A long wait for the Asian century

Lowy Interpreter

Dr Ken Henry and his team are busy preparing the federal government's White Paper on 'Australia in the Asian Century', due to be released in the middle of this year.

In Australian academic, business and media circles there is breathless excitement about the rise of China (and the US decline they assume as its inevitable corollary). But one of the points I would make to the White Paper team is that it would be a major error to write out the US (as the White Paper's title seems to imply), and that we may yet prove to be living in the Asia Pacific century, or indeed the Indo-Pacific century.

Following President Obama's November visit and his historic address to the Australian parliament, a number of influential academic, business and political figures expressed concern about moves (supported by both the major parties) to further strengthen the Australia-US alliance.

In essence, their concern was that stationing a relatively small number of US Marines in Australia's north for half the year might feed the concerns of our largest trading partner that we are part of a US-led strategy to 'contain' it.

To the extent that anyone thinks current US policy really resembles Cold War containment, this reflects woeful ignorance of US strategy during the Cold War and now. But their argument also rests on an assumption that America has had its day and that China's burgeoning gross domestic product will translate directly into predominant power which Australia has to start heeding, now.

I have argued elsewhere that, far from becoming a liability, Australia's strategic relationship with the US is becoming more important. That conviction is made stronger by an important new article by Michael Beckley in the journal International Security.

Beckley notes the widespread view that the US is declining relative to China and that this owes largely to the levelling effects of globalisation. He analyses a broad set of economic, technological and military indicators to reach a conclusion which, if true, is as profoundly important as it is unfashionable; far from declining in relative terms, America is now wealthier, more innovative and more militarily powerful compared to China than it was in 1991. Here are some of Beckley's main points:

– Estimates of China's power tend to be exaggerated (and estimates of America's power tend to undershoot) because: GDP correlates poorly with national power (per capita wealth providing a better indicator of surplus wealth available for broader national purposes); conclusions are often based on static single-year snapshots rather than trends over time; and China is often compared with itself (at an earlier time), rather than with America (which is itself not standing still).

– The US is not like Britain and other eclipsed hegemons but holds a unique geopolitical position owing to an unprecedented combination of material advantages; as a result it exercises 'structural power' – an ability going beyond the use of force or coercion to set global agendas and shape the range of choices open to other countries.

– America has its problems, including public debt and a fractious polity, but suggestions of imperial overstretch and decline are premature. Past hegemons succumbed after fighting wars against major powers on multiple fronts and spending anything between 10 per cent and 200 per cent of GDP on defence to do it; by contrast, the US spends a relatively modest 4 per cent on defence and confines itself to knocking off the odd rogue regime or occasional humanitarian interventions.

– Rather than operating neutrally to close the gap, globalisation – and particularly globally networked production – may be an active political process shaped by the US to serve its interests (yes, that's right – the conspiracy theories may be true!).

– Wealth, innovation and (conventional) military capabilities are the most vital elements of power in the contemporary international system.

– Yet, for all China's double-digit economic growth, massive investments in education and research and rapid military modernisation, today the US is wealthier compared to China than it was in 1991, China continues to lag behind America in innovation, and (despite some asymmetric advantages) the US-China military gap is growing, not shrinking.

Not everyone will agree with Beckley's methodology or with all of his conclusions. The relative contributions of wealth, innovation and military capability to national power, for example, are debatable. Nor is it to suggest Australia or the region should be complacent. Even if Beckley is right, misperceptions of the balance of power in Asia – on either side – can be dangerous.

Nonetheless, he has done us a considerable favour by questioning some of the glib assumptions that underpin much of the Australian debate – in particular by cautioning against the idea that raw economic power necessarily translates directly into global clout and by highlighting significant shortfalls in China's ability to innovate (some of which Fareed Zakaria has also documented).

At least one of Beckley's conclusions could almost have been written with Australia's White Paper in mind:

The best that can be done is to make plans for the future on the basis of long-term trends; and the trends suggest that the United States' economic, technological and military lead over China will be an enduring feature of international relations, not a passing moment in time, but a deeply embedded condition that will persist well into this century.

'Whose century?' indeed.

Originally published by The Lowy Institute publication The Interpreter. Reproduced with permission.