacy. What also needs to be noted is that Shinzo Abe’s government
hypes the “Assertive China Theory” and the “China Threat Theory” at
almost all important East Asian multilateral governmental conferences.
Such actions seriously disrupt and damage any discussion of East Asian
multilateral cooperation, and so does bilateral diplomatic lobbying directed
against China in Asia-Pacific countries. Hence, as long as the Sino-Japanese
confrontation continues, meaningful progress in advancing East Asian
multilateral cooperation will be blocked, paralyzed, or even destroyed. This
works at cross-purposes with China’s desire to promote East Asian regional
and subregional multilateral cooperation, and it also goes against the eco-
nomic, political, and strategic interests of China.

Apparent Stalemate of South China Sea Disputes

South China Sea disputes have existed for a long time, but its intensifica-
tion happened only recently. Its development into a big problem in China’s
42  Y. SHI AND C. HAN

­ eripheral diplomacy has its own recent historical background. Apart from
p
the reason of strengthened Chinese government actions and public opinion
toward territorial sovereignty and maritime rights and interests of South China
Sea, there are another two reasons to be discussed here.
One reason is America’s strategy and diplomacy with regard to China
in East Asia. After Barack Obama came to power, the major direction of
US policy on China, after 2010, in a narrow (military related) sense was
to tie down and compete with China’s rising military power. In a regional
geopolitical sense, the fundamental theme of US foreign policy toward
China or the Asia-Pacific is to intensify competition with China in order
for the U SA to maintain long-lasting diplomatic influence in East Asia
and diminish such Chinese influence. The US government has paid close
attention to the South China Sea issue and introduced a grand new policy
that seeks a multilateral framework and negotiation to solve the disputes.
The other reason is the dysphoria of some Southeast Asian countries.
They might use their confrontation and fight over South China Sea islands
and related waters to gain America’s compassion, support, endorsement,
and strategic reward. For the USA, such dysphoria provides an oppor-
tunity to clamp down on China, add problems to China’s foreign rela-
tions, and curtail China’s influence in East Asia (Shi 2012). What’s more,
a stalemate over the South China Sea dispute aggravates the complexity
and difficulty of the China-ASEAN relationship, which has always been
viewed with great importance by China. The problem is that ASEAN has
members involved in the dispute, making their relations precede the rela-
tion between ASEAN and China. For this reason, ASEAN insists on using
the United Nations Convention on the Law of the Sea (UNCLOS) to deal
with South China Sea disputes as a whole. Such a standpoint is unaccept-
able to China because it holds that UNCLOS, which only relates to mari-
time rights and interests, is not and cannot be the basis for resolving this
dispute. The more salient the South China Sea dispute is, the fiercer the
confrontation between China and several Southeast countries becomes.
Accordingly, more difficulties and tensions emerge in China-ASEAN rela-
tions (Calmes 2011a), and East Asia subregional multilateral cooperation
led by these two main positive actors is consequently damaged. Despite
efforts to achieve détente that have been made between China and ASEAN
countries (Vietnam, for instance) several times, the South China Sea dis-
pute in general stays stalemated (People’s Daily 2012), especially the terri-
torial dispute between China and the Philippines. Therefore, even without
considering the actions of the USA and Japan, the negative impact on
 CHINA AND EAST ASIAN COOPERATION: FUNDAMENTAL BOTTLENECKS...  43

China-ASEAN cooperation and on East Asian multilateral cooperation

caused by the South China Sea dispute, though it can be lowered to a less
noticeable level, will continue to exist.

US Initiative in East Asian Multilateralism

In terms of exercising smart power, the regional multilateral initiative per-
formed by the Obama administration is impressively innovative in that,
according to a celebrated American scholar, “the U.S. is traditionally sus-
picious of multilateral organizations initiated by Asia” (Fukuyama 2004).
The Obama administration began to actively advocate Asian multilateral-
ism in both speech and action. Washington began to actively participate in
different Asia-Pacific regional multilateral frameworks in the past few years
guided by acute strategic thinking and a strong urge for initiative, using
markedly improved bilateral relations with several East Asian countries.
The consequence of Washington taking this multilateral initiative is a
deepened paradox of scope and efficiency, more argument over “insider”
and “outsider,” and more mutual strategic doubt or fear between the
great powers. Moreover, the new initiative can be seen in the US govern-
ment’s close attention to the South China Sea issue, where it proposes
the policy of solving the South China Sea disputes through multilateral
negotiations, and in advocating TPP. For instance, the New York Times in
November 2011 pointed out that TPP and other US initiatives amounted
to “economic and military encirclement” (Calmes 2011b). Until recently,
China has by and large lost the advantage and initiative in advocating East
Asian multilateralism. The relatively practical and preferable establishment
and construction of subregional multilateral institutions around China are
in danger of being marginalized and disabled.

The Swift and High-Profile Launch of TPP

In November 2011, on top of pronouncing the strategy of “rebalancing,”
Barack Obama promoted a significantly expanded version TPP that had
a much larger geographical scope and a rather strict threshold for mem-
bership. Yet, he proclaimed that China, Asia’s largest economy, would be
excluded as long as it kept its present domestic economic system (Calmes
2011b). Since then, especially because of the significant “sacrifice” of
Japanese economic interests for the purpose of antagonizing China, TPP
has been launched and developed with unexpected high speed.
44  Y. SHI AND C. HAN

Such a circumstance has caused China a conundrum, even more so when

the construction of Northeast Asian and Southeast Asian subregional eco-
nomic and trade multilateral mechanisms are clouded by Sino-Japanese
confrontation and South China Sea disputes. The purpose of America’s
active promotion of TPP may be first, to lead Asia-Pacific economic inte-
gration through TPP and second, to recover its trade edge in East Asia on
the basis of a TPP that can later be expanded into a more inclusive free
trade agreement of the Asia-Pacific (FTAAP) so that its status as an eco-
nomic super power can be maintained and procure diplomatic/strategic
benefits. The negotiations and establishment of TPP can check the influ-
ence of the ACFTA and marginalize or paralyze the East Asian subregional
economic and trade multilateral mechanisms that China desires and wishes
to establish, at the same time impairing China’s economic and diplomatic
influence in East Asia. Thus, the TPP initiative might have initiated a con-
test between the East Asian regional economic integration centered on
China and ASEAN, and the integration led by the USA. But in this game,
China and ASEAN are not tipping the balance in their favor.
How China should react is a question requiring consideration. Up to
now, China has responded in a low-profile manner and has refrained from
initiating any new action; however, in the long run this appears unfavor-
able for China to regain the advantage in this round of Asia-Pacific eco-
nomic integration. Therefore, China needs to devise a more promising
policy and strategy to alleviate the problems discussed above within realis-
tic and workable limits. It has to address trade routes, like plans and prepa-
rations for “Eurasian silk roads,” “Shanghai silk roads,” and high-speed
rail projects. It also has to underscore diplomatic and strategic routes. For
example, China could wait to join TPP in future in a way that does not
cost much in terms of benefit and prestige, and then partially “adjust”
TPP using its huge economic scale and political influence. Meanwhile, the
implementation of deeper overall reform stipulated in the Third Plenary
Session of the 18th CPC Central Committee can at least shrink the gap
between China’s domestic economic system and TPP’s threshold.

The Course China Should Take

The orientation for China, as we have just discussed, is guided by the situ-
ational pressure and challenge created by the TPP initiative. Moreover,
observation and reflection upon fundamental issues in a comprehensive
way are necessary. The bottlenecks of East Asian regional multilateral
 CHINA AND EAST ASIAN COOPERATION: FUNDAMENTAL BOTTLENECKS...  45

cooperation (especially the institutional factors) are apparent, and they

slow down its progress to a standstill. It is fair to say that the old belief in
East Asian multilateral cooperation and the path forward that it provides
is no longer appropriate.
The majority of East Asian-related theoretical circles and political
circles believe in two concepts: First, that security in East Asia can only
be achieved through the formation of East Asian regional economic and
security institutions that integrate the region; and second, that economic
interdependence will accelerate institutionalized East Asian economic and
security integration. Such concepts come from three conditions: the wide-
spread hold of liberal internationalism; the successful model of European
integration; and the achievements of East Asian multilateralism (the estab-
lishment and development of ASEAN, and the realization of ASEAN+1).
Thus, there is an old path: the hope, idea, advocacy, and efforts related to
future East Asia is placed upon the formation of an East Asian multilateral
cooperative system. However, the traditional path of international politics
(especially traditional bilateral diplomacy) that emphasizes détente, stabil-
ity, coordination, and friendliness is relatively belittled, and is regarded
only as expedient in the transition to an East Asian multilateral cooperative
system. This old path and belief in regional integration cannot be aban-
doned, because according to existing theories, it is reasonable and has
contributed to some substantial achievements. But due to the structural
and situational bottlenecks and long-lasting problems discussed above,
the construction of East Asian multilateral cooperative system has mostly
stopped and will probably remain this way. There comes the need for a
“new belief,” that is a belief in the limitation of the utility and possibility
of East Asian multilateral cooperation.
The new path should stress two aspects: First, the construction of a
multilateral system and multilateral cooperation that is beneficial to China,
especial those in sub-subregions, because a smaller sphere is easier for oper-
ation, and is favorable for China to exert its dominant influence. Second,
the establishment of proactive bilateral relationships between China and
East Asian countries, including bilateral détente and alleviated bilateral
disputes, as long as such détente is necessary, workable, and suitable.
All in all, China should address the whole situation and surrounding
circumstances, and steadfastly emphasize peripheral diplomacy and the
improvement of peripheral relations based on working diligently on each
bilateral relationship. Peripheral strategy and diplomacy was, is, and always
will be an urgent priority. Contemporary China, a great power that has
46  Y. SHI AND C. HAN

various needs in foreign relations, should not target the United States as
the only focus in diplomacy. It must have two priorities: one is its relations
with neighboring countries; and the other is the USA. Otherwise, China’s
foreign policy and strategy will lose its balance in the external domain.
Therefore, the strategic importance of the periphery should be explicitly
recognized, and the basic principles of foreign policy toward neighboring
countries put forward by President Xi Jinping at the Peripheral Diplomacy
Conference in October 2013 should be followed with perseverance: per-
sistence in establishing a good-neighborly relationships and partnerships;
and building an amicable, secure, and prosperous neighborhood to win
more friends and form a community.10 This is a long-term plan for China.
What it contains in practice is more comprehensive than in just advancing
East Asian multilateral cooperation.

Notes
1. As early as the end of 2005, former Malaysian prime minister Mahathir Bin
Mohamad said in a radical yet reasonable way: “The expansion of East
Asian conference to non-Asian countries and close partners of America
thwarts the goal of the conference” (Seth Mydans 2005).
2. As stated below, “the construction of East Asian multilateral cooperative
system has mostly stopped and will probably remain this way.”
3. The Chinese government has long been conscious of this and mildly
expressed the purpose of dispelling suspicion and avoiding danger (Oon
2005; Sino-US Joint Statement 2009).
4. Katsuya Okada, the foreign minister of Democratic Party of Japan, in his
incumbency has stated publicly that the East Asian community should
exclude the USA (Kogenishi 2009).
5. Jackie Calmes, “A Marine Base for Australia Irritates China,” The New York
Times, November 17, 2011.
6. See endnote 3.
7. In 2004, the chairman of Singapore Institute of International Affairs wrote
an article to underscore that “Asia Isn’t Ready for NATO-style Alliance”
(Tay 2004). After ten years the situation hasn’t changed substantially.
8. A senior journalist of the New York Times, in an analytical report in 2004,
emphasized that “the broad new influence Beijing has accumulated across
the Asian Pacific with American friends and foes alike,” and “China is
leveraging its economic clout to support its political preferences,” and
“Beijing is pushing for regional political and economic groupings. . . It is
dispersing aid and, in ways not seen before. . . ” In contrast, “the United
 CHINA AND EAST ASIAN COOPERATION: FUNDAMENTAL BOTTLENECKS...  47

States appears to be on the losing side of trade patterns,” and “many

[Asians] here already contend the future belongs to China.” (Perlez 2004).
9. One of the backgrounds for the fierce confrontation is the “Japan’s New
Security Concern” in the Washington Post: “The most obvious sign of
Japan’s new security concerns came two years ago, under then prime min-
ister, Naoto Kan, when the country overhauled its defense strategy, turn-
ing its attention to China’s expanding naval threat and promising greater
surveillance of the southwestern island chain that marks a tense maritime
border between the neighbors” (Harlan 2012).
10. President Xi Jinping said: “The operation of foreign policy towards neigh-
boring countries needs a multi-dimensional, trans-time and trans-space
perspective” (CCTV.com 2013).

Bibliography
Acharya, A. (2009). Competing communities. Pacific Forum CSIS, No. 70, 27
October.
Calmes, J. (2011a, November 17). A marine base for Australia irritates China. The
New York Times.
Calmes, J.  (2011b, November 19). Obama and Asian leaders confront China’s
premier. The New York Times.
CCTV.com. (2013). 25 October.
Cody, E. (2005, December 14). East Asian summit marked by Discord. The
Washington Post.
Fukuyama, F. (2004, September 20). Next U.S. President should review E. Asia
Security. The Yomiuri Shimbun.
Harlan, C. (2012, September 21). With China’s rise, Japan shifts to the right. The
Washington Post.
Kogenishi, H. (2009, October 26). No place for U.S. in regional bloc: DPJ. Asahi
Shimbun.
Mydans, S. (2005, December 13). As an Asian century is planned, U.S. power
stays in the shadows. The New York Times.
Nojima, T. (2005, April 1). Japan, China at odds on summit. Asahi Shimbun.
Oon, C. (2005, November 1). West is welcome in Asean plus 3: China. Straits
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Sea.
Perlez, J.  (2004, August 28). Across Asia, Beijing’s star is in ascendance. The
New York Times.
Shi, Y. (2008). Truth and reconciliation: Overcoming history obstacles in the
northeast Asian community. In Challenge and response in northeast Asia
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(pp. 53–54). Jeju Peace Institute, Jeju and Seoul, ROK: Jeju Peace Institute
and Friederich Naumann Foundation for Liberty.
Shi, Y. (2010). The trajectory and implications of China’s rise for Northeast Asian
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 CHAPTER 3

Remapping Asia’s Geopolitical Landscape:

China’s Rise, US Pivot, and Security
Challenges for a Region in Power Transition

Jingdong Yuan

China’s rise is changing the global and regional geoeconomic and

geopolitical landscapes. Since 2008, when the world economy went
­
through serious decline with the onset of the global financial crisis (GFC)
and has yet to fully recover, Chinese economy, albeit growing at a much
slower rate of 7.0 percent (as compared to the phenomenal double-digit
growth rate over the previous three decades), has essentially weathered
the crisis and come out relatively intact and stronger compared to most
major industrialized countries. In 2010, China overtook Japan to become
the second largest economy in the world and since then the gap between
China and Japan in gross domestic product (GDP) terms, has widened
further. According to the US Central Intelligence Agency, in 2014,
­
Chinese economy stood at $10.355 trillion while Japan’s was $4.6 trillion
(Central Intelligence Agency 2015). Chinese economy is today at about
two-thirds that of the USA and it is projected to overtake the latter to

J. Yuan (*)
Centre for International Security Studies, University of Sydney,
Sydney, NSW, Australia

© The Author(s) 2016 49

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_3
50  J. YUAN

become the world’s largest economy in the next decade. However, using
the purchasing power parity (PPP) formula, China’s GDP in 2014 stood
at $17.63 trillion, slight more than that of the USA (Business Spectator
2014).
China’s growing economic power is on full display where Beijing has
launched numerous ambitious initiatives that focus on Asia but go much
beyond. President Xi Jinping has called for the revival of the ancient Silk
Road (One Belt) and the establishment of a Twenty-First Century Maritime
Silk Road (MSR, or One Road) to enable faster and wider connections
between East and Southeast Asia, through Central Asia and the Indian
Ocean, and Europe. Beijing has put up a $40 billion Silk Road Fund. In
addition, China and its Brazil, Russia, India, China, South Africa (BRICS)
partners have launched a development bank and, most recently, the $100
billion Asian Infrastructure Investment Bank (AIIB) (Zha 2015).
Chinese activism is not confined just to the economic arena. Beijing has
become relatively more active in global and regional diplomacy, and its
presence also extends beyond Asia to other regions of the world. On criti-
cal international issues such as climate change, financial reform, nuclear
nonproliferation, and humanitarian intervention, Beijing has more than
ever before expressed its views, defended its positions, and taken specific
actions to safeguard what it considers to be its national interests. While
the jury is still out on whether China has already become a global super
power or remains a partial one, there is no denying that it is affecting the
perceptions of other powers, causing major realignments, especially in the
Indo-Pacific region, just as it is reevaluating its own interests, objectives,
priorities, and policy options (Shambaugh 2013; Dyer 2014; Mearsheimer
2014a).
Indeed, the rise of China is most acutely felt in the regional context,
especially within what is now called the Indo-Pacific region. Three parallel
developments have marked the dramatic geopolitical and geoeconomic
transformations taking place in this part of the world. First, China’s rise
has been facilitated by, and is further deepening, its close economic ties
(one may also use the term, economic interdependence) with almost all
the major countries and economies in the region. In fact, China has now
become the number one trading partner with most of them. Investments,
both inflows and outflows, are also registering rapid growth. For many
countries and economies, China has become the engine of growth, lead-
ing the regional recovery (Das 2014). Second, even as the region is get-
ting close to China economically, many countries in the Indo-Pacific are
 REMAPPING ASIA’S GEOPOLITICAL LANDSCAPE: CHINA’S RISE, US PIVOT...  51

becoming alarmed and deeply worried about China’s growing military

power and a more assertive foreign policy, and a more uncompromising
approach to territorial disputes. Some are actively seeking US reassurance
in alliance commitments; others are agonizing over the prospect of having
to choose between Beijing and Washington, should the two great powers
get into serious conflicts (Kaplan 2014; White 2012; Friedberg 2011).
Third, while the Obama administration has time and again disavowed it,
the US pivot or rebalancing to Asia has been driven by the concern of a ris-
ing power challenging its primacy in a region of growing strategic salience
to the reigning superpower. While Beijing and Washington have engaged
in multiple channels of dialogue and consultation, and the two countries
also share important common interests, neither has been able to convince
the other that its intentions are benign and both are wary of what the
other is doing: mutual distrust runs deep (Hachigian 2014; Lieberthal and
Wang 2012; Glaser 2015; Blackwell and Tellis 2015).
Meanwhile, the past few years have witnessed serious debates within
China on the country’s grand strategy and approaches to foreign policy
(Has there been one and, if not, what should constitute China’s grand
strategy? [Wang 2012; Zhang 2012; Buzan 2014]. Should China be more
assertive or continue to exercise restraint?), the continued relevance of
Deng Xiaoping’s advice of taoguang yanghui in guiding Chinese foreign
policy conduct, and the country’s interests, role, and responsibility in the
changing international environment (Yan 2014). Events since GFC dem-
onstrate that Beijing’s national security policy making increasingly has
to contend with growing demands from a multitude of actors within, as
much as it has to deal with external pressures, contingencies, and threats.
Three gaps have also emerged to make the formulation and implementa-
tion of Chinese foreign policy ever more challenging. The first is the gap
between the expectations and anxieties of the international community
in response of China’s rise. There is hope that China should and will be
able to provide more public goods and contribute to international order
as a responsible stakeholder just as much as it is concerned with the rising
power becoming more assertive and challenging that order. Meanwhile,
expectations within China, and occasionally expressed in nationalism, are
exerting pressure on Beijing to act more forcefully in dealing with issues
such as territorial disputes (Swaine 2015). The second gap refers to the
perceptual divergence between what Beijing seeks to project itself as a
peaceful and responsible rising power (the “peace and development” line;
the advocacy for a “harmonious world”; and lately, the “China Dream”)
52  J. YUAN

(Glazer and Medeiros 2007; Callahan 2013); and how China is viewed by
the USA and its neighbors in the region as an assertive rising power set to
challenge the existing norms of the current international order (Friedberg
2011). Finally, a third gap relates to the growing complexity of policy
issues that China need to address and the lack of or inefficacy in policy
coordination given the plethora of actors with divergent and at times com-
peting parochial interests. The recent establishment of the State Security
Commission may begin to address this problem, but it remains to be seen
how it will operate in the future (Jacobson and Knox 2010; Christensen
2013).

China’s Power Play in the Indo-Pacific

China’s foreign policy actions over the past few years have inevitably led
policymakers and analysts alike to conclude that Beijing is becoming more
assertive and that with its growing capabilities, it is all set to challenge US
primacy and seek its own domination, just as Mearsheimer has predicted.
Despite its rhetoric of peace, the nature of international politics and natu-
ral tendencies of rising powers would dictate that they will seek regional
hegemony and prevent other powers from maintaining or acquiring such
position in one’s own neighborhood (Mearsheimer 2014).
Examples abound. Since 2008, Beijing has resorted to economic, dip-
lomatic, and military power in dealing with regional security issues. On
the one hand, Beijing has sought to maintain a foreign policy consistency
in projecting a reassuring posture of peaceful rise and developing cordial
and friendly relationships with its neighbors. On the other hand, over the
past few years, tension has risen as some of the key contending states to
the long-standing territorial disputes, principally China, Vietnam, and the
Philippines, have reiterated and sought to strengthen their claims both
through their interpretations of the 1982 United Nations Convention
on the Law of the Sea (UNCLOS), and by taking more assertive and at
time aggressive actions to stake out their claims (Contemporary Southeast
Asia 2011). These include naming the occupied and/or claimed islands
and features; conducting marine survey and exploration activities; staging
high-profile visits by officials; establishing administrative authorities over
disputed areas; exercising maritime enforcement with tussles over fishing
grounds, harassment, detention and fines of other claimant countries’ fish-
ermen; public protests and threatened disruptions of oil extractions in the
disputed territories; and imposing restrictions on foreign military activities
 REMAPPING ASIA’S GEOPOLITICAL LANDSCAPE: CHINA’S RISE, US PIVOT...  53

in coastal country exclusive economic zones (EEZs), at times obstructing

and endangering navigation and over-flights resulting in serious incidents
(Kaplan 2011; Ungerer et al. 2010).
In the East China Sea, Sino-Japanese disputes over the Diaoyu/Senkaku
Islands have intensified since 2010. In the wake of the Japanese national-
ization of three in the island group, bilateral relations have further dete-
riorated and Chinese maritime surveillance and enforcement ships began
more frequent patrols, with growing encounters of ships and aircraft in
close proximity.
Since October 2012, in response to Tokyo’s unilateral action that
changed the status quo that both had maintained and tacitly agreed to
since the 1970s, Beijing has in effect introduced and steadily increased
both the frequency and extent of its administrative patrol over the area,
including maritime surveillance and aerial flight over, forcing the Japanese
side to accept a new status quo. In late November 2013, the Chinese
Defense Ministry further announced the establishment of an Air Defense
Identification Zone (ADIZ) that overlaps with Japan’s ADIZ and covers
the disputed Diaoyu/Senkakus Islands. It is not entirely clear if this new
tactic is directly linked to or even encouraged by the new Xi Jinping lead-
ership but one thing is quite obvious—Xi is more resolute and forceful in
both putting forth Chinese foreign policy agendas and confident in their
execution in a style that is in sharp contrast to his predecessor. While the
fundamental worldviews and strategic visions for China may remain the
same, Xi clearly is moving away from a low-profile, passive foreign policy
stance toward embracing bolder diplomacy befitting a rising great power
(He and Feng 2013; Godement 2013).
Beneath and underlining the Sino-Japanese disputes are fundamen-
tal undercurrents that are defining future Sino-Japanese relations (Wan
2014). As mentioned above, China has overtaken Japan as the world’s
second largest economic power and, at a 7–8 percent annual growth rate,
remains a far more dynamic economy than Japan’s, which has yet to pull
itself out of the economic stagnation that started in the 1990s despite
the measures introduced by the Abe administration. China has emerged
from the 2008 global financial crisis with growing confidence and diplo-
matic activism. Beijing seeks to redefine relations between major powers,
support new power groupings such as BRICS, and become more vocal
in regional and global issues where its interests are affected (Yan). One
important issue that weighs heavily on the minds of Chinese leaders and
people is the so-called hundred-year humanization inflicted on China
54  J. YUAN

when the country was weak and disunited. Beijing is determined to right
the wrongs and erase this painful memory. It therefore remains resent-
ful of Japan’s lack of true repentance over its past (Wang 2012). Tokyo,
however, is concerned over China’s growing military power and its asser-
tiveness in territorial disputes, and seeks the reassurance of US commit-
ments under the bilateral security treaty. In recent years, and especially
since Abe returned to power in 2012, Japan has undertaken major steps
to strengthen its self-defense forces in terms of priorities and posture, and
to build strategic partnerships with countries in the region that share simi-
lar concerns over China’s rise (Grønning 2014; Hook 2014). Japanese
defense spending has been expanding for three consecutive years, with
the Ministry of Defense requesting a budget of $47.1 billion for the fiscal
year starting April 1, 2015, a 2.4 percent increase over the previous year
(Sekiguchi 2014; LeMiére 2014).
These developments are taking place at a time of a major US deci-
sion to strategically reorient and rebalance toward East Asia after more
than a decade of retraction and negligence, largely due to its preoccupa-
tion with the Afghan and Iraqi wars. Despite the global financial crisis of
2008 and a slow economic recovery that has left Washington increasingly
focused on domestic issues and its budgetary woes, including $487 billion
in defense budget cuts over the next decade, the Obama administration is
determined to maintain and strengthen its presence given the enormous
stakes it has, both in strategic and commercial terms (Robinson 2012;
Clinton 2011; Panetta 2012). Over the past few years, Washington has
strengthened its alliances with Tokyo, Seoul, and Canberra and formed
closer partnerships with Hanoi, Manila, Jakarta, and New Delhi, through
arms sales, joint military exercises, and basing and training arrangements
in the region (Dormandy 2014; Whitlock 2012; Tow 2012).

Chinese Foreign Policy Behaviors

Chinese foreign policy behavior since the end of the Cold War has gone
through three phases. The first phase, from the 1989 Tiananmen incident
to the early 1990s, witnessed a wary Beijing in response to both Western
sanctions and the emerging regional security architecture as aimed at gang-
ing up against China. It sought to placate its neighbors through active
­peripheral diplomacy, including efforts to resolve some of the long-stand-
ing territorial disputes with the former Soviet republics, but at the same
time was hesitant to join the multilateral security arrangements such as
 REMAPPING ASIA’S GEOPOLITICAL LANDSCAPE: CHINA’S RISE, US PIVOT...  55

the ASEAN Regional Forum (ARF). The second phase began in the mid-
1990s, when China began to participate in ARF activities, and became
more active in regional diplomacy, especially in the economic arena in the
wake of the 1997 Asian financial crisis. Beijing started to develop a more
comprehensive relationship with ASEAN and concluded important trade
agreements and declaration of principles regarding territorial disputes.
This phase, which lasted up until 2007–2008, also saw proactive Chinese
diplomacy in the establishment of the Shanghai Cooperation Organization
(SCO), the Six-Party Talks on the North Korean nuclear issues, and par-
ticipation in the development of East Asia Summit and community build-
ing such as the China-Japan-South Korea trilateral summit. A key feature
of these two phases is Beijing’s willingness to endorse the concept of mul-
tilateral institution building in Asia and its greater contribution to secu-
rity cooperation in the region, albeit with varied approaches to different
multilateral arrangements and different issue areas (Kang 2010; Rozman
2011).
The third phase, from 2007 to 2008 onward, has witnessed noticeable
shifts in Chinese foreign policy behavior, in that Beijing appears to be
more assertive in both expressing and defending what it considers to be its
“core national interests.” For outsider observers, China’s “charm offen-
sive” is being replaced with a hard-edged, unyielding posture that appears
to be challenging US dominance and intimidating others in the region.
Analysts have pointed out that Beijing’s growing assertiveness is deeply
rooted in offensive realism and it is only natural for a growing power like
China to be aspiring for regional hegemony, just as the USA did in the
nineteenth century in the western hemisphere. There is nothing surprising
and the heretofore optimistic, liberal worldview is at minimum premature,
if not completely misplaced (Noguchi 2011; Mastro 2014; Mearsheimer
2010).
In late October 2013, the Chinese leadership held, for the first in the
PRC’s history, a high-level meeting dedicated to periphery diplomacy,
with all Standing Committee members attending. Clearly, a stable and
peaceful periphery environment would be conducive to China’s contin-
ued economic growth and prosperity. However, to achieve this objec-
tive requires winning friends and projecting an amicable and trustworthy
image. Regaining and further strengthening China’s soft power influence
in the region would be critical toward achieving that end (Xinhua 2013).
However, it has clearly departed from previous low-key and reactive
approaches to contentious issues in the region, most prominently territo-
56  J. YUAN

rial disputes. There are a number of specific approaches that have been
employed. One is to establish administrative routines and enforcement.
For instance, Sanya City and the Hainan’s People’s Congress passed a
resolution granting maritime agencies authorities the right to stop and
search vessels in Chinese waters. Another is the controversial adoption of
a new e-passport with a Chinese map including the contested territories.
Yet a third is to invite foreign oil companies for joint drilling in the area
(Raine and Miére 2013; Yahuda 2013; Shijie Zhishi 2013).
Various actors, in their specific roles, have been more active in pursu-
ing their individual agendas, with the totality of these actions undertaken
conveying a more assertive Chinese regional policy even though at the
official level, no significant policy shift has taken place.1 Specifically, these
involve the Impeccable incident of March 2009, where Beijing contended
that the US surveillance ship had operated within China’s EEZ without
permission, a direct challenge to the ability of the USA to navigate in
international waters, which in turn could undermine its regional strategy
and cause deep concerns among its allies and partners on its trustworthi-
ness and reliability as a security guarantor (Mastro 2011). The ongoing
stand-off between China and the Philippines over the sovereignty of the
Scarborough Shoal (Huangyan Dao in Chinese and Panatag Shoal by the
Philippines) has seen Chinese use of maritime enforcement in conjunction
with the PLA Navy, in establishing effective control over the disputed
island. Likewise, in the aftermath of Japan’s nationalization of the three
islands in the Diaoyu/Senkakus island group, the Chinese have instituted
routine aerial and maritime patrols in the vicinity, changing of previous
status of the Japanese having sole administrative control. These force-
ful uses of maritime and/or paramilitary instruments to assert Chinese
claims over the disputed territories have been dubbed as a “new normal”
in Beijing’s handling of such issues, and in no small measures as a result of
both its growing power and public pressures for stronger actions (Holmes
2013; Chellaney 2013).
Behind this “new normal” is a deliberate and calculative, yet still reac-
tive but more resolute “one plus” tactic, that is, China will respond to
any encroachment of its sovereignty by pressing hard its own sovereign
claims further. This reactive assertiveness serves to send a clear signal to
other claimant parties that Beijing would prefer a stable status quo ante.
However, if provoked, it will go beyond the original status quo to estab-
lish a new one (You 2013). China’s response to Japan’s nationalization
of the three isles in the Diaoyu/Senkakus Islands is a case in point. Since
 REMAPPING ASIA’S GEOPOLITICAL LANDSCAPE: CHINA’S RISE, US PIVOT...  57

October 2012, in response to Tokyo’s unilateral action that changed the

status quo that both had maintained and tacitly agreed to since the 1970s,
Beijing has in effect introduced and steadily increased both the frequency
and extent of its administrative patrol over the area, including maritime
surveillance and aerial flight over, forcing the Japanese side to accept a new
status quo. In late November 2013, the Chinese Defense Ministry fur-
ther announced the establishment of an ADIZ that overlaps with Japan’s
ADIZ and covers the disputed Diaoyu/Senkakus Islands (Harlan 2013).
These developments clearly both reflect and have been driven by China’s
growing power and influence in Asia in the aftermath of the 2008 global
financial crisis, which has seen a declining USA but a relatively unscathed
and more confident China. Either out of self-interest or being pushed by
rising nationalist sentiments, Chinese behavior appear to be more asser-
tive, and at times even abrasive and coercive. It is not clear, however,
whether the past five years have witnessed a fundamental departure from
the established pattern of a cautious, selective, and low-profile foreign
policy as admonished by Deng Xiaoping’s taoguang yanghui principle on
the one hand, and a more assertive foreign policy hijacked by growing
nationalism, overconfidence, and a complete misjudgment of the broader
global and regional geostrategic landscapes and China’s own limitation
and vulnerability on the other. The jury is still out (Johnston 2013).

 Conclusions
China is at a tipping point as it marches toward great power stardom, with
a new generation of leaders coming into power, and a growing multitude
of players with divergent and sometimes competing interests, and with
public opinion veering toward growing nationalism. Ironically, as China’s
power and influence grow, instead of shaping a regional order as it existed
before, it is in fact causing the other powers to hedge against rather than
join the bandwagon with China (Luttwak 2012). Unless and until Beijing
revalues its foreign policy and exercises greater restraint in its military pos-
ture and approaches to territorial disputes, it is likely to push a regional
order into a bipolar structure, resulting in instability and probably even
confrontation between itself and the USA.
The last few years have witnessed ostensible changes in the ways in
which Beijing conducts its foreign policy. It is becoming more assertive
and unequivocal in both voicing and defending what it perceives as its
core national interests. It is more willing to showcase and exercise its new-
58  J. YUAN

found economic power and military prowess through selective and signal-
ing sanctions and displays of force. It has responded to external challenges
with counter-challenge measures that establish a new normal and status
quo and it at times appears to risk confronting major opponents all at
once. The new leadership under Xi Jinping clearly is no longer taking
a low-key, passive approach to national security and foreign policy mat-
ters. However, there is also the continuity with the past in that Beijing
remains cognizant of the importance of maintaining a stable and peaceful
periphery, a preference for bilateral rather than multilateral approaches to
negotiating territorial disputes, and opposition to internationalization of
regional issues, in particular the involvement of the USA.
Several conclusions can be drawn from the analysis above. First, there
is no question that China’s rise is fundamentally changing the geostrategic
landscape in the Indo-Pacific. However, there is a tendency to substitute
and confuse a rising power’s growing capabilities with its intentions, will-
ingness and its ability to change the existing international and regional
structure of power. China’s rise is predominantly captured and reflected
in its GDP, in particular in the PPP formulation. Much less attention has
been paid to the other essential ingredients of a great power: its position
in the global production and distribution chains; its ability to innovate
and occupy a leading position in science and technology; its impact on key
global and regional institutions; and the appeal of its soft power. In many
these categories, China is making rapid progress; however, the USA, and
indeed some of the region’s other major powers such as Japan, are still
years if not decades ahead.
Second, although China’s overall capabilities in terms of GDP, military
modernization, and power projection are growing, the overall structure
of regional power distribution has yet to tilt to China’s favor. Indeed,
with 14 land-based and eight maritime states in its periphery, with five
of them (including the USA) being nuclear weapons states, seven among
the top ten largest military powers in the world, and seven or eight hav-
ing unresolved territorial disputes, China faces enormous challenges in
managing complex relationships with its neighbors and the USA. Indeed,
the past few years have seen not only a US rebalancing to Asia, but grow-
ing networks of security arrangements among America’s allies and part-
ners, aimed principally at hedging against a rising China. Third, the three
gaps I mentioned above could further exacerbate regional instability and
therefore need to be closed. One way to do this is for Beijing to be less
ambivalent and more explicit in both its policy announcements and imple-
 REMAPPING ASIA’S GEOPOLITICAL LANDSCAPE: CHINA’S RISE, US PIVOT...  59

mentation. At the same time, Washington could make a significant con-

tribution to regional stability by both reassuring and restraining its allies,
while continuing to engage China. For the foreseeable future, a key chal-
lenge to the Chinese leadership would be to close the gap between the
growing expectation and rising nationalism as a result of China’s rise on
the one hand, and the diplomatic skills, policy coordination, and crisis
management on the other.

Note
1. Interview with Chinese security analyst, Shanghai, June 2013.

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 CHAPTER 4

Sino-US Strategic Convergence

and Divergence in East Asia

Bin Shi

China-US Strategic Cooperation: The Significances

and Structural Difficulties

Changes in East Asia’s Strategic Landscape

The convergence of two great powers, China and the USA, in the Asia-­
Pacific region is probably a historic development of world politics today:
China is rising rapidly in this region, while the USA is “returning” with an
unprecedented lofty tone and high profile.
The related changes in the strategic landscape of East Asia and even
the whole Asia-Pacific region give prominence to China-US strategic
relations. As a result, the strategic stability and mutual trust (or distrust)
between China and the USA have become a core concern (Wang and
Lieberthal 2012). Asian countries have also directed great attention to the
respective strategic motives, intentions, and future roles of the two powers
in this region.

B. Shi (*)
Hopkins-Nanjing Centre, and School of Government, Nanjing University,
Nanjing, China

© The Author(s) 2016 63

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_4
64  B. SHI

Taking its history into consideration, it seems that China-US relations

have entered a new but more complex stage.

Four Phases of China-US Relations

Since the foundation of the PRC, the strategic and security relations
between China and the USA have always been wobbling between “con-
flict” and “cooperation.”
In the first two decades (1949–1969), the China-US relationship was
“completely hostile and conflicting.” With a comprehensive containment
strategy by the USA toward China, the two countries fought two wars in
North Korea and Vietnam, which cost a lot on both sides.
In the second two decades (1969–1989), their relations might be
summarized as “cooperation exceeded competition.” China broke away
from the confrontational relations with the USA and other Western coun-
tries during the Cold War, resisted great pressure from the Soviet Union,
and greatly improved its international strategic environment.
In the third two decades (1989–2009), except the downturn from
1989 to 1992, their relations might be characterized by “competition
and cooperation coexisted,” and it was hard to distinguish which side
overweighed the other. During this period, various and constant con-
flicts emerged in bilateral relations. For example, the US curb on China’s
bid for the Olympic Games, the Yinhe incident, the Bush administra-
tion’s great increase on arms sales to Taiwan, the US-led NATO’s mis-
sile bombing on the Chinese Embassy in Belgrade, the plane collision in
2001, the Impeccable incident in the South China Sea in 2009, and so on.
Nevertheless, bilateral relations did not fall into overt hostility, but main-
tained normal relations on the official level and were stable in a general
view.
Meanwhile, China was developing at a fast pace. On the one hand,
China pursued economic construction as its central task when faced with
dramatic changes at the end of the Cold War, and was devoted to improv-
ing and developing its relations with the USA (Deng 1993). On the other
hand, suffering from a series of setbacks in the same period, such as the
Gulf War, the September 11 terrorist attacks and subsequently the Iraq
War and Afghanistan War, as well as a rare financial crisis, relatively speak-
ing American power was sliding into recession.
Looking back at the 60-years’ history of China-US relations, two con-
clusions can be reached:
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  65

First, “cooperation” is in line with the interest of both China and the
USA, while “conflicts” cost a lot for both sides.
Second, the existence of a strategic foundation, or rather, the “mutual
trust” between China and the USA is most crucial for the stability of bilat-
eral relations.
Since the détente of China-US relations, on the basis of clear strategic
foundation and positioning, bilateral ties enjoyed two long periods of sta-
bility and comprehensive cooperation. The first was from early 1970s to
1989. During this period, the strategic foundation for bilateral ties was
their cooperation in dealing with the Soviet threat.
The second such period was from 1992 to 2009, during which the
“join-accept” model was accepted by both sides. China was seeking to be
integrated into the US-led global system, with China’s entry into World
Trade Organization (WTO) as a crucial sign. China was clear about its
aim of deepening reform and opening up, moving toward a market-based
domestic economy, and integrating itself into the international market.
The USA was also willing to embrace China and “mold” it into an impor-
tant partner in the progress of globalization. It was a win-win situation
for both countries. China enjoyed the benefits created by the US-led
globalization.
As the two had basic consensus on their crucial strategic interests and
their roles in the world order were fairly clear, China and the USA did not
fall into overt confrontation, despite the coexisting competition and coop-
eration, as well as several severe urgencies and acute tensions. Instead,
bilateral ties could always rebound from the downturn and maintain an
overall stability.
In the fourth two decades (2009–), however, there appeared some
delicate changes that have brought China-US relations into a more com-
plex era. Till now the general situation is that: the coexistence of compe-
tition and cooperation still remains, but bilateral ties are not improving;
direct conflicts and confrontation have been avoided temporarily, but
mutual distrust has been increasing and hard-liners are gaining promi-
nence in both countries; if serious urgencies emerge, it is highly doubted
whether the incidents can still be effectively controlled as they were in the
last three phases, or if they will give rise to severe political crisis and dra-
matic regression of bilateral relations.
A turning point for China-US relations was the Copenhagen climate
conference in December 2009. The conference failed to achieve any sub-
stantial results. “The Basic Countries” (Brazil, South Africa, India, and
66  B. SHI

China) led by China and the G77 (actually 131 developing countries)
directly confronted the US-led “Umbrella Group” and other developed
countries such as the European Union. The Western media considered
China as the chief troublemaker, who should be held responsible for the
conference’s failure. China, however, took the conference as a rich coun-
tries’ conspiracy to curb her development.
In 2010 the USA declared its new arms sales plan to Taiwan. Together
with the Google incident, Obama’s meeting with the Dalai Lama, the
RMB exchange rate issue and successive trade frictions, China-US rela-
tions were faced with the most severe political reverberation since the
South China Sea plane collision in 2001.
Meanwhile, in dealing with the global financial crisis from 2008, China
and the USA have diverged in opinions on not only their development
patterns but also the world order in the future. For the USA it means
only one possibility that China will no longer be satisfied with the pres-
ent “join-accept” model and playing along the US-led international rules,
but will attempt to lead a bloc of developing countries to work against
America. If the USA (or even both sides) looks at the matter from this
perspective, the two countries’ confidence in the strategic foundation and
positioning, with the “join-accept” model as its core, will be shattered.
In short, a “trust deficit” has arisen in the important strategic relations
between China and the USA. The loss of basic strategic mutual trust is
largely attributed to the loss of the strategic foundation and the blurred
mutual roles in bilateral relations and world affairs. With China’s rapid
rise, such a “trust deficit” is ever more obvious. Deep skepticism toward
the other grows among the Chinese and US public and the elites.
Though not necessarily representing the mainstream opinions of the
public, the data from various polls and online comments to some extent
reflect the attitudes of certain political activists in both countries, which
exert influences on the domestic politics of both sides. Both the USA
and China are witnessing the rise of populism, which is cultivated in the
strained social and economic recession in the USA, while promoted by the
swelling of national confidence and pride in China.

The Present “Structural Conflicts” Between China and the USA

The various difficulties in China-US relations are commonly regarded
as the “structural conflicts” between a rising power and an established
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  67

power. Such conflicts were called a “security dilemma” in the past, while
the popular term now is the “Thucydides’ Trap.”
Actually, the core issue behind these problems is how the largest power
and second largest power can get along within an international system, or
in other words, how the present leader of the existing international order
and the potential successor can deal with their relations. As for China’s
present delicate position in the world, China’s domestic opinion is differ-
ent from those of the overseas nations. Chinese academia and media tend
to treat the significance of “the second largest GDP” with caution and
rationality. They warn that China cannot afford to be complacent.
However, the majority of the public opinion outside China tends to
overestimate or magnify China’s developing speed and level, considering
China as growing into a “superpower.” The world mainstream opinion
even proposes that China’s GDP will exceed that of the USA around the
year 2020, and that China’s trade volume will surpass that of the USA
around 2015. In other words, in the upcoming decade, China will at least
take the place of the USA in the two key sectors of economy and trade.
In that case, in terms of the economic foundation of international status,
China will have the chance to become the first in the world (F/A Response
2012; Luce 2012). Although China has already surpassed Germany and
Japan in the past, the possibility of the USA falling from the top rank
is more likely to cause strategic tension and misjudgment of both sides,
which makes China-US relations more unstable (Dyer 2012).
Whatever the case may be, Chinese people should have a more compre-
hensive understanding of this situation and make proper responses, instead
of responding with mere modesty and self-restraint, though indeed based
on objective and sincere self-perception. After all, international relations
are interactive. Without effective channels of communications and mutual
understanding, the more restraint a rising power appears to have, the
more confused and nervous other countries might feel, just like China’s
proposal of “keeping a low profile” and “period of strategic opportuni-
ties” have once generated misunderstanding.
For a long time, Chinese and US decision makers and elites, who have
a deeper understanding of the history and status quo of bilateral rela-
tions, though admitting the existing divergences, were usually cautiously
optimistic toward the development of China-US relations, and kept try-
ing to promote cooperation and mutual trust. However, for the media,
68  B. SHI

the ­general public, and some academic or political elites, at present the
­pessimistic feeling is on the rise in both countries.
With a lack of comprehensive strategic foundation and the rise of struc-
tural conflicts, China-US relations are in fact in a “sensitive phase” in the
context of a “power shift,” so that rational actions of each side can be eas-
ily interpreted as being aggressive by mistake. For instance, the Western
media tends to regard many of China’s diplomatic words and actions as
“overbearing.” Likewise, the US policy of “rebalancing Asia,” and its atti-
tude toward China’s disputes with neighbors such as Japan, are taken as
US schemes to “contain” or “besiege” China.
Needless to say, China-US relations are the most crucial bilateral rela-
tions not only for China, but also for the USA as well as for the rest of
the world. Of course, to underscore the key influence of the two countries
over East Asia does not mean ignoring or denying the roles of other coun-
tries such as Japan, South Korea, India, and ASEAN. But East Asia lacks
an overall security mechanism for the whole region. There are only some
subregional security regimes (which are not consistent or even conflictive
in terms of their objectives). Under such circumstances, China and US
“paradigm” choice between cooperation and confrontation will not only
have a sweeping influence on China’s relations with its neighbors, but will
also have a direct impact on the US role and interests in East Asia, and
on the peace, stability and prosperity of East Asia as a whole. The clashes
between Britain and Germany before the World War I, between the USA
and the Soviet Union in the Cold War demonstrated that it is hard to deal
with power relations. Nevertheless, the massive scales in terms of territory,
population, military forces, economy, and technology of China and the
USA require that both sides should make every effort to establish coop-
erative relations rather than conflictive ones, otherwise East Asia and even
the whole world would suffer from unexpected devastating consequences.

Cognitive Difference and Policy Divergence

Between China and the USA on Several Key Issues
As super-sized and continental powers, China-US relations have more
problems than most power relations, and might have more as China keeps
growing.
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  69

The Thucydides’ Trap and the Contest for Asia-Pacific Leadership

A popular representative idea is that China and the USA are faced with the
so-called Thucydides’ Trap. For instance, Aaron L. Friedberg in Hegemony
with Chinese Characteristics believes that:

The growing competitions between China and the U.S. are not only the
result of misunderstanding or mistaken policies, but are influenced by the
structural transformation of international system.

Historically speaking, there have always been fierce competitions between

an existing power and a rising power. The established power tends to think
of itself as the guard of international order. It has set the foundation of such
order, and keeps benefiting from it. The rising power, on the other hand,
feeling restricted or fooled by the order, attempts challenge the order to
attain the rights and interests it finds legitimate.

The resulting clashes of interests between two sides have seldom been
resolved peacefully. (Friedberg 2011)

However, the Chinese don’t see such historical experience as abso-

lute or universal. On January 21, 2014, when President Xi Jinping was
interviewed by a journalist of the Huffington Post, he pointed out that
China would not fall into two traps: “the middle-income trap” and the
“Thucydides’ Trap.” To avoid the first trap, China will keep the current
developing momentum over the next 10–20 years, and to prevent the sec-
ond trap, China does not have the inherent quest for hegemony of powers
in the past.
Nevertheless, the US wariness over China’s rise is inevitable. China has
surpassed the USA to be the largest trade partner for most of the world.
China is also the largest trade partner of 18 of its neighbors. At present East
Asia as a whole is economically dependent on China, yet relies on the USA
in terms of security, presenting a delicate regional landscape.
Though it seems that China and the USA are forming influential com-
petitions in the region, China has no intention of evicting the USA from
Asia. In fact, though holding strategic suspicions for historical reasons, in
the two decades from 1989, the latest three generations of Chinese lead-
ers have adopted cautious rather than confrontational policies toward the
US.A. Whenever the USA shows worries over China’s strategic intention,
Beijing would guarantee Washington that it will not seek to challenge
70  B. SHI

or replace USA’s leading status in the world. Therefore, from Beijing’s

standpoint, the “trust deficit” is mainly attributed to US policies and mis-
understanding toward China.

Political Divergences Between China and the US on China’s

Sovereignty
Taiwan  The appeasement of both sides of the Straits in recent years has tem-
porarily excluded the Taiwan issue out of major obstructions to the ameliora-
tion of China-US relations. But China and the USA will still argue around
“arms sales to Taiwan” every year. Some US political analysts point out that
the USA in fact regards the issue as its “critical interest” (similar to China’s
“core interest”) (Wang 2010). Since arms sales to Taiwan involves US commit-
ment to its security allies in Asia-Pacific, the USA will not compromise on this
issue. So, in the long run, the USA will still be a major external power that
hinders China’s great cause of unification.
Tibet Western countries never give up the opportunity to criticize China’s
human rights violations on the Tibetan issue. It is generally regarded in China
that, by stirring up the Tibetan issue, the USA can exert moderate political
interferences in China’s stability and development while living up to the
American sense of mission. Therefore, the issue will stay in the development
of China-US relations. However, it is noticeable that US attention on this issue
is strongly related to the status quo of China-US relations. The Tibetan issue is
no longer viewed separately, but as a tool to “bash” China when necessary.

Different Concerns of China and the USA on Military Security

Since the reform and opening up policy that began at the end of the
1970s. China has for a long time deliberately contained its military
power. The acceleration of China’s military construction in recent years,
from fighters to aircraft carriers, is simply a natural release after years of
suppression. For instance, Premier Li Keqiang announced in March that
the military budget of 2014 would increase by 12.2 percent, reaching
$1,316 billion. But he underscored that the range of this increase cor-
responded to China’s speed of economic growth. Some military experts,
such as those from IHS Defence and Stockholm International Peace
Research Institute, affirmed that China’s military budget, though on the
rise each year, fits in with its rate of economic progress. Take inflation
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  71

into ­consideration, China’s military expense is just slightly higher than

the speed of its GDP growth.
However, the narrowing gap between Chinese and US military
strengths has deepened US strategic concern. The issue has been compli-
cated by US rejection of a bipolar world order, and the fact that China’s
Gross Industrial Production has surpassed that of the USA and will pro-
vide a solid industrial foundation for China’s military modernization.
Presently, the future for substantial military communication and coop-
eration between China and the USA is bleak, since both harbor increasing
feelings of hostility and the need for vigilance. Moreover, there are many
cognitive disparities and different concerns between China and the USA
in terms of military security.
From the US perspective, by increasing military expense, and prioritiz-
ing the development of weapon systems directed against US combat plat-
forms, China has strengthened its force projection capabilities in the West
Pacific, posing threats to the flexibility of US forces in this region. Due to
the lack of mutual trust, the USA worries that the course of events would
damage the US alliance system as well as its diplomatic and commercial
interests. It is also concerned that the strong PLA intention to control the
“near seas” would challenge the operational freedom of USA in the mari-
time area beyond China’s territorial waters (Wang and Lieberthal 2012).
With China’s technological progress, China-US competitions have
expanded to the larger fields including space, electronics, and cyberspace.
In the latest round of The Strategic and Economic Dialogue, the USA
presented great interest on the protection of cyber security and intellectual
property rights of information.
However, China also has doubts over a series of US actions. For one
thing, though cross-Straits relations have been greatly improved since the
KMT took office in May 2008, the USA insists on keeping on supply-
ing arms to Taiwan. And for another, though the Obama administration
declared that it had no intention to contain China, US naval and air forces
have operated more close-in investigation and surveillance in China’s
coastal areas. Across the globe, China is the only nation under such mili-
tary pressure.
The US strategic policy of “pivoting to Asia” or “rebalancing Asia” also
has raised China’s suspicion of being perceived the biggest security threat
by the USA. Some US moves in Asia have deepened such suspicions. For
instance, the USA keeps reinforcing joint military exercises with its allies
in Asia; deploys Marine Corps in Port Darwin in Australia; strengthens
72  B. SHI

military ties with the Philippines; enhances security bonds with many of
China’s neighbors, including encouraging Burma to loosen domestic
political control; and is intensifying relations with India and Vietnam. In
recent years the USA has interfered with the territorial disputes in the
South China Sea. Its support for some ASEAN countries has made China
feel besieged.
In addition, though the USA has repeatedly announced that it is neu-
tral in China-Japan territorial disputes, for China it appears to play a dou-
ble game or even to side with Japan. A well-known example is President
Obama’s recent visit to Japan in April 2014, the USA and Japan published
a joint statement that declares the U.S.-Japan Treaty of Mutual Cooperation
and Security covers all areas under Japanese administration (implying the
Diaoyu Islands). The statement also focuses on China’s establishment of
East China Sea Air Defense Identification Zone (ADIZ). Shinzo Abe later
said that the joint statement “marked a new era” and demonstrated that
the US-Japan alliance will play a “leading role” in safeguarding the peace
and stability in the Asia-Pacific.
However, China’s standpoint is widely known: Diaoyu Island and its
affiliated islands have been China’s inherent territory. This fact can never
be changed by the U.S.-Japan Treaty of Mutual Cooperation and Security.
The establishment of East China Sea ADIZ is China’s legitimate right as a
sovereign country, and it is in accordance with international laws and prac-
tices. The USA and Japan have set their own ADIZ decades ago. China
also believes that it is inappropriate and against the basic principles of
international relations to strengthen an alliance while damaging the inter-
ests of a third party through bilateral security treaties.

Economic Issues
As each other’s second largest trade partner, the economic interdepen-
dence between the two countries is growing. There are still much room
for bilateral economic and trade cooperation, as the USA is expanding
export, introducing foreign capital, while China is expanding domestic
demand and promoting the export of capital.
It is no wonder that economic and trade issues have become “daily”
frictions between China and the USA. However, the transition of China’s
economic development pattern still needs time. In addition, the two
countries have structural contradictions over the exchange rate, since the
USA seeks to increase fiscal revenues and decrease deficit through magni-
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  73

fied export. They also have divergences on export subsidy, government

procurement, IP protection, rare earth export, and opening of financial
service market. Many US-invested companies complain about the dete-
rioration of China’s investing and managing environment. China’s SOEs
also meet political barriers in investment in America and in acquisition of
American enterprises.
Moreover, China and the USA have cognitive differences and policy
divergences in economic issues. For instance:
The USA worries that China’s mercantile policies may grasp US oppor-
tunities to recover from economic recession. And China believes that US
trade protectionism on the basis of dollar’s reserve-currency status has
exerted negative influences on China’s economy.
The USA condemns China for violating intellectual property rights,
holding down the price of its currency RMB, setting harsh barriers on mar-
ket access, which is perceived to have directly raised US economic costs.
However, China considers the US pressure on RMB appreciation as a hege-
monic move that serve US interests while burdening increasing the costs on
China’s economy and labor. China also attributes China-US trade deficit
largely to US restraints on China’s export out of political prejudices.
In general the USA no longer regards China as a developing country
and thinks that China cannot merely pay attention to trade, resources, and
other practical interests, and urges China to shoulder greater international
responsibility. Yet China’s mainstream domestic opinion is that China is
still a poor country that should not and cannot provide so much public
goods to the international community.
Since November 2011, the Obama administration has decided to
expand Trans-Pacific Partnership Agreement (TPP). It explicitly declared
that China would be excluded from TPP if its current domestic economic
structure stayed unchanged (Calmes 2011). From Beijing’s perspective,
the USA actively pushes forward TPP in order to reposition US trade edge
in the Asia-Pacific, while reducing China’s economic and diplomatic influ-
ences in East Asia and limiting RMB circulation. With the acceleration of
TPP negotiations, the East Asia economic integration led by China and
ASEAN and the Asia-Pacific economic integration led by the USA will fall
into fiercer competitions.
Currently, China-US economic frictions mainly lie in traditional trade,
exchange rate, and debt. However, with the acceleration of China’s
industrial structure upgrade and internationalization of RMB, bilat-
­
eral trade relationship might shift from complementary to competitive,
74  B. SHI

hence leading to structural conflicts. In short, the rapid growth of China’s

industrial and capital forces might give a harsh blow to the structure of
China-US economic relations. So both countries should make efforts to
accommodate themselves to this new trend.

Real and Potential Conflicts in Ideology

Political realists (whether sincere or self-proclaimed) tend to undervalue
or neglect ideological influences on interstate relations. However, like it
or not, political, cultural, and religious factors or values under the scope
of ideology have obvious and profound influence on China-US relations.
Aaron L. Friedberg is blunt on this issue: the differences between China
and the USA in political structures and ideology have become the obstruc-
tion that hinders the establishment of stable bilateral cooperative relations
as well as “the source of antagonism and suspicion.” He even thinks that
in fact it is ideological differences rather than pure strategic concerns that
make the USA have stronger suspicion and hostility toward China.
Due to the differences in the political system, values, and ideology
between the two countries as well as the wars and conflicts they had his-
torically, antagonistic position on each side has its own emotional, public,
and policy sources. In both countries, there are “eagles,” “extremists,”
and “pessimists” whose influences are very significant today. They advo-
cate harsh, adversarial policies toward the other.
Domestic opinion (at least before the 18th CPC National Congress)
held that China was too weak and lenient in diplomacy. In contrast, on
an international level, countries like the USA tend to regard China as
increasingly tough and arbitrary in the international arena. Recently, apart
from “China threat,” the American media also raises the notion of “China
arrogance,” accentuating on China’s diplomatic “assertiveness.”
Online opinions reveal that China’s public opinion and values are more
and more diversified today. As China does not have a middle class like that
in American society, and its core values are under a process of transforma-
tion and reconstruction, it is harder to reach a consensus in China con-
cerning its US policies or other international issues. The diversification of
China’s social stratification and public opinion is considered by some US
observers as a demonstration of a lack of stability and cohesion.
Besides, Western media frequently uses the “Chinese model” to sum up
China’s development path, though the Chinese government never uses this
term. It is also controversial, both in domestic and overseas academia, about
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  75

the existence of a so-called Chinese model and whether this model can be
universal. However, China’s achievements may have offered an alternative
to Western democracy and market economy for developing countries, set-
ting a sharp contrast to those national-seceded and sovereignty-­infringed
countries caused by “Color Revolution.” Thus, it is often interpreted as a
challenge to US “universal values.” As Aaron L. Friedberg stated, that so
far Chinese mainland has successfully incorporated authoritative rule and
market economy. If such a pattern is gradually taken as an alternative for
development, China’s continuous growth will hinder the US long-term
efforts of promoting free and democratic systems worldwide, or complicate
the circumstances.

Multilateral International Factors and Third-party Issues

in China-US Security Relations
China’s economic influence in the Asia-Pacific has surpassed that of
the USA, and it has generally maintained stable ties with neighboring
countries. However, China’s land and maritime territorial disputes with
some neighbors, as well as the suspicion from India, Japan, Vietnam, the
Philippines and South Korea about China’s rise, may be exploited by the
USA. Also, as the overcautious mentality of the USA toward China grows,
some of China’s neighbors will utilize China-US confrontation to their
own ends.
The recent escalating maritime disputes reflect not only the external
uneasiness toward China’s rise, but also the mutual reliance of the USA
and its allies in terms of their China policies. The US allies in East Asia, like
Japan, the Philippines, and South Korea who are both envious and afraid
of China, wants to use US forces to balance China and gain self-interests
as China’s influence has not yet been robust enough, while US “rebalanc-
ing” strategy appears in some sense an acceptance of their “invitation”
(Mahbubani 2014). The USA has adopted an “indulgent” strategy toward
its allies that is expected to have the best cost-benefit ratio. The strategy
tacitly allows or secretly encourages the allies to make troubles in China’s
neighboring areas, in the hope that the USA can better control this region
while China is busy coping with these disputes.
As a natural result of economic and military development, it is unlikely
to swerve China’s step toward the sea. The USA, always deeming itself
a sea power and China a land power, has issues in adapting to the new
circumstances. After the Cold War, the USA had taken control of the sea
76  B. SHI

power over the West Pacific through three island chains, so it is sensitive
to China’s development of maritime forces, considering it a challenge to
the current security order and status quo.
Undoubtedly, China should handle its neighboring relationships prop-
erly, since a nation quarreling with its neighbors can hardly be a stable
and reassuring nation to the world. But in the meantime, other countries
should also try to avoid viewing China with prejudices or misinterpreting
China’s rational and sensible action as threats to regional security.
The USA is not directly involved in the disputes in the East and South
China Sea, so that it will probably not confront with China head-on as the
open agent of a certain Asian country as long as China does not plan or
attempt to exclude US presence in Asia. In fact, China and the USA have
achieved a strong consensus on the freedom of navigation on high seas.
They have both made efforts to protect the navigation security on the
Indian Ocean in combating the Somali pirates. They should further work
out to reach agreements on China’s maritime disputes, and jointly push
forward the communications and negotiations among related countries,
so as to control divergences and to safeguard the interests of all parties
involved.

Disparity of China and the US Security Strategies in East Asia

Actually, the sixth point also shows the coexistence of two interwoven
processes in East Asia security cooperation, namely, US Asia-Pacific alli-
ance system featuring bilateralism, and East Asian regionalism featuring
multilateralism.
China has been taking more initiatives in advocating East Asian multi-
lateralism, but refuses to accept the approach of multilateral negotiation
to resolve sovereign issues on the East China Sea, the South China Sea
disputes and Cross-Straits relations. The USA, on the one hand, wouldn’t
allow its bilateral military alliance system be constrained by any multilat-
eral mechanism; on the other hand, it has begun to involve itself more
actively in the East Asian multilateral process.
Up to now, the basic national security strategy of the USA still depends
heavily on the European Union and ASEAN politically, the strengthening
of NATO and US-Japan, US-South Korea alliances militarily, and the pro-
motion of G20 economically. Its East Asian security strategy is still based
on bilateral alliances with Japan, South Korea, Australia, Thailand, and the
Philippines. It attaches greater importance to its alliances with Japan and
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  77

South Korea, with the former being the cornerstone of its Asian policy.
Meanwhile, the USA tries to establish new partnerships, including quasi-­
military relationships with Vietnam, India, Indonesia, Singapore, and so
on. While adhering to bilateral alliances, the USA also actively joins Asian
multilateral process and makes use of it. For instance, it insists on resolving
the South China Sea disputes through multilateral negotiations, attempt-
ing to restrain China to stay within multilateral framework (Shi 2010).
Consequently, strategic dialogues between China and the USA, so as
to sort out, adjust, and regulate each other’s East Asian strategic relations,
goals, and security approaches, will be of vital importance to the effec-
tive operation of East Asian cooperation and construction of a collective
security system.

Building a New Pattern of Power Relationship,

Getting Rid of the “Tragedy of Power Politics”
China-US relations are now going through lots of obstacles and facing
great challenges. The complexity and novelty of coping with bilateral rela-
tions are unprecedented for both. Yet there exist some favorable condi-
tions for China and the USA to build a “new pattern power relationship”
on the basis of cooperation. These favorable conditions have not been
easily available to many great powers in history.

Favorable Conditions for China-US Cooperation

First, on the national level, China and the USA have similar subjective
characteristics that are suitable for a win-win cooperation.

(1) Both China and the USA are superlarge countries and civilized
nations, with rich material hard power and cultural soft power. This
means there will be no winners in confrontations. It also indicates
that their power competitions can be moderated through the plu-
ralism and profoundness of their civilizations, through various
approaches to reach mutual understanding and cooperation in
functional fields.
(2) The societies of both countries advocate civilian values, believe in
materialism and pragmatism and have strong cultural inclusiveness.
These may generate a favorable foundation for cooperation and
compromise. The differences in value systems do not constitute an
78  B. SHI

irreconcilable “cultural clash.” On the contrary, the distinctive his-

torical and cultural features are appealing for the people in both
countries.
(3) China does not have a messianic mentality of converting others.
China’s traditional mainstream strategic culture is rather defensive,
in contrast to Western colonial culture. China is the only nuclear
power to openly state that it will not be the first to use nuclear
weapons against other countries. China indeed hopes to establish
“a new type of power relationship” with the USA based on mutual
respect.

Second, at the level of a bilateral relationship, the China-US relation-

ship is extensive in content, deep-rooted, and relatively mature. They
share extensive common interests, and have built a sound foundation in
terms of economy, society, and politics for future cooperation.

(1) In the economic field, the 530 billion trade volume between China
and the USA, the 1.3 trillion US bonds held by China indicate that
a state of “mutual assured economic destruction” has been ensured,
if it comes to war. The USA and the world as a whole cannot afford
a new China-US cold war.
(2) In functional fields, China and the USA have vast room for coop-
eration in fields such as antiterrorism, antitransnational crimes and
global public healthcare. Global governing mechanisms, such as
the G20, reveal that cooperation exceeds the friction between the
two countries.
(3) In terms of social bonds, despite the huge amount FDI and OFDI,
connections and exchanges between common people are getting
stronger. For example, each year there are millions of visitors who
travel between these two countries. There are about 190 thousand
Chinese students studying in the USA and more than 20 thousand
American students studying in China, and the number is still
­growing rapidly. All these social connections provide a profound
public foundation for the establishment of a new power
relationship.
(4) In the political field, the bilateral relationship has gone through
professional and institutional consultation. Both countries have set
nearly a hundred bilateral multilayer dialogue mechanisms, includ-
ing at the highest level The Strategic and Economic Dialogue, and
other military and defense dialogues.
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  79

Frequent exchanges between leaders and senior officials make it easier

for both countries to understand the standing of the other on impor-
tant issues and to know what might cause conflicts and divergences. Most
importantly, China and the USA share much common ground in terms
of the fundamental ends of East Asia security, the significance of mutual
cooperation and long-term partnership.

(1) Both regard the “peace, stability and prosperity” of East Asia as
their fundamental ends.

Both China and the USA want to profit from the stability, peace, and
prosperity of East Asia. This determines that both have important coop-
erative benefits on protecting the political stability, economic growth,
and market prosperity in this region, stopping nuclear proliferation on
the Korean peninsula and preventing the extreme policies of Japanese
right-wing. Neither would like to fall into a new cold war, let alone a real
China-US war or a war between China and its Asian neighbors.
Once China gets into war with other Asian countries, especially US
allies, the USA will fall into a dilemma. If the USA decides not to get
involved, it will damage its reputation as leader of alliances. If it decides to
get involved, it will face the threat of having a war with a nuclear power.
Therefore, the USA is reluctant to see China starting a war with its neigh-
bors, or to see other Asian countries provoking a war against China.
However, China does not have an expansion plan like that of Germany
or Japan before World War II, or a global hegemony plan like those of the
two super powers during the Cold War. China only wants to protect its
core interests that leave little room for compromise. China even maintains
a certain flexibility on some of these core interests. For example, China
has not only separated clearly the concepts between sea navigation safety
and island sovereignty, but has also agreed to participate actively in discus-
sions and negotiations concerning common code of conduct on the South
China Sea. Furthermore, China has neither a plan nor the capability to
rule out the USA from Asia. On the contrary, it has realized that the US
presence in Asia has a positive side for China and other Asian countries
(Zheng 2014).
80  B. SHI

(2) Both are seeking to develop a long-term constructive partnership.

In fact, the leaders of both countries reiterate very often the importance
of developing future cooperative relationship. For instance, In February
2012, during his visit to the USA, then Chinese vice president, Xi Jinping,
expressed in a systematic way his hope of building a China-US cooperative
partnership. He pointed out that China is frank, sincere, and consistent
in developing its relationship with the USA (Sina News 2012). President
Obama also said on several occasions that the USA welcomes China’s con-
tinuous stability, prosperity, and peaceful rise, and embraces China to play
a more responsible role in world affairs. Indeed, when Xi met with Obama
at the Sunnylands ranch in California in June 2013, the two sides agreed
to make joint efforts in establishing a new type of “major-country rela-
tionship” based on mutual respect and win-win cooperation.

(3) Actually, it is generally believed in both countries that the USA and
China’s common interests in fields such as antiterrorism, prohibi-
tion of nuclear proliferation, promotion of global economic growth
and financial stability, dealing with climate change and environ-
ment protection, all suggest that it is possible for the two to solve
critical issues in a peaceful way (USA Phoenix News n.d.). In
President Obama’s words, “the U.S. and China have constructive
relations,” and will cooperate on issues of mutual interests.

Third, at the level of the international system, historical changes of

international environment determine that developing a cooperative rela-
tionship is the only reasonable choice for China and the USA.
In a nuclear era, “security interdependence” is a reality. The damage
and destruction of armed confrontations between great powers are obvi-
ous. Leaders from both sides will never resolve conflicts by force with ease.
In an era of globalization, “economic interdependence” is also an
undisputable fact, which means that no country can enjoy long-term pros-
perity alone when others are experiencing depression.
In an era of industrialization and modern mass politics, the ties between
foreign affairs and domestic politics are getting closer. With the awakening
of civil society and public political awareness, it is much more difficult than
ever for countries to realize their political goals through violent, confron-
tational methods. A case in point is the domestic turbulences in American
society aroused by the Iraq and Afghanistan wars.
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  81

Furthermore, the development of international institutions, norms and

rules and their functions of regulating the behavior of nation-states, are
far more mature than what was there a hundred years ago. Any attempts
that completely ignore the UN Charter and other international norms will
have to pay hefty costs.
In a word, there is no lack of practical foundation and conditions to
establish a new type of relationship. However, it is not sure whether such
conditions can be effectively utilized. Both countries have to adjust their
mentality and mode of behavior to adapt to current changes of world situ-
ations and bilateral relations.

To build a “new type of power relationship,” four critical

problems need to be solved
Under the new circumstances of the national strengths, domestic poli-
tics, and international status in China and the USA, in order to get rid of
“magic curse” of history and to avoid falling into the “Thucydides Trap,”
both countries should develop a new type of power relationship. This new
pattern entails four important aspects: First, as the term suggests, its goal
is to break the vicious circle that an emerging power will confront with an
established power. Second, unlike other rising powers in history, China has
positioned itself (also understood by the outside world) as a participant and
reformer of the current international system, not a revolutionist and sub-
verter. Third, China takes more international responsibility and obligation
within its capability and participates more actively in global governance.
Fourth, the USA should treat China in a fair and equal manner.
The metaphor of the “Thucydides Trap” was drawn from the histo-
rian Thucydides and his book on the Peloponnesian War. It is believed
that it was the rise of Athens and the fear that this inspired in Sparta that
made war inevitable. It is worth noticing that the inevitability of the war
between major powers is often interpreted as a natural result of the rising
power’s provocative challenges, which draws people’s attention more on
the emerging power but more or less neglects the behaviors of the existing
power. In other words, the interactions between two powers or two alli-
ances are often undervalued in analyzing the “Thucydides Trap.”
What Thucydides said was that the major source of the war was the
emergence of structural conflicts or security dilemma between Athens and
Sparta, and the failure of BOTH sides to tackle such predicament. He did
not mean that Athens should take the full responsibility for the war. The
existing power’s ignorance of the shifting power structure, the refusal to
82  B. SHI

share its power with a rising rival, and other related strategic responses are
usually the significant causes of security dilemma. Actually the war was
caused by a series of underlying, personal, and immediate causes and it was
Sparta who struck the first blow.
However, the lasting lesson for today is that with the shifting balance of
power, along with combined effects of the two sides’ strategic judgment
and sentimental preferences, vicious interactions may eventually ferment
healthy competitions into confrontations or even wars.
In an era of global interdependence, we cannot ignore the great eco-
nomic, social, and technological progresses of the human beings. Partial
or mistaken understandings of the “Thucydides Trap,” and oversimplified,
far-fetched comparison of the historical event to contemporary circum-
stances, are imprudent. If the rising power is to be blamed for arousing
confrontation in all circumstances, the fundamental quest for develop-
ment that is natural for every nation will be deemed as an original sin.
Such logic is absurd and unrealistic.
There are various traps in the world, but it is not necessary that every-
one is bound to fall into these traps. In history, examples of peaceful
coexistence and power-transition also existed. The “structural conflict”
is objective to a certain extent. However, its negative consequences can
still be avoided through proper choices of policies. The USA, though it
had warfare with other countries during its rise to a global power, did not
generate major wars with existing powers then. In this sense, it is safe to
say that it has gone through a peaceful rise.
In short, to avoid the “Thucydides Trap,” it is not only the responsibil-
ity of the emerging power, but also an obligation for the existing power.
The formation of the relationship between two major countries depends
on their interactions, instead of the choice of just one side. Thus, to escape
the “Thucydides Trap” that has cost a lot on power relations in history,
both the USA and China have to make great endeavors in building a new
type of power relationship.
First, China-US relationship needs to find a new strategic foundation so
as to construct a strategic mutual trust.
The key to the development of China-US relationship lies in a clear
and reasonable strategic positioning, so as to build a stable strategic foun-
dation and mutual trust and to realize strategic stability. If both coun-
tries would make some sort of “strategic reassurance” as suggested by
some policy analysts,1 a slightly moderated “join-accept” model based
on ­compromise can still serve to be the grand strategic foundation for
China-US relationship. This means that the USA will not only welcome
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  83

a ­prosperous and successful China, but also leave more room for China
to play its constructive role, while China should not only transit from its
role of passively accepting the international order to a role of “creative
joining,” but also remain responsible for the world in the process of its
development. In short, the USA should “share power” with China and
China should “share responsibility” with the USA.
Hence, strategic compromises between China and the USA need to be met
for this foundation. It is unrealistic to ask China for one-sided sharing respon-
sibility, or to demand one-sided sharing power from the USA. For example,
China should realize that US interests and military presence, including its alli-
ance system in West Pacific, have historical continuity and some positive influ-
ence on the stability of Asia-Pacific region. At the same time, the USA should
realize that China is not an inland country, but a compound land-maritime
country with over 18,000 km coastline, which has a natural right to protect
its legitimate maritime interests. If the USA wants China to refrain from using
military forces to solve maritime disputes, it should also commit to enforcing
necessary constraints on its East Asian allies concerning their unilateral pro-
vocative acts or attempts to change the status quo in disputed areas.
China should also pursue reasonable objectives while protecting its
legitimate rights. In fact, though China has surpassed the USA in electric-
ity output, gross industrial output value, total trade volume, the quality of
China’s economy is still far lower than that of the USA. Particularly, China
considerably lags behind in advance technology, brand ownership and the
core competiveness of grand companies. With the US position in East Asia
as a traditional leader in political, economic, military, and social arenas,
there exists an asymmetry between China and the USA in their competi-
tions in the Asia-Pacific. As a newcomer in the power and wealth structure
of Asia-Pacific, China cannot take over the position of the USA merely on
the basis of its economic influence. Therefore, China should reasonably
pursue limited goals and not to rush in pushing forward resolutions for
territorial and maritime disputes according to its own will.
In return, the USA should treat China fairly and equally, admit the fact
of China’s development and leave more room for China to play a positive
role on the international stage.
In short, to avoid cut-throat competitions, especially to counter con-
tinued military escalation in China-US relations, both sides need to find a
viable alternative for peaceful coexistence and seek mutual benefits on the
basis of mutual respect. Actually, both governments have expressed such
expectations. According to the experts who have formed a research group
84  B. SHI

focusing on the framework that ensures restraints in China-US relations,

the core of “mutual respect” is to set clear the strategic intention of both
sides, set a boundary for military development and coercive diplomacy, in
the hope that policy-making on this basis will contribute to self-restraint
from both sides (USA Phoenix News n.d.).
Second, China and the USA should establish a set of dispute resolution
and crisis management mechanisms, so as to maintain the stability of East
Asia through bilateral coordination and multilateral dialogues.
East Asia’s potential for crisis not only lies with China and the USA,
but also on third parties. The current US “hedge off” policy is negative
for future crisis management. The USA, on the one hand, declares that it
will not take sides on sovereignty issues, yet on the other hand, it provides
political and military support for countries that have territorial disputes
with China. This ambiguous position will not only enhance China’s sus-
picion on US strategic intention, but may also lead to other countries’
misuse of US “limited promise,” which might stir up the disputes between
China and its neighbors into conflicts between China and the USA.
Therefore, both China and the USA should dedicate themselves to
establishing a set of crisis management mechanisms, so as to have effective
communication, consultations, and coordination in case of an emergency.
Particularly, in the most sensitive military field, both sides are in urgent
need of closer dialogues, so as to avoid suspicion and misjudgment.
Moreover, the pluralism of power structure, the complication of secu-
rity agenda and the variety of security dilemma in East Asia require both
China and the USA to work with other countries to build a multilateral
security order in East Asia. A necessary step toward this goal is to first cre-
ate multilateral mechanisms that involve all parties of interests centering
on important issues such as nuclear proliferation, territorial water disputes,
maritime security, and nontraditional security.
Third, China and the USA should abandon ideological prejudice, seek
harmony but not uniformity, so as to advance a win-win cooperation.
One cannot disregard the differences of ideology and values, as well
as their practical effects. Yet it is more dangerous to perceive and handle
international relations through the prism of stereotyped ideology. The
cooperative foundation across countries lies in common interests rather
than in the uniformity of political system, economic mode, and value sys-
tems. Unfortunately, it is undeniable that ideological elements (including
US ideological prejudice toward China and Chinese ideological wariness
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  85

about the USA) are still influencing the China-US relationship today, and
to some extent are hindering their understanding of common interests.
Even during the Cold War from 1970s to 1980s, China-US relation-
ship could still make great progress because the two had played down their
divergences on ideology while they prioritized common interests. Hence,
to build new strategic foundation and mutual trust, both sides should
base their policies on the fundamental goals of “peace, stability, prosper-
ity,” seek agreement on valued strategic interests and embrace the idea of
mutual benefit instead of “zero-sum game.”
Fourth, leaders of both sides need to have determined political resolu-
tion and long strategic vision so as to overcome domestic limitations on
China-US relationship.
Numerous obstacles faced by China-US relationship have made hard-­
liners’ opinions quite popular in both sides, which have considerable
impacts on the two governments’ adjustment of strategic mentality and
their establishment of a new pattern of relationship.
For China, the central government has for a long time put much
emphasis on the diplomatic relationship with the USA and tries to keep a
stable condition. China’s attitude to the USA is defensive, with no inten-
tion to challenge or take over the US role. However, there have emerged
voices among the mass public that are in contrast to the central govern-
ment’s policy toward the USA. The most notable among them is the ris-
ing nationalism, which believes that China’s policy toward the USA is too
lenient and asks for a tougher diplomatic stance. These tendencies put
much pressure on the central government’s diplomatic decision-making
and arouse doubts in the international society on China’s mainstream
diplomacy.
For the USA, the importance of China-US relations keeps enhancing.
The USA pursues a “hedge off” strategy that focuses on both cooperation
as well as restraint toward China.
On the one hand, mainstream American politicians see the great oppor-
tunities of China’s economic development and potential cooperation with
China in fields such as antiterrorism, nonproliferation, regional and global
stability. They also realize the great loss that might result if the relation-
ship with China worsens. On the other hand, there are no lack of people
in the US Congress, military interest groups, monopolies, labor unions,
right-wing forces and think-tanks who hold deep skepticism and enmity
toward China. In general, the US political atmosphere in recent years and
86  B. SHI

the near future is unfavorable for the government to promote pragmatic

and far-sighted strategies toward China.
The US “hedge off” strategy targets China as a “Frienemy,” some-
where between a friend and an enemy (Fan 2012, p. 11). This ambiguous
strategy cannot decide whether to adjust to or defend against an emerging
China, hence contradicts itself in many cases.
Therefore, it is a great challenge for the leaders of both sides to make
“cooperation” a public supported mainstream opinion, and to get support
for the “new type of power relationship.”

 Conclusion
It is a fact that China-US relations have been ever more important, almost
dominating the current international relations. The structural conflicts
between China and the USA are increasing. However, both countries
are not destined to be enemies. It is a fundamental strategic mistake
for a rising power to regard an existing power as enemy. Yet, it is also a
historical mistake for the existing power to force an emerging power to
turn against it.
Admittedly, China and the USA have cognitive divergences and pol-
icy discrepancies in terms of political, economic, and military affairs.
However, the two also share common interests in many fields. The peace,
stability, and prosperity in East Asia are in accordance with the fundamen-
tal interests of China and the USA, as well as all parties in this region. The
most significant mutual benefits in China-US relationship comes from the
in-depth interdependence of the two economies, as well as the develop-
ment opportunities provided by regional stability. Meanwhile, the greatest
obstacle for China-US relations is the lack of mutual trust in political and
military terms.
The so-called tragedies of power politics is not inevitable. Subjectively,
it is because both China and the USA want to avoid open, comprehensive
confrontations like the Cold War. Objectively, it is because bilateral ties
and current international environment enjoy many favorable conditions.
Policy-makers from both sides should have the political determinations
and strategic insights, make full use of the existing cooperation founda-
tions, and overcome the restrictions from both home and abroad, reach
consensus and enhance mutual trust in respect to their respective strategic
goal and role positioning, foster a win-win situation in functional fields
through bilateral coordination and multilateral dialogues, make joint
 SINO-US STRATEGIC CONVERGENCE AND DIVERGENCE IN EAST ASIA  87

efforts in coping with crisis, and seek common points while reserving dif-
ference, cast away ideological prejudices. In this way, it is absolutely pos-
sible that China and the USA, together with other countries, can create a
peaceful and win-win future for East Asia.

Note
1. Deputy US Secretary of State James Steinberg proposed the notion
of “strategic reassurance” in September 2009. This idea was contro-
versial and did not represent the US consensus.

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story20140415-332598
 CHAPTER 5

The USA and Challenges to East Asia’s

Security Order

Zongyou Wei

In recent years, turbulence in the East Asian security order has aroused
widespread concern in the international community. Why have ever-­
increasing economic ties neither dissipated strategic suspicion nor pre-
vented security competition between China on the one hand and the
USA as well as China’s neighboring countries on the other? This chapter
attempts to probe this issue by looking at East Asia’s distinctive security
architecture and its inherent defects. It will explore the negative influence
of power shifts in East Asia, regional leadership competition, maritime
disputes, and US strategic responses to these developments. Furthermore,
possible approaches as to how to establish peace in East Asia and to achieve
China-US strategic reconciliation will be suggested.

The Bifurcated Continental-Maritime Security

Order and Its Flaws
After some readjustment in the early 1970s, the current East Asia security
order has been based on two pillars: the reconciliation between China
and the USA ever since President Nixon’s visit to China in 1972, and the

Z. Wei (*)
Center for American Studies, Fudan University, Shanghai, China

© The Author(s) 2016 89

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_5
90  Z. WEI

bilateral alliance system established by the USA in the early 1950s. The
former ended the animosity between China and the USA, while the latter
guaranteed the security of American allies and US maritime hegemony in
the West Pacific. These two pillars distinguish the East Asia security order
from that of Europe.
While this order has guaranteed overall peace and stability in East Asia,
this security architecture is not without its shortcomings.1 Basically speak-
ing, it suffers from four flaws. First, this East Asian security architecture is
a bifurcated order, with China as a land power on the East Asia continent
and the USA as a maritime power in the West Pacific. What is lacking is an
integrated architecture that links both the continental and maritime East
Asian security spheres.
Second, when they were established the US bilateral alliances were
aimed at containing China and the Soviet Union. Even though the Soviet
Union became their main target after China-US reconciliation, China
never disappeared from the radar. With the collapse of Soviet Union,
China once again loomed large in US alliance calculations.
Third, China-US reconciliation is not based on common values or
ideology, but on an opportunistic anti-Soviet common interest, and it
therefore lacked a solid foundation and remained vulnerable to chang-
ing circumstances. Once the Soviet threat evaporated, relations between
China and the USA had the potential to go sour again, due to their obvi-
ous differences in values, political systems, and cultures, as did happen in
the aftermath of the Cold War (Lampton 2001).
Lastly, if or when China turned its attention toward the sea and tried
to transform itself from a continental power to a continental-maritime
dual power, avoiding a strategic problem between China and the USA and
reconciling their respective interests would be thorny issues (Liu 2013).
This East Asia security order experienced its first shock in the after-
math of the Cold War. First, the collapse of the Soviet Union eroded
the foundation of China-US cooperation. With the demise of the Soviet
Union, China lost its strategic value and the rationale behind reconcilia-
tion with China was questioned. Meanwhile, the differences in ideology,
political system, and culture between China and the USA became ever
more prominent. Bilateral relations hit bottom after 1989 due to China’s
Tiananmen Square incident. With US triumphalism over “the end of
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  91

history,” socialist China was no longer deemed a strategic partner, but

rather an ideological “other” that became a problem to be coped with.
Second, a “China threat” became the rationale for the continuing exis-
tence of US bilateral alliances. After the Soviet Union collapsed, there were
loud calls heard throughout East Asia and the USA for cutting US troop
presence in Asia and reducing or even closing US military bases. Many
doubted the necessity and wisdom of sustaining US military alliances in
East Asia (Gholz et al. 1997; DeCastro 2003). In 1992, at the demand
of the Philippines, the USA shut down two bases and withdrew its forces
from the country. Similar appeals for a drastic reduction of American bases
and troops were heard across Japan, South Korea, and other East Asia
countries. To make matters worse, the US economy witnessed a sharp
downturn at the end of the Cold War era, while East Asia enjoyed an
economic miracle led by Japan. Relations between the USA and its allies,
especially Japan, were put to a test due to economic and trade disputes
(Ito 1990; Song 2005).
Against this backdrop, the “China threat” became the glue that resolved
intra-alliance differences, controlled centrifugal tendencies, and maintained
alliance solidarity. The “China threat” first emerged in Japan and the USA as
far back as 1992, in the aftermath of the end of Cold War (Cheung 1992).
From 1995 to 1996, the China threat was brought up again due to the
South China Sea disputes and strained China-US relations after Taiwanese
leader Lee Teng-hui’s visit to the USA and China’s subsequent missile
test in the Taiwan Strait (Krauthammer 1995). In February 1995, the US
Department of Defense published its East Asia security strategy, highlight-
ing China’s threat to regional stability in the South China Sea. It stated that
the maritime disputes in the South China Sea were a source of tension in
Southeast Asia. The report further argued that the US-Japan alliance should
remain the cornerstone of US security policy in Asia, and that US mili-
tary bases and forces in Japan would safeguard not only the interests of the
USA and Japan, but also the peace and stability of the Far East as a whole
(US Department of Defense 1995). In September 1997, the jointly pub-
lished Japan-U.S.  Defense Cooperation Guidelines emphasized that Japan
should make greater defense contributions in order to cope with regional
security threats. It affirmed that “situations surrounding Japan” were also
covered by the US-Japan security treaty, a move apparently directed at
92  Z. WEI

China. In 1998, the USA and the Philippines signed a visiting forces agree-
ment, which reopened the Subic naval base and Manila port to US warships.
Faced with a common “China threat,” the alliance between the USA and
the Philippines gained a new life.
Third, as the competition between China and the USA in East Asia
intensified, the inherent flaw of the bifurcated order was given full play.
Without strategic mutual trust, any of China’s political, economic, or
security activities on its Southeast coast are interpreted by the USA as
ill-intentioned moves to cripple US regional influence and maritime hege-
mony, while any US attempts to strengthen military alliances with littoral
Asian countries are viewed by China as evidence of confining and contain-
ing China. For instance, China’s proactive political and economic diplo-
macy with ASEAN countries in the 1990s was perceived by the US as
China’s “charm offensive” to enhance its soft power and weaken the US
presence in the region (Kurlantzick 2007). China’s increasing national
defense expenditures along with its economic growth appeared to be men-
acing from a US perspective. Similar suspicions grew on China’s part that
US consolidation of its East Asian alliances and US arms sales to Taiwan
were aimed at containing China. In a word, the land power China and the
sea power USA viewed each other as a real or potential threat that should
be guarded against. As a result, the competition between China and the
USA in East Asia intensified.

Shifting Power and the Security Order in East Asia

Since the twenty-first century, and especially in recent years, the chang-
ing balance of power in East Asia put the East Asian security order under
increasing pressure. When George W.  Bush came into office he real-
ized that, although vigorous economic development in East Asia greatly
enhanced East Asia’s geostrategic weight on the global chessboard,
China’s rapid economic progress along with its increasing military power
and regional influence might present a particular challenge to US interests
in the region. Unlike his predecessor Bill Clinton, who viewed China as
a strategic partner, President Bush considered China a strategic competi-
tor and intended to allocate stronger military presence in the Asia-Pacific
region as a check (Layne 2004). However, the tragic 9/11 terrorist attack
changed the Bush administration’s foreign policy agenda, and China
became a partner to work with against global terrorism.
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  93

The US war against terrorism opened up a window of opportunity for

China. By focusing on economic development, China’s comprehensive
national strength was enhanced significantly in the first decade of the new
century. From 2001 to 2013, China’s economy enjoyed an average annual
growth rate of around 10 percent to reach $9.39 trillion, while its per
capita GDP increased from $1000 in 2001 to $6900 in 2013 (Morrison
2014). Moreover, China became the economic engine of regional devel-
opment and overtook the USA and Japan as the largest trade partner of
most Asia-Pacific countries. This new pattern not only replaced Japan’s
“Flying Geese Model,” but also changed the economic foundation of the
East Asia security order, which had been based on the USA providing
both market access and security for its East Asian allies in exchange for
their support of US hegemony.
China also became an active driver and leader of regional economic
integration. China signed the China-ASEAN Free Trade Agreement in
2001, and then reached a series of bilateral free trade agreements (FTAs)
with many Asia-Pacific countries. Following China’s example, a multitude
of bilateral and multilateral FTAs were signed between ASEAN and Japan,
South Korea, and Australia. East Asia has become one of the three largest
free trade zones in the world, the other two being the European Union
and North America.
In contrast to China’s vigorous economic growth and increasing influ-
ence, the US and Japanese economic weight and influence in the region
were on the decline. Partly due to huge spending on the war on terrorism
in the Middle East, the Bush administration witnessed the country’s worst
economic performance since the 1970s, with an average annual GDP
growth rate of merely 2.09 percent. When Bush left his post in 2008,
the USA was hit by the worst financial crisis since the Great Depression.
The unemployment rate ran high, the fiscal budget deficit soared, domes-
tic consumption plunged, and the economy as a whole stagnated. The
US economy even fell by 2.6 percent in 2009, its first negative growth
since World War II (Manuel 2014). Japan, once the economic miracle
and engine of East Asia, also slipped into a painful long-term economic
recession and “lost” two decades of growth since the 1990s. Japan’s GDP
was overtaken by China in 2010, resulting in it losing its place as regional
economic leader.
94  Z. WEI

The rise of China and the relative decline of the USA and Japan gave
rise to several “new challenges” to the security order in East Asia.
First, there is the “Thucydides Trap” between China and the
USA. Though it is a continental power with vast territory, China’s eco-
nomic growth is distinctly export oriented. China’s most developed prov-
inces are clustered in its coastal areas, and China’s economic growth is
highly dependent on overseas markets, energy, and resources. Among all
land powers and open economies, China ranks high in terms of depen-
dence on foreign trade (Li and Xu 2013). Therefore, the sea-lanes along
the Indo-Pacific littoral are vital to China’s economic development and
national security. Consequently, as China grows, it is only natural that
Beijing turns to the sea and aims to enhance its maritime capabilities.
Moreover, with the advance of sea exploration and exploitation, China
increasingly turns its eyes to maritime energy, resources and the related
maritime economy (He 2013). To safeguard China’s developmental and
maritime interests, in recent years, it has paid great attention to its mari-
time power, including naval modernization.
China’s growing attention to the ocean, along with its ever-increasing
economic influence in the region, has aroused suspicion and concern from
the USA. Some US scholars argue that China’s naval nationalism is likely
to cause costly regional tension and even conflicts. For the USA, China’s
economic influence and increasing naval capabilities in the West Pacific
are a direct challenge to US dominance in this region. The USA is also
concerned about China’s progress in “anti-access” and “area denial” capa-
bilities, which are perceived as challenges to US maritime supremacy in the
West Pacific (Ross 2009). In addition, the friction between China and the
USA on the waters and airspace over China’s exclusive economic zone,
China’s maritime disputes with Japan and some ASEAN countries, and
other examples of China’s diplomatic “assertiveness” all contribute to US
about the future of China-US concerns relations and China’s long-term
strategic intentions. Some even worry that China and the USA cannot
escape from the historical “Thucydides Trap” and that war is inevitable
between them (Allison 2012; Zoellick 2013).
Second, there is the China-Japan regional leadership competition. Since
the normalization of bilateral diplomatic relations in 1972, China-­Japan
relations have warmed considerably, especially in the economic area. Since
1993, Japan was China’s largest trade partner for 13 successive years.
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  95

In 2004 China overtook the USA to be Japan’s largest trade partner.

Unfortunately, the close economic and trade ties have not spilled over into
the political arena. Instead, haunted by the intractable issues of history and
maritime sovereignty disputes over the Diaoyu Islands (Senkaku Islands),
bilateral political relations remain lukewarm since the mid-1990s. Coming
into the twenty-first century, with the rise of China and the relative decline
of Japan, competition for regional leadership has further eroded political
ties (Calder 2006). Although it was never a political superpower in East
Asia, Japan’s economic miracles and long economic dominance in post-
World War II East Asia led Japan to aspire to become a political power in
East Asia (Wu 2007). However, China’s dramatic rise in the post-Cold
War era not only challenges Japan’s leading economic position in East
Asia, but also stands in the way of Japan’s political aspirations. In 2004,
when Japan, together with India, Brazil and Germany, sought a permanent
seat on the United Nations Security Council (UNSC), China expressed
explicit opposition. This led Japan to preach about a “China threat” across
the international community. Japan is also fostering closer relations with
India, Australia, and ASEAN members, competing with China to influence
these countries in regional issues. The Shinzo Abe government went even
further, by virtually claiming that counterbalancing China’s rise is Japan’s
major contribution to Asia’s security (Mie 2014.
Third, there are maritime disputes. East Asian countries are also
haunted by numerous pending maritime disputes. During the Cold War,
these disputes were overshadowed by the US-Soviet rivalry. When the
Cold War ended and East Asian economic growth took off, maritime dis-
putes surfaced and worsened. Among all these disputes, the ones between
China and Japan, and China versus Vietnam and the Philippines are the
most volatile. The China-Japan dispute over the Diaoyu Islands (Senkaku
Islands) in the East China Sea, a longtime thorn in bilateral relations,
dramatically intensified after September 2010, when the Japanese Coastal
Guard detained a Chinese fishing boat in disputed waters around the
Diaoyu Islands and for the first time brought the crew to trial according
to Japanese laws. China expressed strong dissatisfaction and urged Japan
to release the crew immediately. The dispute got worse after 2012, when
Japan decided to “nationalize” three of the Diaoyu Islands, which China
considered to be a unilateral change of the status quo by Tokyo (Chinese
Spokeswoman Jiang Yu on Japan’s Collecting Evidence for the Detained
96  Z. WEI

Chinese Fish Boat 2010). In response, China sent fishery patrol ship to
the disputed area and entered the 12  nm limit of the disputed islands.
This maritime friction between China and Japan has greatly exacerbated
bilateral political relations.
In the South China Sea, the Chinese government proposed the prin-
ciple of “shelving disputes for joint development” in the early 1990s as
a way to deal with the maritime disputes. However, Vietnam and the
Philippines have since answered China’s proposal with continued explora-
tion and exploitation of underwater gas and oil reserves in disputed waters,
and with the construction of facilities on disputed islands. To arrest this
adverse development, China began “asserting rights” in the maritime
area in recent years. In particular, China has stepped up law enforcement
and even land reclamation to combat unilateral moves that attempt to
erode China’s maritime sovereignty and change the status quo in disputed
waters (Wang and Luo 2013). China’s more proactive maritime policy
provokes protest from the USA, Japan, and some ASEAN countries, who
regard China as becoming increasingly assertive or even aiming to resolve
the South China Sea disputes by force (Christensen 2011; Cho and Park
2013).
Fourth, the North Korean nuclear issue has emerged. The USA and
the Democratic People’s Republic of Korea (DPRK) reached an Agreed
Framework in October 1994, which ended the first North Korean
nuclear crisis. According to that agreement, North Korea consented
to freeze its nuclear programs and open all its nuclear installations to
international inspections. In return, the USA agreed to build a light-
water reactor of 2000 megawatts or two of 1000 megawatt capacity
for the DPRK by 2003. During construction, the USA and some other
countries would provide heavy oil to compensate the DPRK for energy
loss (Cai 2006). Unfortunately, the implementation of the agreement
was far from satisfactory on both sides because of the lack of mutual
trust. After the 9/11 terrorist attacks, President George W.  Bush
denounced the DPRK for supporting terrorism. He called it part of an
“axis of evil” and virtually suspended the implementation of the agree-
ment. This severely worsened bilateral relations. In October 2002, the
DPRK acknowledged to visiting US Deputy Secretary of State John
Kelly that it had been carrying out a secret uranium enrichment pro-
gram. The news shocked the international community and resulted
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  97

in the second North Korean nuclear crisis. Thanks to China’s active

mediation, China, USA, North Korea, South Korea, Russia, and Japan
agreed to sit down and discuss the issue at the Six-Party Talks and since
2003 six rounds of talks have been held. Unfortunately the talks failed
to achieve their primary goal of denuclearizing North Korea. When
Obama came into office, he pursued a policy of “strategic patience”
toward North Korea and the Six-Party Talks were never resumed. Time
and again, North Korea would launch missiles or threaten to resume
nuclear tests and has remained a chronic destabilizing force in regional
security.

The US Response and Rebalance to Asia

The Obama administration’s response to the emerging East Asia power

shift and ensuing security challenges in the first decade of the twenty-first
century can be seen in his “pivot to Asia” or “rebalance to Asia” strat-
egy: balancing China’s increasing influence in Asia while engaging China.
Officially announced in 2011, this strategy aims to balance China’s influ-
ence and potential threat to regional security order, reassure US allies and
partners, and reassert US hegemony in the West Pacific by strengthening
US political, economic, and military presence in East Asia.
First, coping with China’s rise lies at the heart of the Obama adminis-
tration’s “rebalancing to Asia” strategy. Politically, the Obama administra-
tion greatly enhanced the US presence in East Asia by actively engaging
with East Asian multilateral regimes. The USA acceded to the ASEAN
Treaty of Amity and Cooperation in Southeast Asia in 2009 and joined the
East Asia Summit in 2010. The Obama administration’s cabinet members
and senior officials frequently flew to East Asia to show strong support
for its regional allies and partners, and to increase US political presence
to ease its allies’ worries of being neglected or ignored. Obama also made
great efforts to promote India’s position as a great power and encouraged
India’s “Look East” and “Act East” policy as a counterbalance to China’s
growing influence (Blackwill et al. 2011).
Economically, the Obama administration announced the Trans-Pacific
Partnership (TPP) initiative to create a high-standard, multilateral free
trade agreement for the twenty-first century Asia-Pacific, in order to com-
pete with the East Asia economic integration process driven by China.
98  Z. WEI

Militarily, the USA is moving its strategic focus from the Atlantic to
the Indian and Pacific oceans: deploying more naval forces in the Asia-­
Pacific; strengthening ties with its traditional allies like Japan, Australia,
the Philippines; nurturing and expanding security partnerships with
India, Singapore, Vietnam, and Indonesia; and promoting more US mili-
tary presence in the West Pacific. Moreover, to deter China’s increasing
anti-access and area-denial capacities, in both the 2011 JOAC and the
2012 National Security Guidelines, the USA put great emphasis on the
protection of sea, air, space, and cyber security in the Global Commons,
especially in Indo-Pacific waters (Cavas 2011; US Department of Defense
2012a, b). So far, the USA has deployed its most advanced military weap-
ons and systems in Guam and Japan, including strategic bombers, fighters,
submarines, and unmanned aerial vehicles. It also sends its new littoral
combat ships to Singapore.
At the same time, the USA remains engaged with China. In his remarks
at the Asia Society, then US National Security Advisor Tom Donilon
stressed that a pillar of the US rebalancing to Asia is to build a healthy rela-
tionship with China, for “there are few diplomatic, economic or security
challenges in the world that can be addressed without China at the table
and without a broad, productive, and constructive relationship between
our countries.” Donilon claimed that the USA welcomes the rise of a
peaceful, prosperous China, and disagreed with the premise that a rising
power and an established power are somehow doomed to conflict (The
White House 2013). President Obama has also rejected on various occa-
sions the so-called containment of China. In fact, since Obama took office
in 2009, the two governments have kept frequent interactions and high-­
level visits, improving their channels of communication and harvesting
practical cooperation on issues that matter to both sides. In June 2013, on
the invitation of President Obama, the new Chinese president Xi Jinping
visited the USA for an informal meeting. The leaders of the world’s two
largest economies held talks on mutual strategic trust and pragmatic coop-
eration. The USA initially also responded positively to China’s proposal
of establishing a new model of relations between major countries, par-
ticularly between an existing power and an emerging one (Botelho et al.
2013).
Second, the USA is dealing with the Sino-Japanese competition.
Japan is a crucial US ally in East Asia that is deemed the cornerstone
of the US alliance system in East Asia. Obama urged the Japanese
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  99

government to shoulder greater responsibility in maintaining East Asia

security and in balancing China’s growing economic and military influ-
ence. Accordingly, the USA supports Japan’s expanding role in Asia
and favors Japan in the Sino-­Japanese rivalry for regional leadership.
The USA supports Japan’s efforts to promote political, economic and
security ties with Australia, ASEAN, and India. In the maritime dis-
putes over the Diaoyu Islands, though the USA does not take a posi-
tion on the issue of sovereignty, it requests the two sides to stay calm,
exercise restraint, and avoid the escalation of tension. Nevertheless,
the USA has clarified unequivocally that the Diaoyu Islands are cov-
ered by the U.S.-Japan Treaty of Mutual Cooperation and Security,
rejecting China’s attempts to change the status quo, and reassuring
and favoring Japan over the issue (Newsweek 2014).
Nevertheless, the USA also worries about the Shinzo Abe government’s
nationalist and revisionist tendencies, which not only add complexities
to Sino-Japanese relations, but also hinder relations between Japan and
South Korea, two US allies. Thus, to realize its overall strategic goal in
East Asia, the USA guards against being “trapped” by the alliance, while
supporting Japan’s more active role (Ramzy 2013). In other words, the
USA desires to maintain moderate tensions between China and Japan so
as to deter China’s rise, but does not want to be involved too deep in the
island disputes or see the Sino-Japanese rivalry spiral out of control.
Third, as mentioned above, the USA gets involved in maritime disputes
and seeks to maintain maritime superiority in the West Pacific. The US
military bases and allies concentrated in the coastal areas of East Asia pro-
vide a solid foundation for US maritime hegemony and support US influ-
ence. Moreover, the littoral areas are at the forefront of US surveillance of
China’s military forces and development. Through sea and air reconnais-
sance and surveillance in these waters, including inside China’s exclusive
economic zones, the USA can get firsthand information on China’s lat-
est military developments. Furthermore, these waters are the lifelines of
energy, resources, and commodities for many East Asian countries.
As a result, US responses to maritime territorial disputes in this region
cannot merely be judged by the disputes per se, but should also be viewed
through the lens of the defense of US maritime supremacy, the strategic
competition between the USA and China, and USA’s dependence on its
alliances to pivot to Asia. Therefore, even if the USA wants to appear
neutral in these maritime disputes, it actually favors its allies and security
100  Z. WEI

partners. For instance, when attending the East Asia Summit in 2010, US
Secretary of State Hilary Clinton publicly declared that the USA has a
national interest in the South China Sea and argued for US protection of
freedom of navigation in South China Sea, which is a direct slap at China’s
insistence that the South China Sea issues concern its core interests. And
when China’s land reclamation intensified in 2015, the USA sent a P-8A
plane with a CNN crew to publicize China’s activities.
Fourth, the USA response to the North Korean nuclear issue.
Compared with the above three problems, the nuclear crisis in the Korean
peninsula is not at the center of US strategy toward East Asia. The Obama
administration takes a conservative and practical attitude toward the
nuclear issue. It insists on the suspension of substantive negotiations and
Six-Party Talks with North Korea unless the latter alters its provocative
policies, and responds firmly if North Korea makes provocative moves.
It also urges China to exert greater influence in resolving the issue. After
the Cheonan sinking incident and the shelling of Yeonpyeong Island in
2010, the USA imposed more strict sanctions on North Korea and sent
warships including the George Washington aircraft carrier to participate
in a series of deterrent military exercises to demonstrate the US resolve to
protect its ally South Korea. The move was viewed negatively by China,
which was very unhappy when a US aircraft carrier joined a military excise
in the Yellow Sea. The USA was also disappointed that China did not
react strongly to the aggressiveness of North Korea, and pushed forward
its military exercises in the Yellow Sea despite China’s objection. The inci-
dent had a considerable negative impact on China-US relations (Johnston
2013).

China-US Strategic Compromise and Future East

Asian Security Order
As analyzed previously, the East Asian security order is a bifurcated
continental-­maritime one, with China’s dominance in continental East
Asia and US hegemony in maritime West Pacific. Logically speaking,
to stabilize such order, at least one of the following three requirements
should be met: the existence of a common strategic enemy like the Soviet
Union during the Cold War that can push China and the USA, two ideo-
logically and politically divergent countries, to join hands; or the existence
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  101

of a huge power disparity that will dissuade the inferior one from challeng-
ing the stronger one, or at least acquiesce in the latter’s leadership as was
the case at the beginning of the post-Cold War era; or that China and the
USA strike a grand bargain and readjust the regional security order, even
though they lack a common opponent and have substantial power parity.
Apparently, East Asia at present does not meet any of these three
requirements. Instead, it presents a new situation: China and the USA
don’t have a common strategic enemy to fight against, and what’s worse,
they have not yet reached an agreement on adjusting the security order in
East Asia, even though China’s power is growing rapidly.
In view of the growing significance of East Asia in the global economic
and geostrategic landscape, as well as the massive destruction that would
accompany a great power conflict in the twenty-first century, China and
the USA, the bipolar powers in this region, should join hands to achieve a
second China-US “strategic reconciliation.” Such strategic reconciliation
should cover but is not limited to the following aspects.
First, China should recognize legitimate US interests and its military
presence in the West Pacific. As China gradually transforms itself from a
traditional continental power to a combined continental-maritime power,
it will greatly affect and concern existing maritime powers like the USA,
which is already worried about China’s ongoing naval modernization.
As the rising power, China should give due consideration to legitimate
US worries and take initiatives to acknowledge US interests in the West
Pacific, including the freedom of navigation on the high seas (which China
has already stated), the right of innocent passage through exclusive eco-
nomic zones, and military surveillance. China should not object to a US
military presence and bilateral alliances in the West Pacific.
Second, the USA should recognize China’s legitimate maritime inter-
ests in coastal areas in East Asia. It should understand that China’s power
projection and increasing influence over neighboring littoral areas are
inevitable given its increasing national power and interests. The USA just
cannot hope that China, an emerging maritime power that depends heav-
ily on overseas energy, resources, and market, will shut itself from the sea
and cease to have maritime power aspirations. Instead, the USA should
recognize China’s legitimate maritime interests in littoral East Asia, and
should not see a threat in China’s developing naval forces or expanding
economic and military presence in littoral East Asia and the Indo-Pacific.
102  Z. WEI

Third, China should pledge not to resort to the threat or actual use of
force to resolve maritime disputes. As China grows into a dual continental-­
maritime power, apart from the USA, its neighbors will be the first to feel
the impacts. China should find ways to reassure its neighbors and mini-
mize the negative impacts of its rise. In view of the highly charged issue
of maritime disputes, China should guard against using its power to bully
others and avoid the use of force in resolving territorial disputes.
Fourth, the USA should promise to restrain and regulate the provoca-
tive behavior of its allies in East Asia. As China promises restraint in ter-
ritorial disputes, the USA should reciprocate by restraining its East Asian
allies and prevent them from provoking or changing the status quo. The
USA should draw a line for its allies and partners, making clear that it will
not support any moves beyond that line
Fifth, the USA and China should cooperate in cultivating a multilateral
security order in East Asia. Due to the complexity, dynamic change, and
potential disruptions in the transformation of East Asia’s security order,
China and the USA should make joint efforts to create an inclusive secu-
rity architecture that eventually integrates the maritime and continental
orders in East Asia.

Conclusion
Robert S. Ross argued that strategic dominance by China on land and by
the USA on the sea means that the future of East Asia is inclined to peace.
Nevertheless, he warned that China is the sole power that can challenge
US maritime hegemony and the bipolar structure in Asia. Stability in East
Asia will depend not only on the changing strategic capabilities of China
and the USA, but also on both side’s willingness to restrain any ambition
to challenge the other’s sphere of influence and to make reasonable com-
promises on issues of mutual interests (Ross 1999). The present dilemma
and the challenges that it poses for maintaining East Asian stability and
security demonstrate that if mutual compromises cannot be reached and
the bifurcated security order fails to transform itself, the future of the East
Asian security order and China-US relations will leave much to be desired,
to say the least. But if China and the USA can strike a second strategic
bargain and help transform the East Asian security order, the two will
likely escape the historical tragedy of great power politics, and East Asia
can boast a genuine “geography of peace.”
 THE USA AND CHALLENGES TO EAST ASIA’S SECURITY ORDER  103

Note
1. Robert S. Ross calls the bipolar structure in which China enjoys dominance
in continental East Asia while the USA has dominance in the West Pacific a
“geography of peace” in East Asia that is beneficial to regional peace and
stability. This chapter, however, proposes that this structure works against
stability in East Asia (Ross 1999).

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 CHAPTER 6

How Stable Is China’s Economy?

Paul Armstrong-Taylor

Introduction
Over the past few years, there have been increasing concerns among econ-
omists and investors that China may be at the risk of a financial crisis.
There have been concerns of a housing bubble—house price in income
ratios in many Chinese cities are extremely high compared to other coun-
tries (Ahuja et  al. 2010; Economist Intelligence Unit 2011; Yu 2011).
More recently, concern has shifted to the financial sector, in particular to
shadow banking (Bank of America – Merrill Lynch 2014; Barclays 2014;
Credit Suisse 2013; JP Morgan 2014; Nomura 2014; Federal Reserve
Bank of San Francisco 2013).
One of the sources of the current financial risks is China’s growth model.
Since 1978, the growth model has been based on exports and invest-
ment. In order to support growth, the government has intervened in the
financial markets in various ways. Exchange rate intervention has ensured
a cheap currency and export competitiveness. Of more relevance to this
chapter, financial regulation has suppressed interest rates on bank depos-
its and loans, which has boosted investment and government s­pending
funded by borrowing at the expense of consumption based on income

P. Armstrong-Taylor (*)
Hopkins-Nanjing Center, Johns Hopkins-SAIS, Nanjing, China

© The Author(s) 2016 107

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_6
108  P. ARMSTRONG-TAYLOR

from saving. In addition, some borrowers (most obviously state-owned

enterprises and local governments) have benefited from implicit govern-
ment guarantees on their loans. This eliminates credit risk for lenders and
encourages lending to risky projects. The government has attempted to
control the growth of debt by restricting bank loans, but instead of slow-
ing the growth of debt, this has shifted lending from banks to shadow
banks.
Low interest rates and implicit guarantees have increased financial risks.
They have led to excess capacity in certain industries (such as solar power
and ship building) that have been supported by the central or local gov-
ernment (Zhang and Zhang 2013). Many of these loans may be defaulted
upon.1 Some local governments may also have borrowed excessively for
expenditure on projects with low expected returns (Lu and Sun 2013).
Perhaps most importantly, low interest rates have supported a rapid rise in
real estate prices and investment (Nomura 2014). Given its central role in
the economy, the possibility of a real estate crash has become a concern.
Although this chapter will argue that the current financial risks are
manageable, this does not mean that the historical growth model is sus-
tainable. China will have to reduce the distortions in its economy and rely
more on domestic consumption for the future in order to sustain growth.
Encouragingly, recent reform proposals seem to suggest a movement in
this direction, although these reforms face many technical, economic, and
political challenges. Even if successful, the reforms will see the growth rate
fall as China transitions to a more sustainable path. Future growth rates
will be closer to 5 percent than 10 percent (Pettis 2014).
Financial crises are usually preceded by a rapid growth in debt. In
China, the recent growth in debt has been channeled through the shadow
banking sector (Credit Suisse 2013), and so this chapter will focus on this
sector. A simple definition of shadow banking is a system of institutions
that replicate a function of banks, particularly credit creation, but are not
banks and therefore not subject to banking regulations. Shadow banking
has different risks than banking. On the one hand, it tends to disperse risk
among a diverse group of investors rather than concentrating it in a few
banks. This diversification of risk could make it easier to manage. On the
other hand, looser regulations may allow for greater risks to be taken, and
the lack of deposit insurance (which has virtually eliminated bank runs in
most countries) could make shadow bank runs more likely.
In this chapter, I will explore the nature of China’s shadow banking
system, explain why it came into being, discuss the risks (and benefits)
 HOW STABLE IS CHINA’S ECONOMY?  109

that it brings to the Chinese, summarize the existing and proposed policy
responses of the government, and evaluate the impact that a financial crisis
in China could have on the domestic and international economy.

Shadow Banking in China

Size and Growth
Though there is no simple way to measure shadow banking in China, it
seems that it is both large and growing. Figure 6.1 shows one estimate
of the growth of shadow banking in China. This figure uses an inclusive
measure of shadow banking—the difference between total credit and bank
loans. Using this measure, shadow banking was about RMB 23tn at the
end of 2012, or 44 percent of GDP (Credit Suisse 2013). It represented
about 25 percent of the total credit in the economy and was growing
faster than bank credit.

200%

Bank credit to non-financial sector/GDP

180%
Total credit to non-financial sector/GDP
160%

140%

120%

100%

80%
Jul-01

Jul-03

Jul-05

Jul-07

Jul-09

Jul-11

Jul-13
Mar-00
Nov-00

Mar-02
Nov-02

Mar-04
Nov-04

Mar-06
Nov-06

Mar-08
Nov-08

Mar-10
Nov-10

Mar-12
Nov-12

Mar-14

Fig. 6.1  Growth in credit and shadow banking in China (Source: Bank of
International Settlements, Economist Intelligence Unit) Notes: Shadow banking is
estimated as credit to the nonfinancial sector that is not channeled through banks.
This is a broad estimate of shadow banking, but does allow consistent measure-
ment over time and between countries.
110  P. ARMSTRONG-TAYLOR

400%
350%
300%
250%
200% China estimates for 2012 or early 2013
(dark shading represents estimate range)
150%
100%
50%
0%

Fig. 6.2  International comparisons of China’s shadow banking system (Source:

Federal Reserve Bank of San Francisco (2013), Credit Suisse (2013))

Though China’s shadow banking system is large in absolute terms, it

does not seem particularly big relative to the size of the economy or the
traditional banking system. Figure 6.2 shows how estimates of the size of
shadow banking in China compare to that in other countries. The esti-
mates all lie within a range of 25–60 percent of GDP. This is low relative
to developed countries and even relative to the global average.
On an international basis, shadow banking in China is not large relative
to the banking system. J P Morgan estimated that assets in the shadow
banking system equaled about 30 percent of traditional banking assets.
This is substantially less than the average of other countries (50%) or some
other emerging markets (e.g., South Africa at 66% and Mexico at 56%).

Structure of Chinese Shadow Banking

Although the shadow banking system does not seem large as compared to
other countries, it could still be a cause for concern if its structure is more
risky than those of other countries. Figure 6.3 breaks down the shadow
banking system by type of product.
 HOW STABLE IS CHINA’S ECONOMY?  111

1.8
Trust Funds

4 7.5
Wealth Management Products

Broker Asset Management

1.9
Underground Lending

Local Government Financing Vehicle

Corporate Bonds
7.6

RMB trillion

Fig. 6.3  Structure of shadow banking of China (Source: Credit Suisse (2013))

On this estimate, trust funds and wealth management products rep-

resent about two-thirds of the shadow banking system. These are quite
similar. Both take money from investors and use it to make lending money
(either directly or by buying bonds) to firms or local governments. Both
are used by banks to offer higher returns to investors and to avoid lending
restrictions, but are kept financially independent and so off the balance
sheet. Equivalent products are also common in other countries including
the USA. They are functionally similar to a mutual fund that buys bonds,
but their holdings, and hence risks, are often hidden.
Underground lending are networks of private lenders who make loans
to businesses—often through personal connections. Areas where these net-
works are well developed often have a vibrant private economy because of
private firms having access to loans. The most famous example is Wenzhou
in the Zhejiang province.
Local government financing vehicles are firms set up by local govern-
ments to bypass restrictions on local government borrowing. Other than
a few recent exceptions, local governments are not allowed to borrow
directly. They have responded to this by creating firms backed with local
government assets to borrow money and make investments to support
local government policies (often infrastructure).
112  P. ARMSTRONG-TAYLOR

Broker asset management is lending that arises through the process of

letting investors buy stock on margin or sell stocks short. This is common
in other countries, but has only been legal in China since 2010.

Reasons for Shadow Bank Growth

Shadow banking in China has arisen in response to limitations of the bank-
ing system and regulations. Over the past few years, China has repeatedly
increased the reserve requirement ratio of banks. This limits the loans
that banks can make relative to their reserves. However, the demand for
loans—particularly from local governments and the construction indus-
try—has remained strong. On the other hand, banks are prevented from
raising interest rates on deposits to attract more capital to make loans.2
These two effects meant that there were borrowers who wanted to bor-
row at high interest rates and depositors who were seeking higher returns,
but that banks were prevented from channeling funds to the former from
the latter. Shadow banking developed as a way to capture this business
opportunity (Kim 2014).3

Risks of Shadow Banking

The growth in shadow banking is not entirely a bad thing. It has enabled
depositors to obtain higher returns than they would have received from
bank deposits, and it has enabled some investment to be made that would
not otherwise have been made.
However, there are risks. Credit growth in China has been rapid since
the financial crisis. Rapid growth in credit that fuels asset price apprecia-
tion sometimes precedes a financial crisis and so some concern is justified.
If the debt fuels investment that earns a return higher than the interest
rate on the debt, then it will enhance wealth and poses no risks. On the
other hand, if the debt is used to fund investment with poor returns—
lower than the interest rate—then there will be losses that someone will
have to bear. It is hard to evaluate the quality of the investments made
with funds from the shadow banking system as the data is not available.
However, it appears that many of the loans were made to local govern-
ments to finance infrastructure investments, or to construction firms for
real estate development. Both these forms of loans could have risks.
Local government officials may face noncommercial incentives that
might lead them to invest in low-return projects. For example, an official’s
 HOW STABLE IS CHINA’S ECONOMY?  113

career prospects may depend on the GDP growth in his region. Low-­
return investment will boost GDP growth in the short run and the offi-
cial may hope to have moved on when the long-term costs become due.
According to the National Audit Office of China, in 2010, only a quarter
of the local government borrowing could be repaid from project receipts.
For most of the rest, the local government was planning to use other
funds, particularly income from land sales, to pay off the debt.
Much local government debt is due to be repaid in 2014. For example,
more than half of Shaanxi’s debt is due in late 2013 or 2014, and for
Shanxi, that figure is over 40 percent (Qi 2014). Much of this debt has, or
will be, rolled over. Early in 2014, the National Development and Reform
Commission officially endorsed this debt roll over (Rabinovitch 2014).
While rolling over debt avoids a spike in default in the short run, it may
lead both borrowers and lenders to underestimate the risks of lending and
so lead to excessive lending.
Unlike local government debt, construction loans have performed well
historically. Real estate prices have generally risen faster than interest rates,
so construction firms have had little trouble in paying back debt. However,
there are some reasons to think that these price rises may not continue.
First, prices are already high relative to incomes and rents. For example,
the price to rent ratio in several cities (including Beijing and Shanghai) was
over 40 in 2010 (Wu et al. 2012). This compares to a price to rent ratio
of about 27 in the USA at the peak of the housing boom and implies very
low rental return on properties.
Second, these high prices may have been supported by a lack of alterna-
tive investment opportunities. With bank deposits offering negative real
interest rates, the stock market crashing in 2007 and suffering from poor
corporate governance, and limits on overseas investment, housing (even
at high prices) may have been the best option. However, the proposed
financial liberalization may create more attractive alternative investments
and this could trigger decreases in house prices as investors take advantage
of them.
Much of these points would also apply to conventional banking, but
shadow banking may be more risky for two reasons—both of which stem
from the attempts to bypass the regulations on banks.
First, because it is generally not subject to as comprehensive reporting
requirements as banking, it is less transparent. This means that risks could
build up without policy makers being aware of the scale and nature of the
problem. As discussed above, several organizations have estimated the size
114  P. ARMSTRONG-TAYLOR

of the shadow banking system in China, so the scale may be apparent.

However, we still do not have such good data about the riskiness of the
loans that have been made.
Second, unlike the banking system, the investors in the shadow banking
system are not protected by deposit insurance and this creates a greater risk
of bank runs (or in this case, shadow bank runs). Both banks and shadow
banks generally have a maturity mismatch between their assets (long-term
loans) and their liabilities (short-term deposits). Even if the assets exceed
the value of the loans (so the bank is solvent), it can face liquidity prob-
lems if many depositors want their money back at the same time. This is
most likely to happen if depositors are concerned about the safety of a
bank (perhaps because other banks have gone bankrupt). Deposit insur-
ance removes the risk of depositors losing their investment, so they are
less likely to withdraw deposits in a panic. Prior to deposit insurance, bank
runs were fairly common; since the introduction of deposit insurance,
bank runs have become extremely rare. As the shadow banking system has
no explicit deposit insurance scheme, it may be more subject to bank runs.
It is possible that the government could bailout shadow banks if it faced
a financial crisis, but it is not certain. This uncertainty makes shadow bank-
ing riskier than banking.

Domestic Policy
Anticipatory Policy
Unlike the USA, authorities prior to the subprime crisis, the Chinese gov-
ernment has been aware of the shadow banking problem for several years
and has begun taking actions to reduce the risk. For example, in August
2010, the China Banking Regulatory Committee introduced restrictions
on bank trusts (Credit Suisse 2013). Bank trusts are a type of shadow
banking in which the bank sells wealth management products to its cus-
tomers and then channels the proceeds through a trust to borrowers
that are determined by the bank. Through this mechanism, the bank can
bypass restrictions on the quantity loans that it can make and the returns
that it can offer to its customers.
While these restrictions did slow the growth of bank trusts, the growth
of trusts in general was not slowed. There are many forms of shadow
banking and strong profit incentives for organizations to find forms that
are not restricted. As a result, regulation may be ineffective. Regulators
 HOW STABLE IS CHINA’S ECONOMY?  115

may be able to “whack the mole” in one location, only for it to crop up
elsewhere.
A more effective way to slow the growth in shadow banking may be to
reduce its profitability. Financial liberalization—so that banks could offer
higher interest rates on deposits, for example—would help to reduce the
advantage of shadow banking over banking. Such reforms have been pro-
posed, but they face opposition and will take time to implement.

Minsky’s Big Government and Big Bank

Having assessed the risks of a crisis, I now turn to considering its effects.
How would a crisis affect the Chinese and global economies?
Hyman Minsky, an economist largely ignored by the mainstream until
recently, is best known for his theory of the causes of financial crises: the
financial instability hypothesis. However, he also researched the question
of which types of economy would be relatively resistant to crises (Minsky
1994). His conclusion was that economies with a “big bank” (i.e, a central
bank willing to act as a lender of last resort) and a “big government” (a
government willing to use fiscal policy countercyclically and to support
the financial system) could ameliorate the effects of the crisis. I briefly
consider this theory in the light of the global financial crisis, and then
apply it to China.
The central role of finance is to channel capital to productive invest-
ment. If financial institutions are unwilling or unable to fulfill this role,
then a financial crisis can have major effects on the rest of the economy;
but if it can continue to function, the effects will be smaller. In the Great
Depression, bank lending and other financing was drastically reduced. As a
result businesses could not invest and hire workers. This further damaged
the economy and discouraged banks from lending. In the recent subprime
crisis, the financial system continued to function and so the effect on the
economy was much less severe.
The policies of the government and central bank explain much of this
difference. During the Great Depression, the US government and Federal
Reserve took a laissez faire approach to the financial system. As a result,
many banks went bankrupt and those that remained refused to lend.
However, during the recent crisis, both the Federal Reserve and the fed-
eral government were aggressive in supporting the financial system.
The Federal Reserve engaged in quantitative easing, which in its first
incarnation involved buying distressed assets such as mortgage-backed
116  P. ARMSTRONG-TAYLOR

securities from banks. Ben Bernanke, the Federal Reserve chairman dur-
ing the crisis, is a leading scholar on the Great Depression and critic of the
Federal Reserve’s policies during that period, so he was well-positioned to
avoid repeating the same mistakes. Similarly, the federal government imple-
mented the Troubled Asset Relief Program (TARP) to purchase or insure
bank assets that had lost significant value. Both these policies improved
banks’ balance sheets and reduced the risk of bankruptcy—allowing and
encouraging them to lend. The one area where the government could
have done more was in the fiscal policy. Instead of rapidly reducing local
and federal government deficits, the USA would have recovered faster
with more fiscal stimulus.
Nevertheless, the economy after the financial crisis was in much better
shape than during the Great Depression, and this could be seen as sup-
porting Minsky’s theory.
China, from this perspective, would seem to be well positioned to
respond to a crisis. The major banks are state-owned and have an implicit
government guarantee against bankruptcy. Therefore, in the event of a
crisis, the financial system would probably be able to continue to func-
tion—albeit with disruption in the shadow banking sector. Furthermore,
the government, both directly and through state-owned enterprises, is the
major employer and investor. It therefore could offset any contraction in
the private sector economy. Not only does the Chinese government have
the ability to respond to a crisis, it also appears to be willing to do so.
After the global financial crisis, China suffered a sharp reduction in exports
which negatively impacted the economy. The government responded with
an aggressive stimulus package and expansion of credit that enabled the
economy to recover very quickly. Therefore, China can probably respond
to a crisis more effectively than most other countries.
On the negative side, the fact that the government would be expected
to provide such support may give rise to a moral hazard. If private indi-
viduals believe that the government will rescue the economy, there is an
incentive to take more risk. This risk taking could make the crisis more
likely. This may be one of the factors behind the rise in shadow banking.

International Contagion
If China does suffer a crisis, it will affect other economies through two
channels: trade and financial links. China is the largest exporter and sec-
ond largest importer in the world.4 A decline in imports, due to a decline
 HOW STABLE IS CHINA’S ECONOMY?  117

domestic demand would affect exporters in other countries, and hence

their economy. On the other hand, due to its closed capital account, China
has limited financial links to the rest of the world, and so financial conta-
gion (such as that which followed the US subprime crisis) would probably
be limited.
In my paper in the Frontiers of Economics in China (Armstrong-Taylor
2015), I find evidence that during periods of negative growth, financial
links are much more important than trade links in transmitting GDP
shocks between developed countries. Furthermore, slowdowns in coun-
tries with trade deficits have a bigger effect on growth in other countries
than slowdowns in surplus countries. These findings suggest that a crisis
in China may not be as important to the rest of the world as the size of
China’s economy and trade suggests.

Effect on East Asian Countries

While it is hard to estimate the possible impact of a financial crisis in China
on other countries, we can make some educated guesses about which
countries would be most affected. Figures 6.4 and 6.5 present evidence
of the links between China and other East Asian countries in trade and
finance respectively.

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Mongolia Taiwan South Korea North Korea* Japan

Fig. 6.4  Exports to China as percentage of GDP (Source: Author’s calculations

using data from CIA World Factbook)*Data for North Korea may be unreliable
118  P. ARMSTRONG-TAYLOR

16%

14%

12% Bank Claims in China/GDP

10% Bank Claims in China, Hong Kong
and Macau/GDP
8%

6%

4%

2%

0%
Japan South Korea Taiwan

Fig. 6.5  Financial exposure to China (Source: Author’s calculations using data
from Bank of International Settlements and World Bank)*Data for Mongolia and
North Korea unavailable

Figure 6.4 compares the value of exports to China as a share of GDP. If

there was a crisis, it is likely that these exports would fall. For example,
after the subprime crisis in the USA, Chinese exports fell by about 15 per-
cent after having grown by more than 20 percent in preceding years—a
drop of about one-third relative to trend. If something similar happened
to exports to China, the effects on East Asian economies could be signifi-
cant—ranging from 15 percent of GDP in Mongolia to about 1 percent
of GDP for Japan.5
Figure 6.5 compares bank lending to China as a percentage of GDP. As
might be expected, Taiwan is the economy most financially integrated
with China, and any financial contagion is likely to hit it much harder
than either Korea or Japan. However, it is worth pointing out that even
Taiwan’s exposure is not that large compared to other international
­financial links. For example, Japan’s bank lending to the USA equals 17.8
percent of the GDP—more than Taiwanese lending to Mainland China,
Hong Kong, and Macau.
If China does suffer a crisis, the transmission will probably happen
through trade rather than finance, and (aside from Mongolia) Taiwan will
be the East Asian economy most seriously affected.
 HOW STABLE IS CHINA’S ECONOMY?  119

Conclusion
There are no simple conclusions to be drawn from this analysis. Shadow
banking debt has increased sharply in recent years, is fairly opaque, and
may have funded some over- or mal-investment. However, it is not big rel-
ative to other countries and the Chinese government seems well equipped
to handle a crisis. Other East Asian countries have strong trade links with
China and so any slowdown will undoubtedly affect them. On the other
hand, with the partial exception of Taiwan, there are fewer financial links,
so direct exposure to the financial risks is low. The concern about China’s
shadow banking sector is justified, but the risks may not be as great as
some are suggesting.
However, this does not mean that China can return to the old model
of growth that requires increasing amounts of investment. Such growth
could only be funded by an unsustainable increase in debt. Therefore,
China should see the current problems in the shadow banking sector as a
signal to transition to a new model of slower, sustainable growth founded
on domestic consumption. The government has proposed several policies
that would support such a transition, and it should ensure that these poli-
cies are implemented despite the obstacles that are sure to arise.

Notes
1. On March 4, 2014, Chaori Solar became the first Chinese firm to default on
a bond payment.
2. Until recently, there were also restrictions on the interest rates that could be
charged on loans. This encouraged lending to safe borrowers (typically
state-owned enterprises or entities backed by the government) at the
expense of more risky borrowers (such as small and medium-sized
enterprises).
3. This could be compared to shadow banking in other countries, such as the
USA, that has often evolved to bypass regulations.
4. Although some of the imports are used as inputs in the production of
exports, and therefore not so dependent on the domestic economy.
5. This back-of-the-envelope calculation ignores several issues. For example,
growth would be affected by changes in net-exports (exports-imports). If
imports fell with exports (as happened in China after the subprime crisis) the
realized effect will be smaller than the estimate. However, the estimate does
not consider secondary effects. If the Chinese slowdown leads to a slow-
down in Japan, the latter would also affect Taiwan (for example).
120  P. ARMSTRONG-TAYLOR

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 PART III

Northeast Asia
 CHAPTER 7

US-China Rivalry and South Korea’s

Strategy

Chaesung Chun

Introduction
The summit meeting between President Obama and President Xi in June
2013 was highlighted by an interesting vision of a “new type of great
power relationship.” The two presidents jointly expressed their hopes that
their two countries could cooperate and find mutual interests in major
issues, diminishing strategic distrust that can produce great power rivalry.
The core interests of the two great powers were said to be compatible,
making peaceful codevelopment possible.
East Asian countries that would suffer from the rivalry between these
two great powers in almost every issue area welcomed this hopeful devel-
opment. Yet, the future of the US-China relationship still remains uncer-
tain. In particular, sovereignty and territorial integrity questions in East
Asia are among the most critical issues that do not permit any compro-
mise, and this may lead to unhappy encounters between these two powers.
The USA, which is not directly involved in any territorial dispute, is con-

C. Chun (*)
Department of International Relations, Seoul National University,
Seoul, South Korea
Asian Security Initiative, East Asian Institute, Seoul, South Korea

© The Author(s) 2016 125

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_7
126  C. CHUN

stantly under threat of getting entrapped in its allies’ territorial disputes.

Disputed maritime territories between China and US allies in both the
South China Sea and the East China Sea undermines the US desire for a
“new type” of relationship with China as well as renewed, strengthened
relationships with its allies.
This chapter analyzes the evolution of the US-China relationship and
the prospect for continued cooperation. Also it examines the nature of
Northeast Asian international relations and the implications of the chang-
ing US-China relationship for Northeast Asian countries. Also, it addresses
the question of South Korean foreign policy strategy, which is a middle
power seeking to lessen the strategic distrust between great powers.

Evolution of the US-China Relationship

Toward Power Shift
East Asians have many fundamental problems inherited from the past. Due
to an as yet incomplete transition to modernity there are problems of ter-
ritorial disputes, historical education, and memory politics. Controversial
sovereignty disputes can only be solved by completing the nation- and
state-building process with mutual respect for sovereignty norms. In terms
of the modern balance of power logic, the most significant security chal-
lenge is the US-China rivalry, and the most important consequence of
the rise of China and changing US-China relations is uncertainty. The
relationship between the two giants ranges from naked competition to
multilevel cooperation. Possible flashpoints such as the Korean penin-
sula, the Taiwan Straits, maritime disputes in the South China and East
China seas, and other territorial problems concern all East Asian coun-
tries. For example, regarding the South China Sea, Secretary Kerry in the
US-China Strategic and Economic dialogue in June 2015, emphasized
that “the United States interest is in peaceful resolution of disputes in the
South China Sea. It’s not about whether or not we take sides; it should
be about reducing tensions in that region. And we mentioned that we’ve
been particularly concerned about reclamation and possible militarization,
and focused on the need for more diplomacy and not coercion. We’d like
China to focus on more diplomacy between itself and the other claimants.”
We know that the economic growth and the subsequent expansion of
Chinese power in politico-military and sociocultural areas will continue,
and that the balance of power between theUSA, still the powerful global
leader, and China will change over time.
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  127

What we don’t know, however, is whether there will be a change of

leadership status between the USA and China; what the final result of
China’s rise will be; whether there will be a violent clash between the two
titans; or whether there will be a new common ground for cooperation
not just between the two powers, but also for regional and global multi-
lateral cooperation.
Reasons for a high level of uncertainty come from several factors: at the
individual level, the USA and China both have unique characteristics. The
former is an exceptionally powerful, liberal hegemon, while the latter has
vast natural and human resources that defy historical comparative analysis.
At the structural level, this case of power transition occurs against the
background of unprecedented factors such as the rise of soft and institu-
tional power, a post-Westphalian transformation of international politics
and globalization.
Among other things, uncertainty about the future gives rise to two
interesting phenomena: too many theories about the future, which I will
call over-theorizing; and growing conservatism in both powers in the
sense that, they want to prepare for the worst-case scenario. If we com-
bine these two, we see the advent of conservative over-theorizing. There
are different versions of over-theorized pessimism about the future of rela-
tions between the USA and China. Because the analysis of facts is indeter-
minate, a stronger need to raise the level of security and prepare for the
worst complicates the relations between the two.
From a South Korean perspective, the challenge is not only to prevent a
final clash between the two great powers, but also to muddle through the
long process of finding mutual strategic cooperation. Situated at the front
lines between the two, South Korea will suffer not only from an all-out,
final confrontation, but also from small, procedural disagreements caused
by strategic mistrust as recently witnessed in the case of theater high alti-
tude anti-ballistic missile defense (THAAD). More problematic for South
Korea is its inability to influence the trajectory of the US-China relations
to a great degree. This dilemma may be common to many relatively weak
countries neighboring China.
The US-China relationship can be divided into several phases after
the beginning of the twenty-first century. Before the economic crisis in
2008, China was somehow absorbed in its own national strategy of rapid
and full-scale economic development and the construction of a favorable
international environment. Increasing Chinese ambitions after the 2008
economic crisis drove China to take a more assertive stance at regional and
128  C. CHUN

global levels. For example, China put forward the RMB as an alternative
key currency to solve problems in the US dollar-based global monetary
system; criticized the deficiencies of the current global climate change
regime; and began to assert its geostrategic interests against its neighbors.
This created growing strategic distrust between Washington and Beijing,
which ultimately led to the next phase that focused on alleviating mutual
mistrust and a competitive mindset. The USA, frustrated by China’s
unwillingness to take on global and regional responsibilities as a great
power, asked it to assume a proper role in major issues. Chinese assertive-
ness also caused a higher level of concern in neighboring countries, lead-
ing to China’s rhetoric of “peaceful rise” (Johnston 2013; Swaine 2010).
China also has been trying to advance and realize its regional vision
regarding Asia under various concepts. Recently at the 2015 annual Boao
Forum for Asia, President Xi Jinping proposed the idea of an Asian “com-
munity of common destiny,” which relies on a plan to be “formulated
regarding connectivity building in East Asia and Asia at large to advance
full integration in infrastructure, policies, institutions, and personnel flow.”
It hopes to “increase maritime connectivity, speed up institution building
for marine cooperation in Asia, and step up cooperation in marine econ-
omy, environmental protection, disaster management and fishery.”
To realize this idea, China proposed a regional architectural concept,
the so-called Belt and Road initiative, which has begun to take form in the
case of the Asia Infrastructure Investment Bank (AIIB) and other infra-
structure connectivity projects. China has announced that more than 60
countries located along the routes and international organizations have
shown interest in taking part in the development of the Belt and Road
initiative.
The US-China relationship has changed as each side advanced a foreign
strategy of its own: the American rebalancing strategy and China’s strategy
of “peaceful development.” There appears to be three core components
of the US rebalancing strategy. The first is the US policy toward China.
In international politics, when the power gap between a dominant and
challenger state becomes narrower, the dominant power will generally
not wait until the rising power reaches power parity. According to power
transition theory, when a dissatisfied rising power reaches a ±20 percent
power differential with the established power, there will be a hegemonic
war. In this regard, a hegemon will tend to act first (Chan 2008). After
a ­confusing episode with G-2 rhetoric, the Obama administration seems
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  129

to have decided to be more definitive in building relations with China.

Borrowing from Secretary of State Hilary Clinton’s remarks at the US
Institute of Peace in March 2012, the USA wants to challenge the histori-
cal trend of hegemonic clashes by proving that an established power and a
rising power can coexist. “New relations among great powers” is emerg-
ing as a new term, but there are requirements. China should respect the
already established rules of the game. As the global order has been main-
tained, thanks to the US hegemonic role in providing global and regional
public goods, China cannot be a leader without respecting these rules and
burden-sharing commitments as a responsible power. Soft power require-
ments are frequently indicated, implying that a great power can acquire
the status of hegemon only by proving itself as a value and norm leader
in the areas of human rights, free trade, and democracy. The game now is
not just about military power or economic influence, but also about the
rules of the game, transforming it into a sort of meta-game, resulting in
an ambiguous period of hedging. In this respect, the USA has changed the
rules of the relationship.
Second are the economic benefits. Since 2000, Asia has become the
USA’s largest source of imports and its second-largest export market
after the North America region. As the world’s most populous area and
fastest growing economic zone, Asia is expected to become even more
vital for the US economy in the future. This why the Obama adminis-
tration is pursuing the Trans-Pacific Partnership (TPP), which aims to
make Asian nations central to its National Export Initiative (Manyin
et al. 2012). The economic importance of East Asia becomes very clear
when looking at the trends over the last decade. With Asia as the second-
largest region in regional shares of global merchandise trade in 2010,
Asia’s shares of US merchandise trade rose from 22.0 percent in 2000 to
23.5 percent in 2010 for exports, and 28.9 percent in 2000 to 32.2 per-
cent in 2010 for imports, making Asia the second-largest trading region
following North America in exports. As the structural engagement as
well as the volume of the US economic relationship with Asia increases,
there is growing expectation that it will be harder for the USA to leave
again. This also means that there will be more roles for the USA to take
on in the future.
Third is the security architecture. It is evident that one focus of the US
rebalancing strategy lies in its China policy of how to counter Beijing’s
area denial and anti-access strategy. The basic motivation, however, seems
130  C. CHUN

not to reside in containing China, but in building a more effective security

architecture where the USA can manage a peaceful power transition. The
USA has repeatedly announced that its bilateral alliances are the key to
its security architecture with the renewed roles of mini-, and multilateral
institutions. Developing multifaceted and multilayered dispute settlement
mechanisms is crucial in preventing conflicts from escalating into major
military clashes. So far the USA has maintained the so-called hub-and-­
spoke security architecture in the region, which seems insufficient under
a transforming security environment. The hub-and-spoke model of the
past is slowly giving way to a more complex network among the differ-
ent US alliance partners in East Asia. Other elements will be necessary,
such as inter-spoke cooperation or cooperation among US allies and mul-
tihub networks. These “linchpins” allow for important US allies to take on
major regional roles with a renewed awareness of collective identity and
common values.
However, China revolves around the concept of “core interests” when-
ever the strategy of development is concerned. It was from 2003 that
Beijing officials started to make declarations about core interests, greatly
influenced by a situation in which Taiwan steadily moved toward de jure
independence. It is well known that in his closing remarks at the July
2009 US-China Strategic and Economic Dialogue, then Chinese State
Councilor Dai Bingguo listed and ranked China’s core interests. He
stated: “For China, our concern is we must uphold our basic systems, our
national security; and secondly, the sovereignty and territorial integrity;
and thirdly, sustained economic and social development.” A 2011 White
Paper entitled “China’s Peaceful Development” reiterates these principles
of State Councilor Dai’s list and the 2011 White Paper represents the most
authoritative articulations of the general principles comprising China’s set
of core interests.
However, confusion arises from the fact that the meaning of “core
interest” is constantly changing. In addition to Taiwan, Tibet and Xinjang
were included as components of core interests. Then tensions involving
China’s maritime disputes in the East China Sea and South China Sea
affected the definition of the concept. Chinese officials reportedly told
US officials that the South China Sea was one of China’s core interests in
2010. Former US Secretary of State Hillary Clinton also stated that State
Councilor Dai told her that the South China Sea was a core interest dur-
ing the 2010 Strategic and Economic Dialogue. So far Chinese officials
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  131

neither publicly confirmed nor denied that Beijing had raised the South
China Sea to core interest status.
Interestingly enough, the same thing happened with the Senkaku
Islands in 2013. Japanese media claimed that the Chinese Ministry of
Foreign Affairs officially elevated the Senkaku Islands to a “core interest”
in an the daily press conference. All this means that China defines core
interest based on the diplomatic context to act accordingly and uses con-
ceptual ambiguity very strategically (Campbell et al. 2013).

New Type of Great Powers’ Relationship?

The summit meeting between President Obama and President Hu in
January 2011 started a new phase with a more realistic awareness that
the two countries need mutual cooperation for their own interests. China
accepted America as an Asia-Pacific nation, with a quid pro quo to respect
Chinese core interests from the American side.
Most interesting was the phrase that President Xi Jinping used to define
the US-China relationship during his term of presidency. President Xi
first proposed the phrase of “new type of great powers relationship” in
February 2012 when he visited the USA.  What he meant at that time
was: (1) “steadily increase mutual understanding and strategic trust,” (2)
“respect each other’s core interests and major concerns,” (3) “work hard
to deepen mutually beneficial cooperation,” and (4) “steadily enhance
coordination and cooperation in international affairs and on global issues.”
Continuing this move, at the seventh round of the US-China Strategic
and Economic Dialogue (S&ED) June 22–24, 2015, in Washington,
DC, The USA and China highlighted the progress in US-China relations
in recent years, and decided to enhance practical cooperation and con-
structively manage differences, in order to promote the building of a new
model of relations between China and the USA, in accordance with the
consensus reached by the two heads of state.
It is still uncertain what President Xi and Beijing wanted to achieve
with this term. However, it is certain that this concept is closely associated
with President Xi’s effort to create a favorable environment for expand-
ing China’s economic and strategic interests. Also, this concept reflects
President Xi’s intention to advance his own style of leadership, with the
political goal to draw more popular support commensurate with higher
international status.
132  C. CHUN

After the official launch of the “new type” concept, many different
Chinese officials frame it with some flexibility. The common elements can
be summarized as below:

• Develop deeper, more frequent, and more resilient channels of com-

munication to improve the two countries’ abilities to manage crises
if and when they arise.
• Pressure the USA to respect China’s “core interests,” defined by
Beijing as upholding China’s political system and national security,
Chinese sovereignty and territorial integrity, and economic and
social development.
• Promote an image of China as a constructive actor seeking common
solutions to regional and global issues.
• Demonstrate that China is proactive in building a peaceful and coop-
erative relationship with the USA and does not have the intent or
ability to challenge the U.S. militarily.
• Pressure the USA to cease military reconnaissance and survey oper-
ations in China’s claimed exclusive economic zone,* reduce arms
sales to Taiwan, and relax restrictions on bilateral military coop-
eration, particularly those imposed in the 2000 National Defense
Authorization Act (U.S.-China Economic and Security Review
Commission 2013).

The US response to President Xi’s proposal has been moderately positive.

Officials during President Obama’s first term expressed their hope that China
and the USA can avoid hegemonic rivalry and even general war caused by
the dynamics of shifting power. According to Jeffrey Bader’s memoir, foreign
policy key advisors for President Obama tried to reverse the trend of under-
estimating the importance of East Asia. They were aware of the previous
Bush administration’s error of too much emphasis on counterterrorism and
national security (Bader 2012).
With determination to sustain a stable and economically open regional
order and respect for human rights, Washington welcomed President Xi’s
“new type” of relationship. This culminated during the informal sum-
mit meeting between President Obama and President Xi. President Xi
announced:

“And at present, the China-U.S. relationship has reached a new historical

starting point. Our two countries have vast convergence of shared interests,
from promoting our respective economic growth at home to ensuring the
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  133

stability of the global economy; from addressing international and regional

hotspot issues to dealing with all kinds of global challenges. On all these
issues, our two countries need to increase exchanges and cooperation. Both
sides should proceed from the fundamental interests of our peoples and
bear in mind human development and progress. We need to think creatively
and act energetically so that working together we can build a new model of
major country relationship” (White House 2013a).
President Obama responded: “Inevitably, there are areas of tension
between our two countries, but what I’ve learned over the last four years
is both the Chinese people and the American people want a strong, coop-
erative relationship, and that I think there’s a strong recognition on the
part of both President Xi and myself that it is very much in our interest to
work together to meet the global challenges that we face. And I’m very
much looking forward to this being a strong foundation for the kind of
new model of cooperation that we can establish for years to come” (White
House 2013a). After the summit, American national security advisor Tom
Donilon recalled the two presidents’ “aspiration of charting a new course
here for our relationship into a reality, and to build out what President Xi
and President Obama call the new model of relations between great pow-
ers” (White House 2013b).

If we focus on the cooperative side of the US-China relationship, it

is undeniably true that it provides other Asian countries with wide win-
dows of opportunity to pursue their national interests without worrying
about the clash of the titans. However, this is not the whole picture of
the US-China relationship. With the two great powers rebalancing from
2011, both countries adopt hedging strategies: Washington maintains
amicable relations with China while strengthening its traditional and new
military alliance relationships to check China’s military buildup; Beijing
also pursues a cooperative relationship with the USA while rapidly per-
forming military modernization, which will slowly lead to new strategic
relations with other Asian countries. If the new pattern of great power
relationship implies that both powers increase strategic checking and
balancing the other, other countries may suffer the consequences. For
example, Japan, expecting higher levels of conflict with China, decided
to balance against China more by reinterpreting its constitution to allow
the Japanese self defence force (SDF) to expand its roles. When two great
powers rebalance and hedge, there may be less room for other powers
to hedge because they are pressed by the great powers to assume specific
roles (Goh 2006, 2007, 2011).
134  C. CHUN

Recently there have been questions about the sustainability of rebal-

ancing strategy because the Obama administration in its second term is
re-rebalancing its strategy to address the turmoil in the Middle East and
Eastern Europe (as in Crimea). The original rebalancing created the fol-
lowing issues: American retrenchment led to new security problems in
non-Asian regions; reduced American commitment in non-Asian regions
caused doubt among American allies there; American commitment to the
new type of relationship with China caused US allies in Asia to doubt US
alliance commitment, expressed by Japan after China’s declaration of an
Air Defense Zone in the East China Sea; American entrapment should the
USA permit its allies too much maneuvering room; subsequent disagree-
ment among American allies with regard to new roles and cooperation
with other US allies; and Chinese skepticism about American intentions
when Washington strengthens its ties with its allies.
To solve such problems, the USA reassures its alliance partners by
providing certain security commitments such as inclusion of the Senkaku
Islands within the parameters of the American security treaty with Japan
and Washington’s agreement to Seoul’s request to further postpone the
transfer of operational control (OpCon) of ROK troops. Also, the USA
tries hard to harmonize relations among alliance partners, as shown by its
mediating role between South Korea and Japan. It is true that the USA
works hard to operationalize the new type of great power relationship with
China. However, because China interprets US reassurance of its allies as a
strategy to proactively encircle China, it is to be yet to be seen whether the
new type of major power relation will really take root in future.

Future of US-China Relations and Implications

of the Relationship

Future of the US-China Relationship

How American rebalancing strategy and China’s “peaceful development”
will evolve together remains to be seen. If the future bilateral relation-
ship is hegemonic rivalry, all-out competition may not be inevitable. If
a predictable and stable pattern of both competition and cooperation is
established, we will see an oscillation between good and bad relations.
Also important is how different issue areas will produce their specific logic
of cooperation and competition. Under the American rebalancing strategy
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  135

and Chinese development strategy, a strong consensus seems to take hold

at least in economic areas. However, economic interdependence can coex-
ist with the logic of military competition and mutual balancing. This will
be most evident in maritime territorial issues. Although neither side wants
outright confrontation over territorial issues, worsening relations between
China and American allies will reinforce military buildups (Table 7.1).
Direct maritime confrontation between the USA and China lies in the
question of exclusive economic zones (EEZs). In 2012, China’s People’s
liberation army (PLA) Navy for the first time conducted maritime intel-
ligence collection operations in the US territory of Guam and the state
of Hawaii. The US Department of Defense announced that the Chinese
navy had not provided any prior notification, which contradicted China’s
own insistence that foreign militaries must provide notification and receive
approval prior to operating in China’s claimed EEZ. China and the USA
share the common view that the coastal state has the right to explore,
exploit, conserve, and manage natural resources within its EEZ. However,
China claims the right to regulate foreign military activity in its EEZ,
whether it is exercises, military surveys, reconnaissance, or other military
operations. However, the USA, in accordance with the majority view,
adheres to the opinion that coastal states share those rights. This is espe-
cially serious in the case of South China Sea.
This difference in interpretation regarding maritime rights and the free-
dom to navigate may lead to bilateral tensions, aggravating other related
territorial and military issues. Furthermore, the PLA Navy seems to plan
distant water naval operational capabilities to expand its economic and

Table 7.1  US-China relationship in different power games

Engagement/ Cooperation
Hegemonic competition Great power Rivalry
b/w great powers

US To preserve hegemonic To preserve vital To engage on important

power interests interests
To deter the rise of To strengthen its To develop the framework
China position for competition for cooperation
China To challenge US-led To compete in major To rise under the US-led
governance framework issues and have framework
To fight and win o core superiority To build its own
interests architecture for further
development
136  C. CHUN

security purposes. China is building additional aircraft carriers after its first
one was launched recently, and this implies further modernization and
long-distance projection of Chinese military power.
It is uncertain that the “new type of great power relationship” between
the USA and China will alleviate military competition in the future. So
far, despite agreement that the two countries need to respect mutual core
interests, find common ground for cooperation, and establish the basis
for a more integrated economy, strategic uncertainty accelerates a con-
tinuing military buildup and military preparedness in case of maritime
confrontation.
Over time, China will be able both to increase its anti-access advantage
where it currently exists and to expand it into the Pacific, to Northeast
Asia, and eventually to Southeast Asia. In addition, Chinese cyber and
antisatellite capabilities may in time be able to disrupt US C4ISR capa-
bilities and thus impair US direct defense. In sum, forward-operating US
forces could become more vulnerable, an outcome that represents the top
priority of China’s military investments and deployments (Dobbins 2012).
American rebalancing strategy does not mean weakening military pre-
paredness in Asia. Washington endorses the continued deployment of 11
aircraft carriers, reversing a plan to reduce it to 10. Also it supports contin-
ued production, with only a temporary slowdown, of attack submarines as
well as development of a new cruise missile that can be deployed in fairly
large numbers on submarines. In addition, it calls for continued produc-
tion of a broad range of naval ship types, including relatively “high-end”
Aegis radar-equipped destroyers and, though in somewhat reduced num-
bers, of the Littoral Combat Ship (LCS), a relatively small, maneuverable
vessel for a variety of lower-end missions. Lastly, it includes plans to sus-
tain the projected total number of amphibious ships for the Marine Corps
at 33 ships. Some have called for a larger number of ships—the Marine
Corps, for instance, has wanted 38 ships—but 33 has long been, and will
now remain, the actual program (Manyin et al. 2012).

Diverse Interpretations
How the situation will evolve from now on partly depends on how people
in both countries think about the future relationship. There are pessi-
mists and optimists. In the USA, offensive realists like John Mearsheimer
assume that US-China relations will be defined by typical great power rela-
tions. Given the theoretical hypothesis that great powers pursue maximum
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  137

security by maximizing national power, the narrowing power gap between

the USA and China is destined to bring about fierce security competi-
tion probably after 20 or 30 years. In this line of thinking, an important
assumption is that the rise of China will continue regardless of what other
countries do because national power is the combination of population
and wealth. China, with a population of four times as much as that of the
USA and a fast growing economy, will translate these into military might,
and will never fail to challenge international politics dominated by the
USA. As security competition is in the nature of great powers due to the
logical imperative of anarchy, the USA will have no choice but to meet the
challenge by China, which leads to hegemonic rivalry (Mearsheimer 2001;
Brzezinski and Mearsheimer 2005).
These predictions based on past cases of hegemonic rivalry are enlight-
ening. A repetition of the past, however, is doubtful for the following
reasons. First, there is no reason to think that China will be strong enough
to challenge American hegemony, and just to assume this will cast a long,
pessimistic shadow of the future over current policy making. Assuming
a very powerful, expansive, and intransigent China may help to prepare
for the worst scenario, but the discourse itself determines the thinking
of policy makers. There are many ways to project China’s future national
power using many indicators, such as the growth of the GDP. However,
it is also true that continued growth of China will bring about many pain-
ful problems like having to deal with inequality, demands for democracy,
unemployment, and corruption, and so on. China will wisely control these
situations and feel the need for a stable external environment and favor-
able relations with strong powers such as the USA. Given the possibility
that China will grow into the status of regional hegemon, not a global
one, to expect China to become a global rival will effectively narrow the
policy options not just for the USA, but also for the countries around
China. To avoid the undesirable self-fulfilling prophecy of offensive real-
ism, a more process-oriented approach is necessary.
Second, the rise of China is a phenomenon that may continue, but the
future shape of China is quite uncertain. Now China is characterized by
market socialism directed by one-party authoritarianism. China will be
able to continue its economic development by maintaining its involve-
ment in the framework of liberal international political economy mainly
manufactured by the USA. It is certain that China actually transformed
itself in many major economic areas such as finance and trade in accor-
dance with international standards, not to speak of many groups in civil
138  C. CHUN

society. As China’s rise is inevitably an ‘engaged rise’ under unipolarity

at least up to now, there are structural imperatives for continuation of
this basic pattern. If engagement with China and Chinese input into the
US-led international system are mutually reinforcing, it is not certain, as
Mearsheimer thinks, that a clash is inevitable. There will be more mecha-
nisms to deal with conflicts in specific areas to avoid direct escalation into
strategic antagonism. More small conflicts accompanying China’s rise may
help to prevent a final devastating clash from happening.
Pessimism in China is best represented by realists like Yan Xuetong. He
argues that bilateral relations between the USA and China have experi-
enced a long period of fluctuations due to conflicts and disagreements of
interests. Even in the post-Cold War era, this fact will not easily change.
Having wrongheaded wishful thinking for genuine friendship, Yan argues,
will prevent the realistic management of the relationship. Based on this so-­
called theory of superficial friendship he concludes as follows: First, being
psychologically prepared for the other side’s unfavorable or unfriendly
decisions would lessen the danger of an escalating conflict. Second, a
better the mutual deterrence strategy would generate more preventative
security cooperation between them. Third, their relations would become
more stable by reducing unrealistic expectations of support by the other
side. Fourth, they could improve their relations at a steadier rate by apply-
ing different principles according to specific aspects of their relations (Yan
2010a, b).
In both countries, optimism also remains effective with liberal inter-
national relations discourses believing in the power of economic interde-
pendence, international institutions, and democratic peace. Some liberals
believe that bilateral economic relations create mutual interests in good
relations between states. The greater the volume of trade and investment
between two countries, the more the groups on both sides will have a
strong interest in avoiding conflict and preserving peace (Karabell 2009;
Chan 2011). In addition to their faith in economic interdependence an
instrument of peace, liberal optimists place great expectations in the role
of international institutions of various kinds. These can help to improve
communication between states, reducing uncertainty about intentions
and increasing the capacity of governments to make credible, binding
commitments to one another. By so doing, they can help to ease or
counteract some of the pernicious effects of international anarchy, pav-
ing the way for higher levels of cooperation and trust than would other-
wise be attainable.
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  139

Democratic peace theorists also suggest expectations both for political

development in China, and subsequent better relations with the USA. The
process of political reform in China is being driven largely by economic
development, which, in turn, is being accelerated by China’s increasing
openness to trade.

South Korea’s Strategy

South Korea, as a relatively weak state in the region, has limited options
in the matter of great power competition. South Korea should have the
following in mind.
First, hasty and rash pessimism due to over-theorizing will have far more
disastrous effect upon weak stakeholders like South Korea that are situated
at the interface of the relationship. The specifics of power transition and,
more importantly, changes in the nature of international politics give more
room for South Korea to maneuver. It will try to assuage strategic mistrust
between the USA and China by giving more ideas and knowledge for
issue-specific dispute settlement mechanisms, fostering institutionalization
of cooperation, and assuming roles as conveners or facilitators of coopera-
tion. Also, to situate South Korea as a global middle power that is able to
import global norms into regional problem solving with the help of other
regional middle powers (ASEAN, Australia, Taiwan, and arguably Japan)
is helpful. There are issue areas that both the USA and China can rela-
tively easily accommodate such as human security or emerging issues such
as environmental degradation, cyber security, and nuclear security. South
Korea hosted the Nuclear Security Summit in 2012 and suggested the
formation of a regional nuclear security regime. Both the USA and China
also work for this kind of regime in the bilateral Strategic and Economic
Dialogue, which may be combined with South Korean efforts.
Second, South Korea needs to promote East Asian systemic flexibility.
As uneven development of national power in international politics is inevi-
table, the critical issue is whether there is systemic flexibility and adaptabil-
ity to adjust to new distributions of power. Enhancing systemic flexibility
means: (1) to prevent war among great powers or military clashes for
regional hegemony; (2) to peacefully manage difficult regional affairs that
affect great power rivalry; (3) to establish universal, international norms in
spite of a power shift; (4) to enhance the role of middle powers in lessen-
ing strategic distrust between great powers, especially between the USA
and China.
140  C. CHUN

Third, the development of a new equation for South Korea-US-China

triangular relationship will be a crucial task. The most formidable chal-
lenge is how to maintain strategic relations both with the USA and China,
while contributing to the smooth management of power shift. One thing
that South Koreans have been doing is to smartly transform the ROK-US
alliance. Alliance in the twenty-first century is not just a military partner-
ship against predetermined adversaries. New roles include dealing with
uncertain security threats and human security problems based on universal
values and norms. The concept of strategic alliance in the twenty-first cen-
tury between South Korea and the USA, then, contains common values,
trust, and norms as crucial elements for future alliance. When common
norms provide the basis of alliance, its regional and global role will gain
support not just from both partners but from other countries, including
China.
Values and norms such as nonproliferation, durable peace, modernizing
failed states, and solving human security problems can be most promi-
nent examples, because South Korean civil society can easily draw on past
experiences in dealing with North Korea and Northeast Asian security
problems. When universal values utilizing these specific experiences are
realized in an alliance, new roles for the alliance will not cause unnecessary
misunderstandings.
South Korea’s strategic cooperation with China is also indispensable in
many areas not only in bilateral issues, but also in North Korean issues,
regional ones, and global issues. China, now as the number one trad-
ing partner of South Korea, most significant player in solving the North
Korean nuclear issue and peace on the Korean peninsula, and a country
that shares many traditional and modern values with South Korea, shares
strategic interests with South Korea. Also, because neither South Korea
nor China desire conflict in the region, and they agree to transform the
regional order into one that is more peaceful, mature, and responsive to
regional members, there are many issue areas for cooperation. To have
balanced and mutually beneficial relations with China in the Northeast
Asian regional context will be crucial to South Korean national interests.
South Korea’s interests toward China include a need to further eco-
nomic cooperation and find favorable ways for settling economic disagree-
ments. Other aims include: to develop and share more understanding
about each other in the form of cultural exchanges and human exchanges
at various levels; to facilitate political cooperation by developing multi-
level exchanges of officials and diverse conferences for strategic dialogues;
 US-CHINA RIVALRY AND SOUTH KOREA’S STRATEGY  141

to find a better way to reconcile nationalism with common values such

as economic development and prosperity, regional cooperation, democ-
racy, new postmodern civilization, human rights, and peace in order to
solve critical problems; to establish multilateral Northeast Asian coopera-
tion mechanisms and enhance openness and transparency to solve critical
issues such as environmental problems, refugees, and nuclear prolifera-
tion; and to cooperate in global arenas in areas such as climate change,
energy security, environmental protection, poverty, contagious diseases,
and other global issues.
Fourth, South Korea needs to make full use of global changes that
empower nonstate actors such as civil society and global institutions,
and to localize global norms and civil networks for East Asian multilevel
cooperation. With denser networking among multilayered actors in the
USA and China, and also among other East Asian countries, there will
be more stakeholders in Sino-American relations. Also, close connections
among institutional settings and norms between global and regional lev-
els will have the effect of interlocking East Asian architecture with global
governance. For example, when South Koreans deal with North Korean
problems, it is not just seen in the context of East Asian power relations,
but also from the global normative framework of nonproliferation or nor-
malizing outlaw states, which all great powers cannot but observe. South
Korea has succeeded in persuading China not to recognize Kim Jong Un’s
Byungjin Strategic line, which rejects North Korean denuclearization, by
referencing the global nonproliferation regime. In this way, there is more
leeway to guide the purely power-oriented process of power transition
into a more norm-based one that engages a lot more actors and levels.
Fifth, South Korea needs to develop issue-specific strategies. What is
interesting in US-China relations is that there are different logics working
in different issue areas. Competitiveness is much higher in security and
military issues, moderate in economic issues, and far less in sociocultural
issues. To securitize less competitive economic and sociocultural issues
from the geostrategic perspective is very hasty and risky.
By cultivating the possibility of cooperation in different fields, we can
contain negative spillover and even de-securitize major issues. South
Korean President Park Geun Hye has suggested a regional plan, the
Northeast Asia Peace and Cooperation Initiative (NAPCI). South Korea
emphasizes functional, nonpolitical cooperation in the areas of nuclear
security, environmental degradation and other emerging areas such as
cyber security. It is noteworthy that seemingly nonpolitical issues such as
142  C. CHUN

freedom of navigation, maritime resource development, and cyber security

are actually anchored in political interests.
Sixth, South Korea can develop its grand strategic concept of “mid-
dle power diplomacy,” in the relationship between the USA and China.
Building a complex cooperative network to transcend the balance of
power mechanism in East Asia with the help of other middle powers fac-
ing similar dilemmas is a regional middle power initiative. For this South
Korea needs to establish cohesive domestic, social support for this para-
digm and situate South Korea as a global middle power that contributes
to the development of global governance.

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office/2013/06/08/press-briefing-national-security-advisor-tom-donilon
Yan, X. (2010a). The instability of China–US relations. The Chinese Journal of
International Politics, 3, 292.
Yan, X. (2010b). The rise of China and its power status. In X. Sun, M. Ferchen, &
M.  Fravel (Eds.), Rethinking China’s rise: A reader. Oxford, UK: Oxford
University Press.
 CHAPTER 8

Formation of Regional Community in East

Asia: A Japanese Perspective

Kazuhiko Togo

Introduction
At the time of writing of this paper, an idea of creation of a regional com-
munity in East Asia seems to be hopelessly in disarray. Bilateral relations in
North East Asia between Japan, China, and Korea are in such disarray that
we have not seen for many years, and talking about a possibility of creation
of “regional community” including these three countries, seems to have
lost entirely its ground. But if one looks at the whole situation from lon-
ger historical perspectives, and the fundamentals that surround East Asia,
historical trend toward a formation of some kind of regional community is
natural and logical and might even have historical inevitability. There is a
need to understand current muddy and confused situation and find a trace
for future development, where this natural trend of the history could be
realized through the collective efforts of policy makers and by all people
concerned on the issue of the creation of “regional community”.
Among several situations that make the East Asian Community diffi-
cult, this paper primarily directs its attention to Japan and China and bilat-
eral relations between the two countries. What are fundamental factors
which create a “regional community”? At this time of disarray, it may be

K. Togo (*)
Institute for World Affairs, Kyoto Sangyo University, Kyoto, Japan

© The Author(s) 2016 145

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_8
146  K. TOGO

worthwhile going back once again to this fundamental questioning.

Drawing to the wisdom of Western theory of International Relations
(IR), I would like to analyze from the point of view of security (Realist
Perspective), economic interdependence (Liberal Perspective) and identity
(Constructivist Perspective). A comparison to the formation of “regional
community” in Europe may be useful to gauge exactly where East Asia
stands at this point.

Realist Perspective
It is axiomatic to state that post-World War II creation of European com-
munity started from the fundamentals of the decision taken by France,
never to fight another war with Germany. Germany and France fought
a deadly World War II, the calamity of which exceeded beyond anyone
who contemplated the outcome of the war when it started in 1914. Then
when many thought that the horrendous devastation of World War I des-
tined Europe to make this war as the final war of global scale, just 20
years later, the World War II, where one of Hitler’s major objective was
certainly France, broke out. Needless to say, the extent of damage that
overwhelmed the world far exceeded the World War I. Not only Germany
which was defeated twice, but also France had some serious reason to
consider, that the two devastating experiences that Europe, in particu-
lar France and Germany, had to bear cannot be repeated. Thus, the cen-
tral efforts for the creation of a “European Community” were guided by
Robert Schuman of France, inspired by Jean Monnet and Coudenhove-­
Kalergi at his background. Schuman’s primary objective was very much
realist, to establish a permanent basis of peace and reconciliation between
France and Germany. Robert Schuman’s famous declaration as of May 9,
1950 starts with the following: “In order that European countries become
united, aged adversary between France and Germany have to be resolved.
Whatever action one may take, first of all, these two countries have to be
involved” (Togo 2012a).
This Europeans scenery has to be compared squarely with the situation
of how World War II ended in East Asia. The war in the Pacific was a war
between Japan and all others. But from Japan’s point of view, there was
qualitative difference among war fighting opponents against Japan. The fol-
lowing distinction made from Japan’s point of view may not be n ­ ecessarily
shared by those that fought war against Japan. But it is at least a useful
reference how the end of war was seen from Japan’s point of view. War in
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  147

the Pacific had at least three dimensions. The major dimension was the war
against the USA. The root-cause can be argued differently, but from Japan’s
point of view, it was a war fought fundamentally from clash of interests
between Imperialist powers, which could not resolve differences through
diplomatic negotiations. But the result was catastrophic for Japan, which
was subjected to total defeat resulting in occupation by Allies, consisting pri-
marily of US forces together with other Commonwealth forces. Because the
extent of defeat was so decisive, and seven years of occupation was a match-
ing of US policy to eradicate Japanese militarism and totalitarianism and
Japanese people’s disgust against anything military and totalitarian, post-
occupation Japan-US relations turned into a period of reconciliation which
developed eventually to allied relations. One may argue in this context that
the war fought by Japan was so harsh and rigorous to let the Americans felt
that such war with Japan cannot be repeated again. Arguably occupation
policy under General MacArthur and eventual US guidance to lead Japan
as a key member of US alliances was a reflection of the spirit resembling to
Robert Schuman in Europe “never to fight again”.
But with China, the situation was different. On the Japanese side,
immediately after the end of the war, Japan was engulfed with the ques-
tion of “why did we lose the war?” (Dower 1999). The sense of guilt
developed gradually, partly through Tokyo Trial and also by some state-
ments of returned soldiers from China, which formed their association
in 1957. There was naturally no feeling in general that Japan and China
fought an Imperialist war. There was already shared feeling among many
in Japan that particularly the second Sino-Japanese War from 1937 was a
war increasingly losing purposes, and the longer Japan fights the longer it
was drawn into an impossible “swamp”. Apparently atrocities committed
at the continent have become some discreetly shared knowledge at home.
But all these came out to national consciousness at least a decade or two
after the end of the war. On the Chinese side as well, rather than engaged
in serious reconsideration of war between the two countries 1937–1945,
China was engulfed in its civil war between the Communist Party and
the Kuomintang. That war lasted until 1949. Then East Asia was thrown
again into the Korea War from 1950 to 1953, and China intervened in
October 1950. All opportunity for immediate reconciliation between
Japan and China was dashed by these Cold War realities. San Francisco
Peace Treaty was signed in September 1951 amidst the Korean War, which
in fact deprived PRC, RC, North and South Korea’s p ­ articipation to this
148  K. TOGO

conference. Twenty-seven years after the end of World War II, finally
Japan and China (PRC) established diplomatic relations in 1972.
Thus after its delay of 27 years, initial years of normalization at the
wake of establishing diplomatic relations in 1972, relations between Japan
and China became warm. Zhou Enlai succeeded in quenching Chinese
indignation for Japanese atrocities by way of presenting his formula that
“Japanese people are a common victim of Japanese militarists”. In its own
way, Zhou’s spirit of forgiveness may be the closest that took place in East
Asia with a reflection of Robert Schuman’s “never to fight again”. On the
Japanese side long awaited normalization combined with sense of guilt
and gratitude created a kind of euphoria toward China. Particularly after
the dramatic political changes that occurred at Chairman Mao’s death
in 1976 and Den Xiaoping’s seizure of power and his declared policy of
“Reform and Opening”, friendly and positive feeling toward China among
the Japanese rose to very high point. The 1978 conclusion of Peace and
Friendship Treaty and the embarkation to massive ODA under the Ohira
Cabinet in 1979 symbolized the years of peace and friendly relations.
But from these heydays of the relationship, gradually relations began
deteriorating. In the 1980s, there was already history issues which began
to harp differences between historical memories of the two countries: text-
book issue in 1982 and Yasukuni issue in 1985. But the Japanese leader-
ship filled in the emerging gap by Prime Minister Miyazawa adopting a
new policy to take into account Asian sensitivity in textbook publication
and Prime Minister Nakasone by withholding Yasukuni visit since 1986.
Japan’s most understanding reaction to the Tiananmen Square Incident
in 1989 was met by Chinese wooing for Emperor’s visit in 1992 and the
1990s on the whole stayed as politically stable. But patriotic education tar-
geting Japanese aggression started in China at the wake of the Tiananmen
Square Incident. The first half of the 2000s (2001–2006) was politically
dominated by Prime Minister Koizumi’s yearly visit to Yasukuni.
Despites the lull which was brought in by Prime Minister Abe in
2006–2007, already in 2008 we see open change of China’s policy to
“show evidence for its claim over the Senkaku/ Dyaoyu Islands”. The
tension which rose since then around these islands, by the collision of
Chinese fishing boat and Japanese coastal guard in 2010, and China’s
policy response to send in its coastal guard vessels weekly to the territorial
waters of Senkaku in response to Japanese government’s purchase of these
islands in 2012, need not to be repeated here. Since then the disputes
around Senkaku began to bear the character of sovereignty disputes over
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  149

territories, diverging views on historical memories, and danger of clash of

coastal guards with a possibility of escalation to war. This development
really makes one wonder, why and how on earth has it become possible
that the two countries with an expectation that they live in peace after their
establishment of diplomatic relations in 1972, just 40 years later, stand on
the verge of a physical clash which might even develop to a new war.
It seems that a renewed clash in power balancing is grabbing the two
countries. China’s rise is developing from economic, political, and military.
Last filth of century’s humiliation is shrugged off, and China began con-
sidering a creation of new civilizational direction. Power in that context
seems to have a different meaning to be deployed for the interest of rising
China. But to Japan, this newly declared Chinese military assertiveness is
nothing but a reversion to Westphalian state-to-state conflict of power.
The accepted principle of international law under the United Nations to
resolve conflict peacefully by negotiations does not seem to stand in this
Chinese rising order.
What is taking place between Japan and China is a classic example of
security dilemma, or worse, prisoners’ dilemma, where suspicion against
the other is further deteriorating the relationship to the detriment of
respective country’s national interest. China may be wondering why Zhou
Enlai and Den Xiaoping, Robert Schuman of China who gave a roadmap
for reconciliation is betrayed by continuous statements by Japanese lead-
ers, stretching from Yasukuni visit, “nationalization” of Diaoyu, revision
or re-interpretation of the peace clause Article 9 of the Constitution, now
stretched in person to Prime Minister Abe who is incessantly provoking
China. But reaction that is taking place in Japan is equally serious. In the
post-war recognition of history, there has been a shared image in Japan
of genuine respect and admiration to Zhou Enlai and Deng Xiaoping, or
the political line that China has pursued under their leadership. But some
Japanese on the contrary now began to seriously wonder that Zhou Enlai
and Deng Xiaoping’s readiness for reconciliation might just have been a
“leaning low” profile not to stir the world while China’s power was weak,
and now that it became strong, it began to sable rattle to the extent of
reaching a dangerous point of war, ignoring entirely Japanese sense of
humility for the past, the complete peaceful development for 70 years
after its defeat, not acknowledging minimal necessity for its security policy,
and just constantly rebuking Japan’s pre-war deed to poke into minimal
national pride of Japan. China is rapidly depleting the whole asset of its
positive image accumulated in the post-World War II years in Japan.
150  K. TOGO

Liberal Perspective
Another powerful line of thoughts in thinking regionalism is to take into
account economic factors. There is no reason to believe that economic
factors are negligible. Most that ordinary people are concerned, when
respect to basic human rights is achieved is to ensure material wealth and
happy livelihood. As minimal bondage to form regional cooperation, eco-
nomic factor counts, minimally, so as not to let them become dividing
factor among member countries, and preferably, so that economic inter-
dependence become a key uniting factor for the formation of regionalism.
It is no coincidence that the second pillar of Schuman plan boiled down
to the creation of a community of coal and steel. Schuman stated that
“Through joint control of the production of steal and coal, the first step
of creating a common basis toward the creation of a union in Europe shall
be established”.
In reality, economic regionalism was led in Asia by ASEAN created in
1967. Big powers in North East Asia each had reasons not to take major
initiatives in enhancing a regional community. Led by ASEAN, regional
economic community developed in zigzagging. In 1989, Asia Pacific
Economic Council (APEC) was created, comprising the six ASEAN coun-
tries and six advanced countries: Japan, Korea, Australia, New Zealand,
America, and Canada. It added China and Taiwan in 1991, and from 1993
began holding regular summit meeting. But there emerged a sharp divide
in 1998 at the Kuala Lumpur Summit between the USA which wanted
to make APEC a vehicle to enhance trade and investment liberalization
ahead of WTO, and Japan and ASEAN countries which sought a slower
consensus-based development. Since then it ceased to be a real vehicle for
regional economic cooperation.
At the time APEC ceased to function as the real vehicle of regional
cooperation there emerged ASEAN Plus Three (APT). It all started in
1997 at the wake of financial crisis in Thailand rapidly developing into
ASEAN financial crisis. ASEAN which found the need for more inti-
mate economic cooperation with the three powers in North invited lead-
ers of China, Korea, and Japan to their 30 years of anniversary summit
in 1997 and since then this framework began to have a structural char-
acter. ­Japan-­led Asian Monetary Fund (AMF) was aborted by US and
Chinese opposition, but in 2000 the Chenmai Initiative, a multilateral
swap ­agreement for mutual support in case of financial crisis was formed.
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  151

By this time, economic rise of China seemed to have irreversible charac-

ter. GDP growth of the 1980s marked 9.76% yearly average, and the 1990s
an astonishing figure of 15.47% yearly average, and two-digit growths in
the 2000s was expected to take place by many analysts. As it turned out, it
continued to mark 10.29% in the 2000 (Chugoku no keizai seichoritsu no
sei’i n.d.). For Asian countries, America still continued to play a vital trade
and investment partner, but increasingly, intra-regional trade and invest-
ment began to occupy greater portion. But the economic interdependence
which should become the basis of regional community formation proved
to be fragile already in the 2000s, when political break between Japan
and China deeply engulfed the region. Prime Minister Koizumi began his
tenure in 2001, and since then, his yearly visit to Yasukuni affected funda-
mental trust between Japan and China. Soon it developed to the suspen-
sion of bilateral summit meetings between the two countries. In 2005,
fierce demonstrations in major Chinese cities erupted, and in this process,
Japanese government began to lead the formation of regional structure
incorporating Australia, New Zealand, and India, making ASEAN Plus
Six, and China holding more to the enhancement of APT that developed
thus far. In December 2005 at Kuala Lumpur, the first APT summit was
scheduled but it was so decided that the first East Asia Summit (EAS) with
Australia, New Zealand, and India in addition would be held back to back.
Obama was inaugurated in 2009 and formulated his policy of rebalancing
from the Middle East to Asia policy or pivot to Asia policy. His administra-
tion made all necessary preparation to become member of EAS from 2011
together with Russia. Thus, EAS now became an entity of ASEAN Plus
Eight, assumingly to lead the competition with APT.
As we can see in this process of formation of APT and EAS, it seems
that the key factor for the formation of regional economic community
was not economy but political relations. Or in other words, economic
interdependence alone is not sufficient for regional community forma-
tion. Basic political harmonization seems to be essential for the forma-
tion of regional community. That political ascendency over economic
fundamentals seems to have been shown amply in the latest negotiations
between Japan and the USA on Transpacific Partnership (TPP). TPP was
first formed as Trans-Pacific Strategic Economic Partnership Agreement
in 2005 by Singapore, Brunei, Chili, and New Zealand. It was originally
an organization to ensure small countries in the Asia Pacific to find part-
ners among like-minded countries. But in 2008, when the USA declared
its intension of joining in its negotiations under the Bush administration,
152  K. TOGO

and when in March 2010 President Obama officially joined the nego-
tiating group together with Australia, Vietnam, and Peru, that perspec-
tive of small counties forming a group of like-minded countries entirely
changed. Malaysia joined the negotiating group in October 2010, Canada
and Mexico in November 2012, and finally Japan in July 2013, which may
have even changed its character. President Obama visited Japan in April
2014. Media reports indicated the two highlights of the visit: namely to
confirm that the security treaty between Japan and the USA applies to
Senkaku/Diaoyu islands and to agree on basic concrete modality for TPP
negotiations. The former was confirmed in Obama’s verbal statement at
press conference and was written in the Joint-Statement.1 The latter was
also confirmed in the Joint-Statement but only in an abstract language.2
It goes without saying that the issues discussed and kept the agreement of
the Joint-Statement on hold until the very departure of President Obama
from Japan, were purely economic, such as agriculture or auto-industry.
But the whole momentum of the negotiations cannot be considered
outside the context of who takes the leadership of trade and investment
liberalization in the Asia-Pacific Ocean. Is it the USA or any other coun-
try, such as China? US decision to join the TPP negotiations as formerly
accepted in March 2010 is precisely geared to Obama’s policy of pivot to
Asia, and is followed by his decision to join the EAS on the following year.

Constructivist Perspective
The key concept of East Asian regionalism from Constructivist point of
view is “identity”. This entails huge debate on the question of what is East
Asian identity. When the issue on the formation of European regionalism
occurred, primary concern, as we saw above, was the issue of war and peace
and of economic interdependence which should underpin it. Identity was
not an immediate problem. Why was it not? Because the countries at stake
were all European countries, with common history, culture, religion, and
values, in all, with common civilizational root. The root of their world view
dates back to Greek philosophy of Plato and Aristotle, Christianity, and
Christian theology in the middle age. And then it went through turbulent
periods of Renaissance, Religious Revolution, and Industrial Revolution.
With the power of technology, material wealth and military superiority,
it began dominating the world under its power loosely defined as the
era of European, and then, Euro-American Imperialism. The two wars
were fought as war between nations starting from European powers, and
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  153

Hitler’s Holocaust emerged as an extreme aberration from the European

culture itself. In that sense, Robert Schuman’s declaration as of May 9,
1950 on reconciliation with Germany stood on the basis of the judgment
of Nuremberg verdict given in October 1946 and Germany’s acceptance
of its consequences. As for the full scale Germany’s acknowledgement of
the past, it still took several steps, such as Willy Brandt’s kneeling down
at Warsaw in 1972 or President Weizsacker’s speech of 1985, but on the
whole Germany’s open penitence to the evil of Holocaust gave sufficient
ground for the formation of new European Community where “European
identity” did not become a major stumbling block.
As for the historical analysis of civilizational development in East Asia,
there cannot be a negation that on overall scheme, China, Korea, and
Japan all lived in the world broadly understood as the “Sino-centric
World”. Japan borrowed critical elements of civilization from China, often
through the Korean Peninsula. Starting from the age of Xia, Yin and Zhou
Chinese civilization dates back three millenniums BC.  The Japanese on
the southern part of Honshu, the main islands, opened the Jyomon era
one millennium BC leading to Yayoi era from the first century BC. The
technologies of rice-paddy agriculture and bronze weapons were transmit-
ted through Korea in this period. After China went through the period of
Qin and Han dynasties and moved to Sui and Tang dynasties, the State
of Yamato which was formed around AD 400 sent Kenzuishi (emissaries
to Sui) and Kentoshi (emissaries to Tang). Involvement in the war at the
Korean Peninsula and knowledge gained from these emissaries brought
to Japan horse riding, Chinese characters, Confucianism, Buddhism and
knowledge of an advanced political system defined as Ritsuryo system.
The first Japanese identity formation was made in the period of Asuka
(593–710), Nara (710–794), and Heian3 (794–1192), with the Imperial
tradition, Shinto, first historical narratives of Kojiki and Nihonshoki, col-
lection of poems of Manyo, creation of own alphabetical writing of Kana
and such literature as the Tale of Genji and all architectural marvel of Nara
and Kyoto as we see today.
The second development of Japanese identity was shaped when Japan
began to be ruled by the class of Samurai, who originated from regional
farmers with their own need to protect their farmland, began excel-
ling their martial arts with spiritual training. The power center shifted
to Kamakura (1192–1333), back to Kyoto (1333–1467) and period of
country-wide turbulence of clans’ fight for survival (1467–1603). During
this period, Japanese culture reached the height of Japanese Buddhism in
154  K. TOGO

the form of Shingon Belief and Zen in the thirteenth century. Waves of
architecture were built in Kyoto where Emperor continued to live. Japan
also went through two wars to fight outside forces, first rejecting Yuan ’s
invasion twice in the thirteenth century, and Toyotomi Hideyoshi’s inva-
sion to Korea in the sixteenth century.
The third period of Japanese identity formation was under the ruling of
Tokugawa dynasty (1603–1868), when Japan developed a unique society
of its own culture worthy of calling an independent civilization within the
Sino-centric world. That was the period which more or less overlapped
with Qing 清in China. The society was governed by horizontal struc-
ture of four classes: samurais, farmers, artisans, and merchants and verti-
cal ruling based on clan (domain) system governed by Daimyou (lord)
at the helm of which dominated the Tokugawa Shogunate. Identity as
Japanese hardly existed and identity was restricted to this horizontal class
and vertical domain systems. The society was cut off from the outside
world by a system of Sakoku (Closing the country), only allowing a line of
communication at Deshima (Nagasaki Prefecture) with the Netherlands,
and Matsumae (Hokkaido) Domain with Russia, Satsuma (Kagoshima)
Domain with China, and Tsushima (belonging to the present-­ day
Nagasaki Prefecture) Domain with Korea. And yet during the two centu-
ries and half Edo succeeded in creating culturally rich society with Zhuxi
school of Confucianism transmitted from Song 宋dynasty, elaborate
Samurai ethics of Bushido, revisited Shinto by such scholars as Motoori
Norinaga or Hirata Atsutane, rising interests to Dutch/European schol-
arship absorbed at Deshima. Through long period of peace, the society
became rich and enabled to sustain flourishing elite and popular culture,
such as Kabuki, Ukiyoe, Tea ceremony, Ikebana, and Noh. At the time
of Meiji Restoration, Japan startled the world as the Shangri-La of Asia
(Togo 2012b).
I do not think I need to spend lengthy analyses on what happened in
Japan and China since then. But it is vitally important to note, that in the
basic identity memory of Japan, Japan was a country basically belonging in
the Sino-centric world but having achieved an autonomous position wor-
thy of calling as a civilizational entity. From the Meiji Restoration Japan
began, after initial hesitation, to embark on the passage of Bunmei Kaika
(opening a new civilization) and Datsua Nyuou (getting out from Asia
and Entering Europe). It tried to learn as quickly as possible the best of
European civilization, won two wars against mighty Qing and Imperial
Russia and eventually tried to stood up against Western powers on its own
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  155

and was crushed and diminished in 1945 to the point of the beginning of
the Meiji Restoration. Defeat at the Pacific War left, as stated, deep hollow
in Japanese minds but thereafter, turned the whole country to exclusively
concentrate on economic reconstruction guided by American occupation
forces and American values. But at the end of the Cold War when Japan
managed to win the race of economic construction, it was bound to face
a new task and agenda: “where are we going from here? What is going to
be our national objective?”
In facing this question, in my view there can be only one answer.
Japan’s future identity would be something of unique Japanese-ness, but
that Japanese-ness shall be placed and based within the Asian cultural envi-
ronment, just as the Edo Japan succeeded in creating something uniquely
on its own, within the broad spectrum of Sino-Centric values. Three issues
can confuse this identity debate. First, there is a contention that the singu-
larly unique history of Japan’s success of absorbing Euro-American values
twice, after the Meiji Restoration and after its 1945 defeat, makes Japan
a banner-bearer of Western Culture and Western values in Asia and other
part of the world. Historically, this questioning forces to go back to those
polemics in Japan, including real range of debates of Japanese Asianism,
such as Tarui Tokichi’s Daitogohouron (Theory of Union of Great East
Asia), Okakura Tenshin’s Asiaha Hitosu (Asia is One), Shigemistu
Mamoru’s Tozai Yuwa (Harmony between East and West), and ultimately
Kyoto School scholars’ contention to seek philosophical justification of the
war to be fought by Japan against Anglo-Saxons. The answer is not simple.
But with all these complexities in history, the author simply cannot agree
to the simplistic argument that “Japan equals the West in Asia”. In the
history, culture, way of thinking, social behavior, fundamental relationship
between social values and individuals’ right, there are too many differences
between Euro-American values and the way Japanese created its society.
The second confusion seems to occur from the analysis that Japan is
a maritime power, and hence its interest and identity converge well with
other major maritime powers such as America or Great Britain, but Japan
finds interests convergence with such continental power as China or pen-
insular power as Korea difficult. But this contention does not seem to
stand. Great Britain is certainly an island country, and arguably therefore
might have a close relationship with the USA. But this does not mean that
Great Britain cannot be an integral part of the European Union with its
full identity as a European state. China is obviously seeking a place as a
156  K. TOGO

new and emerging maritime power. No country is in a position to negate

China’s desire and right to become a maritime power. There could be seri-
ous argument as to “what kind of maritime power” but as soon as China
begins claiming its desire to become a maritime power there would be no
reason why Japan and China can find common identity from that aspect.
The third issue is the question of membership, inclusiveness, and exclu-
siveness. This is a difficult issue which if mishandled can develop quickly
to emotional polemics. Naturally I have no intension to exclude anyone to
have desire to find his right place in regional cooperative scheme in East
Asia. Also there has already accumulated political reality in East Asian for-
mation of regional community that every analyst has to take into account.
The concrete structure of regional community can be complex and multi-­
layered. This will allow satisfaction of all entities concerned. But at the
same time, both theoretically and realistically some kind of streamlining
and search for the essentials from historical perspective may have some
usefulness, in order to determine concrete and pragmatic solution.
Looking from these perspectives, the closest regional community which
would base its identity on Asia, or on East Asia, thus far emerged in his-
tory was APT that had its height of existence from 1997 until 2005, even
after Japan-China relations became strained by Koizumi’s visit to Yasukuni
since 2001. From the point of view of “Asianist” identity supporter, the
fall of APT is such a pity. In addition to my analysis above, some activation
that further took place in 1997 till 2005 is as follows:

• In 1998, at the second summit in Hanoi, Prime Minister Obuchi

expressed his determination to work for early implementation of the
$30 billion Miyazawa Initiative declared in October 1997.
• In 1999 at the third summit in Manila, Prime Minister Obuchi and
ASEAN leaders issued a “Joint Statement on East Asia Cooperation”
to include such subject matters as political-security and transnational
issues.
• Likewise at this summit, Obuchi took initiative to host, within the
auspices of APT, the first trilateral summit of Japan, Korea, and
China. That framework became regularized since then in principle.
• In 2003 at the seventh summit in Bahli, Japan, and ASEAN signed a
Framework for Comprehensive Economic Partnership and agreed to
establish an EPA/FTA in principle by 2012.
• Likewise in 2003, Japan, China, and Korea signed a Joint
Declaration on the Promotion of Tripartite Cooperation to include
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  157

­ across-­the-­board and future oriented cooperation in a variety of

“
areas” and defined tripartite cooperation as “an essential part of East
Asia cooperation”.
• In December 2003, Japan hosted an ASEAN-Japan summit in
Tokyo, the first summit meeting in ASEAN’s history held outside
Southeast Asia (Togo 2008).

At the time of writing of this paper, formation of East Asian regionalism

based on East Asian historic identity is completely out of sight. There does
not seem to be any moves either on the Chinese side or Japanese side, to
revert to the historical and civilizational development of the two countries
seeking common ground of identity there. There does not seem to be any
moves to see current divide in power and historical memory as an aber-
ration which ought to be mended soon, and place the two countries in
search of respective historical identities.

Conclusion
In dealing the issue of present and future formation of East Asian region-
alism, the author considers that there are two-staged solutions for this
issue. First, there seems to be minimal conditions to ensure the creation of
regional community. Borrowing the wisdom of IR theoretical approach,
they are: (1) sufficient trust among participants to extinguish any seri-
ous security threat among members country should exist, (2) sufficient
conditions so that economic interdependence which in ordinary situa-
tion would become the basis of community formation should work, (3)
historical, cultural and civilizational sense of identity should find natural
place in community formation. At this point in time, there is a need to
overcome fundamental barrier which make a fatal obstacle to ensure these
conditions. In all factors raised above, Japan-China conflict on history and
territory really results in such a destructive consequence extinguishing all
hope for regional community building. It is therefore essential that on
pragmatic basis the two countries are recommended to take all measures
In this context of the necessity of alleviate tensions on immediate scale,
the author proposes three guiding principles:

(1) First, two sides seem to have a lot to request to the other. But the
efforts have to be mutual, and each side should try to become a good
158  K. TOGO

listener to the other. After all this is an unbeatable rule of diplomacy

that mankind came to learn.
(2) Second, on the territorial issue, since China is the status-­quo chang-
ing power, humility is required on the measure to assert its position.
Japan should by all available diplomatic measures become seriously
engaged in dialogue, but if China continues present-day usage
of physical power, alleviation of tension would become a faraway
agenda. China’s present official position that Japan’s “nationaliza-
tion” of Senkaku/Diaoyu gives the Chinese authority the right to
break into the territorial waters of Senkaku/Diaoyu, as is maintained
by Ren Xiao in this volume, cannot be accepted by most of Japanese
interlocutors but at the same time, as said above, this is no reason for
Japanese and Chinese authorities, let alone at track II level, to seri-
ously engage in any discussions related to these islands.
(3) Third, on historical memory issue, since Japan has been the perpe-
trator in its war of aggression to China and China as victim of that
aggression, it is Japan which is required of humility. It is Japan which
should establish and maintain that position based on humility and at
least do all efforts to remember it. But at the same time, reconcilia-
tion emerges only from two-way directions. If in the spirit of Robert
Schuman, China has the intention to establish reconciliation, then, at
least post-war Japanese pacifism as a response and penitence against
pre-­war Japanese brutality, Japan’s unwavering legal acceptance of
Tokyo Trial’s judgment by Article 11 of San Francisco Peace Treaty,
and 1995 Prime Minister Murayama’s Statement to guide Japanese
government policy of humility may be some factors to pay further
attention (Togo 2013).

But second, looking this issue from longer perspective, if the issue of
China’s rise ultimately develops to a search of new world civilizational
order, going beyond the established Eurocentric world order based on
Greek philosophy, Christianity, Industrial Revolution, and Euro-American
values, if that is the case, why does not China seek to establish a new world
order with all its civilizational values, but encompassing some of the best
of Western values of democracy and rule of law? If the true challenge com-
ing from China bears above-mentioned civilizational aspiration, why can-
not Japan reorient itself with a new civilizational vision of its own, just like
it did for 260 years in the Edo period, but now under an entirely different
transparence and openness in the age of globalization?4
 FORMATION OF REGIONAL COMMUNITY IN EAST ASIA: A JAPANESE...  159

It is my view that the best way for China and Japan to deal with the issue
of regional community building is, while seeking to adopt concrete mea-
sures to diminish tensions on history and territory, to engage in this civi-
lizational dialogue, bearing in mind the historically shared identity as well
as respective difference in accepting Western values, and trying to identify
mutually reinforcing respective direction of civilizational development.

Notes
1. “These commitments extend to all the territories under the Japanese admin-
istration of Japan, including the Senkaku Islands. In that context, the United
States opposes any unilateral action that seeks to undermine Japan’s admin-
istration of the Senkaku Islands.”
2. “United States and Japan are committed to taking the bold steps necessary
to compete a high-standard, ambitious, comprehensive Trans-Pacific
Partnership (TPP) agreement. Today we have identified a path forward on
important bilateral TPP issues. This marks a key milestone in the TPP nego-
tiations and will inject fresh momentum into the broader talks.”
3. Heian is the period when Kyoto became Japan’s capital.
4. The conclusion stated in this paragraph was presented by the author at the
ASAN Conference on “Future of History” held on April 22, 2014 in Seoul,
Korea.

Bibliography
Chugoku no keizai seichoritsu no sei’i. (no date). Available from: http://ecodb.
net/country/CN/imf_growth.html
Dower, J.  (1999). Embracing defeat: Japan in the wake of World War II
(pp. 485–524). New York: W.W. Norton.
Togo, K. (2008). Japan and the new security structures of Asian multilateralism.
In K.  Calder & F.  Fukuyama (Eds.), East Asia multilateralism: Prospect for
regional stability (pp.  168–197). Baltimore: The Johns Hopkins University
Press.
Togo, K. (2012a). The construction of East Asia community: Japan-China rela-
tions in its background. In K. Togo, K. Jyo, & E. Chin (Eds.), Transforming
EU and East Asia Community (pp.  121–150). Taiwan: Taiwan University
Publication.
Togo, K. (2012b). Japanese national identity: Evolution and prospects. In
G.  Rozman (Ed.), East Asian national identities: Common roots and Chinese
160  K. TOGO

exceptionalism (pp.  147–168). Washington, DC: Woodrow Wilson Center

Press.
Togo, K. (Ed.). (2013). Japan and reconciliation in post-war Asia: The Murayama
statement and its implications (Palgrave Pivot series). New  York: Palgrave
Macmillan.
 CHAPTER 9

Rebuilding Sino-US Cooperation Over

North Korea Nuclear Issue

Jishe Fan

Since the eruption of North Korea nuclear crisis in early 1993, the past
two decades witnessed the ups and downs, on and off, of the negotia-
tion over denuclearization in the Korean Peninsula. However, on the one
hand, no long-lasting solution has been reached yet so far; on the other
hand, North Korea has been investing on and developing its nuclear and
missile programs. This article will try to answer the following questions:
What is the current status and future of North Korean nuclear capability?
What is the major difference in China and American policy toward North
Korean nuclear issue? How to rebuild Sino-US cooperation over North
Korea nuclear issue?

North Korea Nuclear Program: Current Status

and Uncertain Future

Concerns over North Korea’s nuclear capability mainly include North

Korea’s stock of plutonium, uranium enrichment program, and North
Korea’s potential to weaponize its nuclear materials.

J. Fan (*)
Institute of American Studies, Chinese Academy of Social Sciences,
Beijing, China

© The Author(s) 2016 161

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_9
162  J. FAN

North Korea’s Plutonium

North Korea got its plutonium from the 5  MW nuclear reactor in
Yongbyon, which was shut down in July 2007 with the presence of IAEA
inspectors, and its cooling tower demolished one year later. In April
2009, immediately after the UN Security Council passed the President’s
Statement condemning North Korea’s satellite launch, IAEA inspectors
were kicked out of North Korea. Ever since then, there is no more verifica-
tion activities in North Korea. In early 2014, North Korea declared that it
would restart the 5 MW reactor, which means it might be able to produce
plutonium enough for one bomb every year.
How much plutonium has been separated by North Korea in the past
remains controversial, and estimates vary much. It is reported that North
Korea declared 37-kilogram plutonium in its declaration under the six
party talks (Strobel 2008). According to David Albright from Institute of
Science and International Security, “As of February 2007, North Korea
has a total estimated plutonium stock of between 46 and 64 kilograms of
plutonium, of which about 28–50 kilograms are estimated to be in sepa-
rated form and usable in nuclear weapons (Albright and Brannan 2007).
According to Dr. Siegfried Hecker’s estimate, North Korea may have
obtained 24–42 kilograms of plutonium, enough for 4 to 8 nuclear war-
heads, and North Korea is technically capable to restart the 5 MW nuclear
reactor within six months if they choose to do so. In September 15, 2015,
North Korea made an announcement via state media that its plutonium
and highly enriched uranium facilities at the main Yongbyon nuclear com-
plex had been “rearranged, changed or readjusted and they started normal
operation” (McCurry 2015).
North Korea has conducted three nuclear tests in 2006, 2009, and
2013, respectively, thus, part of it stock of plutonium has been used in
these tests. There is rumor that North Korea might conduct more nuclear
tests, though nobody knows for sure when it might happen.
At this moment, North Korea is building a light water reactor with the
capacity of 25–30 MW, and if this reactor comes to operation, it has the
potential to produce plutonium as well, though not as suitable for nuclear
warhead as the plutonium separated from spent fuels from 5 MW reactor.

North Korea’s Uranium Program

North Korea’s uranium program remains a mystery for almost all North
Korea observers, and practitioners as well. In April 2009, North Korea
announced that it would build its own fuel cycle system for the light water
 REBUILDING SINO-US COOPERATION OVER NORTH KOREA NUCLEAR ISSUE  163

reactor, and five months later North Korea declared that major prog-
ress had been made in uranium enrichment technology. One year later
in November 2010, North Koreans displayed their uranium enrichment
facilities in Yongbyon to a delegation from Stanford University. According
to Dr. Hecker, member of the Stanford University delegation, there were
about 2000 centrifuges in Yongbyon, and judging by the constructing
speed of the centrifuge facilities, the advanced level they achieved, and
traces of uranium enrichment found in the past, the uranium enrichment
program displayed to them certainly was not the only one. North Korea
insists this uranium enrichment program is to produce 3.5% low-enriched
uranium for the light water reactor. However, many American experts
believe that the recently disclosed uranium program could be the second
route for North Korean to build up its nuclear material stock. According
to recent satellite images, North Korea is expanding its enrichment plant
rapidly, and nobody knows for sure what is going on there.

Weaponization
So far, North Korea has done three nuclear tests, but that does not neces-
sarily mean North Korea has already had nuclear weapons. To weaponize
the fissile material and do the test is only the first step; they also need to
miniaturize the nuclear device so that it could be mounted onto a delivery
system. No doubt, North Korea has mastered the technical capability to
weaponize its fissile material; North Korean officials told American expert
Selig Harrison that North Korea declared stock of plutonium has “already
been weaponized” (Arms Control Association 2015). However, whether
they have mastered the technical capability to miniaturizing it and fit it
onto its missiles remains an open question. Former CIA officer indicated
that with the third nuclear test early this year North Korea was moving
toward that capability, but now they were not there yet (PBS 2013). Some
experts said that North Korea is “very close to being able to put a device
on a missile (Fox News 2013).”
North Korea has proven short-range missile capability, and that is
no secret at all. The question left is that whether they are working on
longer-­range missile as well. In October 2010, North Korea displayed
an untested new missile “Musudan” at a parade, which is estimated has a
range more than 3000 KMs. North Korea also has road mobile ICBMs
called KN-08, which was displayed in April 2012 at the parade in honor
of Kim Il Sung’s 100th birthday (Schiller 2012). In October 10, 2015,
164  J. FAN

North Korea ­displayed its KN-08 ballistic missiles once again the military
parade celebrating the 70th anniversary of the Workers’ Party of Korea.
Other than Musudan and KN-08, North Korea in the past decade also
tested flight of rocket Taepodong II, Unha-2, and Unha-3. After several
failures, North Korea successfully put a satellite into orbit in December
2012, which was considered as a major breakthrough in its efforts to
develop ICBM technology.

North Korea Nuclear Program and Its Future

With regard to North Korea’s development of its nuclear program in the
past two decades, several points could be made.
First, North Korea has accumulated fissile material enough for several
nuclear warheads, and it has mastered the technology to make nuclear
bomb. North Koreans talked the talk, and walked the walk. They were
trying to convince all countries concerned that they are determined to
obtain its nuclear deterrent.
Second, other than obtaining plutonium by reprocessing the spent fuel
of the 5 MW nuclear reactor, North Korea is trying the second path to
obtain nuclear material, namely, high-enriched uranium. If no deal is to be
made, North Korea has the potential to build up its fissile material.
Third, if time permits, North Korea has the potential to miniaturize
its nuclear device and mount it onto a delivery system, and possibly long-­
range missiles.

China and America’s Policy: Convergence

and Divergence

North Korea nuclear issue is not only a proliferation concern, but also a
regional security concern. Both China and the USA have made commit-
ment in preventing the proliferation of weapons of mass destruction, and
both countries are committed to maintain the peace and stability in the
Korean Peninsula. In this sense, China and the USA share common inter-
ests in preventing nuclear proliferation, a horizontal one in the Korean
Peninsula, and maintaining the stability in Northeast Asia. China and the
USA have cooperated in dealing with the challenge from North Korea in
the past two decades. In 1990s, China did the job behind scenes in the
negotiation of the Agreed Framework, and in the past decade, China hosted
 REBUILDING SINO-US COOPERATION OVER NORTH KOREA NUCLEAR ISSUE  165

the six party talks aiming at denuclearizing the North Korea nuclear pro-
gram. Other than that, China also supported all the UN Security Council
Sanction Resolutions and UN Security Council’s Presidential Statement
immediately after North Korea did nuclear test or missile test.
With so many Diplomatic efforts made, and diplomatic energy invested,
then why all countries failed to convince North Korea to renounce its
nuclear ambition? All countries not only failed in curbing the North Korea
nuclear proliferation, but also failed in maintaining the regional stabil-
ity. The Cheonan Warship incident and the Yeonpyeong Shelling almost
brought the Korean Peninsula into a major regional military conflict.
North Korea nuclear issue became an irritant issue in Sino-US relations
as well, as demonstrated by the disputes over whether US aircraft carrier
could enter into the Yellow Sea in June 2010. As argued by Professor
Kenneth Lieberthal and Professor Wang Jisi in their article, North Korea
became one of the sources of strategic distrust in Sino-US relationship
(Lieberthal and Wang 2012).
The reason for such a diplomatic failure lies in China and the USA’s
policy difference toward North Korea. First, China and the USA share
common goal while addressing the nuclear challenge from North Korea,
namely denuclearization and stability, but differ in priority or sequence.
China is committed to the denuclearization of the Korean Peninsula,
but has deep worries of any possible instability incurred in the Korean
Peninsula and its ramification for Northeast Asia. Thus, China tends to
emphasize stability over denuclearization. Many officials and scholars in
China believe that US tough policy toward North Korea is to maximize
the external pressure against North Korea so that North Korea could
be brought down, and then the nuclear proliferation challenge could be
solved naturally by regime change like what happened in Iraq. Therefore,
China tried to maintain a balance between the two policy goals of denucle-
arization and stability. For the USA, denuclearizing North Korea is the
foremost important goal, and if necessary, denuclearization should be pur-
sued at the expense of stability.
Second, China and the USA favor different approaches in dealing with
the North Korea. As reflected in China’s White Paper on Endeavors for
Arms Control, Disarmament and Non-Proliferation, “proliferation of
WMD has complicated root causes. In order to prevent their proliferation,
an integrated approach must be adopted to address both the s­ ymptoms and
166  J. FAN

the root causes (Information Office of the State Council of the People’s
Republic of China 2005)”. The integrated approach includes building a
global security environment of cooperation and mutual trust, resorting to
political and diplomatic means (seeking dialogue instead of confrontation,
seeking cooperation instead of pressuring) to solve the proliferation prob-
lems. China does not think sanctions, or pressure of any kind, will work
if the root course of proliferation is not eliminated. In addition, China
emphasizes finding a face-saving approach as well, and does not think pub-
lic confrontation helpful for nonproliferation efforts.
By contrast, the USA tends to discuss proliferation directly, and does
not bother to address the root causes of proliferation. All American offi-
cials like to say that all options, including dialogue, negotiations, sanctions,
threat of the use of force, and military strikes, are on the table. For China,
a political solution serves as a framework and once that political frame-
work is achieved, a nonproliferation challenge will become a “specific”
and “technical” issue to be tackled with easily. That is a “build down”
approach. For the USA, only when “specific” and “technical” issues
are dealt with successfully, will there be some hope for a political solu-
tion. That is “build up” approach. This difference between the Chinese
approach and American approach is somewhat similar to the difference
between traditional Chinese medicine and Western medicine. When there
is a symptom of illness, a Chinese doctor’s diagnosis is that something
might have gone wrong with the whole body, and the medical prescription
usually deals with the whole body rather than the affected part only. The
western doctor will address the same symptom differently, treating the
affected part in a targeted way with some specific medicine, treatment, or
running an operation if necessary.
Difference in approach matters much more than expected. China argues
that bilateral talks between North Korea and the USA are very important
for the diplomatic solution of North Korea nuclear issue, while the USA
argues that without denuclearization there is no hope for any relaxation
of political relations. As a result, North Korea nuclear issue becomes one
source of finger pointing between China and the USA.  China blames
that the USA continues a failed, rigid, tough policy toward North Korea,
while the USA blames that China is not willing to exert pressure against
North Korea which might be necessary to bring North Korea back to the
­negotiation table.
 REBUILDING SINO-US COOPERATION OVER NORTH KOREA NUCLEAR ISSUE  167

Third, North Korea nuclear issue was narrowly defined as a prolif-

eration concern, though it should be understood in the framework of
regional security arrangement. In short, China and the USA hold different
views of this issue: Is it a North Korea nuclear issue only, or is it a Korean
Peninsula issue? The Cold War era was officially ended for more than two
decades, but the Northeast Asia remains locked up in a Cold War state. In
this sense, North Korea nuclear issue is more of a regional security issue
rather than a proliferation concern only.
If North Korea nuclear issue is framed as a proliferation concern, then
six party talks will turn out to be a platform of five countries to put pres-
sure on North Korea, and North Korea’s legitimate concern might be
ignored intentionally. Under such circumstance, it is understandable that
North Korea would turn on the six party talks when its concern was par-
tially addressed, and turn off the six party talks when its concern was not
addressed at all.
If North Korea nuclear issue is framed as a regional security issue, then
any talks or negotiations should address the bigger issue, such as North
Korea’s perceived security threat, its desire for any sort of diplomatic rela-
tions with the USA, the replacement of armistice agreement with a peace
treaty, and so on.
The past two decades witnessed the successful negotiations of the first
nuclear crisis starting in early 1993 when North Korea’s legitimate con-
cern was addressed, and the failed negotiation in the second nuclear cri-
sis starting in late 2002 when not enough attention was paid to North
Korea’s legitimate concern.
Fourth, the US policy toward North Korea did not respect or address
China’s concern in the possible solution of this issue. Together with
North Korea, China fought a war six decades ago against the USA and
South Korea to keep US troops away from Chinese border. Ever since
then, China maintained a close tie with North Korea. Certainly China
has historical, geopolitical, even economic interests in the final solution of
North Korea nuclear issue, and any instability in Korean Peninsula might
endanger these interests. Most of the time, China’s policy in nonprolifera-
tion is not to choose one interest against the others, but to balance long-­
term and short-term national interests. Therefore, it is very important
for China and the USA to find a balanced way to address these concerns
simultaneously, and it is too idealistic to expect China to echo other coun-
tries concerns without reservation.
168  J. FAN

Rebuilding Sino-US Cooperation over North Korea

Nuclear Issue
How to fix the problem and rebuild Sino-US cooperation over North
Korea nuclear issue? A strategic consensus should be agreed upon by both
China and the USA. A strategic consensus in North Korea nuclear issue
does not necessarily refer to a full agreement upon this issue, but it is
very important for both countries to reach consensus on this issue: the
common assessment of those common interests endangered by crisis, the
understanding and respect of the counterpart’s key concerns and policy
preferences, and more importantly, the choice of appropriate framework
to manage the crisis.
For China and the USA, neither country wants the stalemate in the
Korean Peninsula to deteriorate, nor they want to see any further challenge
from North Korea. Even though China and the USA share the common
interests of stability and denuclearization in the Korean Peninsula, the
worse scenario might be neither goal could be achieved. In addition, due
to the unstated poisonous atmosphere after the USA publicly announced
its Asia Rebalancing Strategy, American military moves in the name of
deterring North Korea as activities will be considered as doing harm to
China’s security interests, such as American missile defense capacity build-
ing in Asia, the strengthening of American military alliance. There exists
the danger that North Korea nuclear issue might be transformed into a
troublesome issue between China and the USA.
The two goals of denuclearization and stability are both important for
both countries, and even though China prefers stability to denucleariza-
tion and the USA prefers denuclearization to stability, it is not an issue
to choose one against the other. Both goals could be compatible and
­mutually enforcing. If both countries continue the halfhearted coopera-
tion, mutual distrust is likely to be strengthened, and suspicions deepened.
The past decade witnessed the policy failure for both countries, and
the key reason is that both China and the USA could not agree on the
framework to address North Korea nuclear challenge, namely, the policy
toward North Korea is to promote regime change or to promote regime
transformation? To promote regime change proactively may not be US
policy at this moment, but Obama Administration’s policy seems to wait
for North Korea to collapse. China had made efforts in the past, and
China is making efforts now to promote regime transformation. Whether
it is regime change or regime collapse, the fallout is not in the interests of
 REBUILDING SINO-US COOPERATION OVER NORTH KOREA NUCLEAR ISSUE  169

any ­country in this region. China does not support such policy. If the goal
is to promote regime change, it will be mission impossible to persuade
North Korea to give up its nuclear option, and there would not be any
hope for denuclearization. However, China’s effort to promote regime
transformation, if without support or cooperation from the USA, is less
likely to succeed in near term either.
If the strategic consensus could be reached, China and the USA can
rebuild their cooperation and coordination when addressing the North
Korea nuclear challenge. Since diplomatic efforts in the past two decades
failed to convince North Korea to renounce its nuclear option, it might be
the time for China and the USA to try other alternatives, or to put it the
other way, why not try to promote North Korea’s regime transformation.
First, both China and the USA could learn from past nonproliferation
issues. Since the end of Cold War, there are several examples of successful
and failed diplomatic efforts in curbing the nuclear proliferation. Belarus,
Ukraine, and Kazakhstan inherited nuclear weapons when Soviet Union
collapsed, with the security guarantee from both the USA and Russia, and
economic assistance, these three countries gave up their nuclear weap-
ons, and signed the NPT. South Africa developed nuclear bombs without
being found by international community, but with the change of external
security environment and the aspiration to get integrated into interna-
tional community; South Africa voluntarily abandoned its nuclear option.
The UK and the USA negotiated away Libya’s weapons of mass destruc-
tion (WMD) program. India and Pakistan did nuclear tests in 1998, and
both were sanctioned by UN Security Council. They survived from sanc-
tions, and became de facto nuclear weapon states. With a war lasted for ten
years, Iraq’s WMD program was eliminated with an almost unaffordable
price for the USA and for Iraqi people.
In these cases, nuclear proliferation concern could be solved in dif-
ferent ways; however, sanction and isolation did not force India and
Pakistan to give up their nuclear weapon program. In the North Korea
case, solution by war is a non-starter simply because a war is not afford-
able for all countries concerned, and sanction and isolation did not work
in the past either.
North Korea has the incentive to learn from the past as well. After
several nuclear tests and satellite launches, North Korea is further isolated
in international society. In March 2015, North Korea officially unveiled a
new strategy of carrying out economic construction and building nuclear
armed forces simultaneously (Xinhua 2013). If North Korea does not
170  J. FAN

come back to the negotiation table, and continue its nuclear program
and provocative activities, the pressure it is facing will accumulate further-
more. South Korea is less likely to tolerate another provocation similar
to Cheonan Incident or Yeongpyong Shelling. Without the change of its
external security environment and integrating into the international com-
munity, it is almost impossible for North Korea to achieve the twin goals.
The aforementioned successful or failed nonproliferation cases might shed
some light for North Korea’s future, and it is time to encourage North
Korea to follow the example of Ukraine, Belarus, Kazakhstan, South
Africa, and Libya instead of the example of Iraq, India, and Pakistan.
Second, China and the USA should help to nurture an external envi-
ronment conducive to North Korea’s regime transformation. There is an
internal requirement for opening up and reform, and North Korea indi-
cated to move toward such direction, such as sending out skilled workers
to other countries, rumors of disarming 300,000 army, Kim Jung-Un’s
frequent visit to places immediately relevant to economic life.
For North Korea, two elements could seriously affect their decision
to open up and reform, that is, how to maintain domestic stability while
opening up and reform, and how to shift focus from developing military
to developing economy. China could help North Korea with the first con-
cern by sharing China’s experience. However, the second concern can
only be addressed by the USA. North Korea insisted that the nuclear issue
is the outcome of the US hostile policy toward North Korea, and accord-
ing to the lengthy memorandum issued by North Korea Foreign Ministry
on August 31, 2012, the USA refuses “to recognize the DPRK as a sov-
ereign state with whom it may co-exist in the international community”
is hostile policy (Korea News Service 2012). If the USA could offer the
hope of establishing diplomatic relations with North Korea, then there is
a possibility of regime transformation.
Third, other than that, all countries concerned should also gather to
discuss how to replace the armistice agreement with a peace treaty so that
a long-lasting solution could be achieved. The key players should include
China, the USA, North Korea, and South Korea. Other countries could
get involved in this process as well. All four countries could reactivate the
four party talks, and the six party talks could serve as a broader platform
to endorse and implement agreements achieved in the four party talks.
Fourth, it might be a bit later, however, better late than never, experts
from both countries should conduct joint review of their countries’ poli-
cies toward North Korea. The purpose would be to find out why both
countries have succeeded or have failed in the past, and to explore the
 REBUILDING SINO-US COOPERATION OVER NORTH KOREA NUCLEAR ISSUE  171

reason behind those successes and failures. Based on that kind of policy
review, it would be equally important for experts from both countries to
assess jointly each country’s respective interests and stakes in a nuclearized
or a denuclearized Northeast Asia.
Fifth, in case North Korea conducts provocative actions in the future,
China and the USA should work together and send out the same message
to North Korea, leaving no room for North Korea to manipulate differ-
ences between China and the USA. Should China be alerted of any pos-
sible provocative moves by North Korea in advance, China could use its
ties with North Korea to urge it to exercise restraint and prevent it from
escalating the fragile situation. Should North Korea initiate any actions
which could be viewed as a direct violation of UNSC resolutions and dam-
aging to regional stability, China and the USA should consult closely to
figure out a proper response.
Sixth, both China and the USA could try any form of negotiation that
may lead to progress and that is conducive to the final solution. Ever since
the emergence of the North Korea nuclear crisis, many forms of negotia-
tion have been tried, including bilateral talks, three party talks, four party
talks, and six party talks. It is not an issue of choosing one against the other;
to solve the proliferation challenge from North Korea, any form of nego-
tiation should be explored. Bilateral negotiations and multilateral nego-
tiations could be mutually reinforcing and complementary. Certainly, the
history of negotiations with North Korea indicates the results of neither
bilateral negotiation nor multilateral negotiations are sufficient. Bilateral
negotiations might be interpreted differently and turn out to be difficult
to implement, while negotiations in a multilateral s­etting might dilute
the core issue and make a consensus difficult to achieve. Therefore, in the
future, it is worthwhile for the USA to address the core issues with North
Korea in a bilateral setting, but the achievements should be endorsed in
the multilateral setting.
Finally, in case the current situation in the Korean Peninsula goes from
bad to worse, it is worthwhile for both China and the USA to further their
cooperation under the umbrella of Global Initiative to Combat Nuclear
Terrorism. China and the USA could take measures as required jointly or
unilaterally in the following areas: sharing information of nuclear or radio-
logical material smuggling; building up China’s capacity to scan or inspect
cargos transiting Chinese ports or airports, with technical assistance from
the USA; increasing scanning or inspection of particular cargos transiting
Chinese territory, waters, or airspace, if authoritative information warrants
these actions; conducting dialogues over emergency response to nuclear
security dangers in Northeast Asia.
172  J. FAN

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lish/world/2013-03/31/c_132274938.htm
 CHAPTER 10

Pathways to a Northeast Asian Energy

Regime

Gaye Christoffersen

Introduction
Northeast Asia would benefit from greater energy cooperation, organized
within an institutional framework that would facilitate cross-­border infra-
structure. The region has contemplated numerous initiatives for the past
two decades, but has failed to form a cooperative mechanism for energy
cooperation between China, Russia, Japan, South Korea, and North
Korea. These numerous initiatives were never successfully realized because
each country has its own vision of a Northeast Asian (NEA) regional
order which informs its understanding of how energy relations should be
organized.
Alternative explanations for the failure to implement a region-wide
mechanism for energy cooperation include the bitter historical lega-
cies that fracture the region, different political systems, and discordant
domestic politics. Some scholars argue that a great power balance is a
precondition for NEA regime formation (Rozman 2004). Some schol-
ars argue that NEA’s regional “organizational deficit” requires external
involvement from outside actors such as the USA, UN Economic and
Social Commission for Asia and the Pacific (UNESCAP), or Association of

G. Christoffersen (*)
Hopkins-Nanjing Center, Johns Hopkins-SAIS, Nanjing, China

© The Author(s) 2016 173

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_10
174  G. CHRISTOFFERSEN

South East Asian Nations (ASEAN) to form a regime (Swanström 2005).

Other scholars have made the case that transnational civil society orga-
nizations (CSOs) could play a role in expanding institutionalization of
regional regimes, creating domestic-regional linkages that by-pass state-
to-­state relations (Kim 2006b, p. 5).
A principal source of difficulty in implementing a broad vision for NEA
energy cooperation and related efforts can be found in the failure to form
regional consensus on a regime at the Track I level. Each NEA nation has
tried to assume the role of regime maker and place itself at the center of its
own vision of regional order. However, each has failed to persuade all six
NEA countries to recognize its leadership.
As the following discussion illustrates, it is misleading to narrowly
focus only at the Track I, top-down level to assess the prospects for
NEA oil and gas cooperation. A broader focus, including an examina-
tion of those smaller, cooperative projects in functional areas that could
become the root of an expanded regional project, yields a more accu-
rate picture. Examining these initiatives requires assessing the numerous
bottom-up Track II energy initiatives that NEA countries have been a part
of, as well as the wider East Asian and Asia Pacific organizations—Asia
Pacific Economic Cooperation (APEC), ASEAN Regional Forum (ARF),
ASEAN plus China, Japan, South Korea (ASEAN+3), and their energy
working groups.
In addition, it should include initiatives that represent attempts at NEA
institutionalization that have failed and yet contributed to broad regional
learning, or the strengthening of an epistemic community in support of
regional cooperation robust enough to move efforts from idea to action.
Some initiatives go dormant without actually failing, called “Zombie ini-
tiatives,” neither entirely dead nor entirely alive (APERC 2007). In other
words, Zombie initiatives provide a framework that could be revived—
given new meaning and content at a future date. This broader approach,
including both Track I and Track II projects, failed institutions, and
Zombie initiatives, provides a comprehensive understanding of the possi-
bilities of a future NEA energy regime which could be nested in East Asian
and Asia Pacific energy regimes.
Rather than a comprehensive, unitary NEA energy regime, what is more
likely to emerge in the region is an “energy regime complex,” defined
as a mix of formal international institutions and informal networks, a
­patchwork of loosely linked institutions (Prantl 2011). A regime complex
does not necessarily form as a process of gradual, incremental institutional
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  175

change. Stephen Krasner (1984) has argued, for example, that institutional
change reflects a pattern of “punctuated equilibrium” oscillating between
phases of stasis followed by phases of innovation. Applied to international
relations, punctuated equilibrium attempts to explain institutional change
in clusters of international organizations known as “regime complexes.”
This concept has been used to explain institutional change in the global
energy regime complex over the last four decades, finding path depen-
dence and incremental change within existing institutions until accumu-
lated dissatisfaction requires a response. An energy crisis can shock states
into creating new institutions in response to the crisis (Colgan et  al.
2012). This notion of shock resonates with Kent Calder’s and Min Ye’s
thesis on policymaking—crises can create critical junctures, opportunities
to go in new directions. Accumulated dissatisfaction and periodic crises in
Northeast Asia has been a result of North Korea’s foreign policy behav-
ior—nuclear tests and missile tests—which have motivated other NEA
nations to consider institutional mechanisms in response.
With these alternative pathways in mind—punctuated equilibrium,
interest homogeneity, and crises as the source of institutional innova-
tion—this chapter will demonstrate that the more likely and workable
pathway to NEA institutional design may well begin with a small cluster
of countries cooperating in a “mini-lateral” project, with a limited number
of norms and rules. A mini-lateral group can more easily achieve consen-
sus on the provision of international public goods than a larger group-
ing could. Since mini-lateral groupings by their very nature are ad hoc,
transitional arrangements, they inherently have potential to be the loci
of institutional innovation and evolve into something larger and more
permanent, perhaps in response to accumulated dissatisfaction or a crisis
(Barrett 2007).
This chapter assesses past efforts at institutionalizing Northeast Asia,
assuming path dependence, that is, previous organizational experience
constrains perceived options available for subsequent institutional design.
It also assumes that crises produce a critical juncture from which new
institutions are created (Komori 2009). Crises that currently shape NEA
energy thinking include the 2008 financial crisis, the Fukushima crisis, and
ongoing crises provided by North Korea. The 2014 Ukrainian crisis has
influenced Russian supply of natural gas to NEA.  The North American
shale gas revolution has created a critical juncture in NEA, widening its
options for sourcing LNG imports.
176  G. CHRISTOFFERSEN

This chapter attempts to identify the key initiatives undertaken by each

country and ascertains which mini-lateral is most likely to form the core
of a NEA energy regime.

The US Initiative: Korean Peninsula Energy

Development Organization
American policy analyst, Scott Snyder (2000), has argued that Korean
Peninsula Energy Development Organization (KEDO) was “an improb-
able, inadequate, incomplete, and unintended model for institutional-
ization of multilateral co-operation in the North Pacific region, yet it is
the most institutionalized concrete example of ‘functional multilateral-
ism’…” in NEA. The KEDO was created in 1995 to implement the 1994
US-DPRK Agreed Framework. This was a bilaterally negotiated agree-
ment that required a multilateral regime to implement. Japan and South
Korea joined the USA, agreeing to cover KEDO’s costs while several
other countries joined later and made financial contributions. China and
Russia were invited to participate but refused to join. China did encour-
age the DPRK to sign the Agreed Framework. However, Beijing claimed
China could better work for KEDO if it remained outside of the regime.
In return for the DPRK freezing and dismantling its nuclear program,
KEDO was to finance and construct two 1150 MW light water reactors,
and provide 500,000 tons of heavy fuel oil/year until those reactors could
generate electricity. In 2002, the DPRK’s alleged nuclear weapons pro-
gram undermined KEDO, and it was officially shut down in 2006. KEDO
still maintains a website to provide links to key documents (KEDO n.d.).
Pessimistic assessments of possibilities for NEA energy cooperation have
narrowly focused on KEDO.
However, KEDO has a robust legacy as the incubator of other regional
initiatives. During 1995–2002, KEDO fostered a US-Japan-South Korea
trilateral relationship in a Trilateral Coordination and Oversight Group
(TCOG), created in 1999 (Calder 2004). The TCOG became a mech-
anism for meeting prior to, and after, meetings of the Six-Party Talks.
In addition, a Four-Party process among other members of KEDO—the
USA, South Korea, North Korea, and China—emerged in the late 1990s.
What might be called “habits of cooperation” learned in KEDO contrib-
uted to facilitating what would become the “Six-Party process.”
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  177

The history of the Six-Party Talks and their failure is well known. The
USA had expected China to take a leadership role in encouraging North
Korea to participate in the Six-Party Talks. Some Chinese scholars had
high expectations for the Talks as the basis for forming a NEA security
regime. However, as Alastair Johnson’s (2003) study of this issue sug-
gests, Chinese policymakers remained insufficiently schooled in multilat-
eral thinking, despite regional expectations that they had been socialized
through participation in such regional groupings as the ARF. Moreover,
China had not appreciated the need to provide international public goods
if it were to take a leadership role in regime formation.
Chinese for their part blame the USA for the Six-Party Talks’ failed
institutionalization. Tsinghua Professor Sun Xuefeng (2010), for example,
identifies the chief challenge as a failed effort at “co-governance” with the
USA in the Six-Party Talks. Renmin University Professor Shi Yinhong,
assessing what China learned from the Six-Party Talks, leads him to con-
clude that Washington marginalized Beijing in the Six-Party process after
January 2007—perhaps referring to strengthening of the TCOG.  Shi
(2009) contends that other countries in the process ended up rubber-­
stamping US decisions. The USA was narrowly focused on the outcome
of DPRK denuclearization, while China was concerned with establishing
the process while it was still learning multilateral processes.
Progress toward institutionalization of the Six-Party Talks was reflected
in the formation of working groups for specific tasks agreed to in the
February 13, 2007 Joint Statement. Japan and the US WGs focused on
normalizing their respective bilateral relations with the DPRK; other
countries in the region assumed leadership for other processes. China led
a WG on the Denuclearization of the Korean Peninsula; Russia headed
a WG on construction of a NEA peace and security mechanism; South
Korea headed a Working Group on Economic and Energy Cooperation
(EEWG); South Korea was a good choice to lead the EEWG. As a mid-
dle power, South Korea had the most to gain from formation of a NEA
energy regime. The Korean Energy Economics Institute (KEEI) has done
much to foster shared understandings through regional meetings and
joint research projects. The EEWG had an initial task of delivery of heavy
fuel oil to the DPRK, but there were expectations that the group would
expand to a wider economic and energy agenda through a process of insti-
tutionalization (Haggard and Noland 2008).
North Korea’s April 5, 2009 missile test and its May 25, 2009 nuclear
test led to UNSC Resolution 1874, and DPRK’s declaration that they
178  G. CHRISTOFFERSEN

would never return to the Six-Party Talks. However, the Six-Party pro-
cess as a process has continued; the sustained activities of working groups
indicate progress toward some measure of institutionalization of regional
cooperation around a range of common security challenges (Snyder 2009).
These processes have also been sustained by a Track II project, the
Northeast Asian Cooperation Dialogue (NEACD), initiated by Professor
Susan Shirk at the University of California, San Diego, which has provided
important continuity when the talks are canceled by the DPRK. Begun in
1993 and meeting annually, the NEACD invites government officials to
engage in informal candid discussions. The Seoul 1996 meeting included
discussion on the security implications of energy demand, requested by
Beijing. The 2006 NEACD meeting in Tokyo functioned as a forum for
government negotiators to meet during a time when the Six-Party Talks
had stalled. The NEACD has brought energy experts together but does
not seem to have a NEA energy project.
Thus, while the US initiative, KEDO, is generally considered a failure
of institutionalization, it helped foster or enable several additional initia-
tives, including the TCOG, the Four-Party Talks, the Six-Party Talks, and
the EEWG, also accompanied by a Track II project with potential to sus-
tain dialogue and foster cooperation around a range of security issues in
the region even when Track I interactions falter. KEDO established a path
dependence for NEA that North Korean energy needs should be included
in subsequent energy regimes.

China’s Five-Country Energy Ministerial

The record of China’s role in a NEA energy regime is largely negative.
This can be linked to various factors, but certainly most important are
the preferences of China’s powerful NOCs, national oil companies, which
believe they have more to gain through fierce competition with other con-
suming countries rather than cooperation.
Nevertheless, despite this, Chinese energy reformers within the National
Development and Reform Commission (NDRC) had initiated a Five-­
Country Energy Ministerial. The Five-Country Energy Ministerial was
created in 2006 to coordinate the Strategic Petroleum Reserves (SPRs) of
the five largest petroleum importers—the USA, China, Japan, India, and
South Korea, which account for 42% of total world oil demand.
China’s promotion of an energy multilateral regime has generated
conflicting interpretations. Japanese scholar Hidetaka Yoshimatsu argues
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  179

that China has responded very passively to East Asian regional energy
initiatives in ASEAN+3 and the East Asian Summit because so many of
them were initiated by Japan. He claims that Beijing promoted the Five-­
Country Energy Ministerial as an alternative to these Japanese initiatives
(Yoshimatsu 2011). However, a Chinese analyst has argued that this Five-­
Country Energy Ministerial demonstrates Beijing’s interest in working
with other net consumer nations for their common energy security (Kong
2011).
China has not entirely shunned multilateral cooperation around energy.
It initiated the Tumen River Development Programme through collabo-
ration with the UN Development Programme (UNDP). This regional
initiative was first discussed within Track II groups in the late 1980s where
a regional division of labor was assumed: Russian oil and gas, Chinese
labor, and Japanese investment and technology. Until 2009, when North
Korea withdrew its participation, the Tumen project, now known as the
Greater Tumen Initiative (GTI), included China, Russia, both Koreas and
Mongolia—a mini-lateral, given the absence of the USA and Japan in the
grouping. The GTI Strategic Action Plan 2006–2015, sustained the proj-
ect’s longstanding interest in energy cooperation, and was expected to
provide a foundation for regional energy planning through 2015 (Gulidov
2009).
In addition, prior to the formation of the Five-Country Energy
Ministerial, there was a 30-year history of US-China bilateral energy coop-
eration that experienced increasing institutionalization over time, drawing
on both Track I and Track II projects. This bilateral energy cooperation
continued steadily through political crises in US-China relations, main-
taining a low profile below the radar screen of domestic politics, often car-
ried by Track II when governmental interaction was minimal. Track I often
piggybacked on Track II, for example, the First US-China Energy Policy
Dialogue (Track I) took place immediately following the 6th US-China
Oil & Gas Industry Forum (Track II) in June 2005. Robert Zoellick, US
Deputy Secretary of State, would include energy issues in his September
2005 speech asking China to be a responsible stakeholder in the inter-
national system. This included working with the USA in the newly cre-
ated Asia Pacific Partnership on Clean Development and Climate, working
with the International Energy Agency (IEA) to build SPRs, and within the
newly created US-China Energy Policy Dialogue (Zoellick 2005).
Chinese scholars have pointed out that China did not have a govern-
ment agency, a Ministry of Energy that could coordinate implementation
180  G. CHRISTOFFERSEN

of its energy diplomacy, either bilaterally or multilaterally. This resulted in

energy insecurity rooted in lack of state capacity to organize the Chinese
oil industry internationally, and the lack of energy policy coherence (Zha
and Hu 2007).
On December 15, 2006, the first meeting of the US-China Strategic
Economic Dialogue (SED) convened. Immediately following the SED,
China hosted the Five-Country Energy Ministers’ Meeting. US DOE
Secretary Bodman participated. It was the first energy multilateral regime
that China had initiated, an oil consumers’ multilateral regime with India,
Japan, South Korea, and the USA.  Minister of the NDRC, Ma Kai,
offered a six-point proposal for developing energy cooperation which was
incorporated into the Joint Statement issued by the Five-Country Energy
Ministerial (2005) on the need for energy conservation and efficiency,
cooperation building strategic petroleum reserves, greater transparency
of energy data, safeguarding the sea lanes of communication (SLOCs)
for energy transport, diversification of energy supply and energy mix, and
maintaining stability of international oil markets.
A second meeting in June 2008, held back-to-back with a G-8 Energy
Ministerial, produced a set of energy security principles that would be
incorporated a few weeks later into the Joint Statement of the bilateral
Fourth US-China SED that met June 17–18, 2008, in Washington,
D.C. The bilateral meeting also produced the US-China Ten Year Energy
and Environment Cooperation Framework. The bilateral framework reads
as if it was designed to be “nested” within these multilateral agreements
previously agreed to, and is simply reiterating them at the bilateral level.
Shoichi Itoh suggests that the December 2006 Five-Country Energy
Ministerial also contributed to furthering Sino-Japanese bilateral energy
cooperation when the two countries signed a bilateral memorandum of
understanding on energy conservation and environment at the December
2006 Ministerial. This was followed in April 2007 by the first policy dia-
logue of Chinese and Japanese energy ministers. A joint statement issued
at that time recognized that their cooperation enhanced energy security
for East Asia (Itoh 2008).
Since 2008, it appears that the Five-Country Energy Ministerial has
faded, becoming a failed institution or dormant initiative. Yet even as
a failed institution, it has contributed to NEA path dependence. Some
energy experts believe the Five-Country Energy Ministerial could be the
foundation of a NEA energy regime if Russia and North Korea joined
which would transform it into a producer-consumer dialogue (Herberg
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  181

2015). Former Chinese President Hu Jintao in 2006 came to realize the

importance of strengthening China’s capacity for energy diplomacy based
on Chinese experience in the Five-Country Energy Ministerial and he
made energy security a priority on China’s diplomatic agenda (Wang and
Qin 2012, p. 4).
Since 2011, Beijing has instructed Chinese analysts not to discuss NEA
multilateral energy initiatives and has also discouraged foreign analysts
from doing so, although Chinese continue to participate in NEA energy
dialogues.

Japan’s East Asian Energy Community

Japan, as a net importer of oil and gas, approaches energy security as a
problem of security of supply in need of a consumers’ dialogue. Japan
continues to be overly dependent on oil imports from the Middle East,
and has failed to diversify sources of supply. Oil and gas pipelines from
Russia had been envisioned as a more secure source of supply compared
to dependence on oil imports brought through SLOCs transiting choke-
points in the Persian Gulf and the Straits of Malacca.
Japan’s Northeast Asian Gas and Pipeline Forum (NAGPF) is a NEA
energy infrastructure initiative. It was officially started October 21, 1997
by a Japanese think tank, The Asia Pipeline Research Society of Japan
(APRSJ) with Japan, China, Korea, Mongolia, and Russia as members.
Japan’s political goal for the NAGPF was to create a long-term stable rela-
tionship with Russia through construction of a pipeline (Fesharaki et al.
2000). Because Russo-Japanese state-to-state relations are constrained
by territorial issues, there was ambiguity surrounding the organization of
NAGPF, giving it the appearance of a Track II initiative.
The initial ideas for NAGPF emerged in 1993, at about the time that
Moscow and Beijing began discussions on a Sino-Russian oil pipeline. The
formation of NAGPF had been preceded by international conferences in
1995 and 1996 that initiated regional discussions about the need for a
forum in which to build consensus around pipeline infrastructure.
The NAGPF characterizes itself as a nongovernmental CSO financially
supported by members, which include representation from across the
region: the Asia Gas & Pipeline Cooperation Research Centre of China
(AGPRCC); the Mineral Resources and Petroleum Authority of Mongolia
(MRPAM); the Korea Pan-Asian Natural Gas & Pipeline Association
(KPGA); the Asian Pipeline Research Society of the Russian Federation
182  G. CHRISTOFFERSEN

(ROSASIAGAS) (a cooperation of JSC Sakhaneftegaz in Sakha Republic,

and the Siberian Branch of the Russian Academy of Sciences’ Energy
Systems Institute in Irkutsk, Russia).
APRSJ has acted as the secretariat of NAGPF. The other NEA coun-
tries’ organizations are all funded by their respective governments. In
1998, NAGPF hoped the APEC Natural Gas Initiative for promoting
infrastructure, on which APEC energy ministers had agreed, would link
up with and be integrated with NAGPF NEA objectives but that did not
happen. Eventually, NAGPF discussion would broaden to include LNG
plants. Japan had an agreement with Russia to build an LNG plant in
Kozmino at the terminus of ESPO, although political issues have inter-
rupted its progress.
NAGPF meetings are held every two years. A NEA trans-regional
pipeline has not materialized but other objectives have been achieved
such as NEA consensus building within a regional epistemic community,
and Russian oil/gas pipelines have been built—the East Siberian-Pacific
Ocean (ESPO) and the Sakhalin-Khabarovsk-Vladivostok pipeline. Asia
Pacific Energy Research Centre (APERC) claims NAGPF has achieved
information sharing and capacity building through workshops and discus-
sions. There have been at least four joint research projects on the long-­
term vision for NEA energy infrastructure which no doubt contributed
to developing common understandings and consensus. The envisioning
projects have had an effect on regional perceptions of the viability of NEA
energy cooperation.
The organization’s visioning project, A Long-term Vision of Natural
Gas Infrastructure in Northeast Asia, had a 2009 version. NAGPF is now
organized under the Economic Research Institute for Northeast Asia in
Niigata (Ohashi 2010). Although the NAGPF helped to build a regional
consensus that NEA energy infrastructure cooperation was a logical idea,
as a Track II organization, it is generally considered by Japanese analysts to
have had no influence on governmental energy decisions and should thus
be considered a failed institution.
A Track I NEA regional framework had begun to emerge following
Prime Minister Koizumi’s announcement in January 2002 that Tokyo
intended to form an Asian Energy Community, using ASEAN+3 as the
framework. Tokyo’s project would create an “international public good,”
regional energy security, for all NEA countries. Tokyo, as provider of this
international public good, would take on a regional leadership role in an
area that is vital to Japanese national interests and to regional security and
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  183

stability. It was a consumers’ dialogue of net importers and did not include
Russia or the DPRK.
The Institute for Energy Economics Japan, which has housed APERC,
institutionalized relations with China’s Energy Research Institute under
the NDRC, and with the KEEI.  These three institutes would provide
energy expertise to ASEAN+3.
Japanese energy planners have long believed that Japanese energy secu-
rity would only be attained when energy security for the Asian region as
a whole, especially China’s, was attained. In summer 2001, the Advisory
Committee on Energy and Natural Resources had issued a report for the
Ministry of Economy, Trade and Industry that recommended Japan’s
energy security be situated within the Asian region’s energy security to
be considered as a whole (Asahi Shimbun 2001). The Japanese Ministry
of Foreign Affairs (2001) issued a statement on Japan’s energy diplomacy
in August 2001 which included the need for Asian energy security pro-
moted through international organizations such as IEA, the APEC Energy
Working Group, and bilateral energy consultations.
The Koizumi idea of an East Asian Energy Community was under-
mined in January 2003 when Koizumi traveled to Moscow and indicated
Japan’s interest in Russia’s oil pipeline ESPO extending to the Pacific
Ocean rather than being directed only toward China. This initiated the
open Sino-Japanese struggle for Russian oil. The Japanese government
was actually deeply divided over whether it should compete with China
for Russian oil. The pro-Russia faction promoted Japanese investment in
Russian oil while the “internationalists” promoted partnership with Asian
countries, especially China (Itoh 2010a).
Russia was also domestically divided between Transneft’s preference for
a Pacific pipeline and Rosneft’s preference for a Chinese pipeline. China
was also conflicted about whether or not it could rely on a Russian pipe-
line for its energy security given Russian vacillations over the pipeline that
increased Chinese insecurity. This struggle over ESPO has lowered the
expectations of a Russia-China-Japan mini-lateral forming the core of a
NEA energy regime.
Japan has thus taken a leadership role in several regional energy coop-
eration initiatives: the NAGPF, an Asian Energy Community based on
ASEAN+3 as the framework, Northeast Asia Petroleum Forum, and the
China-Japan-South Korea trilateral mechanism. However, the Japanese
government is often divided on energy relations with China and Russia.
Beijing’s shift away from multilateral energy cooperation negatively
184  G. CHRISTOFFERSEN

influenced Japanese expectations of China. Japan’s reliance on hybrid

organizations, that is mixed government/private initiatives, also creates
ambiguity about its level of political commitment. In addition, all of
Japan’s initiatives have several characteristics in common: they have con-
tributed to a sense in NEA that energy cooperation was desirable and fea-
sible; they have left the USA out of a NEA regional architecture, and they
all depend on Russian oil and gas although Russia was a full participant
only in NAGPF. Yet Japan, due to domestic politics and territorial disputes
with Russia, has not to date brought to fruition any energy cooperation
initiative at the Track I level.

South Korea’s Intergovernmental Collaborative

Mechanism on Energy Cooperation
in Northeast Asia

Northeast Asia’s larger powers, Russia, China, Japan, can rapidly slip into
resource competition and treat energy resources as an instrument of geo-
political strategies. That was the lesson for NEA from the Sino-Japanese
struggle over the Russian oil pipeline ESPO.  A South Korean analyst
claimed that neither China nor Japan had been successful in increas-
ing their energy security through this geopolitical struggle, yet neither
could shift from this traditional paradigm to a more cooperative security
paradigm at the Track I level (Choo 2006). South Korean analysis on
Sino-Japanese competition in general is disparaging, especially when it
negatively impacts East Asian institutionalization (Kim 2010).
An analyst at the KEEI identified the stages ASEAN and APEC had
taken in a top-down approach to regional energy cooperation as a model
for NEA to follow—political consensus formed, institutional framework
created, cooperative entity established, joint feasibility studies, actual
regional projects developed and implemented. He thought this would
eventually evolve into a common East Asian regional energy market. This
is a top-down approach because the regional political framework had
existed for decades before a regional energy project was developed. A
bottom-up approach would start with a regional cooperative project on
a commercial basis, and then create a multilateral cooperative framework
for that specific project which would be increasingly institutionalized as it
managed an actual project (Ryu 2010).
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  185

South Korea, as a middle power, has more to gain from a NEA energy
regime than its larger neighbors. Smaller countries have less capacity to
engage in geopolitical struggles for resources which leads them to seek
energy security through multilateral regimes. Consequently, South Korea
has persistently pursued an institutional framework for NEA energy coop-
eration, the Intergovernmental Collaborative Mechanism on Energy
Cooperation in Northeast Asia. Begun in 2001 with a symposium, Korea
called upon international organizations, UNESCAP and the IEA, to
provide support for institutionalization of this mechanism. Economic
and Social Commission for Asia and the Pacific (ESCAP) functions as
the Secretariat. Seoul would also draw on Track II meetings to discuss
and overcome impediments to implementation on the part of the larger
countries in the region of a regional energy mechanism. Russia joined
but China and Japan did not. Korea would find an ally in another smaller
country, Mongolia.
At a meeting of the Track II Working Group on Energy Cooperation
in Northeast Asia, one Korean analyst candidly assessed the issues: the
major powers were too competitive over resources and too reluctant to
commit to a cooperative multilateral approach; China promoted bilateral
arrangements; Japan’s promotion of regional cooperation did not extend
to Russian resources; Russia’s geopolitical maneuvering demonstrated it
preferred Asian competition to Asian cooperation; the USA was not sup-
portive of a NEA cooperative framework because it might decrease US
influence in the region; and middle powers Mongolia and South Korea
were too dependent on their larger neighbors for regional infrastructure
(Kim 2006a). For the mechanism to gain traction, South Korea would
need to take a leadership role itself.
By the November 2005 Ulaanbaatar meeting of the Korean initiative,
hosted by UNESCAP, the first Senior Officials Committee (SOC) adopted
the Intergovernmental Collaborative Mechanism on Energy Cooperation
in North-East Asia, with a project for Energy Cooperation in North-East
Asia (ECNEA). In addition, a Working Group on Energy Planning and
Cooperation (WG-EPP) was created to identify possible future coopera-
tion activities. The work plan would be coordinated by KEEI with part-
ner research institutes in each country. China’s response was to propose
very limited functions for the organization and suggested countries should
simply strengthen bilateral energy cooperation. A participant from KEEI
proposed a much more extensive agenda for regional cooperation and
called on the meeting to decide whether it would take a bottom-up
186  G. CHRISTOFFERSEN

(similar to the EU and IEA), or top-down (similar to ASEAN and APEC)

approach to multilateral energy cooperation. The necessary components
for successful implementation were in place: SOC, working group for
planning, a research institute KEEI to do required data collection, Track
II groups and an international organization, UNESCAP, to assist with
institutionalization.
UNESCAP issued a critique of ECNEA in December 2007 identi-
fying numerous challenges: low visibility, no benchmarks or long-term
strategies, short-term plans are ad hoc, China and Japan had not formally
joined, and the ECNEA initiative is not coordinated with other initiatives
in NEA (Saha 2007). In 2009, the WG-EPP created a Five-Year Strategy.
The September 2009 SOC meeting in Ulaanbaatar reviewed a report
by KEEI on the working groups during 2009, including: the Five-­
Year Strategy for implementing the Intergovernmental Collaborative
Mechanism on Energy Cooperation in North-East Asia, strengthen-
ing institutional arrangements, assessing the relevance and contribution
of the Mechanism to NEA energy cooperation, and inviting China and
Japan to become formal members of the Mechanism. Within the Five-
Year Strategy, it was planned to study possible oil and gas pipeline projects
from 2011, and to have investment plans for them ready by 2014. The
SOC also reviewed the activities of the GTI in energy cooperation.
South Korea’s leadership in this initiative had the necessary components
although it lacked Chinese and Japanese participation. On the positive
side, it had Russia’s membership in the Intergovernmental Collaborative
Mechanism on Energy Cooperation in Northeast Asia, ascribable per-
haps to the fact that the South Korean project was in effect a producer-­
consumer dialogue. Russian participation gave this mini-lateral potential
to form the core of a broader regional energy regime under the right
circumstances.

Russia’s Approach to Northeast Asian Energy

Cooperation
As the only net-exporter in NEA, Russia’s concept of energy security is
different, focused on “security of demand” at the highest possible price
with Russia in an interdependent relationship with consuming coun-
tries, expanding into their downstream markets (Brookings Institution
2006). Moscow seeks a producer-consumer dialogue that would create
stable demand. For Russia, a NEA energy regime should be the core of
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  187

a producer-­consumer dialogue in a much larger framework that would

impact world oil market prices. The primary Russian goal was to develop
the Russian Far East, an area in need of investment, infrastructure, and
better integration with the national economy (Saneev and Sokolov 2014,
pp.  181–182). Russian interest in NEA energy projects increased as
construction on the ESPO pipeline brought it closer to its terminus at
Kozmino Bay in Primorski Krai.
In 2010, a Russian analyst, at the Energy Research Institute of
the Russian Academy of Sciences, offered a concept of NEA energy
cooperation that would give Russian companies greater access to NEA
markets and promote “integration of Northeast Asian countries into a
unified Eurasian energy system” which would give Russia a larger role
(Kulagin 2010).
Russians hold a deep-seated fear that Russia could become a permanent
raw material appendage to Chinese, Japanese, and Korean industrializa-
tion as Russia itself de-industrialized, becoming dependent on East Asian
economies.
Russia has also demonstrated a preference for bilateral arrangements
over multilateral regimes, leading to concern that Russia cannot be social-
ized into the norms of Asia Pacific multilateralism. This impression is
based on the Sino-Japanese struggle for Russia’s ESPO pipeline, a com-
petition that Moscow encouraged. Some analysts believe that the Sino-­
Japanese scramble for ESPO is over, which will allow Russia to depoliticize
its energy strategy (Itoh 2010b).
Signaling a potential change in Russian behavior, a joint Russian-South
Korean leadership role in Northeast Asia emerged out of the mini-lateral,
the Intergovernmental Collaborative Mechanism on Energy Cooperation
in North-East Asia with a focus on a Russian-Korean gas pipeline. The
idea for a Russian-Korean gas pipeline was proposed in 1991 as the Vostok
Plan (Paik 2005). The USA in 2003 had considered a Russia-Korean
­pipeline as a means to end North Korea’s nuclear program, using gas from
ExxonMobil in Sakhalin I (Paik et al. 2012).
The Russian-Korean project was finally agreed to in September 2008,
during a bilateral summit in Moscow, in a memorandum of understanding
signed between the state-run Korea Gas Corporation (Kogas) and Russia’s
Gazprom. But the project was stalled as North-South Korean relations
became tenser. The project would give Russia a pathway into the Asia
Pacific that was not dependent on China or Japan. This would open up a
188  G. CHRISTOFFERSEN

new market for Russian energy exports and spur economic development
of the Russian Far East.
The third round of the Russian-Korean Strategic Dialogue met on
November 23, 2011 in Seoul, discussing tripartite projects: the gas pipe-
line from Russia through North Korea to South Korea, a power transmis-
sion line on the same route, and a railway network between Russia and the
two Koreas. Gazprom produced a roadmap for cooperation that it and
Korea Gas Corp. had agreed to in September 2011. North Korean leader
Kim Jong-il had given his support to the pipeline project in August 2011.
After Kim Jong-il’s death in December 2011, the new leadership of Kim
Jong-un continued to support the project.
Although North Korea would be a major beneficiary of the Russian-­
Korean gas pipeline, the Kim Jong-un government made unreasonable
demands regarding transit fees. Also, China had discouraged the Russian-­
Korean pipeline, promoting alternative routes via undersea pipelines from
Shandong to South Korea or from Dalian to South Korea. The Chinese
route would prevent Russian influence from expanding in North and
South Korea, displacing Chinese influence. By the end of 2012, South
Koreans were divided over the alternative routes, and North American
shale gas had become still another, more stable option for South Korea.

NEA Energy Dialogue

UNESCAP organized the “North-East Asia Sub-regional Consultation
Meeting,” November 2012  in Incheon, South Korea. It was meant as
preparation for the Asian and Pacific Energy Forum (APEF), a May 2013
Track I ministerial meeting in Vladivostok. The meeting brought together
key participants in the NEA energy epistemic community. The purpose of
the NEA meeting was to contribute to consensus building toward an Asia
Pacific regional energy strategy.
Japanese and Chinese participants did not offer substantive ideas. A
Japanese participant focused on domestic crises and noted that Japan
had not yet finished formulating a new Basic Energy Plan following the
Fukushima crisis. The role of nuclear energy had not been finalized. The
Basic Energy Plan would not be finished and adopted until April 2014.
Japanese participants stressed the necessity of NEA cooperation and sim-
ply reiterated the role of NAGPF in promoting a NEA natural gas infra-
structure vision.
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  189

A Chinese presentation emphasized China’s bilateral cooperation

regionally, through “energy channels” that radiated out from China
to Russia, Central Asia, Myanmar, and offshore for oil and gas, and to
North Korea for coal. These energy channels exist within the inner ring
of the Sino-centric order (Gao 2012). Another Chinese presenter also
emphasized bilateral energy cooperation. He suggested creating a shared
NEA oil stockpile (SPR), the original idea of the Five-Country Energy
Ministerial, and construction of energy trans-border infrastructure, with-
out specifying, however, how China might evolve from bilateral projects
to multilateral infrastructure (Ou 2012).
South Korea provided more leadership. Korean consultants prepared
a background paper for the meeting that focused on the NEA organi-
zational deficit: NEA needed a ministerial-level meeting at the Track I
level that would renew the political mandate for NEA energy cooperation
with less geopolitical struggles over energy. NEA needed a “more effec-
tive institutional design” that could be created by building on an existing
institutional framework or creating a new one; NEA energy coopera-
tion should be nested within APEC and ASEAN+3 cooperative projects
through institutional networking (Lee and Yu 2012).
The NEA meeting report, submitted to the Asia Pacific Energy Forum
in May 2013, noted the benefits of NEA cooperation were not clearly visu-
alized by the region despite the large number of initiatives for NEA energy
cooperation (UNESCAP 2012). APEF subsequently recommended that
NEA energy experts keep networking to strengthen cooperation, that is,
continue to build the NEA energy epistemic community and promote
cross-border energy infrastructure.

Conclusion
Although a comprehensive NEA region-wide energy regime has not yet
formed, there are several mini-lateral projects for energy cooperation that
are functioning or emerging. This patchwork of competing and overlap-
ping, loosely linked institutions at both the Track I and Track II levels
constitute an emergent NEA “energy regime complex.” Could these
evolve into a unified, comprehensive energy security regime for the region
in the future?
There is much rhetoric about commonality of interests in NEA, but the
constant stream of new energy initiatives indicates the exact opposite. Each
NEA country has tried to institutionalize its project into a region-wide
190  G. CHRISTOFFERSEN

regime, but no project has included all the NEA countries as mem-
bers. South Korea is the driver of the Intergovernmental Collaborative
Mechanism on Energy Cooperation in Northeast Asia but China and
Japan did not join. The USA led the KEDO initiative, but China and
Russia did not join. Japan has provided leadership for many East Asian
projects in which the USA and Russia do not participate. China’s ini-
tiative in constructing the Five-Country Energy Ministerial did not lead
to further Chinese NEA energy initiatives. Despite all the Sino-Japanese
discussion of rules for NEA regime formation, Sino-Japanese resource
competition appeared to be a no-holds-­barred struggle with no rules.
China does not join the Russian-North Korean-South Korean mini-lat-
eral, and has tried to undermine it. The Sino-Russian oil relationship has
so far lacked the capacity to form the basis for a NEA regional regime
(Christoffersen 2002, pp. 39–58).
In contemporary discussions on organizing NEA, it is surprising how
often failed institutions, such as KEDO, the Vostok Plan, or the Five-
Country Energy Ministerial, are resurrected or some of their concepts
and practices are rediscovered and incorporated into a new initiative. This
is the path dependence of formation of a NEA energy regime complex.
Notably, what has remained constant since the late 1980s is the idea that
a NEA energy regime should include consideration of NEA countries
jointly meeting North Korean energy demand. Its latest manifestation is
the Russian-Korean gas pipeline initiative. These initiatives go dormant for
long periods of time, neither failing nor succeeding, sometimes looking
like a Zombie initiative, but in the end there is a strong possibility they
could be realized.
Some Chinese analysts have argued for an end to NEA organizational
chaos. Zhang Jianping of the NDRC, for example, has suggested that
there needs to be a unified system because the large variety of regional
energy cooperation initiatives, especially competing Japanese, Chinese,
and Korean initiatives, had not created greater stability in NEA energy
supply and demand. Finding common ground among all of these NEA
initiatives could enable them to establish a “unified multilateral inter-
governmental energy cooperation mechanism” which would also draw
on the Track II work of CSOs, research institutes, and private enterprises
(Zhang 2009).
The China-Japan-South Korea trilateral mechanism has many features
that suggest it is the best candidate to form the core of a NEA energy
regime. However, Sino-Japanese conflict over the Diaoyu/Senkaku
 PATHWAYS TO A NORTHEAST ASIAN ENERGY REGIME  191

Islands, and Korean-Japanese conflict over the Dokdo/Takeshima Islands,

has impeded this trilateral mechanism.
Deepening (and thus strengthening focus and identity) is more read-
ily achieved in one of the region’s mini-laterals designed for a concrete
project. When the mini-lateral regime has acquired a clear identity and
purpose, it can then broaden to include additional members. Existing
mini-laterals, US-South Korea-Japan, China-Japan-South Korea, and
Russia-South Korea-North Korea, all thus represent potential building
blocks for a NEA regime.
Although the idea of a NEA energy regime continues to be shared by
a transnational epistemic community of energy analysts within the region,
achieving a coherent NEA multilateral energy regime appears unattain-
able. The continuing competing visions of regional order among NEA
countries, with their associated competing energy initiatives, prevent
the formation of a NEA multilateral energy regime. What is more likely
to emerge in the region is an “energy regime complex,” a mix of for-
mal international institutions and informal networks, loosely linked and
overlapping.

Acronyms
ACE ASEAN Center on Energy
ADB Asian Development Bank
APEC Asia Pacific Economic Cooperation
APEC ESI APEC Energy Security Initiative
APEC EWG APEC Energy Working Group
APERC Asia Pacific Energy Research Centre
APG ASEAN Power Grid
APP Asia Pacific Partnership on Clean Development and Climate
ARF ASEAN Regional Forum
ASEAN Association of South East Asian Nations
ASEAN+3 ASEAN plus China, Japan, South Korea
CSCAP Council for Security Cooperation in the Asia Pacific
EAS East Asian Summit
ECNEA Energy Cooperation in North-East Asia
EEWG Working Group on Economic and Energy Cooperation
ERINA Economic Research Institute for Northeast Asia
GMS Greater Mekong Sub-Region Interconnection
GTI Greater Tumen Initiative
192  G. CHRISTOFFERSEN

IEA International Energy Agency

IEEJ Institute of Energy Economics Japan
IEI International Energy Initiative
KEDO Korean Peninsula Energy Development Organization
KEEI Korean Energy Economics Institute
NAGPF Northeast Asian Gas and Pipeline Forum
NDRC National Development and Reform Commission
NEACD Northeast Asian Cooperation Dialogue
NEAPF Northeast Asia Petroleum Forum
SCO Shanghai Cooperation Organization
SED U.S.-China Strategic Economic Dialogue
TAGP Trans-ASEAN gas pipeline
TCOG Trilateral Coordination and Oversight Group
UNESCAP UN Economic and Social Commission for Asia and the
Pacific
UNDP United Nations Development Programme
WG-EPP Working Group on Energy Planning and Cooperation,
Intergovernmental Collaborative Mechanism on Energy
Cooperation in Northeast Asia

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 PART IV

Southeast Asia
 CHAPTER 11

The Meaning of ASEAN in the Regional

Security Architecture

Quang Minh Pham

Introduction
According to the institutionalist school’s theory of hegemony, based on
the European and American experience, leading states in a given region
set the parameters for the actions and ambitions of medium to small states.
The case of Germany and France in Europe represents one convincing
example. While the China-Japan relationship is somewhat analogous to
that of Germany and France in Europe, in recent years China and Japan
did not find a way to overcome their historical baggage and individual
ambitions to cooperate in providing the structural leadership necessary
for smooth regional integration. Among other things, the region has
­historically been an arena for competition between two leading states,
namely China and Japan.

Q.M. Pham (*)

Rector, University of Social Sciences and Humanities, Vietnam National
University-Hanoi, Hanoi, Vietnam

© The Author(s) 2016 199

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_11
200  Q.M. PHAM

The main objective of this chapter is to answer the question why the
Association of Southeast Asian Nations (ASEAN) should play a central
role in constructing a new security architecture in East Asia. The main
argument of the chapter is that unlike other regions, a number of factors
account for the complicated conditions observed in the East Asian region,
and these provide a chance for ASEAN to become a central player in this
process. The prospect is promising because small and middle powers can
rarely abuse power.
The chapter is divided into three parts. The first part analyzes the major
obstacles to the construction of a new China-Japan relationship akin to the
post-World War II (WWII) ties between France and Germany. The second
part analyzes problems faced by the USA in its role as a regional facilita-
tor. The third part shows how ASEAN can become the driving force or
catalyst for fostering regional cooperation, because as mentioned above
neither China nor Japan can do this at this stage (Tsunekawa 2007). The
chapter concludes that, although ASEAN still faces many weakness and
limitations, it continues to be a central player in designing a regional archi-
tecture insofar as no alternative appears. In order to succeed, it requires
stronger confidence building measures.

The Main Challenge for East Asia Regionalism:

Sino-Japan Competition
A number of factors account for the complicated circumstances in the East
Asian region (Northeast and Southeast Asia) (Ikenberry and Mastanduno
2003). Among other things, the East Asian region has historically been
an arena for competition between the region’s two leading states, namely
China and Japan (Buszynski 2009; Dreyer 2006). China and Japan faced
three major problems in building a constructive new relationship akin to
the post-World War II ties between France and Germany: First, Beijing
and Tokyo held to very different perceptions of Japan’s invasion of China
during the World War II; second, the two still face territorial disputes over
the Senkaku (Diaoyu) Islands; and third, Japan’s alliance with the USA,
which implicates China’s unfulfilled national goal to achieve unification
with Taiwan and otherwise serves to counter and contain China’s pursuit
of its regional ambitions. Absent Sino-Japanese cooperation, East Asian
regional integration is unlikely to be feasible in the near future.
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  201

Since the end of the Cold War by the end of 1980- the early of 1990s,
there were tremendous changes in Southeast Asia politics. After the with-
drawal of the USA and Soviet Union military forces from Southeast Asia,
a power vacuum appeared in the region. This gave regional powers like
China and Japan a chance to fill this vacuum. A competition between these
two countries for influences in Southeast Asia began. Japan had established
dialogue partner relations with ASEAN as early as the 1970s, but China
did not establish relations with ASEAN until the 1990s. However, one can
observe the contrast between the rapid development of China’s relations
with ASEAN on the one hand, and the lack of advancement in Japan’s pol-
icy toward ASEAN, on the other hand. If China was so active and intensive
in promoting a multilateral relationship based on expanding cooperation
with the whole region, Japan seemed to be more passive and less interested
in relations with ASEAN. But the situation has changed, especially since
Japan changed its policy toward the Senkaku or Diaoyu islands.
China’s policy toward Southeast Asia can be divided into three peri-
ods: 1991–1997; 1997–2000; and from 2000 up to present. The first
period was characterized by Southeast Asian distrust when facing grow-
ing Chinese influence. ASEAN had a reason to believe in the so-called
China threat when China issued a law on territorial waters and published a
map that incorporated territories claimed by neighboring countries (Guan
1999). China and Vietnam and China and the Philippines clashed several
times over sovereignty in Spratly islands.1 Despite this, China became a full
dialogue partner of ASEAN in 1996. In the same year, an ASEAN-Beijing
Committee was launched (Wong 2007a).
The year of 1997 was a turning point in the China’s policy toward
ASEAN due to the Asian financial crisis, which pushed both sides into
a new era of cooperation based on a new mechanism. In 1997, the first
China-ASEAN Leadership Summit was launched, which has since become
an indispensable annual event. In order to strengthen cooperation
between China and ASEAN, and to coordinate ongoing activities of dif-
ferent dialogues established over time and put them under one umbrella,
the China-ASEAN Joint Cooperation Committee (CAJCC) was created
in February 1997. The CAJCC is the coordinator of dialogue and coop-
eration between the two sides, with a focus on human resources develop-
ment and personnel and cultural exchanges (ASEAN CAJCC 1997). To
assist the activities of CAJCC, China contributed US$700,000 in 1997.
To further its cooperation with ASEAN, China contributed US$500 mil-
lion more in 2000 (Wong 2007).
202  Q.M. PHAM

The beginning of the twenty-first century marked a new phase of

China’s policy toward ASEAN.  In contrast to the two first periods, the
focus of the third one was put on security issues. After several years of
clashes and negotiations, in November 2002, China and ASEAN signed
the “Declaration on the Conduct of Parties in the South China Sea”
(DOC). Until today, the Declaration on the Conduct (DOC) is consid-
ered the most important success in the field of security that these parties
could achieve, and it served as the only instrument to stabilize the situa-
tion in one of “hot spots” of the region. The DOC states: “The parties
undertake to exercise self-restraint in the conduct of activities that would
complicate or escalate disputes and affect peace and stability.”
The other evidence of improvement of security cooperation between
China and ASEAN was the fact that both sides increased mutual military
exchanges in this period. Between 2003 and 2005, China sent 46 defense
delegations to nine ASEAN countries while 10 ASEAN members sent 45
delegations to China. Among these exchanges, there were 11 delegations
sent from Vietnam to China (MOFA n.d.).
Facing a shared regional security situation marked by the emergence
of non-traditional security issues such as “the threat of disease, hunger,
unemployment, crime, social conflict, political repression and environ-
mental hazards” (UNDP 1994), China and ASEAN issued the “Joint
Declaration of China and ASEAN on Cooperation in the Field of Non-­
traditional Security Issue” in 2002. One year later, China and ASEAN
signed the Joint Declaration on Strategic Partnership for Peace and
Prosperity. In 2003, China joined the Treaty of Amity and Cooperation in
Southeast Asia and established a Strategic Partnership with ASEAN.
Beside the security problem, China has also paid attention to eco-
nomic cooperation, aided by the fact that China joined the WTO in
2001. At the sixth China-ASEAN Summit in November 2002, China and
ASEAN signed the landmark Framework Agreement on ASEAN-China
Comprehensive Economic Cooperation, marking the establishment of
a China-ASEAN FTA (CAFTA) within a 10-year period. This idea was
in fact a Chinese effort to ease ASEAN concerns about China’s WTO
membership. By the time of its completion in 2010, the CAFTA was
expected to have a total population of 1.8 billion and a combined gross
national product of US $2 trillion and US $1.2 trillion in trade volume
(ASEAN-China Expert Group on Economic Cooperation 2001). The
CAFTA would be the third largest market in the world after the EU and
the NAFTA.
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  203

The creation of CAFTA was a strategic economic plan within China’s

Great Western Development Strategy (Xibu Da Kaifa) or the so-called
“Go-West” policy that was launched in 2000 (Phanishsarn 2006). The
reason for launching the “Go-West” policy was the reality that after 30
years of openness and reform, the rapid economic growth that took place
mainly in the eastern coastal region caused a large disparity in develop-
ment between the east and the rest of China. Among the six provinces in
the Great Western Development Strategy, Yunnan and Guangxi play the
most important role. From China’s perspective, Yunnan was considered
the “Gateway to the South,” thanks to the fact that it shares a border with
Myanmar, Laos, and Vietnam, and connects to Thailand via the Mekong
River. In comparison to Yunnan, the position of Guangxi is still more
important, thanks to its direct access to the sea with some deep seaports
that can connect to all maritime countries of ASEAN. In addition, Guangxi
shares a 637 km border with Vietnam, and has a highway and railway con-
necting Nanning, the capital of Guangxi, with Vietnam. Thanks to its
strategic position, Guangxi is considered a “Gateway to ASEAN.”
On July 20, 2006, at the Forum on Tonkin Economic Cooperation
held in Nanning, Liu Qibao, Secretary of Guangxi’s Communist Party of
China proposed the new cooperative strategy of China-ASEAN One Axis
Two wings, of which the Nanning-Singapore Economic Corridor is the
axis, and Pan-Tonkin Gulf Economic Cooperation and Greater Mekong
Subregion (GMS) Cooperation are the wings. This plan is called “three
M cooperation” among which Pan-Tonkin Gulf Economic Cooperation
is Maritime Economic Cooperation; the Nanning-Singapore Economic
Corridor is Mainland Economic Cooperation, and the GMS is Mekong
cooperation. All three Ms are important to China. If the Mainland
Economic Cooperation (Nanning-Singapore Economic Corridor) can
connect China with six Southeast Asian countries, namely Vietnam, Laos,
Cambodia, Thailand, Malaysia, and Singapore, the Maritime Economic
Cooperation (Pan-­Tonkin Gulf Economic Cooperation) includes China
and eight Southeast Asian countries, namely Vietnam, Malaysia, Singapore,
Indonesia, Brunei, Philippines, Cambodia, and Thailand.
GMS cooperation was initiated and led by the Asian Development
Bank, and the Pan-Tonkin Gulf Economic Cooperation was proposed by
China. Most GMS countries have small GDP, poor infrastructure, and
low economic development, while most of countries targeted by the Pan-­
Tonkin Gulf Economic Cooperation have relatively large GDP and higher
204  Q.M. PHAM

economic development. I view of this, the latter will certainly form “a new
pattern for China to cooperate with island countries in Southeast Asia,
fully promote cooperation between China and Southeast Asia.”
In comparison to China, Japan’s relations with ASEAN countries were
established much earlier. In the 1960s and 1970s, Japan developed its
economic relations with Southeast Asian countries. However, these rela-
tions received the encouragement and support of the USA (Nester 1992).
Nationalistic backlashes against Japan’s regional economic dominance in
some Southeast Asian countries toward the end of the Vietnam War forced
Japan to embark on a new diplomatic initiative.
The new policy of Japan toward Southeast Asia was unveiled by
Prime Minister Takeo Fukuda on August 18, 1977  in Manila, and
became known as the Fukuda Doctrine. The doctrine consisted of
three important points. First, Japan committed to peace and reaf-
firmed that it would not assume any military role in Southeast Asia.
Second, Japan expressed its wish for cooperative relations and genu-
ine mutual understanding with ASEAN through political, economic,
and cultural exchanges. Third, the Fukuda Doctrine pursued relations
with Indochinese countries based on mutual understanding. Through
this doctrine, Japan and Southeast Asian economies became more
interdependent (Edstroem 1988). The Fukuda Doctrine inaugurated
a massive flow of FDI and ODA from Japan to Southeast Asia. The
year 1977 also marked the first summit meeting between Japan and
ASEAN. However, it took ten years for Japan and ASEAN to convene
their second summit meeting (1987), and another decade for the third
leadership meeting (1997).
It was Prime Minister Ryutaro Hashimoto who proposed expansion and
deepening of relations between Japan and ASEAN at all levels during his
visit to Southeast Asian countries in January 1997 (MOFA n.d.). During
his tenure, new mechanisms for cooperation between Japan and ASEAN
were introduced, like the Japan-ASEAN Roundtable on Development
(1997), Japan-ASEAN Consultative Group Meetings (1998), and the
Economic and Industrial Cooperation Committee (1998). The Japan-­
ASEAN Leadership Summit convened annually from 1997 (except in
2002 and 2003). In 1999, Japan proposed to convene the first interna-
tional conference to combat piracy, which was held in April 2000. Four
years later, Japan and ASEAN issued a joint statement on combating
­international terrorism in 2004. In the same year, Japan signed the Treaty
of Amity and Cooperation in Southeast Asia. This event showed, on the
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  205

one hand, how Japan became interested in cooperation with ASEAN in

the field of security, but on the other hand, how dependent on the USA
was Japan in foreign policy. Japan also did not want “to fall too far behind
China” in signing TAC (Wong 2007), which China had signed in October
2003.
In short, the above discussion shows how competition and rivalry
between China and Japan inevitably grew. Problem between them remain,
for example mutual suspicions, historical memory, and, last but not least,
territorial disputes over Senkaku/Diaoyu islands. Thus, the prospects for
promoting East Asian regionalism are challenged by rivalry and power
competition between China and Japan.

Is the USA Pivot a Challenge to East Asian

Regionalism?
In the case that no party in the East Asia can take a lead, a third party—
the USA—as a Pacific nation and one more powerful than the other two
(China and Japan) has seemed to play the primary role of cooperation
facilitator. The USA not only played this role vis-à-vis Germany and France
in the 1950–1960s, but also to some extent with Japan and Korea in the
1960s–1970s (Phillips n.d.). However, the USA cannot accomplish the
same mission vis-à-vis China and Japan due to several factors. First, there
is distrust between China and the USA; second, it is not clear whether the
USA even wishes to promote Sino-Japanese reconciliation and coopera-
tion; and third, China threatens the US position in East Asia.
Facing a new situation in the Asia-Pacific, the US government
announced the so-called pivot to Asia on November 17, 2011. President
Barack Obama in his address to the Australian Parliament pledged to
rebalance US strategy toward the Asia-Pacific. The Bush Administration
had previously proclaimed US presence in the East Asian littoral spread-
ing from Japan to the Bay of Bengal. However, the pivot raised a different
point of view. First, as former Secretary of State Hilary Clinton (2013)
stated: “There is no intrinsic contradiction between supporting a rising
China and advancing America’s interests.” Viewing this from a different
perspective, Henry Kissinger was very concerned about inevitable conflict
if it was not wisely managed (Foreign Affairs 2012).
The US pivot to Asia-Pacific was a long process, but its turning point
took place during 2009–2010, and related closely to China’s actions
toward the South China Sea. As mentioned earlier, immediately after
206  Q.M. PHAM

China officially presented its “cow’s tongue map” claiming more than
80 percent of the South China Sea to the UN Commission in May 2009,
the US Senate passed a resolution “deploring China’s use of force in the
South China Sea and supporting the continuation of operations by US
armed forces in support of freedom of navigation rights in international
water and air space in the South China Sea.” Replying to this, Chinese
officials declared its claims in the South China Sea being a “core interest”
(The Australian 2010) and having the same importance to China as Tibet,
Xinjiang and Taiwan have (Wesley 2012).
From this analysis, one could say that the pivot strategy is first of all and
foremost about China. However, it is not only about China. There are dif-
ferent factors that pushed the USA to Asia in the same way.
First, according to former US Secretary of State Hilary Clinton (2011),
the twenty-first century will be America’s Pacific century. The main battle
in this political game will be decided not in Afghanistan or Iraq, but in the
Asia-Pacific. Here there are important US allies including Japan, South
Korea, Taiwan, the Philippines, Thailand, and Australia, not to mention
potential partners like Malaysia, Indonesia, and Vietnam. So strengthen-
ing traditional alliances and developing new partnerships with other coun-
tries remains a top military security agenda of the USA.
Second, it seems that the economic dimension of the pivot is as impor-
tant as security. We remember that President Barack Obama hosted the
nineteenth APEC Summit not accidentally in Hawaii in November 2011
before going Darwin (Australia) and Bali (Indonesia). In his delivered
speech in Hawaii, President Obama expressed the US interest and deter-
mination to further talks for the Trans-Pacific Partnership (TPP) involv-
ing nine economies including Australia, Brunei, Chile, Malaysia, New
Zealand, Peru, Singapore, Vietnam, and the USA. In addition, Canada,
Korea, Mexico, and Japan expressed their will to join the negotiation.
The 15th round talks took place in December 2012  in New Zealand.
The USA understands that it would be excluded in East Asian economic
integration if China dominated ASEAN Plus Three cooperation begun in
1997. China is already dominant in the China-ASEAN Free Trade Area
(CAFTA) completed in 2010.
By joining the East Asia Summit in 2011 and by negotiating TPP,
the USA is trying to counterbalance Chinese economic influence in the
­Asia-­Pacific. One of the most important objectives of the USA in the TPP is
to create an alternative framework that includes services, investments, trade
in which the USA has comparative advantages as a basis for advancing its
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  207

economic and strategic interests. Despite a stated US aim to prevent divi-

sion in the Pacific, the TPP in fact is a US policy to counter China as US
leaders always accuse China of unfair trade policies. The TPP is no doubt an
ambitious agenda for the Asia-Pacific countries, and “it should be managed
with great sophistication” so that it does not become another “battleground
between the US and China” (Das and Hman 2012).
In short, for the USA, the pivot to Asia must be considered a strategy
to consolidate its traditional position in the Asia-Pacific region, but China
considers it a barrier that challenges its peaceful rise. Therefore, confronta-
tion rather than cooperation seems to be the most likely scenario for the
Asia-Pacific region in the years to come.

The Role of ASEAN

East Asia’s special circumstances show that small and middle powers,
namely, the ASEAN member countries, can take the lead in fostering
regional cooperation through such regional mechanisms as the ASEAN
Regional Forum (ARF), ASEAN+3, and ASEAN +1. This argument
seems to hold promise because the small and middle powers cannot abuse
power, and both China and Japan will offer support to ASEAN due to its
special regional status. China, Japan, and South Korea will work closely
with ASEAN because they have nothing to lose and much to gain; they
can only strengthen their regional position and increase their influence in
power bargaining. Cooperation between China, Japan, South Korea, and
ASEAN is especially important from the perspective that “East Asia is a
region with simply too much external presence for a single regional power
to be able to achieve dominance” (Tang n.d.).
Despite much criticism, ASEAN so far has been proving its indispen-
sible role in regional politics. The member states of ASEAN initiated the
ASEAN Joint Industrial Project in the 1970s; they also agreed to establish
an ASEAN Free Trade Area (AFTA) in the late 1980s. Based on this,
Malaysian Prime Minister Mahathir Mohammad proposed to establish an
East Asian Economic Group (EAEG) in 1990. Facing regional security
challenges in 1994, ASEAN decided to form the ASEAN Regional Forum
(ARF), a multilateral dialogue involving big powers with three aims: to
promote confidence building measure, to develop preventive diplomacy,
and to solve conflicts. Furthermore, after the onset of the Asian crisis,
ASEAN took the initiative to establish the ASEAN Plus Three (China,
Japan, and Korea), which should be considered a new development in
208  Q.M. PHAM

East Asian regionalism. In 2003, ASEAN adopted the Declaration of

ASEAN Concord II that aims to build up three ASEAN community pil-
lars: political-security, economic, and socio-cultural.
As distinct from other regions of the world where member interests are
complementary, East Asia witnessed a rising China, a revitalized Japan, and
an increasing involved America. Occupying a cross-road of development,
ASEAN has been successful because its non-interference and consensus
principles have helped its member states manage disputes and expand
cooperation to keep the region peaceful. This main goal of ASEAN has
been consistently affirmed in all key ASEAN documents from the Bangkok
Declaration in 1967 through the Treaty of Amity and Cooperation (TAC)
in 1976, to the Charter of the Association of Southeast Asian Nations
(ASEAN Charter) in 2007, and the current ASEAN Political-Security
Community Blueprint.
In the Preamble of the Bangkok Declaration it was stated that:
“Considering that the countries of Southeast Asia share a primary respon-
sibility for strengthening the economic and social stability of the region
and ensuring their peaceful and progressive national development, and
that they are determined to ensure their stability and security from exter-
nal interference in any form or manifestation in order to preserve their
national identities in accordance with their ideals and aspirations of their
people.” (The Bangkok Declaration n.d.)
In the ASEAN Concord I and the TAC (1971), ASEAN again and
again affirmed its general principles to establish a “zone of peace, freedom
and neutrality” (ZOPFAN) through “self-determination, sovereign equal-
ity, and non-interference in the internal affairs of nations.”
On November 20, 2007 in Singapore, the members of ASEAN unveiled
the historic ASEAN Charter, which was approved by their respective
national assemblies one year later. In Article 1 of the Charter, ASEAN
affirmed its purposes and principles: “To maintain and enhance peace,
security and stability and further strengthened peace-oriented values in
the region.” The peace-oriented values of ASEAN are reflected in the
Article 2 in which non-interference and peaceful settlement of disputes are
highlighted. It is also notable that the ASEAN Charter has adhered strictly
to the Charter of the United Nations in term of the prohibition of the
“threat or use of force.” The topic “Settlement of Disputes” encompassed
seven articles of the ASEAN Charter, from 22 to 28, whereby the role of
ASEAN is to “maintain and establish dispute settlement mechanisms in
all fields of ASEAN Cooperation.” However, the ASEAN Charter reflects
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  209

its limitation with respect to “unresolved disputes” which then “shall be

referred to the ASEAN Summit, for its decision.”
The “ASEAN Political-Security Community” (APSC) is one of three
pillars of the ASEAN Community, and the 14th ASEAN Summit (in
2009) adopted the APSC Blueprint in Cha-am, Thailand. It relies on key
ASEAN political instruments such as ZOPFAN (1971), the TAC (1976),
and the Southeast Asia Nuclear Weapon-Free Zone (SEANWFZ) Treaty
(1995). In contrast to other regional security regimes, the main idea of
ASEAN is to promote regional norms of good conduct and solidarity in
accordance with the TAC, SEANWFZ, ASEAN Charter, and the DOC of
the Parties in the South China Sea (2002). More specifically, Paragraph
10 of the APSC Blueprint identified three key characteristics of the APSC
including (1) a rules-based Community of shared values and norms; (2)
a cohesive, peaceful, stable, and resilient region with shared responsibility
for comprehensive security; (3) a dynamic and outward-looking region in
an increasingly integrated and interdependent world.
The importance of ASEAN for regional peace and stability is demon-
strated by the experience of ASEAN from its beginning in 1967 through
its subsequent inclusion of Vietnam in 1995, Laos and Myanmar in 1997,
and Cambodia in 1999. It is hardly imaginable that Southeast Asia could
have developed as it has without the existence of ASEAN. It helped the
founding members solve their disputes during the Cold War, and the
expansion of ASEAN during the 1990s brought with it new disputes
some of which remain unsettled. However, one clear thing is that it was
ASEAN, not the big powers that prevented members from resorting to
military force to address their disputes. For example, the 1990s witnessed
high tension between Myanmar and Thailand along their border (Amer
2000). And in 2008, conflict between Cambodia and Thailand threatened
due to differences regarding the Preah Vihear temple.
For conflict resolution, the member states of ASEAN prefer to resolve
disputes through bilateral talks and dialogues rather than international
court. However, this did not prevent Indonesia and Malaysia from decid-
ing to bring their sovereignty dispute over Pulan Sipadan and Pulau
Ligitan to the International Court of Justice, and Malaysia and Singapore
did likewise with their dispute over Pedra Branca/Pulau Batu Puteh.
At this point, it is important to ask whether the ASEAN mechanism
of conflict settlement is weak, leaving ASEAN members unable to solve
their sovereignty disputes. Whether ASEAN members solved their dis-
putes bilaterally or by bringing them to the International Court of Justice,
210  Q.M. PHAM

in accordance with ASEAN principles and mechanisms for conflict settle-

ment, ASEAN acts as a facilitator rather than an adjudicator. Vietnam pro-
vides an example of this. Since the early 1990s, Vietnam has settled its
border with Laos, Cambodia, and China bilaterally. This bilateral approach
of Vietnam could work without the active involvement of ASEAN as long
as it did not contradict regional norms.
However, the question of what role ASEAN can play when there is dis-
pute among its member states still remains. In fact, it was a long process
for ASEAN to establish a framework for conflict management. In 1976,
ASEAN adopted the TAC. Twenty-five years later, in July 2001, ASEAN
finally adopted the Rules of Procedure of the High Council. In 2003, its
importance was reaffirmed in the ASEAN Concord II.  Again in 2004,
ASEAN leaders reaffirmed the position of the High Council, and called on
ASEAN member states to “endeavor to use the regional dispute mecha-
nism and process.” The members’ states are required to use the High
Council of the TAC as a preferred option.” (ASCPA)
The fact is that today, more than a decade after the Rules of Procedures
were adopted in 2001, the High Council still has not been called upon. It
seems there is still mistrust among ASEAN members that prevents them
from bringing their disputes to the High Council.
From this analysis it can be argued that the role of ASEAN can be seen
from different perspectives. First, ASEAN can play a role of a vehicle that
aims to promote better relations between its member states rather than
to play the role of a third-party mediator. ASEAN will get involved in
disputes among member states if it asked to do so by the disputing states.
Second, the role of ASEAN can be understood as a norm creator that for-
mulates and adopts mechanisms and principles of behavior that regulate its
members. Third, ASEAN manages disputes by urging its members to seek
peaceful solutions rather than by coercing them or intervening directly.
In sum, it is clear that non-interference is the fundamental principle of
ASEAN, and this has not changed since its establishment. However, in
practice, this principle is not applied uniformly to all members, and flex-
ibility can be found in some cases such as Mindanao in the Philippines
or Aceh in Indonesia. In general, each member state can pursue its own
independent foreign policies. Thanks to its non-interference principle and
flexibility in security issues ASEAN has proven to be East Asia’s most effi-
cient and effective regional organization in the changing context of global
politics. The model of ASEAN conflict management only works if it is
accepted by its member states.
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  211

The main challenge of ASEAN is to keep its centrality and solidarity in

Southeast Asian affairs. History shows that as long as ASEAN can achieve
consensus it can overcome divisions. Although a united ASEAN will serve
the interest of the whole region, ASEAN’s involvement in Sino-American
competition may have divided ASEAN.  The first important measure to
be implemented for maintaining ASEAN solidarity would be to fulfill
the Regional Comprehensive Economic Partnership (RCEP), which was
endorsed by ASEAN leaders during its 19th Summit in November 2011.
The RCEP is expected to bring all ten ASEAN members and external
partners including China, Japan, Korea, India, Australia, and New Zealand
together to serve their common economic interests (Das 2012). In fact,
RCEP could be seen compromise between the East Asia Free Trade Area
(EAFTA-favored by China) and Comprehensive Economic Partnership in
East Asia (CEPEA—favored by Japan). RCEP can be seen as one key com-
ponent of ASEAN’s foreign economic relations because it can forge close
ties and a common position among all ASEAN members unlike other
mechanisms like TPP and APEC that do not include all ASEAN members.
In terms of security issues, the Asia-Pacific is witnessing a transition
of power, from US dominance to a balance of power in the decades to
come, although the USA still will remain the single most powerful actor.
The difference is that the Asia-Pacific today sees competition among new
forces, namely the navies of the USA, China, and Japan. Confronting this
new context, especially China’s assertive policy in the South China Sea,
and the American pivot to Asia, the main strategy of ASEAN should be to
balance between these two giants. So far, ASEAN has done a good job.
The crucial issue for ASEAN is maintaining solidarity. All members should
realize that it is not just a problem for claimant states, but is a common
one. If China National Offshore Oil Corporation could move its Haiyang
Shiyou 981 oil rig into an area under dispute with Vietnam in May 2014,
which resulted in a tense situation that lasted two and a half months, it
may do the same in the future in South China Sea waters disputed with
other ASEAN members.
ASEAN should avoid choosing between China and the USA. In order to
do so, ASEAN should continue to as a catalyst and facilitator for ASEAN-­
centered forums like the East Asia Summit whereby all Asia-Pacific powers
can consult and inform each other. In terms of the South China Sea prob-
lem, ASEAN should ask the new Chinese leadership to clarify its claim and
sign the code of conduct of behavior of the parties in the South China
Sea (COC). ASEAN also should understand the US dilemma in avoiding
212  Q.M. PHAM

military conflict with China while maintaining support for its allies and
partners. Any provocations may put multiple parties on both sides at risk.
In any case, ASEAN should work together not to allow the threat or use of
force in relations between parties. ASEAN should communicate to all par-
ties that their long-term interests are best served by abiding by UNCLOS.
As discussed above, regional realities including Sino-Japan rivalry, the
US-Japan alliance, and Sino-US rivalry have created an opportunity for
ASEAN, a group of small countries, to play a central role. Attempts by
China to replace ASEAN centrality, for example, the AIIB and the “new
security concept” that Xi Jinping spoke about at the CICA summit in
Shanghai, will not be accepted because they lack clear credibility.

Conclusions
From the above discussion, the way toward an East Asian security archi-
tecture seems to be long and difficult. However, it is clear that Southeast
Asian countries have endured and continue to successfully promote
regional cooperation. On the political front, the Bangkok Declaration in
1967, the establishment of ZOPFAN in 1971, the signing of TAC in
1976, and the establishment of ARF in 1994 show how ASEAN created
a new security architecture in East Asia. From an economic perspective,
ASEAN also initiated the ASEAN Joint Industrial Project in the 1970s and
the AFTA in late 1980s. During the Asian financial crisis, ASEAN formed
the ASEAN Plus Three, and following the Hanoi Plan of Action it agreed
to economic integration and security cooperation. Entering the twenty-
first century, when faced with new security challenges, ASEAN issued the
“2001 ASEAN Declaration on Joint Action to Counter Terrorism” at
its 7th Summit. At its 9th Summit, ASEAN adopted the Declaration of
ASEAN Concord II to build an ASEAN Community by 2020 (a target
since moved forward to 2015).
Nevertheless, ASEAN faces a number of internal and external obstacles.
Internally, there are different levels of economic development, problems
maintaining consensus among member states, as well as soft and loose
mechanisms and institutions. Externally, big power competition remains a
big problem for regional integration and cooperation. The ASEAN mem-
bers view with concern the rise of China, a new security role sought by
Japan, and the USA pivot to Asia. The future of East Asia regionalism
depends on how much ASEAN can keep its unity and centrality, and no
 THE MEANING OF ASEAN IN THE REGIONAL SECURITY ARCHITECTURE  213

less important is managing relationships between external powers, China

and Japan on the one side, the China and the USA on the other side.

Note
1. The disputes between China and ASEAN over sovereignty of the
South China Sea and its resources are numerous. These include dis-
pute between Indonesia and the PRC over water of the Natuna
Islands; The Philippines and the PRC over the Malampaya and
Camago gas fields, over Scarborough Shoal; the PRC, Vietnam, the
ROC, Brunei, Malaysia, and the Philippines over Spratly Islands;
Vietnam and the PRC over the Paracel Islands.

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Declaration on the Conduct of Parties in the South China Sea. Available from:
http://www.aseansec.org/13163.htm
Dreyer, J.  T. (2006). Sino-Japanese rivalry and its implications for developing
nations. Asian Survey, 46(4), 538–557.
Edstroem, B. (1988). Japan’s quest for a role in the world (pp. 88–91). Stockholm:
University of Stockholm.
Foreign Affairs. (2012, March–April).
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Forging Closer ASEAN-China Economic Relations in the Twenty-First Century.

(2001). A report submitted by the ASEAN-China Expert Group on Economic
Cooperation, p. 2.
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http://www.mofa.go.jp/region/asia-paci/asean/
Ikenberry, J., & Mastanduno, M. (Eds.). (2003). International relations theory
and the Asia-Pacific. New York: Columbia University Press.
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Meeting, Beijing, February 26–28, 1997. Available from: http://www.asean-
sec.org/5880.htm
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Summit, November 2001. Available from: http://www.aseansec.org/5317.
htm
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D. Webber (Eds.), ibid. p. 80.
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story-fn59niix-1225949666285
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Jakarta 2010, p. 3.
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Jakarta 2010, p. 23.
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Jakarta 2010, p. 24.
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aseansec.org/3629.htm
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Wesley, M. (2012, July). What’s at Stake in the South China Sea. Available from:
www.lowyinstitute.org/publications/what-stake-south-china-sea
Wong, L. F. (2007a). China-ASEAN and Japan-ASEAN relations during the Post-­
Cold War Era. Chinese Journal of International Politics, 1, 385.
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Cold War Era. Chinese Journal of International Politics, 1, 373–404.
Wong, L. F. p. 380.
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General List No 102 at the website of the International Court of Justice.
http://www.icj-cij.org/docket/files/102/7714.pdf
 CHAPTER 12

South China Sea Disputes: Litmus Test

for China’s Peaceful Rise—How US
Scholars View South China Sea Issues

Li Xue

The South China Sea dispute is one of the hot issues in international
relations. At a certain level, it is viewed as the “litmus test” for China’s
peaceful rise. The dispute involves “Six Countries/Seven Parties”,
namely, Vietnam, Malaysia, Brunei, the Philippines, Indonesia, and China
(Mainland China and Taiwan). The first five claimants will be referred to
as the “ASEAN Five” hereafter. Since the influence of the USA, as the
only superpower, on the development of the South China Sea situation
has even surpassed that of some claimants, the USA could be counted as
“the eighth party”.
American foreign policy thinking is led by scholars. The impact of
American think tanks has also been recognized. Hence, American policy
toward the South China Sea is influenced by the research results of its
think tanks. At the end of 2012, I conducted recorded interviews with
14 scholars at US think tanks, some of whom are friendly to China, and
some of whom are critical of China. Their opinions reflect the “spectrum”

L. Xue (*)
Institute of World Economy and Politics, Chinese Academy of Social Sciences,
Beijing, China

© The Author(s) 2016 217

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_12
218  L. XUE

of American points of view on South China Sea issues. This is conducive

to our understanding of the South China Sea dispute from an outside-of-­
China angle and to making a more effective policy on the South China Sea.

How to See the Function of International Law

and Historic Rights in Solving South China Sea
Disputes?
Of the 14 interviewees, two scholars expressed their unfamiliarity with
international law and historic rights as maintained by China.1 Of the
remaining scholars, one thought that China could claim historic rights
based on the United Nations Convention on the Law of the Sea (UNCLOS),
but not with precedence over the latter.2 The other 11 scholars all believed
that the South China Sea dispute could only be solved through interna-
tional law, especially UNCLOS, rather than by using historic rights.
Of the “Five Countries/Six Parties”, Vietnam and the Philippines
dropped their emphasis on historic rights and advocated UNCLOS to
solve the South China Sea dispute after 2009, reaching a consensus among
the “ASEAN Five”. China insists on taking historic rights into consider-
ation separately from international law. Eleven US scholars are in line with
the standpoint of the “ASEAN Five”, two scholars don’t air their opin-
ions, and one supports the standpoint of China.

Should the South China Sea Disputes Be Solved

Through Multilateral or Bilateral Negotiations?
Scholars think that since the disputes in Nansha (Spratly Islands) waters
involve several countries, it must be dealt with using multilateral nego-
tiations. But as to Xisha (Paracel Islands) waters, Huangyan Island/
Scarborough Shoal, and the Dongsha (Pratas Islands) area, they involve
only two countries/three parties and so could be solved through bilateral
negotiations.
Some scholars have proposed ideas for operations and practices. For
instance, Professor KJ mentions a combination of multilateral and bilateral
negotiations. Professor XHP regards multilateral negotiations as a neces-
sary practice for China’s rise. China should learn to include other stand-
points with its own schemes under a multilateral framework so as to lead
the settlement of disputes rather than avoiding them.3
 SOUTH CHINA SEA DISPUTES: LITMUS TEST FOR CHINA’S...  219

Declaration on the Conduct of Parties in the South

China Sea and Code of Conduct in the South
China Sea
Interviewed scholars recognize the important status of the Declaration
on the Conduct of Parties in the South China Sea in maintaining the stabil-
ity of the South China Sea area, but they also notice that the Declaration
fails to prevent disputing parties from taking actions to change the status
quo. Claimants building more constructions on the islands and reefs they
have occupied is a case in point. After 2009, the situation in South China
Sea intensified, for which the major reason is, according to scholars, that
the Declaration as a political statement is not legally binding on parties’
actions. Therefore, a set of binding new rules is needed to effectively regu-
late their actions and avoid conflicts. A Code of Conduct in the South China
Sea is such an effort. The scholars particularly underscore that the purpose
of such a Code of Conduct is regulation. Settling the attribution or own-
ership of South China Sea islands and reefs does not fall within the realm
of the Code, but rather requires arbitration under international auspices
or, a better way in this case, negotiations among disputing parties.
China’s standpoint of “cooperation in functional fields first to gather
experience and move gradually toward a code” does not win the support
of all scholars interviewed. According to recent history, cooperation in
functional fields has failed to prevent the South China Sea situation from
getting intense, and now there is an actual arms race underway in the
South China Sea.4 Overall, the scholars approve of enacting a Code of
Conduct in the South China Sea as soon as possible, believing that it may
help maintain the stability of this area and prevent a single country from
changing the status quo.

The Nine-dash Line

Scholars all agree that the biggest problem of China’s nine-dash line is its
murkiness. It lacks legal ground and clear definition. The Chinese govern-
ment never gave an explicit explanation of the nine-dash line, and opin-
ions on the precise meaning of the nine-dash line inside China diverge
greatly. Some believe it refers to a territorial boundary, to some it is a line
that marks historic rights, and to others it contains islands that belong to
China. Such lack of consensus has caused doubts outside China. Hence, it
220  L. XUE

is necessary that China clarifies the significance of the line and stipulates a
definition of the nine-dash line to the international society.5

Oil and Gas Development in South China Sea

Scholars have noted that China has limited its oil and gas development
within the Pearl River Estuary and waters near Hainan Island. They all
agree on joint development but also stress the importance of venue and
the distribution of resources should such development be attempted in
practice.
With respect to China’s proposal to begin joint development through
unilateral development,6 the scholars are negative. They understand such
a proposition but expect a strong negative response might emerge from
other countries. So an agreement concluded before exploitation would be
better.

Cross-Strait Cooperation in South China Sea

When it comes to political cooperation between mainland China and
Taiwan, two scholars withhold their opinions, and one scholar thinks that,
based on their similar histories, both sides can conduct suitable coopera-
tion especially with Taiwan under KMT governance.7 Other scholars see
slim chances of such political cooperation. They argue that it is better
and more realistic if the two sides act separately.8 Otherwise, there will be
more complications.9 But if it is only functional cooperation, most schol-
ars deem it possible. In general, the belief that “Taiwan lacks the initiative
to put forward the idea of political cooperation, and energy cooperation
can only operate with prudence” by the scholars is approximately consis-
tent of the actual situation.

The Role and Impact of the USA in South

China Sea
To maintain the freedom of navigation in the South China Sea and the
peaceful resolution of South China Sea disputes are the two points empha-
sized by all scholars. What’s more, to most of the scholars, what the coun-
tries that claim an Exclusive Economic Zone (EEZ) are entitled to is only
sovereign rights that relate to economic resources within EEZ waters, and
these do not include rights to control hydrographic surveying, intelligence
 SOUTH CHINA SEA DISPUTES: LITMUS TEST FOR CHINA’S...  221

collection, passage of ships, and so on. Thus, the activities of American

ships outside the territorial zone of 12 nautical miles that extends out-
ward from coastal baselines enjoy the right of “freedom of navigation”.10
But they have also noted that many countries have a different opinion.
In order to take coastal countries’ security concerns into account, the
US navy should control properly the frequency of its warship activities.11
Communication is conducive to reaching a consensus and avoiding poten-
tial conflicts.
Many scholars hold that China is becoming more assertive in deal-
ing with maritime disputes in recent years. Their impression of the 2012
South China Sea dispute over Huangyan Island/Scarborough Shoal is that
China bullied some ASEAN claimants, who then drew close to the USA
out of fear. The USA does not intend to interfere in deciding South China
Sea territorial disputes, but it is requested to do so by ASEAN claimants.12

The Role of Russia, Japan, India, and EU

in the South China Sea

It is a popular belief among the scholars that big powers outside the
region pay attention to business interests and freedom of navigation, so
they have limited impact on South China Sea disputes. If China makes
substantial moves (such as strengthening military facilities in Huangyan
Island/Scarborough Shoal and Xisha Waters) that leads to Sino-Japan
confrontation, even though Japan and the EU can hardly do anything,
nor will India send troops against China across the Himalayas, these pow-
ers will be “very, very upset”. This clearly will cloud China’s international
image.13 China needs friends and international society to understand its
foreign policies. Radical actions without the understanding or support of
friends may worsen China’s international status and its foreign relations
with other countries.14

Policy Suggestions for ASEAN Claimants, China,

and the USA in Coping with the South China Sea
Dispute
The scholars affirm the necessity of signing a Code of Conduct in the
South China Sea that doesn’t involve the attribution of islands and reefs
but is directed toward the conduct of parties, so as to prevent the creation
and escalation of conflicts. The US and ASEAN claimants all approve of
222  L. XUE

a Code of Conduct in the South China Sea, and China should adjust its
standpoint. They believe that, in the long run, China will probably accept
it.
For the USA, scholars suggest that America should not interfere, but
leave matters to be decided by the claimants. At most, it could be a coordi-
nator. For ASEAN claimants, the next step should be keeping multilateral
dialogues and negotiations, putting a Code of Conduct into practice, and
finding cooperation in joint development of oil and gas and shared fish-
ing resources.15 As to China, scholars mention that the way China deals
with South China Sea dispute can be viewed by the USA, Japan, ASEAN
countries, and other countries as the “litmus test”, through which China’s
exercise of increasing power and sincere intention for a peaceful rise can be
observed.16 In the coming years, China has a lot to do on the South China
Sea issue: clarify the definition of the nine-dash line to dispel doubt, de-­
emphasize historic rights, change its attitude toward a Code of Conduct
in the South China Sea, affirm its sovereign rights in accordance with
UNCLOS, and welcome cooperation with other claimants in areas such as
fishing, oil and gas development, and biological conservation.

Conclusion
From the analysis of the above nine issues, conclusions can be drawn that
the way American scholars view South China Sea issues is apparently dif-
ferent from that of China, but close to the stance of the “ASEAN Five”.
But ASEAN countries, though they sometimes have disagreements, share
the same view as China in opposing the collection of intelligence by for-
eign ships in their EEZ. What China has been implementing in the South
China Sea since 2013 is a strategy of “managing differences, strengthen-
ing cooperation, and leaving the Philippines out in the cold”. As a big
power that pursues independent and peaceful foreign policies, China is
unlikely to adjust its foreign policy due to pressure, but it is necessary to
keep pace with the times. As President Xi proposed the correct standpoint
of “justice and benefit” in foreign relations, diplomacy toward ASEAN
might constitute a breakthrough for China’s periphery diplomacy. Hence,
China’s policies on the South China Sea should be based on its own inter-
ests, be understood and accepted by ASEAN claimants, and be able to
communicate to the world China’s sense of responsibility as a regional
big power. From this angle, the perspectives of American scholars have
a certain reference value for China’s new policy in the South China Sea.
 SOUTH CHINA SEA DISPUTES: LITMUS TEST FOR CHINA’S...  223

Notes
1. Interview Transcription, Dec. 11 and 12, 2012.
2. Interview Transcription, Nov. 14, 2012.
3. Interview Transcription, Nov. 14, 2012.
4. Interview Transcription, morning, Dec. 11, 2012.
5. Interview Transcription, morning, Dec. 17, 2012.
6. One statement of China’s academic circle on South China Sea: China
should not keep leaving oil and gas in Nansha undeveloped. It could con-
duct unilateral development like other coastal countries, and then promote
joint development with other claimants.
7. Interview Transcription, afternoon, Dec. 18, 2012.
8. Interview Transcription, morning, Dec. 12; afternoon, Dec. 14, 2012.
9. Interview Transcription, afternoon, Dec. 12, 2012.
10. Interview Transcription, Dec. 11, 12, & 19, 2012.
11. Interview Transcription, evening, Dec. 19, 2012.
12. Interview Transcription, Dec. 10, 11, 12, 17 & 18, 2012.
13. Interview Transcription, afternoon, Dec. 10, 2012.
14. Interview Transcription, evening, Dec. 19, 2012.
15. Interview Transcription, morning, Dec. 17, 2012.
16. Interview Transcription, morning, Dec. 11, afternoon, Dec. 12, 2012.
 CHAPTER 13

The ASEAN-Centred Cooperative Security

Regime in Asia

Daljit Singh

Different Security “Architectures”

in the Asia-Pacific

It may be worthwhile noting at the outset that the ASEAN-based security

regime is not the only security regime in East Asia and the Asia-Pacific.
There is the “hard” security system of American bilateral alliances with
East Asian states known as the hub-and-spokes system, which has existed
since the 1950s or 1960s—comprising US alliances with Japan, South
Korea, the Philippines, Thailand and Australia. It is widely believed among
ruling elites in many East and Southeast Asian countries that these alli-
ances, together with the forward deployment of US military forces which
they enable, have provided peace and stability that have allowed East Asia,
including Southeast Asia, to make impressive economic gains. To most of
the Asian alliance partners these alliances are far more important for their
security than any cooperative security regime, ASEAN-centred or other. In
recent years, the alliance structure has evolved beyond a ­hub-and-­spokes
system into mini-laterals of two or three countries cutting across the
spokes of the “hub-and-spokes”, for example the Australia–Japan, and

D. Singh (*)
Coordinator, Regional Strategic and Political Studies Program,
ISEAS-Yufof Ishak Institute, Singapore

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DOI 10.1057/978-1-352-00023-8_13
226  D. SINGH

Japan–South Korea security cooperation; and military exercises frequently

involving even non-alliance parties.1
There have been a few other bilateral alliances in East Asia in the post-­
World War II period. The one between North Korea and China remains
in force at least on paper (it was signed in 1961 for a period of 20 years,
and given 20-year extensions in 1981 and then again in 2001). In the past
there have also been bilateral alliances between North Vietnam and the
Soviet Union (Treaty of Friendship and Cooperation, November 1978)
and the Sino-Soviet Treaty of Friendship, Alliance and Mutual Assistance
signed in 1950, which may not be functional any more. There was also
the Anglo-Malayan Defence Agreement (1957) and its sequel, the Anglo-­
Malaysian Defence Agreement, which later morphed in 1971 into the
much looser Five Power Defence Arrangements.2
And in the arena of cooperative security, bilateral arrangements, bilat-
eral diplomacy and bilateral Track 1.5 or Track 2 discussions can be
important in building understandings and confidence and paving the
way for practical action to deal with territorial and security problems. For
example, the USA and China have their high-level Strategic and Economic
Dialogue and nearly a hundred other bilateral discussions at senior lev-
els. They would clearly provide much more scope for frank and confi-
dential exchanges than any multilateral dialogue under the ASEAN-based
regime. In Southeast Asia, through bilateral arrangements in the form
of high-level border committees, Malaysia and Thailand have managed
problems across their common border as have Malaysia and Indonesia on
the border between East Malaysia and Indonesian Kalimantan. Malaysia
and Singapore and Malaysia and Indonesia have resolved their territo-
rial disputes over Pedra Branca/ Pulau Batu Puteh near the eastern end
of the Singapore Straits and Sipadan and Ligitan islands off Northeast
Sabah in the Celebes Sea through a mutual agreement to refer them to the
International Court of Justice and to abide by the judgements delivered
by the court.
The above discussion is to show that a multilateral cooperative secu-
rity regime is just one of several mechanisms to build understandings and
promote peace and cooperation. While often necessary, they are never
sufficient and frequently not the most important.
The ASEAN-based security regime comprises the ASEAN Regional
Forum (ARF), which first met in 1994 and is led by foreign ministers; the
leader-level East Asian Summit was formed in 2005 and was expanded in
2011 to include Russia and the USA. It now brings together the leaders of
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  227

the ten ASEAN countries and eight dialogue partners—Australia, China,

India, Japan, New Zealand, Republic of Korea, Russia and the USA; the
ASEAN Defence Ministers Meeting Plus (ADMM Plus) was made up of
the defence ministers of the same 18 countries which first met in 2010;
and the defence officials’ level Expanded ASEAN Maritime Forum which
held its first meeting in 2013. The ASEAN + 3 process, set up in 1997,
deals more with economic/financial matters.

The Evolution of the ASEAN-based Cooperative

Security Regime
ASEAN was established in 1967 at a time when a bitter cold war was going
on in East Asia between the China and the USA, in addition to the global
West versus Soviet Union Cold War. This was manifested, for example, in
the military confrontation across the Taiwan Strait, the China-supported
insurgencies in various countries of Southeast Asia, and to some extent
also the Vietnam War in which the USA was deeply involved by 1967.
One major reason for establishing ASEAN was to heal the rifts among
the five founding members after Indonesia’s confrontation against
Malaysia, Singapore’s separation from Malaysia and Philippine claims on
the Malaysian state of Sabah. It was felt that avoidance of future conflict
among the members and fostering of cooperation would enable them to
focus on economic development and fighting the common domestic com-
munist threat. Up to the end of the Cold War, communist domination of
Southeast Asia was seen by ASEAN countries as the worst possible out-
come for Southeast Asia.
Another important reason was to use ASEAN as a vehicle to collectively
regulate or moderate major power behaviour and influence in Southeast
Asia. This was a natural response on the part of the five economically
and militarily weak countries located in a part of the world where major
powers have always had important interests and a history of intrusion and
conflict. With the disappearance of the communist threat with the end of
the Cold war, this became a primary objective of ASEAN. Hence wider
organisations were set up after 1990 with ASEAN as their core.
Over the years, ASEAN has progressed to become a successful organ-
isation in regional–political cooperation. The united diplomatic stand
that ASEAN took against Vietnam’s invasion of Cambodia helped to jell
ASEAN cooperation and enhanced its international prestige. But it must
228  D. SINGH

be noted that an important factor in its success at that juncture was the
change in the geopolitical environment in East Asia after Nixon’s visit to
China. The USA–China détente and their subsequent de facto alliance
against the Soviet Union were accompanied by the ending of communist
insurgencies in Southeast Asia and the establishment of diplomatic rela-
tions between China and Southeast Asian states.
The geopolitical kaleidoscope changed again after the collapse of the
Berlin Wall in 1989 and then of the Soviet Union in 1991. The most
important glue that had brought the USA and China together was gone,
and the USA–China relationship lost the closeness it had enjoyed when
there was a formidable common enemy. The Tiananmen Square student
uprising of 1989 and the US response to China’s crackdown on it were
also factors contributing to this change. With the end of the “communist
threat” to ASEAN countries and the normalisation of ASEAN countries’
relations with China, ASEAN moved to establish an Asia-Pacific–wide
cooperative security architecture in the form of the ARF, which first met
in 1994 (Ba 2003).
The notions of cooperative security and comprehensive security gained
prominence in the immediate post-Cold War period in parts of Southeast
Asia and the broader region. To be sure, the establishment of an Asia-­
Pacific cooperative security architecture was not originally an ASEAN
idea. It was Canada, Australia and Japan that felt strongly that such a
vehicle was sorely needed in the Asia-Pacific post-Cold War era, to foster
confidence-building and cooperation between the major powers of the
region, especially the USA and China. In fact, ASEAN at first had reserva-
tions about the Canadian and Australian proposals because they seemed
to be advocating an organisation along the lines of the Organisation for
Security and Cooperation in Europe (OSCE) with its heavy emphasis on
human rights, which ASEAN felt was unsuited to the prevailing condi-
tions in the region and would invite unwelcome intrusions and pressures
from Western countries.
The ASEAN-based architecture expanded with new forums being cre-
ated as time passed so that today, in addition to the ARF (now expanded
to 27 participants), there are the East Asia Summit (EAS), the ADMM
Plus and the Expanded ASEAN Maritime Forum. The complexity of
the overall ASEAN-based architecture is increased by the series of Free
Trade Agreements (FTAs) between ASEAN and Australia-New Zealand,
China, India, Japan and the Republic of Korea (ROK). So of the eight
‘non-Southeast Asian’ members of the EAS, only the USA and Russia do
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  229

not have FTAs with ASEAN. Now ASEAN is trying to bring these FTAs
together into a single Regional Comprehensive Economic Partnership
(RCEP), a formidable task in view of the differences in quality and depth
among the various FTAs.

Centrality
From the beginning, there was an implicit understanding between
ASEAN and the major external powers that ASEAN would be at the cen-
tre of the new Asia-Pacific–wide multilateral cooperative security regime,
which at that time was just the ARF. In practice, ASEAN centrality has
meant deciding the membership of component institutions like the ARF,
the ADMM Plus and the EAS; deciding the agenda of meetings, though
with informal consultation with other members; convening the meetings
at an ASEAN venue; and providing the Chair. With the expansion of the
ASEAN-centred institutions over the past decade, which itself is an indica-
tion of the strengthening of centrality, another aspect of centrality may be
worth noting. As one analyst has put it, “ASEAN’s centrality is derived
from its close and dense ties with other actors in the network of institu-
tions in East Asian regionalism, and more importantly, from its position as
a node bridging these different networks….it is ASEAN’s structural posi-
tion in the density of networks that it has established and those that it has
linkages with which explains ASEAN’s central role in Asian regionalism,
despite its lack of material power” (Anthony 2014).
There was no alternative to ASEAN centrality because the USA and
China would not have accepted leadership of the regional security archi-
tecture (RSA) by either of them or by one of their allies. Another factor
accounting for ASEAN centrality was that it was much easier to set up the
ARF as part of an ASEAN framework because the basic building blocks
already existed in the form of ASEAN’s seven dialogue partnerships with
friendly outside powers with economic and security stakes in Southeast
Asia and the Post-Ministerial Conferences hosted by ASEAN after the
annual ASEAN Ministerial Meeting since the 1970s. All that was needed
initially was the addition of China, Russia and India to this framework.
There is also an important intra-ASEAN dimension of ASEAN cen-
trality. Centrality in the RSA would be difficult to exercise if ASEAN did
not have a measure of internal cohesion and did not enjoy a certain stat-
ure as an attractive and forward-looking organisation. There have been
important achievements in this area: intra-ASEAN conflicts and tensions
230  D. SINGH

have been much tempered over the years; an ASEAN Free Trade Area has
been established and an ASEAN Community declared at the end of 2015.
Also, an ASEAN Charter has been established to make ASEAN a legal
entity, and a Human Rights body has been set up to monitor and promote
human rights in member countries. Further, Southeast Asian states have
used the ASEAN for collective bargaining to establish Free Trade Areas
(FTAs) with all the major powers (except Russia and the USA) and also
Australia/New Zealand and South Korea—a further demonstration of the
enhanced importance of ASEAN centrality.
The objective of the ARF was to bring all the significant players in the
region, and especially China and the USA, into its cooperative security
framework to help build confidence and to involve them in a multilat-
eral setting in the normative framework represented by the principles of
the Treaty of Amity and Cooperation (TAC), in particular the non-use of
force or coercion to settle disputes. Socialisation in international norms
was felt to be especially necessary for countries like China and Vietnam,
which had long been isolated from the international system, while the
USA, which gave more importance to its bilateral alliances, needed to
get used to working in a multilateral environment of “soft” cooperative
security and had to be discouraged from any temptation to contain China.

Inclusivity
A cardinal principle that ASEAN has adhered to from the beginning is the
principle of inclusivity. In its RSA, all East Asian/Southeast Asian states as
well as other states that have significant security and economic relations
with the region should be participants, whether they are geographically
part of the region or not, and whether they are democracies, authoritar-
ian or communist party-led states. ASEAN has regarded this as a matter
of pragmatic common sense, because if the aim is to foster peace, stability
and prosperity in the region, it would be counterproductive to exclude
states with large stakes in the region. Such attempts at exclusion will cre-
ate divisions and those excluded will try to oppose or subvert the system,
which would defeat the objective of achieving peace and stability. Thus
the USA and European Union were included in the ARF because of their
huge economic or security interests in East and Southeast Asia. Russia,
arguably more a European than an Asian power, was included because
of its traditional security and economic interests in Northeast Asia. So
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  231

ASEAN has been colour-blind, ideology-blind and geography-blind in its

choice of members for participation.
Inclusivity also served ASEAN’s imperative to have a balance between
the major powers so that no one power dominates Southeast Asia,
a fundamental rationale for the founding of ASEAN by five Southeast
Asian states to collectively regulate major power influence in Southeast
Asia.
What does this model offer the external powers? From the ASEAN per-
spective, under such an arrangement, any major power is free to pursue its
commercial and other legitimate interests in the region peacefully, without
coercion and to coexist peacefully with other major powers pursuing their
interests in like manner. So the USA can be in the region without fearing
that it will become a China-dominated region which shuts it out. Likewise,
China can freely trade and invest in the region without the fear that the
USA will use the region to contain it. So with Japan, India and other non-­
ASEAN states. Thus ASEAN has believed that this model would serve the
interests of not only ASEAN and Southeast Asian countries, but also of all
other powers with interests in the region.
There can of course be misperceptions about ASEAN’s role. At times,
the Western countries have felt that ASEAN favours China more than
them; at other times, China has felt that the organisation favours the
West. Here a distinction must be made between ASEAN as an organisa-
tion and individual ASEAN states. Since the end of the Cold War, ASEAN
as a grouping has been neither pro-West, nor pro-China. It strives to be
impartial. However, individual ASEAN member states have their own for-
eign policies and may lean more towards the USA, China or Japan. The
ASEAN-centred RSA cannot afford to take sides in regional disputes. If it
does so, it would lose its “effectiveness as a convenor, manager and hub”,
according to former ASEAN Secretary-General Rodolfo Severino. In any
case, because of the consensus principle and divergence of interests of
member countries of the forums in the RSA, it is also difficult to take a
common stand on some issues.

Effectiveness
How is effectiveness to be measured? It depends in part on the goals and
objectives set. The third ARF meeting in Brunei in 1996 agreed on a
three-stage road map for the progress of the ARF—confidence-building,
232  D. SINGH

preventive diplomacy and finally conflict resolution. On hindsight, these

goals were too ambitious because, after two decades, the ARF is still
engaged largely in confidence-building, while efforts to move it to pre-
ventive diplomacy, leave alone conflict resolution, have failed. Critics have
also pointed out, correctly, that the ARF has been concerned more with
Southeast Asian security issues while paying relatively little attention to
the potential sources of conflict involving the major powers in Northeast
Asia, like the Taiwan Straits, the Korean peninsula, and lately, the tensions
between China and Japan in the East China Sea. While the Southeast
Asian states are concerned about security and stability in major power
relations in the broader East Asian region, since they would inevitably
impact on Southeast Asia, they see the ARF more importantly as a vehicle
to manage great power influence in Southeast Asia. Even if the ARF could
pay more attention to the difficult Northeast Asian issues, there is little
it could do about them. Those issues do not easily lend themselves to
multilateral cooperative security mantras based on ASEAN centrality and
are dealt more effectively by the major powers and others who are directly
involved.
However, the ASEAN-centred RSA as well as the FTAs remain valu-
able to Southeast Asia as a collective platform to moderate major power
influences in Southeast Asia as well as to enhance engagement with major
powers for economic and other gains for Southeast Asia (Cook 2014).
ASEAN’s RSA has registered some achievements in cooperative security
among members. These include practical cooperation between military
personnel from different countries in areas of non-traditional security.
For example, since 2009 biannual disaster relief exercises involving mili-
tary personnel have been held under the ARF.  The ADMM Plus has
also embarked on such exercises. Then there is exposure to international
norms and rules and extensive networking among officials of Southeast
Asia, Northeast Asia, India, the USA and Australasia. It is particularly use-
ful for smaller countries to have their voice in a forum like the ARF and to
participate in its practical activities.
But has confidence-building worked? It seems to have between the
small and medium powers and between them and some of the major pow-
ers. However, it has not worked for the key relationships between China
and a few of the major powers nor between Southeast Asia and China—in
these areas distrust is greater today than it was in 1994 when the ARF
was set up. This shows that when vital interests are seen to be in a clash,
confidence-building at best has limited value.
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  233

Coping with New Challenges to the ASEAN-­

centred RSA

Still, until about five years ago, a relatively benign regional security sit-
uation enabled the ASEAN-based RSA to chug along fairly well, as its
multilateral interactions and cooperative activities grew steadily. However,
since about 2009 the security circumstances in East Asia have changed
significantly, and not for the better. The changes have been brought about
largely by Big Power actions. Many Southeast Asian countries see China’s
increased assertiveness—especially, but not exclusively—in the South
China Sea as a primary cause of increased tensions, though most would
not want to say this in public. Perceived Chinese assertiveness has led
Southeast Asians to worry about the sustainability of major power balance
in Southeast Asia, a perennial and fundamental concern among many of
these countries as well as ASEAN. Small countries in particular naturally
want maximum independence and space for themselves in an environment
where several great powers have significant interests, with China the big-
gest and geographically the nearest.
The USA, on the other hand, announced its “pivot” to Asia in 2011,
which was later dubbed as “re-balance”. This “re-balance” was announced
partly to reassure allies and friends concerned about China’s assertiveness,
though the stationing of US Marines in northern Australia and apparent
US plans to make more use of bases in northern Australia initially also
caused some anxiety in Indonesia because of concerns that Southeast Asia
could become a cockpit of conflict between China and the USA. Among
some circles in Southeast Asia, China’s assertiveness is also seen as a dan-
ger to ASEAN unity, as illustrated rather dramatically by the failure of
ASEAN’s Annual Ministerial Meeting in 2012 in Phnom Penh to issue a
concluding Chairman’s statement because of perceived Chinese pressure
on the Cambodian Chair.
In this situation of increased insecurity and uncertainty there have been
proposals to reform or streamline the ASEAN-based RSA to make it more
effective or to set up a new architecture. One proposal has come from
the Council for Security and Cooperation Asia-Pacific (CSCAP), which is
embodied in a draft CSCAP Memorandum (CSCAP 2014). It was initi-
ated by a few ASEAN members and dialogue partners. It calls for a stream-
lining of the ASEAN-centred cooperative security structure by making
the EAS its centrepiece. The EAS would guide political, security and eco-
nomic cooperation in the process bringing entities like the ARF, ADMM
234  D. SINGH

Plus and the ASEAN Expanded Maritime Forum under the EAS.  This
will require some measure of institutionalisation of the EAS (Bisley and
Cook 2014).
On paper it looks like a good proposal because it is logical that the
regional architecture and cooperative security receive guidance from the
highest political levels, namely the top leaders of the member countries,
and that they use the opportunity of their presence to discuss the most
important strategic and security issues. The proponents of such reform
say that ASEAN centrality will be maintained. However, they also suggest
that there be co-chairs of the various forums in the RSA (from an ASEAN
country and a non-ASEAN one) to give the non-ASEAN members a sense
of co-ownership of the RSA process. On this issue they have to win the
support of ASEAN members who may see this as an erosion of ASEAN
centrality. Whether agreement can be found on this among EAS members
is not yet clear. In part, it will depend on how exactly the reforms are con-
figured and presented. The smaller countries of ASEAN may be reluctant
to agree to any scheme that suggests the emergence of a concert of powers
through the EAS, which deprives them of representation and voice and
compromises ASEAN centrality. Some of them may prefer to keep the
existing architecture as it is, with overlapping forums and institutions—
messy though it may appear—evolving slowly in response to changing
circumstances.

A New Architecture?
Apparent dissatisfaction with the existing ASEAN-based architecture also
inspired proposals for new architectures. The first, in 2008, was former
Australian Prime Minister Kevin Rudd’s proposal for an Asia-Pacific C(c)
ommunity (APC(c)) comprising the major and middle powers. It did not
gain traction because of the lukewarm reception from the major powers,
while the smaller ASEAN members opposed it because they saw it as a pro-
posal for a concert of powers and an end to ASEAN centrality. However,
Indonesia expressed interest in the proposal (Liow 2010). In 2009, the
Australian proponents of the APC(c), realising that a new overarching
architecture would be difficult to set up, suggested that the APC(c) could
be built around one of the existing forums like the EAS. Indeed, the pres-
ent thinking in CSCAP on streamlining the existing ASEAN-centred RSA
under the EAS, as discussed in the preceding section, may be a seen as an
evolution and refinement of the original APC(c) idea.
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  235

Another proposal was Japanese Prime Minister Yukio Hatoyama’s call

in 2008 for an East Asian Community modelled on the EU.  Initially,
Hatoyama seemed to have in mind only Japan, China, Korea and ASEAN
as members, but there were disagreements within the Japanese establish-
ment on the relevance of the EU model and on membership, with influ-
ential circles in government favouring the inclusion of Australia, New
Zealand and India (Liow 2010). Hatoyama’s proposal too received luke-
warm response from other powers and ASEAN member states, in par-
ticular because of the unhappiness of several countries over its apparent
exclusion of the USA. The proposal in part reflected a desire on the part
of Hatoyama to show a degree of autonomy from the USA and to improve
relations with China.
Recently, President Xi Jinping has proposed a new security architec-
ture for Asia based on a little-known forum, at least until now, called the
Conference for Interaction and Confidence-building in Asia (CICA). Not
enough is known about CICA, but from preliminary indications, its mem-
bership would be defined by geography, that is Asia,3 and would therefore
exclude the USA, possibly also Australia and New Zealand. It is not clear
if Japan will be invited to join. So membership eligibility for CICA could
contrast sharply with that of the ASEAN-based RSA, which determines
membership not just by geography but also according to a country’s
economic or security stakes in East/Southeast Asia. Further, unlike the
ASEAN-based architecture, in real terms it appears that the new organisa-
tion would be led by great powers, by China and Russia, in that order. The
future evolution of CICA is still unclear.

Big Power Geopolitical Competition and the RSA

There are different visions of the regional order in different parts of the
world. There is the European vision of the European Union and the
Russian vision of a Eurasian community, which took a step towards con-
cretisation in May 2014 with the signing of an agreement to establish an
Eurasian Economic Union between Russia, Kazakhstan and Belorussia,
which will take effect from 1 January 2015. China seems to have a Sino-­
centric vision of Asia
Some of the current manoeuvres on the RSA described in the preced-
ing sections are reflective of more major power competition for influence
in the region which has extended to regional institutions. China had in the
past tried hard to make the ASEAN +3 the most important forum in the
236  D. SINGH

ASEAN-centred RSA since, it is widely believed, it lends itself more easily

to predominant Chinese influence than other larger forums. Beijing does
not seem comfortable with an Asian order that includes the USA.  The
USA, on its part, suspects that China seeks to become a dominant power
in East Asia and in the process also change universally accepted interna-
tional rules and norms. This perception, together with perceived Chinese
assertiveness, has led the USA to “re-balance” to Asia and strengthen alli-
ances with countries of the Western Pacific. As part of the re-balance, the
USA has also joined the EAS and is seeking to negotiate the high-quality
Trans-Pacific Partnership (TPP) to strengthen its economic position in
East Asia. China is not excluded from the TPP, but it remains outside
because it would be difficult for it to meet its high standards. At the Asia
Pacific Economic Cooperation forum (APEC) meeting in Beijing in
November 2014 China proposed that APEC work towards the establish-
ment a Trans-Pacific Free Trade Area of the Asia-­Pacific (FTAAP), which
some observers have seen as an attempt to distract attention from or slow
down progress towards the TPP.
Meanwhile, China has been trying to advance its Sino-centric vision of
Asia through a panoply of instruments, including institutions, land and
maritime connectivity, trade and investments so that all roads in Asia lead
to Beijing as they once led to Rome, and not to Washington, creating an
economic and geopolitical hub (Beijing) and spokes (other Asian coun-
tries) (Economy 2014).
To go back to brass tacks, what is the region’s primary need? It is eco-
nomic growth and progress and the stability that is needed for growth and
progress. So an RSA must not create divisions which will lead to tensions
and instability.
Is there a need for a new multilateral RSA to deal with the chang-
ing security situation when we can improve the existing ASEAN-based
architecture? Will any new multilateral cooperative security regime help
to manage the major crises in international relations any better than the
existing ASEAN-based one, when these crises usually involve conflicts
of vital interests not easily amenable to multilateral cooperative security
recipes? Unlikely. Would a new legally binding treaty maintain peace?
Also unlikely, since the major powers continue to violate international
law openly or stealthily, whenever it suits their purposes. In any case, the
ASEAN Treaty of Amity and Cooperation (TAC) already exists and has
been signed by all members of the EAS. Article 10 of the TAC says that
each High Contracting Party “shall not in any manner or form participate
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  237

in any activity which shall constitute a threat to the political and economic
stability, sovereignty, or territorial integrity of another High Contracting
Party”. And then there are the principles of international law and norms
under the UN. All that is needed is strict adherence to all these.

Conclusion
The geopolitical situation in the Asia-Pacific is significantly different today
from what it was not just at the time of the formation of the ARF but from
even five or six years ago. For the first time since the end of World War II
the USA sees another power, China, challenging its naval dominance of
the Western Pacific. Japan has decided to gradually strengthen its military
capabilities and its economic and security links with Southeast Asia.
The future effectiveness of any cooperative security regime will depend
in part on the policies of the USA, China and Japan towards each other and
towards the ASEAN region, including the South China Sea. The USA, by
taking military, economic and diplomatic initiatives over the past five or six
years, has clearly demonstrated that it has vital interests to safeguard in this
part of the world. Over the past few years there has also been a growing
perception among American security elites that China is embarked on a
course that will be inimical to important US interests, a significant change
from the previous perception that the rise of China could be mutually
beneficial, notwithstanding a competitive dynamic.4
China, on the other hand, has strangely, at least on the surface, been
pursuing polices which seem to harm its own interests. Its policies in the
South China Sea have deepened suspicions and mistrust of it among many
Southeast Asian countries, eroding the goodwill it had accumulated over
the earlier years. Southeast Asians are even more perturbed when they
sense that China does not seem to care what impact its actions have on
Southeast Asian states in view of the fact that it knows that Southeast Asian
states do not have the capability to stand up to Chinese moves because of
the huge asymmetries in power. Whatever the rights and wrongs of the
Diaoyu/Senkaku dispute, China’s muscular policies towards Japan have
strengthened the hands of those in Tokyo who want Japan to become a
strong military power, which surely is not in China’s interest. Deterioration
of relations between the major powers and the growth of nationalism do
not help the cause of peace and stability in Asia.
Some Chinese scholars say that China is still an immature great power,
which does not fully understand how to conduct itself in the regional and
238  D. SINGH

international arena, with still a learning curve to negotiate. This may be

true to some extent, but if so, will it be moving towards greater maturity
in the future, as this claim’s proponents seem to imply, and how fast?
More fundamentally, China and the USA need to find a longer-term
modus vivendi in Asia by reconciling their longer-term strategic goals. The
USA seems to want East Asia to be “open” to all powers—that is, a multi-
polar Asia in which China and the USA may be the most powerful states
but there will also be other strong players. Does China want Asian multi-
polarity, as distinct from global multi-polarity? Many suspect it wants an
East Asia in which it has predominant influence, which it thinks it would
have if the US military presence from East Asia is removed. But remov-
ing the American security presence is likely to be a Sisyphean task, and
not without dangers, as it is deeply entrenched in the region and most of
China’s neighbours want to keep it that way.
China’s influence and its international prestige is not something for
America or others to give or cede. They have already risen enormously
over the past couple of decades and are set to rise more in the future. China
today is more secure from external threats than at any time in the last two
centuries. It can continue to rise peacefully in East Asia and become the
biggest and the most powerful dragon, well respected among a number
of other powerful as well as smaller states. Through its civilisational values
and its respect for both big and small countries, it will do Asia proud.
Meanwhile, the ASEAN-based multilateral RSA is likely to be dura-
ble because, as mentioned earlier in this paper, it serves certain useful
functions. Notwithstanding the negative security trends discussed above,
the greater policy interest in Southeast Asia by the major powers, often
competitive, especially by China, the USA and Japan, has increased policy
interaction between them and Southeast Asian states and has provided the
latter with new economic and balancing opportunities.
How the ASEAN-centred multilateral RSA will evolve in the future is
not clear. It has in the past developed in an ad hoc fashion in response to
changing security and geopolitical circumstances. It could be the same in
the future. It will inevitably be affected by Big Power dynamics. Whether
the USA, China and Japan can find peaceful coexistence in East/Southeast
Asia, whether China’s and America’s long-term strategic goals are exclu-
sionary or inclusive and whether they will be prepared to share power and
influence with others will naturally have important bearings.
 THE ASEAN-CENTRED COOPERATIVE SECURITY REGIME IN ASIA  239

Notes
1. One example is the annual Cobra Gold military exercise. Originally a USA–
Thailand bilateral military exercise, it has in recent years morphed into a
multilateral one. Participants in the 2014 Cobra Gold, in addition to the
USA and Thailand, were Singapore, Japan, Indonesia, Republic of Korea
and Malaysia. Myanmar, China, Laos and Vietnam sent observers.
2. The members of the Five Power Defence Arrangements are Australia,

Britain, Malaysia, New Zealand and Singapore. The arrangements commit
the three external parties to “consult” with Malaysia and Singapore in the
event the latter two face the threat of external attack. There has been an
integrated air defence command for Malaysia and Singapore (changed some
years ago to an “Area Defence Command”) and annual air/naval exercises
between the members of the arrangements (Storey et al. 2011).
3. Speaking at the fourth summit meeting of CICA in Shanghai in May 2014,
President Xi declared, “It is for the people of Asia to run the affairs of Asia,
solve the problems of Asia, and uphold the security of Asia”.
4. This is based on author’s conversations with scholars from both the USA
and China.

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Cook, M. (2014). Southeast Asia and the major powers: Engagement, not entan-
glement. In Southeast Asian Affairs 2014 (pp. 37–52). Singapore: Institute of
Southeast Asian Studies.
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Southeast Asian Affairs 2010 (pp.  14–19). Singapore: Institute of Southeast
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ments at forty. Singapore: Institute of Southeast Asian Studies.
 PART V

Indian Ocean Region

 CHAPTER 14

The China-India-USA Engagement

in the Asia-Pacific: Security Implications
for East Asian Regionalism

Li Zhang

From an East Asian geopolitical perspective, both India and the USA are
significant extra-regional players but, at the same time, have their dis-
tinctive influence on the present-day East Asian landscape by interacting
with different East Asian countries. China is the key East Asian player
and, as a rising power, has sought a greater security role in the region
and beyond. For years, China has developed complex relationships with
both the USA and India. The emerging reality is that China has also to
deal with the USA when dealing with East Asian sensitivities, unfortu-
nately in ways that clash in most cases so far. China also has begun to
seriously consider the relevance of India to the Asia-Pacific in view of
New Delhi’s expansive “Look East” initiative despite India’s geographic
separation. India-USA. strategic cooperation at the regional level has
further enlarged China’s concern about its potential impact on future
developments in East Asia.

L. Zhang (*)
Institute of South Asian Studies, Sichuan University, Chengdu, China

© The Author(s) 2016 243

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_14
244  L. ZHANG

US Pivot to the Asia-Pacific and Role Expectation

for India

The US pivot to the Asia-Pacific is a subject of controversy in terms of its

declared significance and pervasive implications. Many believe that this
strategic readjustment aims to check China’s rise. Even the policy rhetoric
of American leaders repeatedly indicates the relevance of China to the
Asian rebalancing agenda in a negative way. Equally obvious in the strat-
egy is Washington’s special emphasis on India’s unique role designation
in this geopolitical arrangement, acting as one of the leading players in a
USA-led multilateral security regime and an indispensable counterweight
to China.
The USA’s views on India’s status in its renewed Asia-Pacific agenda
are reflected in several important policy documents and policymak-
ers’ remarks. To muster support for President Barack Obama’s Trans-­
Pacific Partnership (TPP) initiative, Secretary of State Hillary Clinton
in November 2011 published an essay, “America’s Pacific Century”, in
Foreign Policy. She avers therein that “we are setting our sights as well on
enhancing coordination and engagement among the three giants of the
Asia-Pacific: China, India, and the United States”. While speaking in a
guarded tone about China, however, she lavishes praise on India’s profile
and expects a greater role for it—a key partner of the USA; an important
contributor to regional and global peace, security and prosperity; and a
recognized model of democracy, openness and tolerance for others. She
claims that the US-Indian partnership is rooted in common values and
shared interests and “the United States is making a strategic bet on India’s
future”, though both sides need to overcome obstacles. Hillary Clinton
adds that “the Obama administration has expanded our bilateral partner-
ship; actively supported India's Look East endeavor, including through a
new trilateral dialogue with India and Japan; and outlined a new vision for
a more economically integrated and politically stable South and Central
Asia, with India as a linchpin” (Clinton 2011).
The 2012 Defense Strategy Review released by the Pentagon in early
2012—a mark of official endorsement of America’s strategic pivot
to Asia—states that the USA’s strategy is to rebalance its power in the
­Asia-­Pacific region and to continue providing global security. As the docu-
ment states, the USA sees the rise of emerging Asian powers as a big chal-
lenge. Nevertheless, China and India are evaluated in distinctive ways,
and India’s significance is positively highlighted. The report made it clear
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  245

that the USA is “investing in a long-term strategic partnership with India

to support its ability to serve as a regional economic anchor and provider
of security in the broader Indian Ocean region” (U.S.  Department of
Defense 2012). Accordingly, Obama and Clinton both stressed that the
US pivot to Asia requires building up a long-term partnership with India,
urging India to play a more active strategic role in East Asia (Karl 2012).
India is neither a strategic ally of the USA nor an Asia-Pacific nation
in the strict sense. It is therefore unusual for the Review to go out of its
way to accentuate India’s designated role, rather than those of USA’s tra-
ditional allies in the region such as Japan, Korea, and Australia. It seems
to unmistakably hint at the association of America’s rebalance toward
Asia with India. As a geopolitical reference, by the same token, the Asia-­
Pacific is redefined as “the arc extending from the Western Pacific and East
Asia into the Indian Ocean region and South Asia” (U.S.  Department
of Defense 2012). It roughly coincides with Clinton’s previous defini-
tion of the Asia-Pacific as ranging “from the Indian subcontinent to west-
ern shores of the Americas” (Song 2011). Moreover, the frequent use of
the term “Indo-Pacific” in American and Indian media seems to reflect a
shared understanding of India’s role projection in the Asia-Pacific region
as a whole, not merely in the Indian Ocean.
By endorsing a unique role for India in helping both to influence the
future of the Asia-Pacific region and to achieve Washington’s objectives,
US policymakers hail India’s Look East policy as a central strategic initia-
tive to engage India in Asia-Pacific affairs, encouraging New Delhi not
just to look east but also to engage and act east (Parnass 2011). As Hillary
Clinton articulated, “the U.S. has always been a Pacific power because of
our very great blessing of geography. And India straddling the waters from
the Indian to the Pacific Ocean is, with us, a steward of these waterways.
We are both deeply invested in shaping the future of the region that they
connect” (Choudhury 2012). For its part, India has reasons to welcome
this overture that encouragingly coincides with New Delhi’s aspiration to
emerge as a global power and pursue geopolitical benefits in a big way.
The then-US Defense Secretary Leon Panetta visited India following
the Shangri-La Dialogue (Singapore) in June 2012. To renew a strategic
dialogue, he called India the “lynchpin” in the “rebalance towards the
­Asia-­Pacific region” and the “doorway into Asia” for the USA, stating
that “we will expand our military partnerships and our presence in the arc
extending from the Western Pacific and East Asia into the Indian Ocean
region and South Asia” (Prashad 2012).
246  L. ZHANG

Indo-US Strategic Engagement: The China Factor

It is widely believed that the goal of Obama’s rebalance strategy in the
Asia-Pacific is to ease American fear that China’s rise will upset the existing
power equation and challenge US leadership in the region. This approach
catalyzes the policy of balancing China. But why does the unfolding agenda
highlight India’s unique role in particular? The overture, most probably, is
based on several central calculations. Among others, India is another rising
power in Asia with an expanding strategic profile and capabilities; India
and America share values and norms of democracy and have similar strate-
gic interests as well as close strategic bonds despite the unlikely prospect of
an actual formal alliance between them. And most significant is the belief
that a strengthening Indo-US strategic partnership will profoundly affect
the balance of power in the Asia-Pacific in favor of the USA.
That India shares USA’s unease regarding China’s rapid rise is another
reason for Washington to underscore New Delhi’s importance. It is
believed that this concern may press India to embrace the US regional
agenda to secure its own benefits. As a matter of fact, many in the US
strategic community tend to see China and India locked in a structural
and chronic conflict that is marked by some outstanding problems. The
festering problems include a prolonged boundary dispute, an unfurling
geopolitical contest in their common neighborhoods, and lack of mutual
trust, among other things. Many Americans believe that India perceives
China to be its major security threat and, therefore, an upgraded Indo-US
relationship would greatly enlarge New Delhi’s strategic position when
engaging Beijing. They argue that the USA’s agenda of rebalance toward
Asia is surely welcomed in India because the emerging US-Indian part-
nership, at least de facto, is directed at China. As a senior US intelligence
official testified before a Senate subcommittee, “despite public statements
intended to downplay tensions between India and China, we judge that
India is increasingly concerned about China’s posture along their disputed
border and Beijing’s perceived aggressive posture in the Indian Ocean and
the Asia-Pacific region.” He asserted that “while India does not anticipate
a full-scale conflict in the near future, it is positioning itself for limited
conflict along the border region and supports a strong U.S. posture in
Asia” (Inderfurth and Lombardo 2012).
This USA’s emphasis on India’s new role in the Asia-Pacific underscores
a US interest in advancing strategic cooperation with India. Washington
has sought tangible and institutionalized cooperation with New Delhi
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  247

in East Asia on the pretext of ensuring an open, balanced, and inclusive

architecture of development and security. As American analysts observe,
US policymakers have recognized that an advanced US-Indian partnership
is among Washington’s diplomatic priorities and that the USA wants to
engage India under a broad Asia-Pacific framework. This relationship is
seen to be—in Obama’s own words—“one of the defining 21st century
partnerships” (“US envoy Leon Panetta” 2012).
Since 2010, high-level dialogues and interaction between Washington
and New Delhi on East Asian issues have advanced in political increments.
Both sides have made efforts to share perceptions on regional security hot
spots, including the Korean crisis, Myanmar’s reform, sovereignty disputes
in South and East China Seas, and uncertain Sino-US ties. The Obama
administration also pressed New Delhi to elevate economic and security
ties with its regional allies and promised rewards for close cooperation with
the USA in East Asia. Due to the very background of these dialogues and
the emerging contest between China and the USA, Beijing tends to see
such engagement to be heavily premised on dealing with China, regardless
of some bilateral considerations.
The accompanying development of US-India security cooperation in
the Asia-Pacific hardly goes unnoticed by Beijing. The Obama adminis-
tration has spurred India to elevate economic and security ties with US
regional allies and has promised benefits to nurture close partnerships
among them. Primarily due to Washington’s urging, there has been a
modest breakthrough in India’s strategic engagement with Japan in recent
years. New Delhi and Tokyo reached an agreement on upgrading security
cooperation in the Asia-Pacific and setting up an interactive mechanism for
maritime security and cyber security cooperation during their first strategic
dialogue in May 2011. Despite prior worries, Tokyo agreed to overcome
political difficulties to make the ongoing civilian nuclear technology nego-
tiation fruitful. India and Japan conducted their maiden joint naval war
game in the Sea of Japan in June 2011 (“India and Japan” 2012). During
Indian Prime Minister Manmohan Singh’s trip to Japan, his Japanese
counterpart Shinzo Abe pledged to step up bilateral defense and security
collaboration and regularize joint naval exercises (“Abe Pledges” 2012).
In retrospect, Shinzo Abe pushed India to take part in his proposed Grand
Asia Strategy in his maiden India visit in August 2007 by arguing that
Japanese-Indian strategic and global partnership would be crucial for
achieving this objective. New Delhi was also impressed with Abe’s rheto-
ric about the significance of making his conceived quadrilateral regime—
248  L. ZHANG

involving India, the USA, Australia, and Japan—a reality (Tripathi 2012).
Despite New Delhi’s reserved attitude toward the initiative, Beijing felt
unhappy and was increasingly concerned about any likely developments in
this regard. Weeks later, the joint naval exercise involving the USA, India,
Japan, Australia, and Singapore in the Bay of Bengal seemed to justify
Beijing’s concern.
Washington has pushed for tripartite and multilateral security coop-
eration among the USA, India, Japan, and its other cooperation partners
in the Asia-Pacific, and New Delhi has expressed its interest despite vis-
ible misgivings and hesitation. A tentative USA-India-Japan dialogue was
held in December 2011, which the US Department of State hailed as an
opportunity for three major democracies in the Asian region to discuss
a wide range of related issues. Washington seemed not to overlook the
China factor behind the event by arguing that “India and Japan have been
concerned about China (China’s rise), especially around the South China
Sea”. It also mentioned that the USA had already nurtured close security
relations with Japan, was developing similar ties with India, and would
possibly forge a trilateral security treaty with India and Australia (Quinn
2011). New Delhi sent out its proactive response, explicitly expressing its
interest in launching joint naval drills and recognizing tripartite coopera-
tion to be only a matter of time (Pardesi 2011).
Maritime security is one central issue of shared concern for India and
the USA in the Asia-Pacific region. Washington and New Delhi both stress
the importance of enhancing maritime security and protecting sea-lanes
of communication (SLOC) and chokepoints in the Indian Ocean and the
Malacca Strait. But Beijing believes that the subtext of such consensus is
how to preempt China’s potential dominance in the eastern Indian Ocean
and the western Pacific Ocean. The USA reacted harshly to Beijing’s dec-
laration of the South China Sea as one of its “core interests” and its cre-
ation of an air identification zone in the East China Sea. For its part, New
Delhi has been haunted by fears of China’s so-called “string of pearls strat-
egy” and Chinese stratagems to gain the upper hand over India. Beijing’s
effort to solidify bonds with smaller South Asian and Indian Ocean region
nations is seen as part of a well-devised scheme that aims to deepen
China’s strategic presence in the Indian Ocean and limit India’s opportu-
nity to expand outward. Beijing perceives that since 2010, the USA and
India have become involved in the South China Sea disputes in different
ways, suggesting that both are challenging Beijing’s sovereignty claims
in that maritime space in the name of securing freedom of navigation or
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  249

safeguarding economic interests. Moreover, American and Indian navies

have frequently conducted joint naval war games over recent years. Their
naval maneuvers are with an enhanced scale and expansive scope, rang-
ing from antipiracy and humanitarian search and rescue to antisubmarine
operational coordination (Pardesi 2011).

Relevance of China-India Relations: Debates

India’s ties with China offer another meaningful angle for assessing
Indo-US strategic engagement in Asia-Pacific. For both Beijing and New
Delhi, no doubt, to properly address their bilateral relationship has proved
to be for both among their diplomatic and security priorities on mul-
tiple counts. To some extent, these two Asian powers realize similarity
in perceiving and engaging in present-day global affairs, while they have
found themselves entangled in a web of problems with each other or even
locked in strategic competition. For Beijing it is a relatively new experi-
ence to engage India at a regional level, in particular across the broader
Asia-Pacific spectrum. And for New Delhi, how to deal with a rapidly ris-
ing China has become a central challenge that has yet to be met.
Some influential observers suggest that India’s preferred way to deal
with China is to embrace political pragmatism, making their relations
manageable, stable, and conflict-free. As Harsh V.  Pant observes, some
regional countries expect New Delhi to act as a balancing power against
Beijing; the USA endorses India’s status as a major Asia-Pacific power,
and India’s prolonged discord with China also amplifies its strategic reli-
ance upon Washington. He argues, however, that to play a balancer role
will necessarily mean the acknowledgment of irreconcilable and unbridled
differences with China over their respective core interests. Even if there
are major differences of interest and intermittent tensions between them,
India should not militarily grapple with China, but instead, it is impera-
tive to proactively respond to Beijing’s policy behaviors in Asian regional
settings (Fried 2011).
The US endorsement of India’s unique role in the Asia-Pacific region
soundly coincides with New Delhi’s ambitious agenda of being among
the global powers. Nevertheless, Indian elites and opinion leaders doubt
whether this role allocation in the US security arrangement will maximize
Indian strategic interests. C. Raja Mohan rightly recognizes this paradox.
On one hand, the US pivot to Asia is seemingly a rare strategic opportunity
for New Delhi, and the emerging Sino-US rivalry would probably ame-
250  L. ZHANG

liorate India’s protracted geopolitical isolation in Asia and offer it chance

to be an indispensable element of a new regional balance of power. On
the other hand, however, New Delhi’s enhanced security partnership with
Washington and its allies, and the attempt to increase India’s independent
influence in East Asia is an unequivocal indicator of its interest in balanc-
ing China. Thus, it is logical that “at the very moment the U.S. moved to
an explicit balancing strategy and is urging India to take a leadership role
in Asia, India is sending ambiguous signals. Delhi has neither endorsed the
U.S. pivot to Asia nor criticized it” (Mohan 2013).
Also, New Delhi has to consider the disparity of capability vis-à-vis
Beijing in making policy. Indeed, few Indian analysts really expect a mirac-
ulous overtaking of China to occur. By comparing different dimensions
of China and India, Mohan Guruswamy argues that India would have to
secure a 12 percent economic growth rate in the next two decades in order
to catch up with China. And he thinks it totally unrealistic. Thus, the
central question India faces is how to interact and deal with a rising China
in terms of the increasing asymmetry between them. While recognizing
existing and even expanding disparities, he stresses the necessity for com-
petition to lessen the gaps: “India and China are clearly set to emerge as
two great economic powers. They are also neighbors who will increasingly
compete for resources, markets and influence. It is unlikely that India and
China will again become mortal enemies. Though the likelihood of war
and conflict is minimal, yet economic circumstances will ensure that both
countries remain competitors and rivals. But to ensure that this does not
turn into yet another Cold War, India must close the economic gap with
China. That will also largely close the strategic gap” (Guruswamy 2006).
China’s economic leverage may, to some extent, discourage India from
serving as a counterbalance. Economic and trade interaction is the most
vibrant aspect of China-India relations. Bilateral trade ties have been mak-
ing phenomenal progress over the last decade, hitting a record US$74
billion in 2011. Beijing and New Delhi recently agreed to achieve an ambi-
tious US$100 billion target by 2015 (Ding 2013). It is hardly ignored
that China is India’s largest trade partner and India is China’s largest trade
partner in South Asia when evaluating their engagement. Their economic
and commercial interaction has also helped elevate mutual trust and con-
fidence between them and has bolstered bilateral relations. India highly
appreciates growing economic and trade bonds despite a formidable trade
imbalance skewed in China’s favor. Beijing has seriously promised New
Delhi to ameliorate this imbalance.
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  251

Some analysts suggest that problems figuring prominently in China-­

India relations would likely lead to confrontation between them in the
future, although New Delhi should take a non-antagonistic approach
given its limited capabilities vis-à-vis China. Thus, India has to be prepared
for entering into confrontation while developing economic and trade rela-
tions with Beijing. There are areas of common interest in international
domains—including climate change and energy requirements—that justify
the necessity of cooperation. But a perceived gap of military and strategic
strength between China and India seems to haunt Indian strategic circles.
Motivated by this key concern, some have argued that New Delhi should
seek an early settlement of the border issue through dialogue while meet-
ing China’s strategic challenge by creating credible nuclear and conven-
tional deterrents (Mancheri and Gopal 2012).
India’s mixed thinking about a rising China help to explain its ambiva-
lence and guardedness toward US rebalancing: India needs to step up
security cooperation with the USA to give it more leverage when engag-
ing, competing with, or even confronting China; while at the same time,
New Delhi has to preserve its strategic autonomy and gain diplomatic
space to maneuver by subtly distancing itself from Washington’s regional
strategy in order to preserve stable relations with Beijing. This hedging
approach is believed to help free New Delhi from dilemmas in readjusting
its relationships with Beijing and Washington while preserving its stated
principle of diplomatic independence and strategic autonomy.

India’s Choice Constraints

India’s misgivings probably are multifold. First of all, India seems reluc-
tant, or at least not very keen, to be part of any USA-led, China-balancing
multilateral strategic alliance. As one Indian observer points out, more
advantageous for India would be one-to-one partnerships based on mutual
support and expanded strategic consensus on a range of issues, rather than
alliance-like partnerships. It is believed that India’s China policy should
be based on its own interests, notably the border problem and China-­
Pakistan strategic links, and it should refrain from complicating these
bilateral problems with additional alliance proposals (Raman 2012). Some
also stress that New Delhi has to be extremely careful about any multilat-
eral security arrangement aimed at Beijing, even though India coordinates
with the USA on defense, counterterrorism, and maritime security and
forges bilateral security cooperation with other regional actors including
Japan, Vietnam, Korea, Singapore, and Australia. Another Indian strategic
252  L. ZHANG

expert simply argues that, even though India and the USA share concerns
about China’s strategic assertiveness, “India does not want to be seen as a
pawn or strategic ‘balance’ against China” (Thottam 2011).
Second, India’s image as a world power is an important factor for India
when reacting to the US rebalancing initiative. According to Indian stra-
tegic expert Subhash Kapila, India should project herself as a big power
with strategic autonomy rather than just another member of a USA-led
alliance. He criticizes New Delhi’s ambiguous policy orientation by iden-
tifying a dilemma of choice: to “strategically stand tall and alone” among
shifting global power centers, or overcome its own sense of insecurity
by using great powers to offset each other. These alternatives could be
inconsistent or even totally contradictory. To overcome the impasse, the
prescription is to strengthen India’s conventional and nuclear capabili-
ties enough to reach a strategic bargain with China and harmonize their
shared positive response to the movement of the global center of gravity
to Asia. But to do this, New Delhi has to delink itself from any USA-­
dominated multilateral security arrangement against China and hold itself
aloof (Kapila 2012).
Third, an attractive option for India is to maintain a balance between
ensuring US strategic support and safeguarding its own diplomatic auton-
omy. As Yogesh Joshi argues, the Indo-US relationship is characteristic of a
paradox of the bandwagoning-balancing game. This paradox suggests that
India still needs US global leadership to achieve its own national interests
in a world where US hegemony will long feature. For instance, India’s
emergence as a big power and its global aspirations, such as permanent
membership on the UN Security Council and accession to multilateral
nuclear regimes, will to a great extent hinge on America’s endorsement
and global influence. But on the other hand, India advocates and pro-
motes a multipolar global structure with other emerging powers includ-
ing China, which tends to undercut the legitimacy of the US hegemonic
order (Joshi 2011). Divergence between New Delhi and Washington with
respect to Iran and Afghanistan offer a telling example. Judging from this,
India seems unlikely to be one of America’s strategic allies in a standard
sense even as it maintains close cooperation with the USA.
The American strategic community has become aware of New Delhi’s
strategic misgivings and constraints. Some point to a mismatch between
India’s ambition and its actual capacity, and they question India’s compe-
tence as a trusted and reliable US strategic partner (Denyer and Lakshmi
2012). Disagreements between New Delhi and Washington are also
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  253

attributed to different policy priorities and interests. One American policy

analyst reluctantly admits that “New Delhi will not wish to be drawn into
the middle of heightened Sino-American rivalry, should this occur, nor
permit India to be cast as a junior partner to the United States in a cold
war with China”. Eventually, “Indians must decide for themselves whether
they are prepared to become an Asia-Pacific power or remain only a sub-­
regional actor” (Hathaway 2012).
It is even assumed that by stressing India’s role in a new Asia-Pacific
order—or in Hillary Clinton’s words, “making a strategic bet on India’s
future”—what the USA truly expects of India is a long-range role orienta-
tion but not immediate availability, because Washington is unable to sim-
ply dictate terms of cooperation to New Delhi. If true, the key to Indo-US
strategic engagement in the Asia-Pacific lies in New Delhi rather than in
Washington. And the USA may neither expect ready strategic solidarity
with India nor make the latter a reliable key security partner in the near
future.

Security Implications
China’s perception of the influence of US-Indian strategic links in Asia-­
Pacific has a key bearing on Beijing’s evolving thinking about prospects
for East Asian community. While recognizing the significance of a broader
structure supporting East Asian regional economic integration, China
sees problems in advancing toward such a seemingly shared goal. Despite
the existing degree of US economic involvement in the Asia-Pacific and
India’s efforts to integrate with the broader region, China’s calculus helps
to explain its guarded stance, in contrast to the attitudes of other East
Asian powers like Japan and Korea, toward having India, let alone the
USA, involved in an East Asian community.
Few doubt that India’s geopolitical importance has further increased
with the unfurling of Obama’s rebalancing agenda. In view of the ­changing
US policy toward the Asia-Pacific and growing Indo-US security coopera-
tion, Beijing thinks that the implicit consensus and stated common inter-
ests joining the USA and India in the Asia-Pacific is, to a great extent,
based on their need to meet the so-called strategic challenge posed by
China’s rise.
The USA has wooed India to play a special role in the region, includ-
ing balancing Beijing, and this China factor seems to loom large in the
Indo-US security partnership. Understandably, New Delhi greatly needs
254  L. ZHANG

Washington’s endorsement and support to achieve the status of a global

power and improve its strategic leverage vis-à-vis Beijing. To maximize its
national interests, however, India has to ensure its strategic autonomy and
diplomatic flexibility in handling bilateral and multilateral security rela-
tions. This approach means India must value stable and manageable ties
with China while keeping close engagement with the USA. This complex
calculus, along with divergences and lingering distrust with Washington,
may lead to New Delhi’s cautious response to Obama’s pivot strategy in
Asia. It means that India, in the foreseeable future, is unlikely to be an
out-and-out ally of the USA that will join a USA-led multilateral security
arrangement aimed at China, but the Indo-US partnership will still move
forward incrementally.
The US rebalance and India’s measured response have apparent impli-
cations for China and its complex ties with Washington and New Delhi.
Beijing’s suspicion about USA’s intentions may tempt it to sharpen stra-
tegic reactions. Nevertheless, Beijing will continue to base its engagement
with the USA on political pragmatism. In recent high-level dialogues,
China and the USA have agreed to forge a new major power relationship
by increasing mutual trust, activating constructive interaction, and deep-
ening tangible cooperation in the Asia-Pacific and beyond.
Beijing has also expressed interest in the TPP despite its stated non-­
participation and rejection of TPP as a substitute for an exclusively East
Asian multilateral arrangement. More importantly, Beijing and Washington
cannot ignore the need to explore cooperation and lessen the possibility
of confrontation due to their economic interdependence and their shared
responsibility to manage crises and other contingencies in the Asia-Pacific.
Their agreement on the need to prevent major conflict is able to bolster
regional peace and stability despite huge differences in their strategic per-
ceptions and interests.
It will be in Beijing’s interest for New Delhi to distance itself from a
USA-led Asia-Pacific strategic alignment aimed at China. To make this
happen, Beijing needs to offer clear-cut support for India’s reasonable
aspirations, including permanent membership on the United Nations
Security Council (UNSC). An early settlement of their boundary problem
will nurture strategic trust between them and reduce the grounds for con-
frontation. Beijing ought to practice a more balanced diplomacy toward
India and Pakistan, though it will be hard work. By the same token, miti-
gating India’s trade deficit with China will significantly contribute to a
sustainable partnership.
 THE CHINA-INDIA-USA ENGAGEMENT IN THE ASIA-PACIFIC: SECURITY...  255

And there is also a growing need for both sides to pursue cooperation
in energy security and civilian nuclear energy, create dialogue and coop-
erative mechanisms to deal with potential disputes on water resources,
achieve constructive interaction in maritime security, create conditions
for jointly addressing terrorism and extremism, and enhance mutual trust
through meaningful public diplomacy.
At the regional level, both China and India are members of the East Asia
Summit (EAS) that is committed to promoting pan-Asia-Pacific economic
and security engagement. They are both willing to seek closer coopera-
tion within the EAS. Despite its reservations toward the ASEAN Plus Six
(China, Japan, Korea, India, Australia, and New Zealand) alternative to
ASEAN Plus Three, Beijing has endorsed India’s aspiration to enlarge its
role in the East Asian integration process. Beijing and New Delhi under-
score their agreement that both sides should advocate coordinated efforts
to explore a new framework for achieving closer Asian regional coopera-
tion. Each government also pledged to positively welcome the other’s
participation in trans-regional, regional and subregional cooperation,
including movement toward an East Asian community. The participa-
tion of both Beijing and New Delhi in other trans-regional or regional
regimes—G-20, Asia-Europe Meeting (ASEM), Brazil, Russia, India,
China, and South Africa (BRICS), Shanghai Cooperation Organization
(SCO) and South Asian Association for Regional Cooperation (SAARC)
in particular—also helps coordinate their interests and policy options in
the reshaping of the Asia-Pacific order.
Defense and maritime security will be the touchstone for China and
India to fathom the nature and scale of their engagement. In September
2012, China and India decided to enhance maritime security cooperation
and resume joint military drills. To escort commercial shipments, Chinese
and Indian navies conducted joint patrols and rotational antipiracy moni-
toring in the Gulf of Aden in 2012. This experience of combating pirates
in tandem in the western Indian Ocean can apply to other waters and
nontraditional security threats. This kind of maritime security cooperation
also works to reduce the likelihood of naval confrontation between China
and India. During Chinese PM Li Keqiang’s visit to India in May 2013,
China and India announced the start of a new round of joint drills. Both
sides agreed to conduct maritime dialogue; strengthen bilateral coopera-
tion such as maritime security, search and rescue, counter-pirate operation,
oceanic research and environmental protection, and make mutual efforts
to address increasingly grave maritime nontraditional security threats; and
256  L. ZHANG

effectively safeguard international sea-lanes of communication and the

freedom of navigation in high seas. Both sides also reaffirmed the neces-
sity of building mutual trust by enhancing bilateral defense exchanges.
Nevertheless, China’s attempt to manage its relations with both the
USA and India seems insufficient to permit it to disregard the risk of los-
ing leverage in the region, especially in political and security dimensions.
This is reflected in China’s position on the composition of a potential
East Asian community. Key East Asian nations have different calculations.
Different from Tokyo and Seoul, Beijing supports an ASEAN Plus Three
framework, and declines to endorse the inclusion of outside players such as
India, the USA, and Australia. Apart from oft-talked about economic and
trading parameters, security considerations remain paramount. Among
emerging challenges are the ongoing escalation of tensions and security
uncertainty caused by the disputes in the East and South China Seas and,
perhaps more importantly, the influence of US strategic objectives in the
region. Others argue that a proposed East Asian Community will be help-
ful in addressing the existing territorial/island disputes by changing such
acute bilateral problems into multilateral issues, which can be resolved
through joint exploration, economic cooperation, and shared benefits.
China’s encounters with both the USA and India in East Asia will
continue to influence its security perception of the evolving East Asian
regional order. As significant non-East Asian powers, the USA and (to a
lesser extent) India can positively or negatively influence Beijing’s percep-
tion and judgment of the emerging regional scenario through their strate-
gic engagement with the Asia-Pacific. But it is still hard to expect China to
accept a scenario of moving toward a broadly inclusive Asian regionalism
that is, unfortunately, accompanied by an unfriendly security alignment
against China that is dominated by the USA and involves India. In that
sense, strategic trust between China and regional players, as well as outside
heavyweight stakeholders, will be extremely helpful in moving toward a
genuine East Asian community.

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analysis.org/node/1103
US envoy Leon Panetta hails India role in Asia security. BBC News, June 5, 2012.
http://www.bbc.co.uk/news/world-asia-18327849
White House. (2010, November 8). Joint statement by President Obama and
Prime Minister Singh of India. http://www.whitehouse.gov/the-press-­
office/2010/11/08/joint-statement-president-obama-and-prime-minister-
singh-india
Wikipedia. Chindia. http://en.wikipedia.org/wiki/Chindia
 CHAPTER 15

India’s Growing Role in East Asia

Mahendra Gaur and Sylvia Mishra

“I must pay tribute to our East and Southeast Asian neighbors for
­shaping our own thinking on globalization and the means to deal with
it. –This was not merely an external economic policy, it was also a strate-
gic shift in India’s vision of the world and India’s place in the evolving
global economy.”
–India’s Prime Minister Manmohan Singh1

East Asia Today

The post-Cold War unipolarity is transiting towards an East Asian multi-
polarity. This transition is unnerving because one is not sure if it is going
to be smooth and free of conflicts and tensions so that regional peace and
stability remain unaffected—a precondition for continued economic dyna-
mism and development. In any case, there is no question that the East Asian
region is under global focus (Kissinger 2008). East Asia’s ascent is repre-
sented by the rise of the entire region. Consequently, its overall weight in
global affairs is also increasing significantly, and hence developments here

M. Gaur (*) • S. Mishra

Foreign Policy Research Center, New Delhi, India

© The Author(s) 2016 259

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8_15
260  M. GAUR AND S. MISHRA

will have major implications for the rest of the world. In addition, virtually
the entire ASEAN region, a community of 1.8 billion people, representing
one-fourth of humanity, with a combined GDP of 3.8 trillion US dollars,
is faring exceptionally well economically. “Today India is an indispensable
part of East Asia and its role and interests are steadily expanding within
the region. That signifies the profound and fundamental shifts the region
is witnessing” (Naidu 2013). East Asia occupies a vital place in India’s
national security priorities as one-third of India’s trade is with East Asia,
and regional security issues have long-term consequences for her.

East Asia: A Region of Contradictions

Economic Dynamism Versus Precarious Peace

East Asia is increasingly becoming a region of contradictions. On the one
hand, it has become a centre of global attention due to the growing sig-
nificance of the region to the global economy with the centre of gravity of
global politics shifting to East Asia.
However, ongoing diplomatic tensions and political spats over a num-
ber of territorial issues point to a worrying future for peace and stability in
the region. Indeed, territorial disputes in East Asia have begun to emerge
as a serious flashpoint, raising regional concerns about the future of East
Asia as a whole. In other words, as peace in East Asia remains precarious,
prosperity cannot be taken for granted.
These territorial problems, if not managed properly and in a restrained
manner, will seriously undermine peace, stability, and prosperity in East
Asia. “Parties to the disputes—both in Southeast and Northeast Asia—
need to realize that the promise of Asian century is too valuable to be
undermined by territorial conflicts” (Sukma 2012).
The allure of potential energy is an important factor in nearly all these
disputes (subtracting the Northern Territories). There are large untapped
offshore oil and gas fields in both the East China and South China Seas,
which promise riches to whoever is able to explore and develop them
first. According to an estimate, there are between 60 and 100 million
barrels of oil and between one and two trillion cubic feet of natural gas
reserves in the East China Sea and approximately 11 billion barrels of oil
and 190 ­trillion cubic feet of natural gas reserves in the South China Sea
(U.S. Energy Information Agency 2014).
Not pictured in the scenario, but still critical players in this drama, are
India and the USA. As part of its “Look East Policy,” New Delhi is hoping
to quench its growing thirst for energy by fostering closer relations with
 INDIA’S GROWING ROLE IN EAST ASIA  261

Southeast Asian countries, particularly Vietnam, and helping to develop

their hydrocarbon resources (Null 2013).

India’s “Look East Policy”

East Asia has come to assume an important place in Indian foreign policy
priorities. Even before independence, Pandit Jawaharlal Nehru travelled
to the East and connected India’s fate with that of the people of Asia.
Under his leadership as India’s first prime minister, India re-engaged with
East Asia. The Asian Relations Conference held in New Delhi on April 2,
1947, served as one of the earliest attempts to form a pan-Asian identity.
But during the Cold War era India’s preoccupations with security forced
her attention on immediate periphery. India in the early 1990s had initi-
ated a “Look East Policy” not merely as a dimension of its external eco-
nomic policy but as recognition of the strategic shift of global focus to
Asia and India’s capacity to partner the processes in this part of the world.
The policy itself was widely accepted by most interest groups in India and
persisted despite new political parties coming to power, and it has come
to stay as one of the cornerstones of India’s foreign policy (Guo 2011).

Look East Policy: A Strategic Shift in India’s Vision of the World

Varied interpretations of the Look East Policy have come up. Some say
it was a very major change in policy, while others view it as more in the
nature of focusing upon a region which had until then not received the
attention it deserved:

• There is no question that India’s future is with the East rather than
with the West. (A.P. Venkateswaran, Former Foreign Secretary)
• It was really an attempt at restoring in a modern context India’s
traditional age old links in commerce, ideas, and culture with a vast
populated region with which India has historically, socially, culturally
enjoyed close contacts. (Amb. C. V Ranganathan)
• The ‘Look East’ Policy represented the Indian response to this new
and changing strategic milieu in the region. (Amb. Ranjit Gupta)
(FPRC 2011)
• However, in the larger historical perspective, “it was hardly a new
change as it amounted to going back to our roots in the past, to what
Jawaharlal Nehru, the visionary first prime minister, had told us was our
destiny shaped by Asian identity and solidarity” (Amb. Rajiv Bhatia).
262  M. GAUR AND S. MISHRA

• The LEP was not a strategic shift in the sense of re-prioritizing in

favour of one at the cost of another. It was more in the nature of
focusing upon a region which had until then not received the atten-
tion it deserved. It was, thus, “more of an inclusive engagement than
an exclusive one” (Vice Admiral (R)Pradeep Kaushiva).
• “It was a very major change in policy, almost a 180 degree turning
around.” The Look East Policy and the economic liberalization, both
promoted by Prime Minister Narasimha Rao in the early 1990s, were
partly an admission on India’s part of the rapidly changing global
situation including in Asia (Emeritus Prof D.R. Sardesai, University
of California at Los Angeles).
• Look East Policy (LEP) represents a marked strategic shift in India’s
vision of the world when compared to its Cold War-era foreign policy.
However, we should note that in the mid-1940s Nehru was already
arguing that the “Pacific is likely to take the place of the Atlantic as a
future nerve center of the world. Though not directly a Pacific state,
India will inevitably exercise an important influence there,” so in
some respects “the vision has been there all along” (Ladwig 2011).

 he Expanded Scope of Look East Policy

T
In the twenty-first century, India is looking beyond the South Asian region
even more ambitiously. After more than 20 years of evolvement, LEP has
been very well developed both in content and extension and has evolved
itself into one of the most successful external policies in India. In the near
future, it may be even more enriched and restructured to cover a much
wider region—the Asia-Pacific region in whole and the region around the
Pacific in particular. Together with new initiatives on cooperation with the
countries in the Asia-Pacific region, India may announce the third phase
of LEP in the near future (Guo 2011).

India and Great Power Relationships in Asia

Asian security will indubitably hinge upon the nature of the USA–China
relations in the coming years. The US allies have found in China a con-
structive economic partner, but they continue to rely upon Washington’s
security commitments. China realizes the importance of economic coop-
eration with the USA to sustain its economic growth, but it has issues with
the US hegemony in Asia. Currently, “the US consternation that China
may surface as an Asian hegemon, and the Chinese angst that the US
intends to restrict the growth of the Chinese power,” will shape strategic
 INDIA’S GROWING ROLE IN EAST ASIA  263

landscape in Asia in coming years (Mahapatra n.d.). The observers caution

that “pivot to Asia” might very well precipitate the very cold war with
China it is supposed to prevent. The USA needs to find a way to live with
Chinese power—unless the USA is prepared to seriously confront China
in a major armed conflict, something one highly doubts US public opin-
ion would support (Kelly 2014).
The ongoing experiments to forge a new East Asian architecture or
community should be understood in the context of major power relation-
ships. Competition and cooperation are different facets of a single new
reality. Asian countries understand that regional stability is the prerequisite
to continued economic growth. Hence, various regional groupings and
dialogue mechanisms have been established in recent decades to manage
these multifaceted relationships, facilitate regional integration, and defuse
potential flashpoints. While varied in their composition and specific focuses,
all these groupings have as their fundamental raison d’être the objective of
managing the increasingly complex interactions among major powers.

India–China
Both are ancient civilizations with deep cultural memories and great
ambitions. Although each side continues to view the other through
lenses coloured by some unhappy experiences, this has not stopped
cooperation. Both sides are adopting a pragmatic approach in their deal-
ings with each other and are learning to manage their differences while
seeking cooperation in areas where there is mutual benefit. Their bilat-
eral trade, for example, continues to expand rapidly. The 2013–2014
bilateral trade has touched USD 65.47 billion (from US$15 billion in
2005); it is hoped that bilateral trade reached the official target of USD
100 billion in 2015, already making China India’s largest trading part-
ner. The competition between these two growing giants for resources
such as energy and raw materials is likely to intensify; there are encour-
aging signs that both sides want to avoid conflict and focus on economic
development.

China Calls India’s Look East Policy a Failure

India’s Look East Policy “was born out of failure—the failure of India’s Cold
War strategy of playing both ends against the middle …today, India is harp-
ing on the same string but should wisely skip the out-of-tune piece ….imply-
ing that India’s assumed and presumed China containment efforts will fail”
(Li 2010).
264  M. GAUR AND S. MISHRA

China’s perspective on India’s LEP is explained as follows: China

knows that in the long term India is the only country that could possibly
challenge its ascendancy and potential hegemony in Asia. “All this cannot
but make China somewhat wary of a Rising India too.” The central fact is
that the two countries have competing visions: India wants a multi-polar
Asia and a multi-polar world, whereas China seems to prefer a uni-polar
Asia and at best a bi-polar world.” “Now China seems to feel threatened
in her own backyard by the success of India’s look east policy.” “China
regarded India’s Look East policy with suspicion that India may not limit
itself only to economic benefits of trade and investment in Asia, that New
Delhi might seek, with U.S. assistance, in blocking China’s rising influ-
ence in the region. “Generally speaking Chinese analysts do not take India
too seriously as a rising power due to differential growth rates in their
economy and defense spending. However, recently the military coopera-
tion component of the Look East policy has provoked some concern”
(FPRC 2011).
With the policy embraced by successive BJP- and Congress-led gov-
ernments in India, and broadened to include the rest of the Asia-Pacific
region, the Look East Policy has become institutionalized as one of the
priorities of India’s foreign policy. Even in the midst of an election process
of massive magnitude in May 2014 with indications of possible change
in the diplomatic initiatives, the ruling party expected “ to proceed with
our mutual efforts with China to work through established instruments
towards a resolution of differences of perception about the border and
the Line of Actual Control (LAC) even as our economic cooperation and
multi-lateral cooperation continue to grow” (Indian National Congress
2014); the main opposition party’s prime ministerial candidate Narendra
Modi (2014) urged China “to adopt a more peaceable mindset, one based
upon mutual development.”

India–USA
• US Secretary of State Hillary Clinton, during her visit to India on
July 20, 2011, hailed LEP.
• US Assistant secretary of State for East Asian and Pacific affairs, Kurt
Campbell (New Delhi, 17 April 2012), exhorted India “to act and
think East” and said: “One of the most important aspects of our Asian
Pacific strategy is to help put meat on the bones of India’s desire to play
a prominent role in the Asian-Pacific region going forward.”
 INDIA’S GROWING ROLE IN EAST ASIA  265

• US Assistant Secretary of State for South and Central Asian Affairs

Nisha Desai Biswal (New Delhi 06 March 2014) reiterated: “In fact
I would say that the policy has moved beyond Look East to Be East,
and that is a welcome development.”

Why Is the USA Is Interested in Working More Closely with India

in East Asia?
According to analysts, the reasons are not far to seek.

(1) “The expectations of USA that India should play a greater role in
Asia should be seen in that context of vastly improved relations
with major powers and with major regional groupings from the
beginning of this century.”
(2) “US would like to encourage as many countries as possible to have
policies which are friendly to the preservation and protection of US
regional interests.” “India has its own vital interests in the region
and to the extent that they are compatible, multidimensional coop-
eration between the two is desirable, inevitable, and perfectly
understandable.”
(3) “US and India share a convergence of interests; so do US and China
as well as China and India. Diplomacy in Asia is a constant and com-
plex dance, with the sole aim of promoting a constellation that favours
you. India has no intention to bring into Asia a new cold war.”
(4) “The US is seeking India’s help in exploring the possibility of a
‘regional architecture’ in the Asia Pacific region that would enforce
international norms, ensure collective security—particularly mari-
time security, and help combat sea piracy together.”
(5) “It is in the US interest to strengthen India’s obligations and ties
with the region and offer India support to checkmate China.”
(6) “From Washington’s perspective, India is a status quo power. They
acknowledge that it would certainly like to have a greater voice in
regional decision-making, but New Delhi is not interested in dis-
rupting or overturning the existing regional order that has helped
facilitate stability and economic prosperity in Asia for decades.”
(7) “It is certainly more advisable for India to plow her own indepen-
dent furrow, with self-confidence, than to get involved with the
USA or the Western countries, which may only lead India to grief”
(FPRC 2011).
266  M. GAUR AND S. MISHRA

Is India “Looking East” to “Look West”—Towards USA?

India’s interaction with every country of Southeast and East Asia has
expanded dramatically in the past two decades, covering all possible areas
of activity and aspects of relations. India’s growing engagement with the
USA is across the globe and across an all-embracing spectrum of activi-
ties. India does not have to look east to look west to the USA! LEP’s
scope may or may not have increased, but the Western powers are cer-
tainly seeing benefit in it for themselves. During the last decade, with
changes in the geopolitical scenario, smaller Southeast Asian states have
also looked towards India to increase its regional profile and engagement
as a balancer. India’s LEP can now be said to have been upgraded to ver-
sion 2. Starting with development of trade and investment linkages with
the ASEAN region, the focus is now on deeper economic ties and more
consultation on security issues. India has also moved into wider East Asia
(Pacific Asia) and Pacific Basin (southern Pacific) settings. In fact, with
the American plans to reduce its obligations in the region, very largely for
economic reasons, Washington would be happy if India picks up some of
the responsibility with potential for checking excessive power in China’s
hands. In 2003, “Phase II” of Look East was launched to encompass the
broader Asia-Pacific region and expand the scope of India’s relations from
strictly economic to embrace political and strategic ties as well. As a major
Pacific power, increased engagement with the USA in Asia has naturally
resulted from India’s eastward focus.
To what extent New Delhi will do Washington’s bidding at the cost of
its relations with Beijing was yet to be seen. New Delhi’s consternation,
for instance, was obvious when American Defence Secretary Leon Panetta
claimed during a visit to Delhi that India was the linchpin of America’s
“rebalancing strategy” in East Asia, for it might result in compromising
the “strategic autonomy” that it always cherished. Moreover, “India gen-
erally shuns security groupings,” and “feels uncomfortable with some-
thing directed against another country as such” (Ollapally 2014).

USA Refuses to Talk China with India

There may be reasons to believe there is no fundamental decline in US
interests, capacities, or role in the Asia Pacific or in Southeast Asia (Limaye
2014). And it makes strategic sense for the USA and India to join hands,
especially because there is no clash of interest between the two once the
 INDIA’S GROWING ROLE IN EAST ASIA  267

nuclear issue has been removed from the equation. But recent develop-
ments relating to US “strategic inattention” are likely to be watched care-
fully in India.
The USA has refused to hold an East Asia dialogue with India for the
past year. Through the East Asia dialogue, the USA and India discussed
issues relating to China and beyond, while India and South Asia are the
subjects of discussion with China in the South Asia dialogue. From mid-­
2013, sources said that the USA has been stalling all attempts to hold
the East Asia dialogue. Indian officials have even offered to meet in a
third country, but the new assistant secretary of state, Daniel Russell, who
took over from Kurt Campbell, met them with stony silence. Many in
the Indian system describe this as “strategic inattention” by the Obama
administration. It is most strongly manifested in the lack of engagement
about Asia.
The USA and India still have a trilateral discussion going with Japan.
That too would have sunk were it not for the efforts of Japan and India to
keep it afloat. “Some in the US, looking for a way to kick-start relations
with India, have toyed with the idea of a trilateral dialogue with China.
But Beijing, it is believed, has torpedoed it, deeming it unworthy. But
Beijing has not been averse to holding a trilateral with India and Russia
on Afghanistan” (Bagchi 2014). For China, “So far, the strategy of the
US to rebalance between security and economy, words and actions, allies
and partners in Asia Pacific is still uncertain. The US should recognize the
centrality and leadership of ASEAN in regional cooperation of East Asia”
(Zhou 2014).

India–Japan

Construction of an East Asian Community

The most promising region for India’s external relations remains the rede-
fined Asia which lies between India and Japan. The potential for devel-
oping relations between India and Japan into a defining partnership for
an “Asian Century” is enormous. The Japanese partnership with India
is of particular significance regarding the construction of an East Asian
Community. This nascent relationship between “the most developed and
the largest Asian democracies,” grounded on a rich historical legacy of
contributions toward East Asian regionalism, has the ambition to play a
central role in the current regional construction (Singh 2006).
268  M. GAUR AND S. MISHRA

The interplay of global trends and events, major power strategic rela-
tions, the rise of China, and complementary economic interests drive India
and Japan towards closer partnership. There is a steadily expanding politi-
cal engagement, economic complementarity, and security cooperation.
A security alliance between India and Japan against China or any other
country is out of question. “Containing China is not the point” (Arase
2012). This “mutually beneficial” relationship may be significant for this
new wave of Asian regionalism, which seems to shift from an “Asia-Pacific”
to a “broader East Asia” focus.
India’s strategic partnerships with the USA and Japan have been
strengthened and transformed, though some misplaced confusion over
the meaning of “strategic autonomy” has resurfaced. India needs to forge
strong ties with the world’s leading powers to bolster its emergence as
an independent pillar of the global community. But it cannot create “a
new and alternative universality” or “nonalignment 2.0” in isolation and
must be prepared to shoulder greater responsibilities in the international
system.
New Delhi should be careful not to allow its ties with Japan to get
unnecessarily entangled in a regional race for power, just as the so-called
China factor must not be allowed to derail India’s relations with other
countries in the region.

India’s Strategic Engagement with East Asia

Managing the current transition and creating a new East Asian security
order is critical, and that is where India’s role is pivotal. Most countries
expect major Indian contribution in meeting the security challenges, espe-
cially maritime related, and in building a stable balance of power. India’s
security role in regional affairs acquires significance at a time when all
the great powers are rebalancing their strategies towards East Asia. Of
course, the high-profile US pivot is well known, but equally notable are
Japan’s new rebalancing strategy under Shinzo Abe and China’s ambitions
of becoming the pre-eminent power in the region. On the other hand,
having remained on the margins, India too has its own pivot strongly
anchored to East Asia. It has now become a key player in regional affairs.
This is evident in the vast security cooperation arrangements it has crafted
with most countries in the region.
India’s strategic engagement with East Asia is both multilateral and bilat-
eral. Relations at the bilateral level are extensive. India has forged defence
 INDIA’S GROWING ROLE IN EAST ASIA  269

and strategic links of one kind or another with countries of the entire East
Asian region—North Korea being the sole exception. The security-related
multilateral frameworks, such as the ASEAN regional forum (ARF) and
Six-Party Talks, have been a disappointment so far because of lack of mutual
confidence. A more credible security framework is the need of the hour.
And India’s role in the emerging balance of power in East Asia is going to
be very significant.
Today, in 2014, India perceives East Asia to be much less harmoni-
ous than it was until a few years ago. It could be due to several reasons:
(1) the simultaneous emergence of several powers has built pressure for
a new equilibrium and balance; (2) rapid economic growth in the last
few decades has given several states in the region the means to militarily
strengthen themselves; (3) technology and politics have eliminated dis-
tance and separation between powers; (4) and ideological restraints on
the use of force or the threat of its use have been removed, even though
it is a recent phenomenon. Continued uncertainty or confrontation in
the region is clearly in no one’s interest. The need is to build an open,
inclusive security architecture in the region. It will, of course, be a security
architecture with Asian characteristics, the political-military equivalent of
the open interlinked economic order that has so benefitted the region,
taking into account the primarily maritime nature of many regional secu-
rity issues and disputes amenable to collective solutions (IDSA 2014).
For India, the guiding principles on which a regional security framework
could be charted are as follows: no containment, no hegemony, no condo-
minium. And “yes” to everything that promotes dialogue as the principal
instrument of foreign policy.

India’s Role in Eastern Power Equations

Over the past two decades, India’s Eastern policies have been deeply ana-
lysed and widely commented upon by scholars. They believe New Delhi
has undertaken a concerted effort to direct its foreign, economic, and
military policies eastwards. India can play an extensive role as an “external
balancer,” “enabling power,” “engaged power,” a pluralistic power, and as
a “stabilising power. India, however, has made it abundantly clear that her
“foreign policy posture needs to be “‘inclusive, comprising all powers—
regional and extra-regional—relevant to the practice of Asia’s security”
(Menon 2013). But India’s sudden withdrawal from joint oil exploration
with Vietnam in the South China Sea, after previously boldly asserting its
270  M. GAUR AND S. MISHRA

legal claims there, has certainly raised questions about the credibility and
sustainability of her role as a major balancing power in the area.

India’s Options
Anticipating US regional decline, Japan was beginning to build economic
and military ties with regional partners, most notably with Delhi. But
analysts expressed scepticism over a potential for a framework of coop-
eration over East Asia between Japan, India, and China due to a num-
ber of factors: India’s limited economic integration and physical presence,
outstanding disputes between China and the states coping with its rise,
and Chinese fears of encirclement and misunderstandings of contentious
democratic publics and medias To some, India’s involvement with East
Asia is “more rhetoric than reality.” India’s limited diplomatic presence
rendered it unable to capitalize on the significant goodwill it enjoyed. To
achieve real power and influence, India would need to grow its foreign
policy apparatus, prioritize its East Asian relationships, and commit real
resources rather than continuing to do “too much with too little.”
Others struck a different tone arguing that, in contrast to the pic-
ture 20 years ago, India’s engagement of East Asia and a large number
of institutions indicated India’s desire to play a larger role internation-
ally, leading to greater multilateral involvement and contributions over
time, ­particularly as Indian trade with East Asia accelerated. India’s efforts
to play “catch up” due to its historically limited role in East Asia need
support from regional actors. However, with China determined to keep
India out of East Asian organizations, it is suspected that “India cannot
play a real regional counterweight to China and will likely remain on the
margins” (MIT 2011). As economic and military gaps with China widen,
India has to depend on its partnerships with the USA and Japan to pre-
serve the strategic balance and secure its interests (MIT 2011).

The Road Forward for India’s East Asian Relations

India as an Asian Power
Some analysts dispute this conclusion; to others, India is definitely an
extra-regional power. The USA has made it abundantly clear that it seeks
partnership with India in more regions. “Increasing cooperation between
the United States and India and between India and US allies in Asia, e.g.
 INDIA’S GROWING ROLE IN EAST ASIA  271

Japan and Australia, clearly with Washington’s blessing demonstrates this

acknowledgement of India’s Asian standing” (Blake 2013). Of all the
great powers, India has perhaps the largest room to grow in all of its
capabilities—economic, political, military—in playing an East Asian role.
Even if India is possibly the weakest of the major powers currently active
in Southeast Asia, it already is showing an enhanced capability to be that
net provider to regional security expected by the USA and Australia as
well as ASEAN members themselves. Nevertheless, it seems clear that
India is already an Asian power and that it must become more of one
if it has to enhance its domestic as well as international capabilities and
responsibilities. There is no dispute that India has arguably put in place a
functioning and positive set of mechanisms or forces that do implement a
strategy. Even if India only develops its overall strategic capabilities fitfully,
its engagement in Asia can only grow because its vital interests are now
engaged there (Blank 2014).
Against the backdrop of the oft-chanted plaint that India is a reluctant
and diffident power, it is stressed that “India has been very economical in
its foreign entanglements but not engagements. We have so far resisted
siren calls for us to do what others want us to, in the name of being
‘responsible’ or ‘stepping up to the plate.’ This shows an acute aware-
ness on our part, but not others, of the extent and limits of India’s power
and its potential uses, and a clear prioritisation between our interests and
between our goals. Others tell us that the articulation of our policies is
normative, moralistic and academic, even in explaining acts of realpolitik.
We have even been called ‘preachy’! The key to understanding India’s
foreign policy practice so far is the Indian understanding of the uses, limits
and nature of power” (Menon 2013).
But India can play a role in the region only to the extent that countries
of the region and countries that exercise influence in the region perceive
that India’s involvement in or with the region is relevant to their needs and
concerns. Therefore, these “challenges” materially circumscribe the scope
of India’s ability to take initiatives; it is much more up to countries of the
region and countries playing roles in the region to involve India. Through
the Look East Policy, India signalled its interest and desire in re-engaging
with the region. Since then, more of the initiative was taken by the coun-
tries of the region to build the current superstructure on the foundations
that India expressing its interest in being engaged represented. The China
factor has certainly played a significant role in the emergence of these new
ground realities in South and Southeast Asia, but it has been a far more
272  M. GAUR AND S. MISHRA

important motivating factor for countries of the region than it has been
for India (Naidu 2013).

India and East Asia: Post-2014

Soon after assuming office in May 2014, Indian Prime Minister Narendra
Modi had summit meetings with the leaders of Japan, China, and the
USA. The meetings initiated a process of substantive economic engage-
ments with Japan, China, and the USA, as the Modi government has
made economics and business the cornerstone of his administration’s
foreign policy. In an attempt to reinvigorate India’s Look East Policy,
Foreign Minister Sushma Swaraj stated that India must not only “Look
East,” but also “Act East.” This further indicates India’s desire for an
enhanced engagement with the region. It should not be a cause of con-
cern to anyone as India is not in a race for supremacy but stands for peace
and cooperation for development in the region. In this regard, the points
enumerated below stand out.

1. East Asia has a stake in India’s economic resurgence.

India’s resurgence could further amplify India’s role on the global

stage, and her economic restoration will positively impact composite Asian
economic growth.

2. India enjoys advantageous position in greater East Asia diplomatic

game.

Tensions due to territorial disputes between China and Japan are esca-
lating and the USA is firmly committed to safeguarding security of its ally,
Japan, in the region. However, the USA is trying to maintain a fine bal-
ance between its strategic alliance between USA and Japan and continuing
engagement with China.

3. India wants to go for rapid economic development through greater

engagement with both China and Japan without diluting her core
interests.

India’s largest trade partner is China, and being the two largest coun-
tries in Asia, India believes that together the two countries could bring
 INDIA’S GROWING ROLE IN EAST ASIA  273

about economic transformation in Asia and also contribute to global peace.

However, India is against “expansionist mindset” and would forcefully
pursue her interests by responding more firmly to secure Indian borders.
Some scholars have pointed out that Japan could be a game changer for
Asia. India-Japan strategic partnership could change the geopolitical com-
plexion of the region. During PM Modi’s visit to Japan, Japan pledged
heavy investment in developing India’s manufacturing and infrastructure
sector but was unwilling to go for civil nuclear agreement for the time
being.

4. There have been concerns that India through its strategic partner-
ship with Japan in the region and the USA is pushing an agenda of
encirclement of China. A host of Chinese scholars suggest that India
should refrain from aligning with the USA and Japan against China.
But the vital question is: Does USA want it? A realistic assessment of
the situation suggests that the USA is not interested in China-India
conflict and would not push India into any confrontation with
China. But it would also be equally realistic to say that India’s orien-
tation towards China will be influenced by the role of the USA in
East Asia (Twinning 2014).

It is of importance to note that India does not take sides in territo-

rial disputes. And India’s strategic partnership with the USA and Japan
is multidimensional: diplomatic, political, economic, and also cultural. It
would be fair to say that Indian foreign policy is guided by its security and
economic interests. Indian policymakers and practitioners work tirelessly
to enhance India’s bilateral ties with the USA, Japan, and China

Conclusion
In conclusion, it may be stated that India remains committed to further
intensifying its relations with this region. The pursuit of regional eco-
nomic integration, emphasis on South-South cooperation, promotion of
societal links through cultural cooperation and educational exchanges, as
well as an increased focus on security cooperation and countering threats
to national security will remain important pillars of India’s engagement
with East Asia.
For historical, cultural, political as well as substantial economic reasons
India belongs to the East Asian table. One of the key opportunities is to
274  M. GAUR AND S. MISHRA

revive and build on India’s historical and cultural legacy in Asia without
appearing to be seeking hegemony or trumpeting a chauvinist vision.
As an emerging power with one-fifth of the world’s population, India
obviously has a major role to play in the unfolding story of an ascendant
Asia, as well as in shaping the contours of the evolving global political and
economic order. But it needs to resolve some difficult challenges so as to
ensure that its influence on the global stage will be commensurate with
its strategic potential. There are no easy solutions, but India has to draw
up policies to deal with them. As progress is achieved in these areas, India
will correspondingly improve its global position. These efforts will, how-
ever, take time and require patience and persistence, which are virtues that
India’s ancient civilization does not lack.

Note
1. India’s Prime Minister Manmohan Singh at the 16th Asia Society Corporate
Conference in Mumbai on March 18th 2006, ­http://pmindia.gov.in/
speech-details.php?nodeid=287.

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 Index1

NUMBERS AND SYMBOLS ASEAN Charter, 24, 208, 209, 230

9-dash line, 11, 14, 24, 25
21st Century Maritime Silk Road, 17
A ASEAN Ministerial Meeting, 25, 229
Act East policy, 287
ADMM+, 228, 229, 232, 233
Agreed Framework (between the US
and the DPRK), 96, 164, 176
alliance, 5, 13, 15, 16, 19, 22,
26–8, 39, 40, 51, 54, 71, 72,
76, 77, 79, 81, 83, 90–2, 98,
99, 101, 130, 133, 134, 140,
147, 168, 200, 206, 212, 225,
226, 228, 230, 236, 246, 251,
252, 268, 272
anti-access/area denial (A2AD),
94, 97, 129
Arunachal Pradesh, 27
ASEAN centrality, 25, 26, 29, 212,
229, 230, 232, 234
ASEAN Community, 208, 209,
212, 230
ASEAN Free Trade Area (AFTA), 7,
207, 212
ASEAN Plus Six, 151, 255
ASEAN Plus Three (APT),
7, 16, 23, 28, 150, 151,
156, 206, 207, 212,
255, 256
ASEAN Regional Forum (ARF),
12, 26, 40, 54, 55, 174,
177, 207, 212, 226, 228–33,
237, 269
ASEAN Summit, 209
ASEAN Treaty of Amity and
Cooperation (TAC),
202, 204, 205, 208–10,
212, 230, 236
Asia Infrastructure Investment Bank
(AIIB), 50, 128, 212

 Note: Page numbers followed by “n” refers to notes.

1

© The Author(s) 2016 277

D. Arase (ed.), China’s Rise and Changing Order in East Asia,
DOI 10.1057/978-1-352-00023-8
278   INDEX
Asia Pacific Economic Cooperation
(APEC), 7, 8, 12, 38, 174, 182,
184, 186, 189, 211, 236
Asia-Pacific region, 43, 63, 83, 92, 207,
244–6, 248, 249, 262, 264, 266
Association of Southeast Asian Nations
(ASEAN), 4, 7, 16, 19, 22, 24–7,
29, 38, 40, 42, 44, 45, 55, 68, 72,
73, 76, 92–8, 139, 150, 156, 157,
173–4, 184, 186, 199–213, 221–2,
227–35, 237, 260, 266, 267, 271
Australia, 5–8, 12, 19, 22, 28, 29, 38,
46n5, 71, 76, 93, 95–8, 139,
150–2, 206, 211, 225, 227, 228,
230, 233–5, 239n2, 245, 248,
251, 255, 256, 271
B 90, 91, 95, 100, 147, 155, 167,
balance of power, 9, 19, 29, 82, 92,
126, 142, 211, 246, 250, 268, 269
balancing, 97, 98, 133, 135, 149, 238,
246, 249–51, 253, 270
bandwagoning, 252
Bay of Bengal, 27, 205, 248
bilateral alliances, 15, 76, 77, 90, 91,
101, 130, 225, 226, 230
bilateral cooperation, 189, 255
bipolar order, 20, 57, 71
Bretton Woods, 5
Brunei, 8, 24, 151, 203, 206, 213n1,
217, 231
Bush, George W., 10, 64, 92, 93, 96,
132, 151, 205
“byungjin strategic line”, 141
C 125, 130–2, 136, 206, 248,
Cambodia, 24, 25, 203, 209, 210,
227, 233
Central Asia, 17, 50, 189, 244, 265
Cheonan Incident, 170
China (Peoples Republic of China),
3–4, 37–63, 89, 107–20, 126,
145, 161, 173, 199, 217–23,
226, 243, 262
China-ASEAN Free Trade Area, 202,
203, 206
China-ASEAN summit, 202
China Coast Guard, 148, 149
China Dream, 17, 20, 51
China’s peaceful rise, 6, 52, 80, 128,
207, 217–23
“China threat”, 74, 91, 95, 201, 205
Clinton, Hillary, 12, 15, 54, 99,
129, 130, 205, 206, 244, 245,
253, 264
cold war, 3, 9, 14, 15, 20, 23, 24, 26,
54, 64, 68, 75, 78, 79, 85, 86,
169, 201, 209, 227, 231, 250,
253, 261, 263, 265
cold war thinking, 13
collective security, 77, 265
Communist Party of China (CPC), 13,
14, 203
Community of Common Destiny, 4,
15–17, 128
comprehensive security, 209, 228
Conference for Interaction and
Confidence-building in Asia
(CICA), 212, 235, 239n3
confidence building measures (CBM),
200, 207
constructivist, 146, 152
cooperation regime, 10, 16
cooperative security, 26, 184, 225–39
core interest, 13, 14, 70, 79, 99,
249, 272
Council for Security and Cooperation
Asia-Pacific (CSCAP), 233, 234

D freedom of navigation, 5, 8, 12, 14,
Dai Bingguo, 130
Declaration on the Conduct (DOC) of
Parties in the South China Sea,
202, 209, 219
Defense Strategy Review, 244
Deng Xiaoping, 3, 8, 51, 57, 149
denuclearization, 21, 141, 161, 165,
166, 168, 169, 177
Dokdo/Takeshima Island, 191
E
East Asia, 3–30, 38–40, 42, 44, 45,
54, 63–87, 89–102, 125, 128–30,
132, 142, 145–59, 180, 200–5,
207, 208, 210, 212, 225–8, 233,
236, 238, 243, 245, 247, 250,
256, 259–74
East Asian Summit, 26, 179, 226
East China Sea, 13, 22, 23, 39, 53,
72, 76, 95, 126, 130, 134, 232,
247, 248, 260
economic community, 150, 151
economic cooperation, 6, 7, 30, 140,
150, 202, 233, 256, 262, 264
economic security, 5, 16, 26, 39, 45,
92, 98, 141, 229, 230, 235, 237,
247, 273
Eurasian Economic Union (EAEU), 235
European Union (EU), 24, 66, 76,
93, 155, 186, 202, 221, 230, 235
exclusive economic zone (EEZ), 12,
13, 19, 21, 52, 56, 94, 99, 101,
132, 135, 220, 222
Expanded ASEAN Maritime Forum,
227, 228
F interdependence, 5, 6, 8, 16, 18, 23,
first island chain, 76
Five-Country Energy Ministerial,
178–81, 189, 190
INDEX   279
15, 25, 30n1, 76, 99, 101, 142,
206, 220, 221, 248, 256
free trade agreement, 7, 93, 97, 228–9
G
Gazprom, 187, 188
Greater Tumen Initiative (GTI), 179,
186
Gulf of Aden, 255
H
Hainan Island, 220
Haiyang Shiyou 981 (HS981), 211
hegemonic cycle, 9
hegemonic order, 8, 9, 29, 252
“hub-and-spokes” system, 5, 225
Hu Jintao, 13, 16, 181
human rights, 10, 12, 15, 18, 19, 70,
129, 132, 141, 150, 228, 230
Hyman Minsky, 115
I
identity, 14, 23, 130, 146, 152–7,
159, 191, 261
Ikenberry, John, 200
India, 5, 38, 65, 95, 151, 169, 178,
211, 221, 227, 243, 259–74
Indian Ocean, 5, 17, 24, 27–9, 50, 76,
245, 246, 248, 255
Indochina, 204
Indonesia, 5, 12, 24, 77, 97, 203,
206, 209, 210, 213n1, 217, 226,
227, 233, 234, 239n1
Indo-Pacific region, 50
innocent passage, 14, 101
40, 45, 50, 72, 80, 82, 86, 135,
138, 146, 150–2, 157, 254
international arbitration, 219
280   INDEX
International Atomic Energy Agency
(IAEA), 162
international law, 5, 14, 24, 72, 149,
218, 236, 237
J 55, 136–8
Japan, 4, 38, 49, 67, 91, 118, 133, 145,
173, 199, 221, 225, 244, 267
Japan Coast Guard, 95, 148
K multilateral cooperation, 10, 37, 40–3,
Kelly, John, 96, 263
Kim Jong-il, 188
Kim Jong Un, 141
Koizumi, Junichiro, 148, 151, 156,
182, 183
Korean Energy Development
Organization (KEDO),
176–8, 190
Korean peninsula, 18, 20, 21, 79, 99,
126, 140, 153, 161, 164, 165,
167, 168, 171, 177, 232
Korean War, 147
L new type of great power relations, 13,
Laos, 24, 203, 209, 210, 239n1
Lee Teng-hui, 91
liberal institutionalism, 10
Li Keqiang, 70, 255
Littoral Combat Ship (LCS), 98, 136
local government debt (in China), 113
Look East policy, 28, 245, 260–4,
271, 272
M Northeast Asian Gas and Pipeline
Malacca Strait, 27, 248
Malaysia, 8, 24, 152, 203, 206, 209,
213n1, 217, 226, 227, 239n1,
239n2
maritime disputes, 19, 75, 76, 83, 89,
91, 94, 95, 98, 99, 101, 126,
130, 221
maritime security, 19, 29, 84, 247,
248, 251, 255, 265
Mearsheimer, John, 10, 15, 50, 52,
middle power, 22, 29, 126, 139, 142,
177, 185, 200, 207, 234
Modi, Narendra, 264, 272, 273
Mongolia, 38, 117, 118, 179,
181, 185
45, 46, 127, 179
multipolar order, 9, 28
Musudan, 163, 164
Myanmar (Burma), 17, 24, 27, 72,
189, 203, 209, 239n1, 247
N
National Development and Reform
Commission (NDRC), 113, 178,
180, 183, 190
Natuna Islands, 213n1
natural gas, 175, 188, 260
New Silk Road Economic Belt, 17
125, 131–4, 136
Nixon, Richard, 89, 228
non-traditional security, 202, 232
norm governance, 22, 30, 129,
141, 210
Northeast Asia, 22, 23, 40, 136, 141,
164, 165, 167, 171, 173, 175, 182,
183, 185–7, 190, 230, 232, 260
Northeast Asian Cooperation Dialogue
(NEACD), 178
Forum (NAGPF), 181–4, 188
North Korea (Democratic Peoples
Republic of Korea), 20–3, 39, 64,
96, 99, 100, 117, 118, 140,

161–71, 173, 175–7, 180, 188,
189, 226, 227, 239n1, 269, 719
North Korean nuclear issue (nuclear
proliferation), 39, 55, 79, 80, 84,
96, 99, 140, 141, 161–71
Nuclear Non-proliferation Treaty
(NPT), 169
nuclear proliferation, 79, 80, 84, 141,
164, 165, 169
O
Obama, Barak, 11–13, 41–3, 51, 54,
66, 71–3, 80, 96–9, 125, 128,
129, 131–4, 151, 152, 168, 205,
206, 244–7, 253, 254, 267
oil (petroleum), 25, 52, 56, 96, 174,
176–84, 186, 187, 189, 190,
211, 220, 222, 260, 269
One Belt, One Road (Belt and Road
Initiative), 4, 128
P regionalism, 4–8, 16–19, 23, 25–30,
Pakistan, 27, 169, 170, 251, 254
Panetta, Leon, 13, 54, 245, 247, 266
Paracel Islands (Xisha Islands), 213n1,
218
Park Geun-hye, 141
“peaceful development”, 128, 130,
134, 149
“peaceful rise”, 6, 52, 80, 82, 128,
207, 217–23
People’s Liberation Army (PLA) Navy,
56, 71, 135
Permanent Court of Arbitration (at
the International Court of
Justice), 24, 209, 226
Philippines, 5, 15, 24, 38, 42, 52,
56, 72, 75, 76, 91, 95, 97, 201,
203, 206, 210, 213n1, 217,
218, 222, 225
pipeline, 17, 181–4, 186–8, 190, 192
INDEX   281
piracy, 23, 204, 265
power transition theory, 128
Pratas Island, 218
preventive diplomacy, 207, 231, 232
public goods, 4, 51, 73, 129, 175,
177, 182
Q
quantitative easing, 115
R
realism, 10, 55, 137
“regime complex”, 174, 175,
189–91
regional community, 24, 145–59
Regional Comprehensive Economic
Partnership (RCEP),
7, 8, 211, 229
regional cooperation, 6, 16, 38, 141,
150, 174, 178, 185, 200, 207,
212, 255, 267
40, 76, 150, 152, 157, 199–208,
212, 229, 243–56, 267, 268
regionalization, 6
regional order, 3–30, 57, 132, 140,
173, 174, 191, 235, 256, 265
regional security architecture, 54, 229
Russia, 20–3, 25, 96, 151, 154, 169,
173, 176, 177, 179–91, 226–30,
235, 267
Russian Far East, 187, 188
S
Scarborough Shoal/Huangyandao,
13, 56
sea lanes of communication (SLOC),
180, 181, 248, 255
second island chain, 76
security community, 208, 209
282   INDEX
security cooperation, 12, 23, 26, 30,
55, 76, 138, 191, 202, 212, 226,
247, 248, 251, 253, 255, 268, 273
security regime, 19, 26, 68, 139, 177,
189, 209, 225–39, 244
Senkaku/Diaoyu Islands, 152, 205
Shanghai Cooperation Organization
(SCO), 16, 55, 192, 255
Shangri-la Dialogue, 245
Shinzo Abe, 41, 72, 95, 99, 247, 268
Siberia, 182
Singapore, 8, 17, 46n7, 77, 97, 98, 151,
203, 206, 208, 209, 226, 227,
239n1, 239n2, 245, 248, 251
Singh, Manmohan, 247, 267, 274n1
Sino-Japanese relations, 53, 99
Sino-US relations (US-China
relations), 125–31, 133–9, 141,
165, 179
six party talks, 21, 39, 55, 96, 99, 162,
165, 167, 170, 171, 176–8, 269
soft power, 55, 58, 77, 92, 129
South Asia, 27, 245, 248, 250, 262,
267
South Asian Association for Regional
Cooperation (SAARC), 255
South China Sea, 11–14, 18, 24–7,
39, 41–4, 64, 66, 72, 76, 77, 79,
91, 95, 96, 99, 126, 130, 131,
135, 202, 205, 206, 209, 211,
213n1, 217–23, 233, 237, 248,
256, 260, 269
Southeast Asia, 4, 17, 23–9, 40–2,
44, 50, 52, 91, 97, 136, 157,
200–4, 208, 209, 211, 212,
225–33, 235, 237, 238, 259,
261, 266, 271
Southern Kurile Islands (Northern
Territories), 260
South Korea (Republic of Korea), 5, 7,
20–3, 29, 38, 40, 41, 55, 68,
75–7, 91, 93, 96, 99, 100, 117,
118, 125–42, 147, 167, 170,
173, 174, 176–8, 180, 183–91,
206, 207, 225–7, 230, 239n1
Soviet Union, 3, 8, 64, 68, 90, 91,
100, 169, 201, 226–8
Spratly Islands (Nansha Islands),
201, 213, 218, 223
strategic competition, 10, 13, 26, 28,
99, 249
strategic distrust, 14, 125, 126, 128,
139, 165
strategic partnership, 10–12,
18, 29, 54, 202, 245, 246,
268, 273
“strategic patience” policy, 96
strategic pivot to Asia. See rebalancing
to Asia
“strategic rebalancing” (US rebalance
to Asia policy), 12, 13
strategic rebalancing to Asia. See
rebalance to Asia
strategic trust, 98, 131, 254, 256
“string of pearls”, 248
subprime crisis, 114, 115, 117, 118,
119n5
T
Taepodong, 164
Taiwan (Republic of China), 6, 16, 18,
22, 39, 64, 66, 70, 71, 91, 92,
117–19, 119n5, 126, 130, 132,
139, 150, 200, 206, 217, 220,
227, 232
Taiwan Strait, 18, 39, 91, 126,
227, 232
“taoguang yanghui”, 51, 57
territorial sea, 12, 14, 22, 24, 25, 27,
39, 42, 52, 72, 99, 126, 130,
219, 221, 226, 256, 260
Thailand, 5, 76, 150, 203, 206, 209,
225, 226, 239n1

theater high altitude anti-ballistic
missile defense (THAAD), 127
Thucydides trap, 14, 67, 69, 70, 81,
82, 93, 94
Tibet, 27, 70, 130, 206
Tom Donilon, 98, 133
track two discussion, 226
traditional security, 230
Transneft, 183
trans-Pacific Free Trade Area of the
Asia-Pacific (FTAAP), 44, 236
Trans-Pacific Partnership (TPP), 8, 12,
41, 43, 44, 73, 97, 129, 151,
152, 159n2, 206, 207, 211, 236,
244, 254
Tumen River Development
Programme, 179
U Wang Yi, 70
UN Convention on the Law of the Sea
(UNCLOS), 12, 14, 24, 42, 52,
212, 218, 222
UN Development Programme
(UNDP), 179, 192, 202
UN Economic and Social
Commission/Asia Pacific
(UNESCAP), 173, 185, 186,
188, 189, 192
United States (US), 3, 38, 49–59,
63–87, 89–102, 111, 125–42,
147, 161–71, 173, 200, 217–23,
225, 243–56, 260
UN Security Council, 28, 162, 165,
169, 252
US-China Strategic and Economic
Dialogue (S&ED), 11, 126, 130,
131, 180, 192
INDEX   283
US-Japan alliance, 72, 91, 212
US maritime hegemony, 90, 92, 99,
102
V
Vietnam, 8, 17, 24, 42, 52,
64, 72, 75, 77, 95, 97,
152, 199, 201–4, 206,
209–11, 213n1, 217, 218,
226, 227, 230, 239n1, 251,
261, 269
Vietnamese Coast Guard, 95
Vietnam War, 204, 227
Vostok Plan, 187, 190
W
Waltz, Kenneth, 9
Western Pacific, 12, 19, 97, 100, 101,
236, 237, 245, 248
World War II, 3, 20, 29, 39–41, 79,
93, 95, 146, 148, 149, 200,
226, 237
X
Xi Jinping, 13–16, 19, 20, 46, 47n10,
50, 53, 58, 69, 80, 98, 128, 131,
212, 235
Xinjiang, 206
Y
Yan Xuetong, 6, 138
Yeonpyeong Island incident, 100
Yongbyon, 162, 163