A pliant China is just California dreamin'

Hopes for a 'G2' on the back of Barack Obama and Xi Jinping’s summit will be sorely disappointed. The prospect of a serious conflict between the US and China is very real.

No carousel of other videos after the video ends.

The informal ‘short-shirt sleeve’ meeting between Presidents Barack Obama and Xi Jinping at the Sunnylands Estate in California over the weekend was designed to signal a new era of cooperation between the two most powerful countries. Normally only reserved for long-standing allies of Washington, Obama chose the setting to bring up some awkward bilateral issues such as Beijing’s involvement in industrial espionage of American firms.

Xi used the ostensibly more relaxed setting to declare that he was after “a new type of great power relations” – one that could avoid tension normally associated with rising and established powers. Although sounding perfectly plausible, the Chinese president (like his predecessors Hu Jintao, Jiang Zemin and Deng Xiaoping) ultimately seeks a Group-of-Two or ‘G2’ arrangement – even if there is recognition that this could well be impossible. The problem is that the Chinese interpretation of a G2 arrangement would be unacceptable to Washington, and also much of Asia.

The prospect of serious conflict between the US and China is very real. As historians point out, the rise of the last six great powers have led to the eruption of five major wars. The exception was Britain handing over the reins of global leadership to the United States, and even that did not go as smoothly as is often assumed. America has treaty obligations to Japan, South Korea, the Philippines, Australia and arguably Thailand. Given that war over the Senkaku/Diaoyu Islands (between Japan and China), or over North Korea (involving South Korean and Chinese troops) is conceivable, the prospect of conflict between the US and China on behalf of the former’s allies is chillingly real.   

American Vice-President Joe Biden in one of his rare moments of brevity recently succinctly summarised the current state of play in Asia: America can’t contain China, and China can’t expel America. Experts disagree whether this stalemate is more or less likely to prolong stability into the future.

As far as Chinese strategists are concerned, what would the ideal Chinese version of a future G2 accommodation look like? Washington would recognise China’s sphere of influence in Asia, while Beijing would see America’s natural strategic backyard as the east Pacific Ocean (to the right of Honolulu) and the Atlantic Ocean. This scheme of arrangement was actually put to then head of US Pacific Command Admiral Tim Keating by a Chinese admiral in 2007, and only half in jest – a proposal that was politely declined by the American Admiral.

The first problem with the spheres of influence arrangement is that Asia has become too important a part of the global production chain for American and other western firms. Indeed, western multinationals either have majority or significant minority stakes in over two thirds of all the export manufacturing firms in China. The same can be said for emerging manufacturing centres such as Vietnam and Indonesia. Washington would consider it an abrogation of its duty to protect the country’s commercial interests were it to cede the western Pacific Ocean to a strategic rival.

Furthermore, the growing developing consumer markets in Asia are essential to America’s future economic fortunes, especially if a manufacturing revival occurs, as many expect (due to lower energy costs from the shale oil/gas revolution and increasing robotics, which will remove higher American labour costs from the equation.) The role of modern military power is to ensure that essential markets remain open and accessible for one’s own stakeholders in addition to the traditional role of safeguarding national sovereignty. In America’s case, the role of the Seventh Fleet in ensuring strategic stability, and free and open access to maritime trade routes will become even more important in the future. No American president or Congress could ever persuade the American public to cede control and rely on the good will of the Chinese People’s Liberation Army Navy to fulfil this role.

This leads to the second problem of trusting Chinese intentions and strategic character. There are many structural factors preventing strategic trust between China and the US – that is, established and rising powers rarely truly get along.

More than this, Beijing claims over almost all of the South China Sea – and declaratory policy that it is willing to use force to defend these claims – creates doubt that China would offer free and open access to critical maritime trading routes to all nations irrespective of the state of political relations with Beijing. Indeed, Beijing has already shown that it is willing to use economic tools to punish the strategic and political decisions of other nations. Examples include temporarily halting rare earths exports to Japan over disputes in the East China Sea; supporting a boycott of Japanese branded goods over the same issue; temporarily banning banana imports from the Philippines over disputes in the South China Sea; and halting energy imports from Mongolia over the latter’s initial decision to receive the Dalai Lama. If the People’s Liberation Army Navy were to control the sea-lanes in East and Southeast Asia, few doubt that Beijing would be a less impartial keeper of the peace than Washington’s Seventh Fleet.   

This is supplemented by the suspicion that Beijing takes a fundamentally hierarchical view of state-to-state relations. As an angry Chinese Foreign Minister Yang Jiechi told Southeast Asian counterparts during a 2010 ASEAN Regional Foreign Meeting when confronted about the inflexibility of Chinese claims over 80 per cent of the South China Sea, “China is a big country and other countries are small countries and that is just a fact.”

The same sentiment was repeated in a recent editorial in the state-owned and run China Daily that scolded Europeans for considering sanctions against Chinese solar panel exports by remarking that “times change and power rises and falls. Still this has not changed the deep-rooted, haughty attitudes of certain Europeans.” The point is not about whether China should rightly feel aggrieved about European complaints on this issue or not. It is an issue of whether China will elevate itself above agreed dispute-resolution procedures and constraints vis-à-vis smaller powers, based on the mindset that large powers ought to simply get their way in the end.     

This brings me to a third reason why a Chinese G2 would never work. If such an arrangement is designed to ensure stability, it will likely achieve the opposite.

The consistent grand strategy of almost all modern Asian nation-states is to resist domination by another Asian state – hence a widespread preference that non-Asian America remain the primary strategic actor. Were America to ‘cede’ Asia, it is unlikely that countries like Japan, Vietnam or Australia would meekly submit to a Chinese-dominated order. Without its America ally, it is likely that Japan would quickly acquire a nuclear weapons capacity and revise its post-World War Two pacifist constitution. South Korea would seriously entertain the nuclear option in response. Vietnam – a long-time adversary of China’s – would not stand still militarily, leading to significant military force upgrades throughout the Greater Mekong Region. Neither would Indonesia, Malaysia and Singapore, meaning that Australia would also have to respond. The overall outcome would be a much more competitive, dangerous and unpredictable arms race. The message is that ‘strategic Asia’ is about more than the US and China, and any scheme with this flawed assumption will lead to a flawed design.

Back to the weekend’s summit between Presidents Obama and Xi… Did it achieve anything of substance? Not really. Chinese entities will continue to hack into American corporate servers, and Washington will continue to complain about it. But diplomacy is a hard grind, and the US and China do take part in hundreds of dialogues over all manner of issues. Summits such as the one at Sunnylands Estate and the annual Strategic and Economic Dialogue will catch the headlines. But the hundreds of small, seemingly prosaic agreements on processes and outcomes are yielding results – both sides have managed to de-escalate a number of potential crises over the past few years.

A hard and boring diplomatic grind, and not a ‘new type of great power relations’ characterised by a G2, is the better bet for the future.   

Dr John Lee is the Michael Hintze Fellow and adjunct associate professor at the Centre for International Security Studies, Sydney University. He is also a non-resident senior scholar at the Hudson Institute in Washington DC and a director of the Kokoda Foundation in Canberra.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles

", "publisher": { "@type": "Organization", "name": "InvestSMART", "url": "https://www.investsmart.com.au", "logo": { "@type": "ImageObject", "url": "https://isprodresources01.blob.core.windows.net/images/investsmart-logo-small.png", "height": 60, "width": 180 } }, "isAccessibleForFree": "False", "hasPart": { "@type": "WebPageElement", "isAccessibleForFree": "False", "cssSelector" : ".paywall" }, "author": { "@type": "Person", "name": "John Lee" } }