US Indo-Pacific Strategy

The quest for a rules-based world order or containment of China?

Facing its ‘most dynamic and formidable competitor in modern history’, Washington increasingly does away with hopeful thinking and seeks new approaches towards Asia. It raised the concept of the Indo-Pacific region. But what strategy is behind this buzzword? And what does it mean for Asia? Territorial disputes, trade wars, resurrection of the Quad, and other trends point to changes taking place in the region. China becomes more assertive in promoting its interests, while US foreign policy shifts to the Indo-Pacific emphasizing its Asian partners and altering US military commands’ areas of responsibility. In a bid to balance China’s rise the US administration aims to foster the ‘free and open’ Indo-Pacific based on market economy, rule of law and cooperation with US regional allies, particularly Japan, India and Australia.

The Trump administration has elevated the Indo-Pacific to a top-level regional priority, as suggested by its placement in the 2017 National Security Strategy (NSS). The strategy describes the Indo-Pacific as a region in which “a geopolitical competition between free and repressive visions of world order is taking place” and where “China is using economic inducements and penalties, influence operations and implied military threats to persuade other states to heed its political and security agenda.” Although the shift in US policy toward China – from one balancing the cooperative and competitive elements toward one viewing Beijing predominantly as a strategic competitor – has occurred gradually, for the Trump administration, Indo-Pacific, beyond a geographic and maritime reality, is very much a work in progress.

The Indo-Pacific concept, on one level, is simply expanding the Asia-Pacific notion to reflect that India, with its “Look East, Act East” policy, has become an economic and strategic actor in a larger maritime theatre. In practical terms, it has meant a modestly enhanced military role to the ‘pivot’ or ‘rebalance’ of the Obama administration stretching it from Asia-Pacific to India. However, in bureaucratic terms, this corresponds to the area of responsibility of the US Pacific Command (recently renamed as Indo-Pacific Command). American concern about China’s re-emergence becoming less benign than anticipated by US policymakers and foreign policy specialists predated Donald Trump’s entry to the Oval Office.

The US perceptions that these assumptions were being proven wrong occurred incrementally over the past decade. While there is still no clear new US consensus on a China policy, there is a hard-edged pessimism. As Kurt M. Campbell and Ely Ratner put it, “Washington now faces its most dynamic and formidable competitor in modern history. Getting this challenge right will require doing away with the hopeful thinking that has long characterized the United States’ approach to China.” The current US–China trade clash is a manifestation of this shift. Regardless of how they try to explain it, an ‘Indo-Pacific’ strategy is best viewed as an effort to reinforce a rules-based order and counterbalance a re-emergent China, not only as a leading global power, but also as a major maritime actor.

A Resurgent China

In July 2009, the then Chinese President Hu Jintao called for China to increase its global power and influence. Beijing began to pursue more proactive political and military actions, most apparent in the South China Sea. China elevated its claims to disputed islets and reefs to a ‘core interest’, a category previously reserved for Tibet and Taiwan. Beijing stepped up maritime activities in the East and South China Seas, later building military facilities on 3200 reclaimed acres on disputed territory there that it controlled. Overall, China claims about 90 percent of the South China Sea.

Beijing disputes Japan’s claims to the Senkaku Islands – Diaoyu in Chinese. Following the Second World War and into the 1970s, it occasionally raised pro forma objections to the transfer of the islands’ administrative control to Tokyo, but indications of displeasure have risen in recent decades. For the past several years, China has dispatched coast guard vessels and military aircraft to the air and sea zones adjacent to the islands, which represents, in Japan’s view, an attempt to disrupt Tokyo’s ability to administer the territories.

In 2017, tensions over Doklam extended China’s irredentism to the Himalayas. China and India have made no adjustment to some of their respective territorial claims. From New Delhi’s perspective, China is attempting to change the status quo either by force or by assertiveness backed by force, all aimed at creating new facts on the ground. In Bhutan, a road near a contested border becomes the instrument of assertion. The language Beijing uses to speak about the Doklam dispute echoes that employed to buttress China’s claims in the South and East China Seas.

President Xi Jinping’s report to the 19th Communist Party Congress (CPC) repeatedly emphasized ‘the rejuvenation of the Chinese nation’, stressing China’s focus on ‘global combat capabilities’ and vowed that in this new era, China will move closer to the centre of the world stage.

China’s creation of the Asian Infrastructure Investment Bank (AIIB) and its multibillion dollar Belt and Road Initiative (BRI) are major signposts of its desire to play a leading global role. Similarly, its remarkable rapid rise as a leading technology innovator, mobilizing its resources to create national champions through programmes such as the Made in China 2025 plan and declared goal to lead the world in Artificial Intelligence by 2030 are the economic underpinnings of Chinese ambition.

US Search for Strategy

Even if China were not displaying signs of a competing vision of regional and world order, the US has had great difficulty in adapting its policies to the dynamics of a multipolar world. But the pace and scope of China’s economic and strategic ascendance has been something of a shock to the system. A $375 billion trade deficit with China and the building of military bases in the South China Sea are emblematic of a jolt to US sensibilities, with the evolving ‘free and open Indo-Pacific’ response.

The first authoritative elucidation of US strategy for a ‘free and open Indo-Pacific’ was offered by Defense Secretary James Mattis on June 02, 2018, at the annual Shangri-la Dialogue. Mattis outlined four main themes, largely overlapping with those of Japan, Australia and India:

1. ‘The maritime commons is a global good, and sea lanes of communication are the arteries of economic vitality for all.’ The US will help ‘partners build up naval and law-enforcement capacities to improve monitoring and protection of maritime orders and interests.

2. Interoperability. ‘We recognize that a network of allies and partners is a force multiplier for peace […]. We will ensure that our military is able to more easily integrate with others.’

3. ‘Strengthening the rule of law, civil society and transparent governance’.

4. ‘Private sector-led economic development’. The US will enhance ‘development and finance institutions, recognizing the need for greater investment, including in infrastructure.’

This reflects the National Security Strategy and Defense Strategy which place an emphasis on the security dimension of the Indo-Pacific. The NSS was the first explicit US definition of China predominately as a strategic competitor: ‘China seeks to displace the US in the Indo-Pacific region, expand the reaches of its state-driven economic model and reorder the region in its favour.’ The near-term US concern is that China is seeking to dominate the first island chain around its maritime borders and pursue an anti-access strategy to limit and raise the cost to US military actions in the region.

This is echoed in the Pentagon’s 2018 Defense Strategy which asserts that China is leveraging military modernization, influence operations and predatory economics to coerce neighbouring countries to reorder the Indo-Pacific region to their advantage.

To counter this, the DS touts free and open Indo-Pacific saying: “With key countries in the region, we will bring together bilateral and multilateral security relationships to preserve free and open international system.”

In fact, security cooperation in the Indo-Pacific region has been increasing steadily over the past decade, in large measure as a response to a bigger Chinese footprint. US–Japan–Australia defence cooperation and annual trilateral meetings are a staple of US Asian diplomacy. The US has also bolstered its defence relationship with India both bilaterally and in the annual Malabar US–Japan– India military exercises. In addition, with its $425 million Maritime Security Initiative (MSI) announced in 2015, the US has been increasingly helping key ASEAN states enhance their respective maritime capabilities, particularly Vietnam, the Philippines, Malaysia and Indonesia, in response to Chinese activities in the South China Sea. These efforts have been loosely coordinated with Japan and Australia.

For more than a decade, the region has seen a pattern of deepening intra-Asian defence cooperation – Japan, with Vietnam and the Philippines, and maritime activities among ASEAN states, as well as Japan–India, Singapore–Taiwan. During a 2016 Summit in Delhi, an elaborate Japan–India security and economic partnership was declared. In addition, India has been building defence cooperation with the ASEAN states, particularly with Vietnam. Delhi has become more vocal on South China Sea issues, as well as deepening its defence ties to Hanoi.

This regional networking is the context in which to view the November 2017 resurrection of the Quad (US–Japan– India–Australia) – a diplomatic expression of the Indo-Pacific strategy. Following the Quad, discussions about creating a joint regional infrastructure plan to compete with BRI ensued, but it remains at the conceptual level, and only Japan has a large-scale aid and investment programme for regional infrastructure, though efforts to expand World Bank and Asian Development Bank (ADB) infrastructure lending are underway.

Indo-Pacific Contradictions

For starters, a continuing trend in the region is that economic and security issues pull in opposite directions. Economically, the Asia-Pacific is an increasingly integrated region with more than 53 percent of its trade within the region, intra-regional investment growing, and a regional economy of some $20 trillion. Yet, as outlined above, in security terms, the region is rife with distrust, territorial disputes, rising nationalism and irredentism, all hedging against uncertainty.

Correspondingly, something of an Asian arms race, particularly in the maritime realm, has been underway most of this century. While increases in military spending are slowing, Asian nations spend substantially more than Europe on defence. One question arising from these discordant trends is: how will nations in the Indo-Pacific define their respective interests? That will determine the limits and possibilities of any Indo-Pacific strategy.

China is the largest trading partner of every economy in the Indo-Pacific: Japan, the Republic of Korea, ASEAN, India, and Australia. The economic patterns render it less problematic to conceive of an inclusive economic architecture for the region than an inclusive security structure. The Comprehensive and Progressive Agreement for a Trans-Pacific Partnership (CPTPP) has 11 members, and is now complete, ratified by several members and expected to enter into force later this year.

In addition to the trade factor, China’s BRI has an allure for the region, and Beijing has been actively cultivating projects from South Asia to ASEAN nations.

Despite discomfort with China’s growing regional footprint and occasional coercive tactics, few see an alternative to coming to terms with Beijing. The biggest fear for nations in the Indo-Pacific region is to choose between the US and China. It is one thing for nations to hedge with uncertainty over US durability in the region and over China’s emerging role; it is quite another in the event of a crisis or military conflict. Geography alone, with China neighbouring 14 nations on the Asian mainland, and the US whose outreaches stop at Guam and an uncertain future in the region, is compelling.

In any case, ASEAN operates on a consensus basis, and is dedicated to a posture of neutrality, so much that it has been politically paralysed in the South China Sea dispute, though four of its members have dispute claims with China. Similar dilemmas hold true for Australia, whose trade with China has been a driver of economic growth, and the ROK, whose hopes for managing the North Korea problem and reunification will require cooperation with its largest trading partner, China.

Even for the US, its large and complex relationship with China, $600 billion annually in bilateral trade and nearly $100 billion invested there, need for cooperation on North Korea, Afghanistan and global issues where interests overlap, suggest that a one-dimensional labelling of Beijing as ‘strategic competitor’ may be overly simplistic.

Indo-Pacific Futures

In light of all the above-discussed factors, impacting an Indo-Pacific strategy, what is its likely trajectory?

Scenario 1: Renewed part cooperative, part competitive consensus based on Chinese economic reforms, opening to more foreign direct investment (FDI) in restricted sectors, reducing subsidies for state-owned enterprises (SOEs), reaching bilateral investment treaties with the US and EU assuring reciprocal investment; supporting WTO digital commerce and other technology agreements. In the security realm, a cooperative resolution of the North Korea nuclear problem via renewed Six Party talks, US–China–ROK–DPRK talks on arms reductions and turning the armistice into a peace treaty. US–China cooperation in Afghanistan, phase out of US troop presence, continued counter-terrorist and counter-narcotics cooperation with frontline states (China–Russia–India–Iran–Pakistan) under Shanghai Cooperation Organisation (SCO) auspices, negotiating terms of a Taliban-dominant government in Kabul on condition of no terrorist safe havens.

Scenario 2: Muddle through: Continued drift towards confrontation and tensions in the East and the South China Seas and Sino-Indian ties, limited cooperation on North Korea, interim solution – ending intercontinental and ballistic missiles (ICBM) and nuclear program, part dismantled, part frozen. Continued economic jousting over trade and technology issues, with WTO resolving some in US favour and US negotiated voluntary export restraints in sectors of Chinese overproduction. Continued efforts by the US and like-minded partners to press China for more normative trade and investment behaviour, pledged by Xi Jinping in Boao Forum speech.

Scenario 3: Heightened tensions and confrontation: US–China trade confrontation escalates, both sides believing they can prevail. Trade dispute hits stock markets and slows growth in the region. After a protracted period, modest steps to partially resolve trade conflict are taken. Geopolitical tensions grow – Sino-Indian over disputed borders in Himalayas, India maritime fears of encirclement with China building ports in Gwadar, Sri Lanka, Maldives, Bangladesh; US–China over Taiwan, and over increased US and Chinese military activities on the South China Sea. On North Korea, China presses both Koreas for a nuclear freeze, US opposes. This scenario is harbinger of a new Cold War-like divide. Miscalculation could trigger conflict with the potential to escalate in each of these situations. The Quad becomes a more active strategic planning forum aimed at countering Chinese anti-access policies and pressing other Asian actors to tilt against China, with very limited success.