The United States Is Losing Asia to China

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BY ELY RATNER, SAMIR KUMAR

With Washington in disarray, the Belt and Road Forum kicking off this weekend in Beijing should be a blaring wake up call that U.S. leadership in Asia is in peril. For two days, China will play host to more than 1,200 delegates from 110 countries, including 29 heads of state. The event will be centered on China’s “One Belt, One Road” program — more recently rebranded as the “Belt Road Initiative” (BRI) — which aims to provide much-needed infrastructure to connect Asia, the Middle East, and Europe.

Announced by Chinese President Xi Jinping in 2013, BRI is nothing if not ambitious, with plans to involve upwards of 65 countries and marshal in the neighborhood of $1 trillion. While skepticism is warranted about the novelty, value, and feasibility of many of the proposed projects, leaders around the world — with nary a better prospect of satisfying their development needs — are pining to take part. This is only the latest manifestation of Chinese leadership at a time when U.S. commitment to the region is less certain than ever.

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Washington’s response so far? More U.S. defense dollars. Senator John McCain has proposed a $7.5 billion “Asia-Pacific Stability Initiative” ($1.5 billion annually through 2022) that, according to a McCain spokesperson, would “make U.S. regional posture more forward-learning, flexible, resilient, and formidable,” as well as improve military infrastructure, buy additional munitions, and enhance the capacity of allies and partners in Asia. The idea is popular, receiving preliminary endorsements from Defense Secretary James Mattis, a bipartisan group of lawmakers on Capitol Hill, and the editorial pages of the Wall Street Journal.

But here’s the catch: Even though larger U.S. defense budgets are sorely needed, no amount of military spending alone can resuscitate American power in Asia. As essential as it is to strengthen U.S. partners and shore up the U.S. military’s position in the region, the near-term battle for influence in Asia will rise and fall on economics instead. And on that score, the United States is losing badly since withdrawing from the Trans-Pacific Partnership (TPP) trade agreement. Trump and his team have only made matters worse by threatening to undo or renegotiate existing deals, such as the U.S.-Korea Free Trade Agreement.

Beijing can’t believe its luck. 

With no indication that the Trump administration has plans to lead on trade and investment, China is busy stealing the mantle.

With no indication that the Trump administration has plans to lead on trade and investment, China is busy stealing the mantle. And not just with the Belt and Road Initiative. Beijing also launched the Asian Infrastructure Investment Bank in 2015 — absent U.S. participation — providing half of the $100 billion in initial capital. The organization has been growing steadily since, welcoming 13 new countries in March (including Belgium, Canada, and Ireland) that brought its total membership to 70. Meanwhile, China is steering the New Development Bank, founded in 2014 by the BRICS grouping, with $100 billion in start-up capital.

China is similarly poised to lead on trade, sitting in pole position in negotiations on the Regional Comprehensive Economic Partnership (RCEP), a regional trade agreement that aims to bring together the 10 members of the Association of Southeast Asian Nations (ASEAN) plus Australia, China, India, Japan, New Zealand, and South Korea. The grouping accounts for almost half of the world’s population and just under a third of global GDP. Negotiations, underway for four years, have picked up pace since the end of 2015. While big cleavages remain and the deal may never be done, RCEP is now the main game in town and the United States isn’t at the table.

These initiatives are important not primarily because of their raw economic impact — which is assuredly less than meets the eye — but instead because they have induced snowballing perceptions of inevitability about the future of a China-led economic order in Asia. And it isn’t lost on anybody that the United States is not participating in any of these programs. This isn’t simply anecdotal or the product of inside-the-Beltway theology. A recent survey revealed that Southeast Asian elites see the United States losing strategic ground to China, and Trump’s Washington as less interested in the region, less dependable, and less likely to uphold free trade.

Which gets back to the efficacy of a strategy predicated primarily on military strength if the administration’s economic policy toward Asia looks more like a noxious mix of neglect and contempt. Officials in the region are now quietly warning that Southeast Asia is rapidly approaching (if not having already crossed) the line whereby countries will be unwilling to initiate major new security activities with the United States for fear of economic retribution from China. This is the case not only among America’s new partners like Vietnam and Malaysia, but also its longstanding friends like Singapore and Australia. After all, would Canberra agree today to a new U.S. force posture initiative akin to the deal the Obama administration successfully negotiated in 2011 to rotate up to 2,500 U.S. Marines in Darwin? The answer is decidedly “no,” and although some of that has to do with Trump himself, the more fundamental reason is the emerging belief (however misplaced) that Australia’s economic future is now hitched to China’s wagon.

The United States will need strong, independent, and reliable allies and partners to advance its vital interests in Asia. But the only way something like McCain’s Asia-Pacific Stability Initiative can succeed is if the United States provides the region with an alternative to economic dependence on China and Chinese-led institutions. Reviving U.S. participation in TPP (or some version thereof) is the simplest and obvious first step. The politics of trade are abysmal right now, but so too are the consequences of U.S. withdrawal and protectionism. If an about-face on TPP is too much for even the Trump administration to bear, then it will be on the hook — and fast — for an equally ambitious economic endeavor in Asia. Otherwise, the United States will soon be squeezed out of large swaths of the region, no matter how many billions of dollars Congress commits to strengthen U.S. military power in Asia.