China-US Relations: Whither the Trade War?


August 6, 2018

China-US Relations: Whither the Trade War?

by Bunn Nagara

http://www.thestar.com.my

FOR further proof that China’s planners don’t always get it right, look no further than the current trade war with the United States.

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According to the latest reports including from within China, Beijing is flitting between damage control mode and full-on panic. A senior researcher at a Chinese think tank recently remarked that China has never seen anything as aggressive as the Trump administration’s current actions on trade.

Yet these are still early days – far worse may yet come. China is unsure what to do and never saw any of it coming. It cannot understand Trump, and there is no sign it ever will. Not that Donald Trump’s style is necessarily comprehensible or even decipherable.

China is now reportedly casting about for useful advice on managing Trump. It is even looking abroad for workable tips.

Amid all the uncertainty, at least three things are clear. One, things are all set to get worse before they get any better. And while China still has buttons to press, it is inadequately prepared for more fallout.

Two, China cannot “read” Trump’s moves because they seem coded or inaccessible to sensible interpretation. That is actually his strength.

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A trade war hurts everybody and benefits nobody. A shooting war, likewise. An expenditure war, or competition to build transnational infrastructure, improves connectivity for trade and travel. It benefits everybody and hurts nobody. In the past, however, a country such as the US would have to borrow from China to initiate such projects.–Bunn Nagara

Three, the prospect of meaningful trade talks is virtually nil. China just has to sweat it out or worse, at least for now.

As of midweek, the US and China have imposed 25% tariffs on US$34bil (RM139bil) of each other’s goods with another US$16bil (RM65bil) of products as the next tranche.

At this point, Trump’s legion of critics in the US may need to take a breather to suspend their cynicism about his style. His very unpredictability, so often an object of ridicule, is actually a tactical advantage useful for keeping his opponents guessing, distracted and off-balance.

By bobbing and weaving, he seems to be inconsistent and even unsteady. But it helps to keep the other side wrong-footed. It is something China should know about – drunken kung fu or drunken boxing. China’s stiff and straitlaced policymakers today forget their own culture and history at their peril.

An international consensus is developing that China should have acted to address US trade complaints, and acted sooner. Now the costs of delay for China may be higher than anticipated.

It is not just the tariffs and trade restrictions, of course. For today’s excess-capacity China the problems include the risk of ballooning unemployment, crimped liquidity and the knock-on domestic social problems they can cause.

Paradoxically, the years of cruising on fat growth figures have bred a crippling complacency. Thus the sense of unpreparedness now stings so much more.

China’s once-abundant funds are now becoming cramped. Last week the People’s Bank of China injected US$74bil (RM302bil) into the system and the State Council announced another US$200bil (RM815bil) for infrastructure.

Among China’s miscalculations was its assertiveness over its South China Sea claims. With its overbearing presence in disputed territory, it upset neighbours and consumed decades-long goodwill and trust in the region.

That was not what the China of Deng Xiaoping or his immediate successors would have done. China then was wiser and more circumspect, knowing how to bide its time and apply soft power to win friends and influence people.

But that is not today’s China. Nonetheless, questionable conduct comes with a price tag quite regardless of any positive achievements before.

Another mistake was to misread European complaints about Trump’s trade policies. China thought it could lead an alliance of sorts against those policies, only to find that core Western interests meant more to Europe.

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As a result of these missteps, the US excluded China from its biennial Rimpac (Rim of the Pacific) 26-nation military exercise this year, while inviting Vietnam for the first time. But another exercise hosted this month by Australia, and involving 27 countries including China, will proceed as planned. However, there will be no live-fire drills for China.

Meanwhile Britain is raising its level of naval activity in the region but will not be part of Australia’s programme. A calibrated response to China’s South China Sea assertiveness seems to be emerging among the Western allies.

China will not fail to take notice. But whether it will have any effect on Beijing’s plans and policies is another matter.

Nonetheless, regardless of what concessions Australia is prepared to make with China, Canberra is still competing with Beijing on some issues.

One of these is Australia’s aid programmes for South Pacific island nations. This comes to A$1.3bil (RM4bil) for this year. Although this amount may seem paltry, it compares favourably to China’s US$1.7bil (RM7bil) for 2006 to 2016.

Ordinarily, China would be able to top Australia’s allocation in a single stroke. But the trade war with the US is making itself felt. Besides, China has other cost items to look after, not least the sprawling multi-nation Belt and Road Initiative (BRI).

The BRI is not just another project – it has been set in stone in the destinies of the Communist Party of China, the state system and President Xi Jinping himself.

If Australia’s aid efforts in the South Pacific still appear limited, the US State Department is on a spending spree in a renamed Asia-Pacific with an India option, now dubbed the “Indo-Pacific.”

At an Indo-Pacific Business Forum in Washington last Monday, Secretary of State Mike Pompeo unveiled new largesse for developing infrastructure in the region.

The trio of countries in this scheduled spending exercise are the US, Japan and Australia.

Not officially mentioned is the great big elephant in the room, China, the object of this round of manoeuvres.

Can the US really hope to outspend and out-construct China? Can it do so even with the help of Japan and Australia? There was also a time when the answer would be an unqualified no. But now China’s spending style has become somewhat cramped.

The trade war aside, little if anything has changed in the fortunes of Japan and Australia.

Japan’s economy remains largely in the doldrums for a quarter of a century now. No great elevation in fortunes seems likely.

The Australian economy is increasingly drawn into China’s orbit, while Canberra is in two minds about opting to be more Asian or staying fully within the Western alliance.

The US economy has not risen substantially in recent times, nor has it shown much sign of doing so sustainably over the long term.

A trade war hurts everybody and benefits nobody. A shooting war, likewise. An expenditure war, or competition to build transnational infrastructure, improves connectivity for trade and travel. It benefits everybody and hurts nobody. In the past, however, a country such as the US would have to borrow from China to initiate such projects.

It may still have to do so. The countries between them would probably benefit the most. In spite of itself, China has begun to undergo a sobering experience about the costs of massive infrastructure projects.

It has unwittingly become more conscious of the predicament of countries like Malaysia. Asking questions about the viability and returns on investment of such projects is Beijing’s new normal.

The larger question is whether the trade war will hurt China or the US first, appreciably, to alter the course in the other’s favour.

But don’t hold your breath.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Malaysia: Embracing Abe-san and Bro Modi


August 1, 2018

Dr. Mahathir’s Look East (Japan) and West (India) Geo-Economics–Embracing Abe San and Bro Modi

by Dr. Shankaran Nambiar, MIER

http://www.eastasiaforum.org/2018/07/13/mahathirs-foreign-policy-reset/

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Malaysian Prime Minister Dr.Mahathir greets Bro Modi

Prime Minister Mahathir Mohamad appears to be setting the tone for a revision of Malaysia’s geo-economic policy, if the bilateral meetings with his Indian and Japanese counterparts in the early days of his administration are anything to go by. 

 

Indian Prime Minister Narendra Modi called on Mahathir not too long after the latter assumed office. The meeting was significant in so far as Modi is keen on ‘Acting East’ and forging stronger ties with ASEAN. With Mahathir at the helm, Modi may well have an active and influential partner in the region.

India is likely to be an economic powerhouse in the coming decade or two, and any long-term economic architecture in the region will have to take this reality into account.

Does Mahathir run the risk of disrupting Malaysia’s economic relations with China by engaging with other partners? Not quite, but he does want to tilt the balance.

Mahathir is not questioning China’s intention to build friendly, harmonious and prosperous relations with the region or with Malaysia. But he is adding a dose of reality to some of the more questionable investment agreements that Malaysia has entered into with China and wants these deals to be reviewed. Mahathir has said that ‘we will be friendly to China but we don’t want to be indebted to China’.

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With Ali Baba’s Jack Ma of China

The Prime Minister is keen to do business with anyone who means business, provided there are no hidden caveats and Malaysia is not compromised. If there was any question of wanting to cut off China, Mahathir would not have met with Chinese entrepreneur Jack Ma.

This brings us to Mahathir’s meeting with a second foreign leader, Japanese Prime Minister Shinzo Abe. Why did Mahathir choose to go to Japan on his first official overseas trip soon after he came to power?

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Teaming with Abe-San on Look East Partnership with No.7 Jersey

Mahathir probably sees value in reviving his ‘Look East’ policy, which he pursued while prime minister in the 1980s, perhaps in a different form and for slightly different reasons. There is an element of nostalgia, to be sure. But Mahathir is not is not a sentimentalist.

The previous Najib administration did not treat the notion of equidistance from global superpowers with the sensitivity it deserved. There was a tumbling over to China coupled with a reticence to engage with Japan, at least with nothing of the enthusiasm that Tokyo enjoyed during the Mahathir 1.0 era.

Mahathir has always believed in maintaining equidistance from other powers, preferring to work with the larger economies as equals. Mahathir would, by logical extension, be willing to cooperate with China’s Belt and Road Initiative as long as the partnership is fair and without Beijing using Malaysia as its playground. In that respect, reaffirming Malaysia’s long friendship with Japan is a reassertion of Mahathir’s pragmatic approach to geo-economic policy.

But equidistance is not possible without the existence of something like the Non-Aligned Movement. In lieu of that, Mahathir will likely pursue equidistance through a more integrated ASEAN in partnership with other countries such as the United States, China, Japan, South Korea, India and the Central Asian states. This would be a revival of his East Asian Economic Caucus (EAEC) concept.

A close-knit ASEAN, through the EAEC, would be able to give countries such as Malaysia more access to foreign markets without having to pay an onerous price for doing so. It would allow countries like India to trade and invest in Southeast Asia or other places while being able to show their home constituencies that they can make gains without paying for them with tough commitments.

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Strengthening ASEAN’s economic cohesion and including other powers through the EAEC would mean that neither the United States nor China could dominate Malaysia’s foreign policy. Malaysia would not have to choose between aligning with either power.

Mahathir’s discussion with Jack Ma after his India and Japan meetings shows the Prime Minister’s pragmatism — more than being caught up in great power politics, Mahathir wants to push ahead with attracting no-strings-attached investment, be it from China, India or any other part of the world.

Mahathir understands that trade and investment are Malaysia’s lifeblood. Improving Malaysia’s networks with the rest of the world’s markets must take top priority to foster better trade and investment connections.

Mahathir’s meetings with Modi and Abe will set in motion a couple of initiatives. Malaysia will return to its default position of maintaining equidistance between superpowers. Japan will not feel it is being edged out of Malaysia’s investment landscape.

Malaysia will stand for a free and unaligned ASEAN, with Mahathir leading a campaign for a new trade architecture that might be more palatable to Southeast Asian countries  and which will minimise the conflicting demands of China, the United States and India by embracing Japan.

Of course, the EAEC idea will have its share of detractors and non-adherents. Much as Mahathir has a tough job setting domestic affairs right now, he has the no less difficult task of realigning the country’s geo-economic policy.

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Shankaran Nambiar is a senior research fellow at the Malaysian Institute of Economic Research.

A version of this article originally appeared here in The Sun Daily.

US-North Korea Singapore Summit– A Long Journey to Peace Ahead


July 26, 2018

US-North Korea Singapore Summit– A Long Journey to Peace Ahead

by Charles K Armstrong, Columbia University

http://www.eastasiaforum.org/2018/07/25/too-early-to-tell-if-the-singapore-summit-was-successful/

“Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. As Pompeo rightly stated, North Korean denuclearisation will take a long time. But the goal to which Seoul, Pyongyang and Washington have committed is not just denuclearisation: the goal is a lasting and stable peace. Building that will take a great deal more patience than we have tended to see in Washington.”--Charles Armstrong

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The 12 June US–DPRK summit meeting was vastly oversold, not least by US President Donald Trump. The day after the summit, Trump tweeted that the North Korean nuclear threat had been removed, even though Pyongyang had taken no verifiable action toward eliminating its nuclear program. On 12 July, one month after the summit, Trump brandished a letter from North Korean leader Kim Jong-un, who declared their Singapore meeting ‘the start of a meaningful journey’ and said he was looking forward to their next meeting. Trump took this as a reflection of the ‘great progress’ that the two countries had made despite the frustrations that had beset US Secretary of State Mike Pompeo in his recent visit to Pyongyang. Six weeks after the Singapore summit, North Korea’s nuclear arsenal has not diminished, US and UN sanctions against North Korea remain in place, and the US government continues to forbid US citizens from visiting North Korea (and vice versa) without special permission.

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Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. But tensions on the Korean Peninsula have eased and that is a major step forward in relations.

Still, despite the largely critical coverage from the Western press — the media in Asia, including in South Korea, has generally been more positive — it is far too early to tell whether the Singapore summit was a success or a failure. Kim’s ‘nice note’ is correct: the meeting of the two leaders was only the start of a journey and was the beginning of a long and unpredictable process of normalising relations between two countries that have been in conflict for 70 years.

As critics were quick to point out, the joint declaration was remarkably vague — not much of a ‘deal’ at all. Trump offered North Korea unspecified ‘security guarantees’ in exchange for which Kim Jong-un ‘reaffirmed his firm and unwavering commitment to complete denuclearisation of the Korean Peninsula’. The one concrete action proposed was the return of US soldiers’ remains from the Korean War. Here some progress has been made: according to a US official who was present at the North Korea–US talks on 16 July, North Korean has offered to send back the remains of over 50 US servicemen on 27 July, which is the 65th anniversary of the Korean War armistice.

The summit was oversold in North Korea as well. The Trump–Kim meeting was covered extensively in the DPRK media, and the usually virulent anti-US propaganda has softened. There has been a new focus on economic development in recent months, and the summit was supposed to be a breakthrough moment that allowed North Korea to shift from nuclear weapons to rebuilding its economy. But the economy still languishes; according to the Bank of Korea in Seoul, North Korea’s GDP shrank by 3.5 per cent in 2017 — its worst performance in two decades. On 20 July, Pompeo reiterated the US position that sanctions could not be lifted until North Korea takes further steps toward denuclearisation, and he criticised Russia and China for failing to enforce sanctions on North Korean oil imports.

As with US–Russia relations, there can be a sizable gap between statements from the White House and the actual policies of the administration. While Trump and Kim (as well as South Korean President Moon Jae-in) emphasise peace and cooperation in more general terms, Pompeo and others in the administration speak the old language of CVID (complete, verifiable and irreversible dismantlement of North Korea’s nuclear program) as a precondition for any change in the US–North Korea relationship. These two approaches may be complementary, but more often they appear contradictory and confusing. Trump himself seemed to walk back on his bullish statements on North Korean denuclearisation by announcing on 20 July the ‘unusual and extraordinary threat’ North Korea still poses to the United States.

In the meantime, relations among the countries of Northeast Asia are moving forward — with or without a dramatic change in US–DPRK ties. Russia and China have so far resisted US calls to block oil deliveries to North Korea. Kim’s three meetings with Chinese President Xi Jinping in less than two months reflect the rapidly warming ties between North Korea and China after several years of cool relations. Russian media recently reported plans for a Kim–Putin summit. President Moon spoke to the Russian lower house on 21 June — the first South Korean president to make an official visit to Russia since 1999 — where he called for greater cooperation between Russia and the two Koreas on economic development and denuclearisation.

On the Korean Peninsula itself, the Moon administration remains upbeat about relations with the North three months after the inter-Korean summit in Panmunjom, which called for a peace agreement to replace the Korean War armistice by the end of this year. Reunions of Korean families separated by the North–South conflict are scheduled for August. Joint inspection has started for reconnecting North–South railway lines. But only so much can be done while North Korea is under heavy UN sanctions. South Korea has requested (and received) special permission from the UN Security Council Sanctions Committee to allow the equipment and materials for communication between the two Koreas’ militaries. Establishing liaison offices between the Seoul and Pyongyang governments, another goal of the Panmunjom Summit, faces similar sanctions obstacles.

Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. As Pompeo rightly stated, North Korean denuclearisation will take a long time. But the goal to which Seoul, Pyongyang and Washington have committed is not just denuclearisation: the goal is a lasting and stable peace. Building that will take a great deal more patience than we have tended to see in Washington.

Charles K Armstrong is The Korea Foundation Professor of Korean Studies in the Social Sciences at Columbia University and author of The Koreas.

The Domestic Political Impact of Rapid Economic Change in the Indo-Pacific Region


July 25, 2018

The Domestic Political Impact of Rapid Economic Change in the Indo-Pacific Region

by Ellen Frost

Asia Pacific Bulletin, No. 426

Publisher: Washington, DC: East-West Center
Available From: July 11, 2018
Publication Date: July 11, 2018
Binding: Electronic
Pages: 2
Free Download: PDF

 

Ellen L. Frost, Senior Advisor and Fellow at the East-West Center in Washington, explains that “A key question is whether the strategies employed by current Indo-Pacific governments are working well enough to be both competitive in the new regional economic environment and responsive to legitimate grievances at home.”

 Structural changes in the external economic environment have a profound and complex impact on the distribution of power and wealth among and within national societies. They mobilize new actors, influence the content of domestic and foreign economic policies, and ultimately contribute to–or erode—the legitimacy of national governments.

Nowhere in the world are these impacts more visible and more dynamic than in the nations of the Indo-Pacific, many of which will hold elections within the next year. These challenges are not new, but they have intensified. Beginning in the 1980s, the revolution in communications technology and the advent of large-scale container shipping swept across East and Southeast Asia, connecting people and markets as never before. In the 1990s, burgeoning production networks linked the more competitive and investment-friendly developing economies—such as Singapore, Thailand, Malaysia, South Korea, and Taiwan—with world markets, leaving more closed economies such as Laos, Myanmar, and India lagging behind. Market-opening in China fueled spectacular rates of growth, lifted millions out of poverty, and enabled the country to become not only an assembly nexus and production hub but also an assertive regional power.

Regional economic integration has become a dominant feature of today’s Indo-Pacific. All governments are committed to promoting closer economic ties with each other, whether half-heartedly or not. Integration is inching along, gingerly encouraged by governments but driven more powerfully by pressure from the private sector and from ocean-facing local governments. Trade-liberalizing agreements, though imperfect and limited, are the new norm. Negotiations spearheaded by the Association of South East Asian Nations (ASEAN) have made some progress. Despite the Asian financial crisis of 1997-98 and the U.S.-origin global recession of 2008-09, no government in the Indo-Pacific region has rejected the rules embodied in the World Trade Organization (WTO) or retreated from its slow and uneven march toward more open markets.

Indo-Pacific governments that signed on to the high-standard Trans-Pacific Partnership (TPP) agreement—Brunei, Singapore, Malaysia, Vietnam, Australia, and New Zealand—remain committed  to improving the protection of intellectual property and tackling other behind-the-border measures that impede trade and investment, with or without the United States. Promoting the transition to a digital economy is likely to gain more prominence next year, when Thailand takes over the chairmanship of ASEAN. Meanwhile, negotiations on a less demanding, ASEAN-sponsored Regional Comprehensive Economic Partnership (RCEP), which includes India as well as Australia, and New Zealand, continue to inch along.

Even India has embraced closer integration, as emphasized most recently by Prime Minister Modi at the June 2018 Shangri-La Dialogue. India’s economic reform is lagging, but its high growth rate, relatively low level of public debt, and youthful population have attracted an upsurge in foreign investment. The Modi government’s outward-looking strategic awakening is gradually improving relations with nations bordering the Bay of Bengal and the Indian Ocean littoral, thus facilitating closer integration. But the combination of India’s federal system, local politics, corruption, and remnants of the “license raj” has thus far thwarted wide-ranging economic liberalization.

Domestic Aspects of Regional Integration

The upsurge in Indo-Pacific economic integration has spawned a rising middle class whose members have embraced the choices available in the regional (and global) marketplace. Urban dwellers in particular have become used to higher standards of living, more consumer choice, and a wide spectrum of social media. Thousands of Asians have found employment in foreign firms or joint ventures, while others have lost their jobs. What Karl Marx and others called the “comprador bourgeoisie”—local agents or managers working for foreign entities—has emerged as an educated political class with a major stake in regional integration.

Many provincial and urban authorities have developed close ties to their nearby counterparts across borders, particularly in mainland Southeast Asian countries bordering on or close to China (Myanmar, Laos, Vietnam, and Thailand). Small- and medium-size companies and local enterprises account for a growing share of China’s overseas investment. All of these groups have acquired a stronger political voice.

China    

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Overshadowing all this activity is the sheer weight of China. China’s economic growth and central role in production networks have made it the number-one or number-two trading partner of virtually all countries in the East and Southeast Asia regions. Some smaller nations have found a niche in China-centered manufacturing networks, while others have boosted their sale of commodities and raw materials. China’s Belt and Road Initiative and the China-sponsored Asian Infrastructure Investment Bank will spur badly needed development of Indo-Pacific infrastructure and connectivity. Local interest groups have sprung up accordingly. For all of these reasons, most Indo-Pacific governments feel compelled to maintain friendly relations with China.

Dependence on China comes at a price, however. Huge loans for infrastructure projects can feed large-scale corruption and saddle poorer countries with unsustainable debt. To enforce its geopolitical agenda, Beijing is increasingly resorting to coercive economic statecraft (“sharp power”), including surprise “inspections” and delayed approvals, selective boycotts, and limits on tourism. Chinese companies investing in Indo-Pacific countries typically import large groups of Chinese workers to perform jobs that might otherwise go to local laborers. The militarization of islands claimed or created in the South China Sea has gone unchecked, spurring criticism in rival claimants.

Challenges Facing Indo-Pacific Governments

“Governments that fail to reform the structure of their economies risk falling even further behind in the regional marketplace, but those who neglect their most vulnerable citizens may be voted out of office—or overthrown.” –Ellen Frost

A number of major threats to integration, growth, and political stability in the Indo-Pacific region are beyond national governments’ control. They include financial volatility, cyber crime, terrorist attacks, refugee flows, fluctuating commodity prices, rising sea levels, severe storms, and other natural disasters. Grievances and conspiracy theories proliferate via social media. Manufacturing breakthroughs such as 3-D printing may localize or otherwise shrink the regional supply chains in which many Asians have found a profitable niche. Growing income inequality is also a threat; when those left behind come from a neglected or persecuted ethnic or religious group, the result can be highly destabilizing.

The latest threat to Indo-Pacific prosperity—and indirectly to regional integration—is the outbreak of protectionism and populist nationalism in the United States. The Trump administration’s “America First” campaign may well divert investment away from the Indo-Pacific and into the United States. Indeed, that is an explicit U.S. policy goal. As regional integration stalls, domestic interest groups with a stake in the expanding regional economy and others with previously high expectations may turn against established governments.

Electoral Prospects: Finding a Balance

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Upcoming elections in Bangladesh, Bhutan, Cambodia, the Philippines, Indonesia, Thailand and India (including Indian states), scheduled for 2018 or 2019, will put the leaders of these countries to the test. Governments not facing challenges from the ballot box will feel pressure from their citizens as well. Some of the likely issues will be linked to or exacerbated by the evolving external economic environment, such as large-scale corruption in the infrastructure sector, widening income gaps, unwelcome Chinese activities, and worker layoffs in non-competitive sectors.

A key question is whether the strategies employed by existing Indo-Pacific governments are working well enough to be both competitive in the new regional economic environment and responsive to legitimate grievances at home. Governments that fail to reform the structure of their economies risk falling even further behind in the regional marketplace, but those who neglect their most vulnerable citizens may be voted out of office—or overthrown.

https://www.eastwestcenter.org/publications/the-domestic-political-impact-rapid-economic-change-in-the-indo-pacific-region

Foreign Policy: Asia after the liberal international order


July 20, 2018

Foreign Policy: Asia after the liberal international order

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by Amitav Acharya, American University, Washington DC

With the election of Donald Trump as President of the United States, the West suddenly woke up with an acute anxiety about the fate of the US-led liberal international order. Until then, the liberal establishment in the United States had assumed that Hillary Clinton would succeed Barack Obama as President and ensure continuity in the liberal order. They ignored or dismissed warnings about the order’s crisis and decline. The belief in the resilience of the liberal order changed dramatically on 6 November 2016.

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 What is the liberal order? It is an international system created and managed by the United States after World War II to promote capitalism and democracy through building alliances and multilateral institutions. Its supporters portray the liberal order as an open, rules-based and multilateral system that operates through consent rather than coercion.

This is a fundamentally self-serving and distorted view. In reality, the liberal order is a club of the West. To other countries, its benefits—such as market access, aid and investment, and the provision of a security umbrella—were offered selectively and conditionally. Leading nations of the developing world, including China and India, were either outside of the system or connected at the margins. Some developing countries were summarily excluded.

The order often operated more through coercion than consent. It was hardly ‘orderly’ for the Third World, where local conflicts were magnified by capricious great power intervention, including by the United States and its Western allies.

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China’s Xi Jinping’s is Asia’s Big Brother

Trump’s rise proves that the challenge to the liberal order is as much from within the United States as from outside. Trump is not the cause of the crisis of the liberal order, but rather its consequence. The liberal order had begun to fray and fragment well before the Trump presidency due to irreversible structural changes in the global economy, especially the rise of China and other non-Western powers. Growth in world trade had slowed and the World Trade Organization had been moribund for some time. A sizable section of the US electorate was already disillusioned with free markets and free trade. While Trump was able to stoke and exploit these sentiments, their origins predate his political rise.

Trump’s policies are pushing the liberal order closer to the precipice. He is severely weakening the US commitment to free trade and multilateralism, and his elevation to US Pesidency is encouraging populist and authoritarian rulers around the world. Trump shows more interest in engaging Putin and  North Korea’s Kim than Merkel and May.

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Trump is all over Moon

Asia was a grey zone of the liberal order for much of the post-World War II period. Some countries of the region, especially the so-called ‘East Asian tigers’, benefited from export-led growth strategies and access to the US market that the liberal order facilitated. But East Asian capitalism was mediated by the strong hand of the state. Democracy in the region was scarce and illiberal, marked by one-party rule, sham elections and scant provision of civil liberties.

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Trump grimaces through ASEAN handshake in Manila, Philippines, this may be the most awkward presidential handshake ever. The US President does not take ASEAN seriously. He has deliberately discouraged the development of regional multilateral institutions in Asia in favour of a hub-and-spoke system of bilateral alliances. 

The United States discouraged the development of regional multilateral institutions in Asia in favour of a hub-and-spoke system of bilateral alliances. ASEAN—the most successful regional multilateral institution in Asia—was established with no help from the US. It came about despite the liberal order, rather than because of it.

 Trump’s effect on the liberal order might not be known for some time. At this point, we do not know how long his Presidency might last, whether he will face impeachment or seek re-election—and if he does, whether he would win a second term.

His approach to foreign policy is so inconsistent (such as his reversals on the Trans-Pacific Partnership), that one must exercise extreme caution in making any predictions about how his Presidency might eventually affect the world order.

The vagaries of the Trump Presidency notwithstanding, the liberal order is facing an existential challenge. Elements of the liberal order will survive but it will not enjoy the dominance it once claimed for itself. The era of liberal hegemony is past. The rise of the rest is real.

Asia has come a long way since the Cold War. China and India, the region’s leading powers, have embraced economic openness. There is now a range of multilateral institutions in the region, centered around ASEAN. But the great powers of Asia will not be the saviors of the liberal order, as some hope.

While China has pledged to support the liberal order, this is likely only in reference to some of its economic and institutional aspects, especially the flow of trade and investment. China will not support the political foundations of the liberal order, such as democracy and human rights. Even in the economic arena, China’s policies—such as the Asian Infrastructure Investment Bank and the Belt and Road Initiative—will alter global trade, investment and development patterns even if they are only partially successful. In the longer term, they will create a Chinese-led international order over Eurasia and beyond.

Instead of helping the West to resurrect the liberal order, Asia will lead the transition to a different type of world order. The remnants of the liberal order will have to come to terms with a Chinese-led order and other regional orders around the world in what I call a decentered and post-hegemonic ‘multiplex world’.

Such a world will not be free of conflict. But conflict will be tempered by both older and newer forms of interdependence and institutions across regional orders, including those responding to shared transnational challenges such as climate change, pandemics and terrorism. This outlook is more plausible than the doomsday scenarios of disarray and collapse that many liberal pundits in the West have imagined as a result of the end of the US-led order. They were wrong before and are likely to be wrong again.

Amitav Acharya is Distinguished Professor of International Relations, American University, Washington, DC. This article is based on ideas from his book, The End of American World Order, 2nd edition, Polity Press, 2018. Follow him on Twitter: @AmitavAcharya.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘Trade wars and Asia’.