When President Barack Obama first sits down with his national security team to review America’s foreign policy portfolio, he will find Asia, and U.S. Asia policy, in seemingly good shape. Despite accusations that it ignored the region in order to focus on the Middle East and terrorism, the Bush Administration actually devoted much energy and attention to Asia, achieving some notable results.

Day-to-day relations with China are better now than they were at the turn of the century. Some observers describe them as warmer and more cooperative than at any time in the past two decades. The United States has bolstered its alliance with Japan and embarked on a new era of strategic cooperation with India. The Bush Administration managed to navigate sharp differences with South Korea—over everything from military bases to negotiations with Pyongyang—skillfully enough to avoid a permanent rift in relations. The emergence of a new, more pro-American government in Seoul may make it easier for Bush’s successor to put the alliance back on firmer footing.

An equally notable result of Bush’s Asia policy is that two long-standing East Asian flashpoints look less prone to explode than they did only a few years ago. Thanks in part to U.S. efforts to restrain both sides, China and Taiwan have passed through a particularly dangerous period in their relations. There is now at least a chance that the new, more pragmatic government in Taipei will be able to achieve a lasting modus vivendi with the Mainland. Meanwhile, North Korea has taken some significant preliminary steps toward denuclearization and has declared its willingness, in principle, to dismantle all elements of its nuclear weapons program. Numerous obstacles to an acceptable settlement remain, but the situation appears more stable now than it did in the autumn of 2002.

It is in Asia, then, that the Bush Administration came closest to achieving its goals. Indeed, one former official has gone so far as to describe it as the site of “Washington’s untold success story.”¹ The successes of the past eight years are real, but such judgments are both superficial and premature. The Obama Administration will have to work hard to prevent its predecessor’s achievements from unraveling. It will also have to address some difficult long-term issues that President Bush and his advisers were able to sidestep or defer.

The Asian Inbox

If we assess the Asia policy portfolio of the Obama Administration, we might logically begin with the Bush Administration’s proudest accomplishment: improving relations between the United States and China. The truth is that this amity is by no means assured. In the near term the greatest threats will come from the economic rather than the strategic realm. Especially if the world is slow to recover from the after-effects of the financial crisis, simmering trade tensions between the two Pacific powers could easily boil over. The Bush Administration managed for the most part to fend off demands that it impose tariffs on Chinese goods to protect American industry or to punish Beijing for not dramatically revaluing its currency. Because they originate largely from within his own Party, President Obama may find it harder to resist such protectionist pressures.

Thus, just as U.S.-Japan relations were strained by disputes over trade in the 1980s, so economic issues could easily become a major source of friction between Washington and Beijing. Despite some similarities, however, the situations are different in at least one critical respect: Whatever their disagreements, the United States and Japan were ultimately bound together by a defensive alliance. Both believed they shared common values and faced a common threat. Today, by contrast, it is the prospect of mutual economic gain that holds the United States and China together, countering underlying tendencies toward mistrust and strategic rivalry. If trade becomes yet another arena of struggle between the United States and China, there will be little to prevent the entire relationship from spiraling downward.

Renewed Taiwan-China tensions are equally capable of undermining the U.S.-China relationship. While Taiwanese President Ma Ying-jeou’s Kuomintang Party may be less eager than the pro-independence Democratic People’s Party to provoke Beijing and more willing to talk, it will not, and really cannot, accept the PRC’s demands for unification. After all, Taiwan is a democracy in which a significant majority favors a continuation of the status quo. If China’s leaders anticipate an early diplomatic breakthrough, they are destined for disappointment.

Owing in part to the deep partisan divisions that have characterized Taiwanese politics over the past eight years, efforts to improve the island’s capacity for self-defense have lagged even as China’s military capabilities have grown apace. Arms sales approved by the Bush Administration in its early months were held up for years by the failure of Taiwan’s parliament to authorize the necessary funding. When Taipei was finally ready to move forward, the Bush Administration dragged its feet in order to avoid offending Beijing, and then approved a fraction of the original 2001 arms package on its way out of office. Among other matters crowding President Obama’s Asian inbox will be the question of whether and how to help Taiwan preserve some semblance of a military balance with the Mainland. Renewed American arms sales will incur Beijing’s wrath, but failure to act will leave Taiwan increasingly exposed and demoralized.

Notwithstanding the progress that has been made toward closer strategic cooperation, the U.S.-Japan alliance will require careful tending in the years ahead. Former Prime Minister Junichiro Koizumi was a remarkably adept leader who succeeded in moving his country more quickly than many thought possible toward a more assertive and “normal” international posture. His successors have lacked his skill and determination. Shinzo Abe’s quick departure from power left a number of initiatives unfinished, including plans to enhance cooperation among Asia’s democracies and to revise Japan’s constitution so that its armed forces can participate in coalition “collective self-defense” operations. An apparent lack of attention and resolve on the part of Abe’s successor, Yasuo Fukuda, threatened to unravel a painstakingly negotiated agreement over the disposition of U.S. forces. It remains to be seen whether Japan’s newest leader, former Foreign Minister Taro Aso, will be able to pick up where Koizumi left off.

Many Japanese now worry that the United States is starting to “tilt” toward China. Recent U.S. actions have fed these fears: For all its talk of “common values”, Washington showed little enthusiasm for the Abe Administration’s proposals on improving cooperation among the region’s democracies. Likewise, the U.S. reluctance to sell F-22 fighters to Japan was widely interpreted as a slap in the face motivated by a desire not to rile Chinese sensibilities.

Perhaps most worrisome from the Japanese perspective is the marked shift in U.S. policy on North Korea. The Bush Administration’s decision—after Pyongyang’s October 2006 nuclear test—to reverse course, ease economic pressure and begin bilateral negotiations left Japan feeling isolated and uneasy. After sticking close to the American position since the start of the Six-Party Talks in August 2003, Tokyo suddenly found itself alone in favoring a continued tough stance. Although the Bush Administration claimed that its goal remained the elimination of every shred of fissile material and bomb-making capability from Korea, Japanese observers have begun to wonder if the Americans have privately decided they can live with a residual North Korean nuclear capability.

That decision will be up to Obama. Bush’s step-by-step process has yielded, at best, an ambiguous outcome. In return for diminished pressure, increased aid and removal from the U.S. list of terror-supporting states, the Kim Jong-il regime has disabled (but not yet dismantled and destroyed) its Yongbyon nuclear reactor and reprocessing facilities and has given what it claims to be a “complete and correct” accounting of its stockpile of fissile material. But Pyongyang has not yet agreed to a procedure for handing over its plutonium. Nor has it disclosed details of a secret, parallel enrichment program for producing weapons-grade uranium, accounted for its dealings with nuclear aspirants such as Syria and Iran, or accepted the kind of rigorous inspection regime that will be necessary to verify its claims.

Even if the North Koreans agree to give up everything they have admitted to having, they might still hold on to a handful of weapons, covert uranium enrichment facilities and perhaps portions of a program they have “outsourced” to other countries. The Obama Administration will have to decide whether living with these uncertainties is an acceptable price for all or most of Pyongyang’s plutonium and plutonium-manufacturing capacity. If the United States agrees to pay that price, Japan’s concerns will not be assuaged. If not, Washington will risk renewed confrontation with the North and a parting of ways with governments that believe the present deal is the best that can be had—especially China’s and possibly South Korea’s.

In addition to the nuclear talks, the United States has other important unfinished business with South Korea. After negotiating a major U.S.-ROK free-trade agreement, the Bush Administration encountered stiff opposition from congressional Democrats who were eager to take a tough stance on trade ahead of the 2008 elections. Responsibility for pushing the agreement through Congress or letting it die now falls to Obama. If the deal wins approval, it will provide a major boost to U.S.-Korean relations and a solid foundation on which to rebuild the alliance. If it fails, the two long-time partners could once again begin to drift apart.

In the case of India, the other big player in the region, President Obama inherits a relationship that is ripe with possibilities, as well as potential pitfalls. After years of negotiation, the United States and India have finally reached an agreement on nuclear cooperation. With this obstacle out of the way, the new Administration will be able to move forward in developing a broader and deeper strategic partnership. But it will also have to negotiate potentially serious differences, latent until now, over how to deal with Pakistan, Afghanistan and Iran.

The Challenge of China

Looming over all these immediate issues is the biggest strategic challenge President Obama will face in Asia and, arguably, the wider world: figuring out how to deal with an increasingly wealthy, powerful, ambitious and assertive China.

The Obama Administration will inherit a consistent post-Cold War U.S. approach to China that has sought to blend elements of engagement with “hedging” (currently the preferred American usage), or “containment” (the pejorative Chinese label), or what I will refer to as “balancing.” This mixed strategy has worked tolerably well for the past decade and a half, albeit with sometimes perplexing shifts in tone and emphasis mostly occasioned by partisan machinations. Nonetheless, in the end Republican and Democratic administrations alike have supported expanded trade between the United States and China. Successive presidents, too, have engaged Beijing on the diplomatic front, encouraging it to become an active participant in multilateral institutions and earnestly seeking its support on a range of problems, from proliferation and terrorism to energy security and climate change.

In the near term, these policies are intended to give China’s current rulers a stake in the stability of the existing international order, even as their capacity to challenge it grows. The deeper aim of engagement, however, is to accelerate the evolutionary forces widely assumed to be leading China inexorably toward liberal democracy. American policymakers hope that, in time, the combination of a growing middle class and the increasing openness of a modern, information-age economy will bring an end to the Communist Party’s monopoly on political power.

At the same time, the United States has sought, even as it trades and talks with China, to preserve its strategic position in East Asia. The goal has never been to “contain” China by building a wall around it. Rather, American policymakers have sought in the face of China’s growing power to maintain a level of capability sufficient to deter aggression or attempts at coercion. Bolstering regional alliances and quasi-alliances, repositioning U.S. forces, and deploying some additional air and naval units to the western Pacific are all parts of this effort.

The past eight years have demonstrated the resilience of a mixed strategy but have also raised questions about its continuing adequacy. Whatever else can be said for the past three decades of engagement, they have yet to transform China’s political institutions. Indeed, rather than loosening its grip on power, the Communist Party has redoubled its efforts to control information, crush dissent and co-opt members of the growing middle and upper classes. These tactics may ultimately fail, but for the moment they seem to be working well. It no longer seems fanciful to suggest that in the coming decades America and its allies will confront a China that is increasingly wealthy and technologically dynamic but whose government remains authoritarian.

As to whether participation in diplomacy and international institutions has helped make China a “responsible stakeholder” in the current global system, the verdict is at best mixed. Beijing has made much of its newfound faith in multilateralism, contrasting its policies favorably with the alleged American penchant for unilateral action. And it has expressed its willingness to make common cause with the United States on a variety of fronts. Optimists see these developments as proof of progress, but a more skeptical interpretation is at least equally plausible. China may simply be making gestures aimed at easing anxieties about its rapid rise while evading meaningful constraints on its future actions. While holding Washington close, Beijing has also been working to weaken the long-term U.S. position in Asia. It has actively wooed many traditional American allies with trade and “smile diplomacy”, and it has advanced new “Asian-only” multilateral mechanisms that exclude the United States.

If it is premature to declare engagement a failure, it is also far too early to be confident of its ultimate success. The fundamental character of the Chinese regime remains unchanged even as China grows richer and stronger, making the task of maintaining a favorable balance of power in Asia increasingly difficult and expensive. That is particularly the case in the military domain.

For more than a decade, China has been engaged in a serious, sustained and broad-based military buildup. According to a recent Defense Department report, annual Chinese defense spending between 1996 and 2006 rose by an average of nearly 12 percent, even faster than the Chinese economy as a whole, which grew at an average of just over 9 percent per year.² While the precise figures are subject to debate, there can be no doubt that Beijing has been pouring extraordinary resources into its armed forces and that these sustained investments have begun to yield tangible results.

Beijing’s buildup has greatly enhanced its ability to project power into the air and sea off its eastern shores and into the deep space above. As a result, China is far better equipped to threaten Taiwan than it was only a decade ago, and it is getting closer to the point where it will be able to pose a serious challenge to America’s military preponderance in the western Pacific. Since the mid-1990s the People’s Liberation Army (PLA) has acquired means for detecting, tracking and targeting aircraft carriers and other large surface vessels. The goal is to be able to hit them with everything from high-speed torpedoes to land-launched short-range ballistic missiles with homing warheads. In some future crisis, the main instruments of American maritime power projection, once essentially invulnerable, may be unable to operate safely within hundreds of miles of China’s coasts.

Additionally, the PLA is accumulating enough conventionally armed medium-range ballistic and cruise missiles to be able to bombard virtually every significant fixed target in East Asia, including U.S. bases in the region. It recently demonstrated the capacity to track and destroy vital space assets such as reconnaissance and communications satellites, and it has become intensely interested in the techniques of cyber warfare, which it has apparently been using to penetrate business and government computer networks in both Europe and America.

Finally, the PLA’s recent modernization and expansion of its strategic nuclear missile force could weaken the credibility of regional U.S. security guarantees. None of this means that America will be forced to retreat from Asia. Still less does it mean that a war, even a new kind of cold war, is imminent. But China’s strength is growing fast, and the balance of capabilities is beginning to shift perceptibly in its favor. The overwhelming advantages in military power that have long underpinned America’s security position in East Asia will soon be a thing of the past.

Alternative Strategies

There are three ways, broadly speaking, in which the United States can respond to these developments: condominium, redoubled engagement or intensified balancing.

The first, favored by some self-styled realists, would be to acknowledge China’s prominence and seek a bipolar Transpacific condominium that would include a tacit understanding on spheres of influence. The United States might agree, for example, to accept Chinese preponderance on the eastern half of the Eurasian landmass in return for preserving its own position as the leading maritime player in East Asia. Some Chinese strategists argue that their sphere should extend out into the Pacific, perhaps to the “first island chain” that runs from the southern tip of Japan, down past the western coast of the Philippines and Malaysia and including within it Taiwan and most of the South China Sea.

For better or worse, no such deal is likely. Given its increasing dependence on imports of food, fuel and other resources, China cannot be expected to accept a situation in which its access to the sea is dependent on American goodwill. For its part, the United States will be loath to cede preponderance in a maritime zone that contains contested resources, crucial sea lanes and a number of democratic friends who rely on America for their security.

Instead of seeking an agreement on spheres of influence, Washington could redouble its efforts at engagement. Advocates of this strategy, including most mainstream liberal internationalists, argue that the United States and the other Asian nations must do more to make China a full participant in the existing system of international rules and institutions. As noted theorist G. John Ikenberry explains, “The United States cannot thwart China’s rise, but it can help ensure that China’s power is exercised within the rules and institutions that the United States and its partners have crafted over the last century.”³

In addition to their faith in the pacifying effects of institutions, most liberals also believe that reform and democracy are inevitably coming to China, probably sooner than later. Outside powers might not be able to speed this transformation along, but they could delay it if they adopt policies construed as threatening or disrespectful, thus stoking the fires of nationalism and slowing the process of liberalization. Thus, argues this camp, the United States must be extremely careful about tightening ties with allies, strengthening American forces in the region, or trying to slow the PLA’s acquisition of advanced weapons technologies. Ignoring its own role in triggering a U.S. response, China will see these gestures as hostile ones intended to encircle and contain it. Beijing will use whatever Washington does to justify its own military buildup and rally popular support for continued Communist Party rule.

In order to deny the regime this opportunity, some observers believe the United States should forego most of these measures. But easing up on balancing and placing even more emphasis on engagement would amount to doubling down on a very uncertain bet. If China liberalizes as its power grows, the likelihood of a collision should recede, and even deeper forms of engagement and cooperation could become possible. Washington might even eventually decide to give way to a rising, democratic China, much as Great Britain chose to accept American preponderance in the Western Hemisphere at the end of the 19th century. But if China grows stronger without reforming, or becomes weak, unstable and unpredictable, U.S. alliances and forward-deployed forces will remain essential instruments of American policy. It would be unwise to allow them to atrophy on the basis of an uncertain theory about China’s democratization.

What about the third option: some variation of the blended approach that the United States has been following since the end of the Cold War? This option can indeed still work today, but we must adjust the mix of elements it contains. While pressing ahead with engagement, we also need to improve upon the Bush Administration’s efforts to maintain, in its words, “a balance of power that favors freedom” in Asia. Putting aside the literal peculiarities of the phrase, what does this mean in practice? With respect to China, it means that American policymakers should be guided by three principles.

Continue engagement. Trade and talk may yet transform China: In the end, market economics and authoritarian politics may prove incompatible. Meanwhile, China’s stake in stability may make its leaders more careful about throwing their weight around and more willing to cooperate on issues of mutual concern. The Obama Administration should continue to seek out areas where U.S. and Chinese interests converge and to work together wherever possible.

Engagement has not outlived its usefulness, but it requires fine-tuning and a more objective, candid assessment of its effects. Exaggerating the extent of China’s political reform or the alignment of its interests with those of the advanced democracies only sets the stage for disappointment and backlash.

Avoid over-sensitivity. Initiatives designed to strengthen America’s position in Asia invariably provoke protests and dire warnings from Beijing. These reactions are typically picked up and echoed by critics here and in Asia, who use them to argue against doing anything that might upset China. While it would be a mistake to dismiss Beijing’s proclamations out of hand, accepting them at face value risks giving China an effective veto over American actions. Chinese strategists deliberately exaggerate their own sensitivities, drawing “red lines” well in advance of actions they would actually regard as unacceptable. By paralyzing or at least slowing responses to their own growing strength they may hope to tip the balance of power so far in their favor that righting it will eventually appear impossible. To prevent this, U.S. officials must be tough-minded and discerning enough to know the difference between bluster and genuine threats.

Keep talking about human rights, democracy and transparency. As China’s wealth and power have grown, most democratic governments have become less vocal in criticizing Beijing’s lack of respect for political freedoms and basic human rights. Such complaints are now widely seen not only as ineffective and self-indulgent but also potentially risky for commercial interests. America remains more outspoken than most, but judging from the muted official response to last spring’s troubles in Tibet, even it is becoming more cautious.

For strategic as well as moral reasons, it would be a mistake to let the subject drop. While hectoring and abstract, ritualized incantations about the virtues of democracy are useless or even counterproductive, the United States should not remain silent on these issues. Occasional, well-timed protests about specific abuses serve to put Beijing on notice that the world still watches and cares how China treats its citizens. A more skillful U.S. public diplomacy has an important role to play here, reminding others of the true character of the Chinese regime and the limits this imposes on the closeness of relationships between China and the democracies. America’s real friends in the region are still its democratic allies and U.S. leaders should never flinch from saying so.

Pressing China for greater openness about its military budgets and plans serves a similar purpose. Its secretiveness on this issue highlights the closed character of the regime and raises legitimate questions about the ultimate purpose of its buildup. If Chinese policymakers eventually become more candid about their long-term military programs, the anxieties of their neighbors will likely be amply confirmed—not necessarily a bad thing.

A Regional Agenda

America’s approach to China’s neighbors will play an equally important role in maintaining stability in the region. As regards the rest of Asia, the United States should do four things.

Strengthen bilateral relationships. America’s most important business in Asia will continue to be transacted on a bilateral basis, and its most reliable partners will remain those nations with which it shares political principles as well as interests. Far from being obsolete, the so-called “hub and spokes” system linking Washington with various regional capitals is still essential to America’s Asia policy. But it will require constant attention and further reinforcement.

The Obama Administration must not allow itself to be beguiled by the distant, uncertain promise of new multilateral Asian security institutions. Instead, it should focus on renovating the U.S.-South Korea alliance, renewing the progress made in recent years toward a more “normal” alliance with Japan, and continuing to build a genuine strategic partnership with India. In the next several years the United States should also broaden and deepen its ties to Indonesia, an emerging democracy that—together with Australia—should eventually grow into a leadership role in Southeast Asia.

Tighten ties among Asia’s democracies. The relative paucity of international institutions in Asia as compared to Europe has been a topic of much discussion since the end of the Cold War. Numerous remedies have been proposed: an East Asian Community modeled on the European Union, a concert of Northeast Asia’s major powers that would include at least five of the six participants in the Six-Party Talks (the United States, China, Japan, Russia and South Korea), and others. Provided that the United States has a seat at the table, it has no reason to object to any of these proposals, but it shouldn’t count on broad and inclusive new regional institutions to secure its interests or keep the peace.

Much better for these purposes would be a new layer of connectivity linking Asia’s democracies to one another and to the United States. The democracies have much to discuss among themselves, not least how they should coordinate their diplomatic, investment and foreign aid policies so as to encourage the spread of liberal democracy throughout the region. China’s rise is the clearest proof of the need to coordinate more efficiently. If the democracies hope to balance its growing power, they must pool their resources.

Some of the proposed mechanisms for achieving these ends, such as an Asian equivalent of NATO, are not presently feasible. Uncertainty about China’s future and reasonable concerns over provoking it unnecessarily make this suggestion a non-starter. A community of Asian democracies, however, would have a softer edge and could conceivably be part of a broader global coalition of like-minded states. Those who object to this idea on the grounds that it would be “divisive” or offensive to authoritarian regimes should recall that the European Union is an international organization with strict political entry requirements. The fact that China has established its own club for authoritarians in Central Asia (the Shanghai Cooperation Organization) should also help ease concerns about creating a league of Asian democracies.

Toward this end, the United States should focus in the near term on promoting communication and cooperation among the various “mini-lateral” groupings that have already sprung up across the region. The United States and Japan are allies. Japan and India have begun consultations on various sensitive topics, as have India and the United States. Why not organize opportunities for officials from all three countries to sit down together? Regular talks among the United States, South Korea and Japan have largely broken down in recent years because of tensions between Seoul and Tokyo. President Obama should try to heal these rifts and restore a three-way strategic dialogue among Northeast Asia’s democracies. If others such as Australia wish to be included in the discussions, so much the better.

The goal of all this communication and cooperation would be to promote candid discussion among like-minded governments and set up regular multilateral mechanisms for sharing information, reviewing options in various contingencies, and establishing common procedures for communication and possible joint military operations. In the event that it becomes necessary to solidify these ties into something more closely resembling a traditional alliance, much of the necessary groundwork will already have been laid. China will not like any of this, to be sure, but that should not inhibit the democracies from defending themselves and securing their interests.

Preserve the free flow of goods and people. Resisting protectionism is essential to maintaining the best possible relationship with China, but it is also vital to countering the growing gravitational pull of China’s economy. If the United States were to close its market to Asian exports and investments, the region would become even more heavily dependent on China. Beyond providing economic benefits for all concerned, American openness will undercut Chinese efforts to put itself at the center of an exclusive regional economic bloc.

Much the same goes for flows of people. As China continues to build successful universities, laboratories and cutting-edge industries, it will become a magnet for people of talent and ambition throughout Asia and the world. If anti-immigrant sentiment and fear of terrorism result in permanent high barriers to entering the United States, we could deprive ourselves of the steady influx of talented, ambitious immigrants that has always been one of our most valuable advantages in the global competition in science and technology.

America’s place as an Asian power rests not only on economic and strategic interests but on strong ties of family, faith and personal experience. For many decades these ties have closely bound the United States to South Korea, Japan, Australia and the Philippines. Today they are linking it to India and China as well. If these connections are to flourish, they must be constantly refreshed. For the United States, openness is an enduring source of national strength as well as a sign of continued self-confidence.

Enhance military capabilities. The last element in a comprehensive strategy for Asia may prove to be the most difficult to implement. Over the coming decade, and probably beyond, the United States will have to do more to respond to China’s military buildup—both because it needs to avoid having its options constricted in a possible crisis, and also to ensure that allies and adversaries do not lose faith in American security guarantees. Without credible U.S. power in the region, some allies might choose dramatic, unilateral options like the acquisition of nuclear weapons. Others might seek the best possible accommodation with Beijing. The prospects for the further spread of freedom would fade, and the risks of conflict would rise.

As clear as the stakes are, the hurdles to taking appropriate action will be high. Given the costs of remaining militarily effective in the Pacific—particularly when the nation will likely be gripped by a mood of fiscal austerity—the pressure to deal with more immediate problems at home and abroad may tempt future administrations to do the minimum, to let things slide and hope for the best. This would be a dangerous gamble. In an age when theorists and diplomats are greatly enamored of “soft power”, the balance of hard power still matters. Responsible national leaders have no choice but to attend to it.

1.
Victor Cha, “Winning Asia”, Foreign Affairs (November/December 2007).
2.
Office of the Secretary of Defense, Annual Report to Congress: Military Power of the People’s Republic of China 2008.
3.
Ikenberry, “The Rise of China and the Future of the West: Can the Liberal System Survive?” Foreign Affairs (January/February 2008).