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Chapter

3

U.S.–China Competition in East Asia

Xin Jin

U.S. is a hegemonic state that has dominating influence over East Asia. China is a rising power which is changing the face of East Asia owing to its fast development. Their relations have a decisive influence on East Asian development and peace. The chapter discusses the U.S.–China competition in East Asia.

The competition occurs when China’s power is on the rise. The rise makes China win more and more regional advantages. Thus, U.S. regional dominance faces competition from China. Now U.S. is no more the only engine in the regional economy. In 2017, China was the largest trading partner of U.S., Russia, Japan, South Korea, India, Australia and ASEAN.¹ In East Asian geopolitics, China broke the status quo in two sub-regions: East and South China Seas.

China rising deepens U.S. concern over its regional dominance. Balancing the growing influence of China has been U.S.’s strategic priority in East Asian affairs. The grand strategy of the Obama Administration (2009–2017) was rebalancing toward the region,² but the reality was that China had established itself as a stronger regional existence. As the strategy failed to achieve success, the Trump Administration (2017–) replaced it with the Indo-Pacific strategy. This calculation is now pulling the rising India into regional affairs toward helping U.S. in the U.S.–China competition, but the strategy in its incipient stage needs to be enriched with practical steps.

A U.S.–China trading war broke out on July 6, 2018. This means that the U.S.–China competition has now reached a new high. This trading war combined with potential others between U.S. and regional countries offers historical chances for regional countries in disputes to improve certain relations on the one hand, while hurting other regional relations, especially that of U.S. with East Asian countries, on the other.

However, U.S. and China not only compete but also collaborate with each other. As the Trump Administration resolves to denuclearize North Korea, China becomes a mediator between U.S. and North Korea. At the same time, collective efforts progress in regional relations. South Korea and Singapore also made their contributions to the U.S.–North Korea Summit on June 12, 2018.

For regional countries, China is indispensable in terms of economy while U.S. is indispensable in terms of security. Hence, on the one hand, they hope that the U.S.–China competition could be controlled, while on the other hand, they hedge between U.S. and China for their respective interests. As for regional countries in dispute with China, they hope to see a competitive U.S.–China relationship.

Compared to the past, regional relations were made more complicated in the U.S.–China competition. So, how did the two deal with each other in the competition? What was the role of other regional states in the competition? What is the future for the Region?

U.S. Competition with China in East Asia

The Obama Administration made great efforts to rebalance toward the (East) Asia-Pacific region, so U.S. warships were frequently sent to patrol the South China Sea; U.S. and eleven regional states reached the agreement of the Trans-Pacific Partnership (TPP) deliberately without China.

As the rebalance strategy failed to balance China in regional affairs, the Trump Administration replaced it with the Indo-Pacific strategy. Aside from the adjustment of the U.S.’s grand strategy, the Trump Administration has been trying to resolve two issues in regional relations: U.S. trading deficit with regional countries and North Korean denuclearization. Obviously, America’s East Asian strategy and policies have been experiencing a historical transition.

U.S. strategy of rebalance

The strategy reflected U.S.’s concern over its regional dominance and the consequence of China rising. As the Obama Administration took U.S. out of the Financial Crisis of 2007–2008, it began to rebalance toward the region for two reasons as explained in the following sections.

China rising

China reformed its economy from 1978. This made China realize stable economic growth for 40 years. For example, China’s GDP grew 75.47 times, from US$148.382 billion in 1978 to US$11,199 billion in 2016 (see Table 1).³ China replaced Japan as the world’s second largest economy in 2010. It is also possible for China to replace U.S. as the largest in 2030s.⁴

Based on its growing power, China is more assertive in regional affairs. The actions China took actually changed the status quo in two sub-regions.

Since the Japanese nationalization of Diaoyu/Senkaku Islands, China began to patrol the waters of the islands from 2012. China unilaterally set the East China Sea Air Defense Identification Zone in 2013. By these activities, China broke the status quo of the Sea.

Since 2013, China has reclaimed seven artificial islands in the South China Sea.⁵ Aside from civil facilities like lighthouses being built on them, China has also deployed advanced weapons like J-11 fighter jets.⁶ Although the ruling of the Arbitration of South China Sea was a disadvantage, China has succeeded in dividing the ASEAN countries. On July 24, 2016, the ASEAN Foreign Ministers Meeting in Laos reached no consensus about the ruling of the Arbitration.⁷ By these actions also, China broke the status quo in the Sea.

Table 1. China’s annual GDP statistics in 38 years (1978–2015) (Monetary unit: US$ billion.)

Source: http://data.worldbank.org.cn/indicator/NY.GDP.MKTP.CD?locations=CN, 2016/08/27.

China proposed the initiative of Asian Infrastructure Investment Bank (AIIB) in 2013. It was received warmly by many countries, including U.S.’s close regional allies. Although the U.S. pressed them not to join the bank, many of them, like Australia, joined in 2015.⁸ IMF agreed to add RMB to its reserve currency basket in 2015.⁹ It was a milestone in RMB internationalization. By these steps, China expanded its influence in regional economy and finance.

China’s assertions, actions and initiatives made U.S. see the far-reaching consequences of China rising. Essentially, the rebalance strategy was to balance the consequences of China rising.

U.S. recovery from the financial crisis

The Financial Crisis of 2007–2009 was considered as the worst one since the Great Depression in 1930s.¹⁰ Compared to 2008, U.S. GDP (see Table 2)¹¹ declined 2% in 2009, and many Wall Street financial companies like Lehman Brothers Holdings Inc went bankrupt or were acquired by other companies.¹²

The U.S. took many steps to recover its economy. In 2008, U.S. President Bush signed a historical plan worth US$700 billion to stem the deterioration of the Crisis.¹³ In 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 worth US$787 billion aimed at helping U.S. recover from the Crisis.¹⁴

The efforts of the Obama Administration were proven to be effective. The U.S. economy attained moderate growth in the following 6 years. As U.S. was recovering from the Crisis, the Obama Administration found that China had made itself into a stronger regional existence and began to change the status quo in the two sub-regions. How to balance the unbalanced region was a major concern for the Obama Administration.

Table 2. U.S. annual GDP statistics in 10 years (2006–2015) (Monetary unit: US$ trillion).

Source: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US&name_desc=true, 2016/09/01.

Competitive efforts of U.S. to rebalance

To some extent, the U.S. strategy of rebalance focuses on balancing the consequence of China rising. For pushing the strategy, the U.S. took comprehensive efforts as follows:

(1)U.S. enhanced its regional military existence. More and more U.S. military power was deployed. It not only increased the number of military personnel but also moved from other places into the region with advanced weapon systems: F-35 stealth fighter jets, P8 surveillance aircrafts, and so on.¹⁵ The U.S. military also interfered into regional affairs. When China changed the status quo in the South China Sea, the U.S. military reacted to prevent further changes in the Sea. From 2015, the U.S. military interfered in countless incidents in the Sea. Aside from sending destroyers like Lassen in 2015, two U.S. aircraft carrier strike groups kicked off operations in the Philippine Sea in 2016.¹⁶

(2)Regional multilateral occasions were used to push rebalance. If regional countries could support the U.S. stance, China would face region-wide pressure. So, many U.S. officials were sent to attend international meetings like the Shangri-La Dialogue to push the initiative.

U.S. Defense Secretary Ash Carter said that “all countries should have the right to freedom of navigation and overflight. Turning an underwater rock into an airfield simply does not afford the rights of sovereignty” in “Shangri-La Dialogue 2015.”¹⁷ In the ASEAN Business and Investment Summit 2015, U.S. President Obama addressed ASEAN states by stating that “for the sake of regional stability the claimants should halt reclamation, construction and militarization of disputed areas.”¹⁸

(3)U.S. gained support from regional allies. U.S. has a geopolitical advantage. Many countries in or neighboring East Asia are U.S. allies or quasi-allies: (1) allies: Japan, Korea, Philippines, Australia and Thailand; (2) quasi-allies: Singapore and India.¹⁹

In 2016, The Joint Statement of the Japan–U.S.–Australia Trilateral Strategic Dialogue stated “Ministers expressed their strong support for the rule of law and called on China and the Philippines to abide by the Arbitral Tribunal’s Award of July 12 in the Philippines–China arbitration.”²⁰

(4)U.S. made efforts to restrain China from gaining leadership over regional economy. As the Chinese initiative of AIIB had the potential to undermine U.S. leadership over regional economy, U.S. pressed its regional allies not to join the bank.²¹ The U.S. intention was clear in reaching TPP with eleven regional countries: “without this agreement, competitors that don’t share our values, like China, will write the rules of global economy.”²²

The transition brought about by Trump

On January 20, 2017, Donald Trump assumed U.S. Presidency. As Donald Trump is different in his handling of international affairs compared with many former U.S. presidents, especially his predecessor Barack Obama, with regard to U.S. strategy and policies toward East Asia, a historical transition is in progress. The transition constitutes a new variable in the U.S.–China competition in East Asia.

Indo-Pacific strategy replacing rebalance

As rebalance failed to realize the goal, the Trump Administration gave it up in 2017.²³ For balancing China, the cooperation of East Asian allies is essential but insufficient. The U.S. needs more help from the countries neighboring the region. Among them, India is a rising power and U.S.’s quasi-ally. In the U.S.–China competition in East Asia, U.S. hopes to win Indian support.

On October 18, 2017, U.S. Secretary of State Rex Tillerson addressed CSIS with a speech Defining Our Relationship with India for the Next Century.²⁴ The strategic collaboration of U.S., India, Japan and Australia constitutes the foundation of the Indo-Pacific strategy.

On November 10, 2017, on attending the APEC Summit in Vietnam, U.S. President Donald Trump repeatedly addressed the Summit with the phrase “free and open Indo-Pacific.”²⁵

On May 30, 2018, the U.S. Defense Secretary Jim Mattis announced that the Pacific Command has been renamed Indo-Pacific Command “in recognition of the increasing connectivity of the Indian and Pacific Ocean.”²⁶

In general, as the strategy of rebalance was replaced, the continuous pressure for China to afford decreased. As a grand strategy toward the region, balancing China is also the strategic goal of the Indo-Pacific strategy. As the specific steps have not been formulated, the pressure on China has not come into play. Compared to the rebalance, the Indo-Pacific strategy is less competitive for China. It is made by the transition — the first difference from the past.

TPP withdrawal

On January 23, 2017, U.S. President Donald Trump withdrew U.S. from the TPP.²⁷ The withdrawal reflected Trump’s antipathy to globalization. “Globalization has left millions of our workers with nothing but poverty and heartache.”²⁸ He said “TPP is pushed by special interests who want to rape our country, just a continuing rape of our country.”²⁹ Compared to the multilateral trading agreements like TPP, the Trump Administration showed more interest in bilateral agreement. “Bilateral deals are far more efficient, profitable and better for OUR workers.”³⁰

The U.S. motive in TPP was to restrain China from the leadership over the regional economy. As TPP was given up, China is relieved from the ever-exclusive prospect. Although the Trump Administration is more interested in bilateral trading agreement, no specific progress has been realized. Compared to TPP, the preference of bilateral arrangement of the Trump Administration is also less competitive for China. This is the second difference.

Waging the trading war

U.S. trading deficit with regional countries is the Trump Administration’s major concern. Compared to former federal governments, the Administration’s solution is imposing tariff with high rate on foreign imports. Six countries are listed responsible for the deficit: China, Japan, Germany, Canada, Mexico and South Korea.³¹ Three of them are East Asian countries.

According to Table 3,³² U.S. trading deficit with the three has been fast growing in the last 10 years. In 2008, the deficit to China accounted for 33.29% of U.S. annual trading deficit; the total deficit with China, Japan and South Korea accounted for 44.03% of U.S. annual trading deficit. In 2017, the former became 48.78% and the latter 60.67%. For the Trump Administration, the harsh fact would be substantially ameliorated if the U.S. could efficiently cut its deficit with the three, especially China.

On June 15, 2018, U.S. President Trump announced plans for 25% tariffs on $50 billion worth of imports from China.³³ On June 15, China proclaimed it would retaliate with the same strength.³⁴ On July 6, 2018, the U.S.–China trading war broke out.³⁵ U.S. and China mutually imposed 25% tariffs on $34 billion worth of imports received from each other. About 59% of the $34 billion in Chinese goods are produced by foreign-invested enterprises in China.³⁶ It is the largest trading war in economic history. The U.S.–China competition has reached a new high.

Table 3. Ten years U.S. trade deficit with China, Japan, and South Korea (Monetary unit: US$ billion).

Source: https://countryreport.mofcom.gov.cn/record/index110209.asp?p_coun=%C3%C0%B9%FA, 2018/06/24.

The U.S.–China trading war would influence regional relations in three aspects. First, regional countries fall victim to the war. Thousands of transnational corporations from regional countries invest in China and export products to U.S. Their U.S. market shares would shrink.

Second, U.S. relations with East Asian countries are deteriorating. The Trump Administration is responsible for the loss of regional countries in the war. U.S. relations with regional countries are thus hurt. Consequently, this would put the U.S. at a disadvantage in future competition with China.

Third, regional countries in disputes gain the historical opportunity to improve their relations. Regional cooperation is necessary in confronting the consequence of the war. On May 9, 2018, the China–Japan–South Korea Trilateral Summit took place in Tokyo, Japan. It was the first reconvening of the summit since its interruption after November, 2015.³⁷ Compared to the past, China would benefit from its latest improvement of relations with others, especially Japan, which is a U.S. ally.

Generally speaking, as the final result of the war remains unknown, so at least now and for China, the consequences of the trading wars are not all bad; for U.S. they are not all good. This is the third difference.

North Korea denuclearization

As North Korean missile and nuclear development have realized great achievements, the Trump Administration is determined to resolve issues with it. Trump is different from former Presidents in agreeing to hold a summit with the North Korean paramount leader.

In the General Election 2016, Donald Trump hoped that China could help to resolve the Korean Peninsular crisis.³⁸ Since Trump became U.S. President in 2017, he gradually founded a working relation with Chinese President Xi Jinping with regard to Korean Peninsular affairs.³⁹ With the collaboration of China, South Korea and Singapore, U.S. President Donald Trump and North Korean Leader Kim Jong-un held a historical summit in Singapore on June 12, 2018.⁴⁰

Denuclearizing North Korea offers a historical chance for regional cooperation. For furthering the denuclearization, regional cooperation is still needed. Also, the ever-present tensions over the Korean Peninsula have decreased to some extent. This is the fourth difference.

Conclusions on the transition

Occurring since 2017, the transition of U.S. strategy and policies toward the region shows us that U.S.–China competition is still in progress.

Objectively speaking, the transition has positive changes for China. The Indo-Pacific strategy is less competitive than the rebalance strategy; the threat of TPP has gone; the final consequence of the trading war is still something that should be judged in the long term, but China gains the historical chance to improve relations with regional countries; for denuclearizing North Korea, U.S. may have to do business with China.

The positive changes would benefit China and its competition with U.S. That which is positive for China is the negative for U.S. It would increase the cost and difficulty for U.S. in the competition with China.

Chinese Dual-track Strategy to Compete with U.S.

For China, rising in the competition with U.S. would be a long-term trend. In dealing with the American competitive challenges, China adopts a dual-track strategy. On the one hand, China restrains itself and collaborates with U.S. On the one hand, China takes countermeasures to compete with U.S.

Self-restraint and collaboration with U.S.

Peaceful rising has been the Chinese strategy for a long time. Chinese diplomacy with U.S. should serve as the strategy, and the tensions of its competition with U.S. should remain at a reasonable level. In short, China could restrain itself according to the specific situations in the U.S.–China competition. At the same time, if historical chances could be offered, China could manage to collaborate with U.S.

(1)China restrained itself in the South China Sea. China’s artificial islands in the Sea shocked U.S., Japan, Australia, Singapore and Aquino III Philippines. They united to pressurize China.⁴¹ China made concessions. On August 5, 2015, Chinese Foreign Minister Wang Yi revealed that Beijing had halted land reclamation in the Sea.⁴²

As U.S. patrolled the waters near the Chinese artificial islands in the Sea, the Chinese military restrained itself even when the U.S. touched its red line, which had been set before. In 2015, the Vice Chairman of PRC’s Central Military Commission, Fan Changlong, told 10 ASEAN defense ministers “we will never recklessly resort to the use of force, even on issues of sovereignty, and have done our utmost to avoid unexpected conflicts.”⁴³ When the U.S. Lassen destroyer came, only two Chinese warships were sent to shadow Lassen.

(2)China showed peaceful intentions. China tried to reassure U.S. and others by making clear its peaceful intention. In 2016, at the Opening Ceremony of the B20 Summit of G20 Hangzhou, Chinese President Xi Jinping addressed the Summit “I wish to stress that the new mechanisms and initiatives launched by China are not intended to reinvent the wheels or target any other country. Rather, they aim to complement and improve the current international mechanisms to achieve win–win cooperation and common development. China’s opening drive is not a one-man show. Rather, it is an invitation open to all. It is a pursuit not to establish China’s own sphere of influence, but to support common development of all countries.”⁴⁴

(3)China collaborates with U.S. in denuclearizing North Korea. China is the most important ally of North Korea. North Korea deeply depends on China for its economy and security. Facing the Korean Peninsular Crisis and frequent U.S. demands, China has been collaborating with the U.S. in North Korean denuclearization. In UN Security Council, China and U.S. hold productive dialogues in passing many moves to sanction North Korea⁴⁵; China is a positive mediator to make possible direct dialogues between U.S. and North Korea. It also helped to hold a summit between the U.S. President Trump and the North Korean Leader Kim Jong-un in Singapore on June 12, 2018; China proposed a practical initiative to defuse the Korean Peninsular Crisis. On March 8, 2017, the Chinese Foreign Minister Wang Yi proposed “double suspension” to defuse the crisis: North Korea may suspend its nuclear and missile activities in exchange for the suspension of large-scale U.S.–South Korea military exercises.⁴⁶ After the Singapore summit, the U.S. agreed to indefinitely suspend the expensive military exercises that it had begun with South Korea to provoke North Korea.⁴⁷

Chinese countermeasures

As a rising state, only restraining itself combined with collaboration with U.S. are not enough for China to deal with the hegemonic state of U.S. As the U.S. efforts to balance toward the region progress as usual, China has prepared the following countermeasures to compete with U.S. in the region:

(1)China urged regional countries not to take sides. The stances of regional countries were important in the U.S.–China competition. If other regional countries involved themselves in the competition and took the side of the U.S., it would increase cost and difficulty for China to compete with the U.S. China hoped they could be neutral along with the states in dispute with China.

Facing Japan’s push for a Statement of G7 Japan 2016 about the issues of the South China Sea, the Chinese Foreign Ministry Spokesperson Hong Lei said that “on the issue of South China Sea ... outsiders should stay neutral and objective instead of taking sides ... we are dissatisfied with Japan’s push for discussions on the issue of South China Sea at the Summit.”⁴⁸

Australian foreign minister Bishop warned China that its reputation would suffer if it ignored the result of the Arbitration.⁴⁹ Chinese Foreign Ministry Spokesperson Lu Kang said that “we are firmly opposed to these remarks … Australia is not a party to South China Sea dispute. It should stick to its promise of not taking sides on disputes over territorial sovereignty.”⁵⁰

(2)China managed to win regional support. The support of regional countries was important for China to counteract the united pressure of U.S. and U.S. allies. By diplomatic shuttles, China achieved regional support for its stance on regional affairs.

On May 24, 2016, in a statement of the Shanghai Cooperation Organization, all member states supported the Chinese stance on the issues of South China Sea.⁵¹ On June 9, 2016, Chinese and Russian warships sailed into the waters of Diaoyu/Senkaku Islands.⁵²

On September 4, 2016, China and Russia held talks during the G20 Summit 2016. The two countries reiterated that it is inappropriate for a third party to meddle in other countries’ affairs.⁵³ On September 12, China and Russia held “Joint-Sea 2016” naval exercise in South China Sea.⁵⁴

(3)China proposed many initiatives to divert U.S. attention in the region. China has proposed many initiatives in world affairs: AIIB, Belt & Road, and so on.⁵⁵ As China became assertive in world affairs, involving itself too much in rebalancing toward the region would disadvantage the U.S. in global affairs. If the U.S. tried to balance China in global affairs, its attention in the region would be diverted. For example, in the case of AIIB, the U.S. used much diplomatic resources to prevent many countries inside or outside the region from joining in.

(4)China counteracts U.S. in trading war. The tariff policy of the Trump Administration threatens Chinese core interests. As the negotiation with U.S. has failed, China has no option but to accept the U.S. challenge. On March 27, 2018, the U.S. threatened to impose tariff on goods imported from China. On April 4, 2018, China also announced it would retaliate with the same strength.⁵⁶

On May 18, 2018, in the Joint Statement of U.S. and China Regarding Trade Consultation, the U.S. and China agreed not to launch a trading war.⁵⁷ However, U.S. reneged on the Statement.

On June 15, 2018, the Trump Administration announced plans for 25% tariffs on $50 billion worth of imports from China. The same day, China announced that it would also impose the same rate tariffs on $50 billion worth of U.S. goods. On July 6, 2018, the U.S.–China trading war broke out.

Regional Relations in U.S.–China Competition

U.S. and China are key players in regional affairs. No regional state could stay out of the consequence of the U.S.–China competition. They have their own objectives as the competition progresses. On the one hand, they hope the competition could be peaceful. Both the nations are nuclear powers. Serious conflicts between them would not be bliss but a disaster for the region.

On the other hand, many regional countries hedge between the U.S. and China. They still depend on U.S. in terms of security. But China is indispensable in terms of economy. The popular position they hold is a neutral one. But countries that are in dispute with China hoped to see a competitive Sino-U.S. relationship. A harmonious Sino-U.S. relationship without competition was not the state they wanted to see.

Also, the assertive China in rise changed the sub-regional status quo. Owing to diplomatic struggles in regional affairs, the U.S. and some of its regional allies still stuck to their original stances of balancing China, while some countries gave up and adopted again the hedging strategy to be neutral in the competition.

The transition brought on by the Trump Administration is both a challenge and a chance for regional countries. On the one hand, regional economic relations would be disrupted by the U.S.–China trading war and potential trading wars between U.S. and other regional countries. On the other hand, it offers chances for regional cooperation.

In the U.S.–China competition, regional countries could be divided into two camps. One camp supported U.S. against China. The other camp supported China. For the latter camp, on the one hand, supporting China against U.S. was of course an obvious way of showing support. On the other hand, taking no side was also an actual support for China. It was the position China wanted from them.

Camp one: Countries taking the U.S. side

The Obama Administration invited many regional countries to rebalance with the U.S. toward the region. Among those invited countries, U.S. regional allies responded favorably.

Japan

U.S. is Japan’s most important ally. The U.S.–Japan alliance is the foundation of Japanese security. Taking the side of the U.S. in regional security has been the Japanese tradition since the end of World War II. As the Obama Administration rebalanced toward the region, Japan had no option but to follow the U.S.

At the same time, China has been more assertive in regional relations. The status quo in East and South China Seas had been changed. Ships of the China coast guard have been frequenting the waters of Diaoyu/Senkaku Islands. China refuses to compromise in historical issues with Japan. For settling the disputes, Japan needs U.S. support. This is also a reason for Japanese taking the U.S. side.

On July 25, 2016, the Joint Statement of the Japan–U.S.–Australia Trilateral Strategic Dialogue called on China and Philippines to abide by the ruling of the Arbitration of South China Sea, although China proclaimed many times that it would not recognize the result of the ruling.

In 2016, Japan claimed to send warships to patrol South China Sea with the U.S.⁵⁸ In 2018, Japan and the Philippines conducted a joint maritime patrol near the Sea.⁵⁹

The Trump transition is not the change Japan wants to see. U.S. withdrawal from TPP made it more difficult for Japan to restrain the growing regional economic influence of China; the Indo-Pacific Strategy diminished the importance of Japan in balancing China; the progressing U.S.–China trading war and the possible U.S.–Japan trading war would be a threat to Japanese economy in the long term.

As the regional relations are made more complicated by the transition, Japan makes necessary adjustments. On March 8, 2018, Japan signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership with ten countries in Santiago, Chile.⁶⁰ On May 9, 2018, the China–Japan–South Korea Summit was reconvened in Tokyo. On May 18, 2018, Japan notified WTO that it was reserving the right to impose retaliatory tariffs against U.S.

Australia

Australia is an important ally for U.S. in the Asia-Pacific region. Taking the side of the U.S. is also the Australian tradition in security. Although China has been Australia’s largest trading partner since 2009,⁶¹ it does not want to change its dependence on U.S. in terms of security. Australia is neighboring the South China Sea. The change in the status quo of the Sea deepens its concern over Chinese assertion. As the Obama Administration rebalanced towards the region, Australia supported the U.S. against China.

An Australian military surveillance plane flew over the disputed South China Sea on December 16, 2015.⁶² Australia issued a joint statement with U.S. and Japan on July 25, 2016. In it, they urged China to abide by the ruling of South China Sea Arbitration.

The Australian Foreign Minister Bishop, addressing the Konrad Adenauer Foundation in Berlin, stated that “The Hague tribunal decision was clear, final and binding ... EU should push back on Beijing in South China Sea” on September 8, 2016.⁶³

South Korea

On July 7, 2016, U.S. and South Korea officially confirmed the deployment of the Terminal High-Altitude Area Defense System (THAAD) in South Korea.⁶⁴ On September 5, 2016, Chinese President Xi Jinping told South Korean President Park Geun-hye that China opposed U.S. deployment of THAAD in South Korea.⁶⁵

In the U.S.–China competition, South Korea has two diplomatic considerations: (1) unifying the Korean Peninsula and (2) developing close trading relations with the economic G2. Hence, South Korea prefers a hedging strategy to taking sides.

As the Obama Administration rebalanced towards the region, South Korea was forced to side with the U.S. As THAAD would disadvantage China in Northeast Asia, China began sanctioning South Korea in entertainment, consumer goods, travel and the like.⁶⁶ China–South Korea relations deteriorated to unprecedented proportions since they established diplomatic relations in 1992.

As the Trump Administration tries to denuclearize North Korea, South Korea takes the historical chance to engage with North Korea. On April 27, 2018, South Korean President Moon Jae-in and North Korean leader Kim Jong-un signed documents at the truce village of Panmunjom inside the demilitarized zone separating the two Koreas.⁶⁷

South Korea also tries to improve the damaged relations with China. On March 12, 2018, Special Envoy of South Korean President Chung Eui-yong visited Beijing. He briefed China on relevant scenarios of his visits to North Korea and U.S., and spoke positively of the role China had been playing in pushing for the process of political settlement of the Peninsula issue.⁶⁸

Camp two: Countries that support China

Many countries supported China in the U.S.–China competition. They can be divided into two groups. One group consisted of countries that supported China openly. The other group gave China actual support without irritating the U.S. At the same time, Philippines and Singapore adjusted their stance of supporting the U.S. In the period of Post-South China Sea Arbitration, they gradually became the countries that actually supported China.

Countries supporting China openly

The U.S. strategy of rebalancing made the U.S.–China competition more competitive. If this situation could not be ameliorated, regional stability would possibly be affected. At the same time, many regional countries have good relations with China. They chose to support China openly.

Russia

U.S. competes with China and Russia, respectively, in East Asia and in Europe and Middle East. China and Russia both confront the challenge from U.S. and its allies, so they depend on each other in global and regional affairs. To some experts, Russia and China are quasi-allies right now.⁶⁹

On May 24, 2016, in a statement of Shanghai Cooperation Organization, Russia, China and all the other member states supported the Chinese stance on the issues of South China Sea.

On June 9, 2016, around the same time, Chinese and Russian warships sailed into the waters of Diaoyu/Senkaku Islands.

On September 5, 2016, China and Russia held talks on the sidelines of G20 Summit. Russia agreed with China that it is inappropriate for a third party to meddle in other countries’ affairs.

On September 12, 2016, China and Russia began to launch “Joint Sea-2016” naval exercise in South China Sea.

Cambodia

For Cambodia, China is the largest trading partner; China is also the largest source of FDI.⁷⁰ In the process of establishing national stability, Cambodia has been depending on China. In the U.S.–China competition, Cambodia takes the Chinese side.

After meeting with the Chinese ambassador to ASEAN, Cambodian Foreign Affairs Minister Hor Namhong said “Cambodia wants to mediate in order to reduce the tense atmosphere between ASEAN and China” on July 20, 2015.⁷¹

On June 20, 2016, Prime Minister Hun Sen implied that Cambodia would not support the anti-China ruling of the Arbitration of South China Sea and the Court’s decision.⁷²

Countries actually supporting China

As most regional countries depend on U.S. and China to realize their interests, they do not want to irritate either of the two. For them, a hedging strategy is better than taking sides. For China, hedging means less pressure than taking the U.S. side, so the countries adopting hedging strategy could be seen as the countries that actually support China.

ASEAN countries

Southeast Asia consists of ten countries. Both U.S. and China want to win the support of the ASEAN countries for their respective stances. But most ASEAN countries have been hedging in the U.S.–China competition. As they all have significant interests with one of the two countries, they do not want to see their interest suffering from the non-neutral stance they hold.

The neutral countries adopting hedging strategy include Indonesia, Malaysia, Thailand, Vietnam, Laos, Myanmar, Brunei, Duterte Philippines (2016–), and Singapore, since Singaporean Prime Minister Lee Hsien Loong’s visit of China in September 2017.

The changed Singapore

Singapore is a U.S. quasi-ally. It has close ties with U.S. in terms of security. Although Singapore depends on China in terms of economy, it still needs U.S. for security. At the same time, China has become assertive in regional affairs and changed the status quo in the South China Sea. Singapore experienced a period of accepting the new situation in the Sea. In getting accustomed to the new status quo in the Sea and the assertive China, Singapore changed itself from siding with the U.S. to hedging again in the U.S.–China competition.

Taking the U.S. side

In 2015, U.S. Defense Secretary Ash Carter and Singapore Defense Minister Ng Eng Hen confirmed the deployment of P8 spy plane in Singapore.⁷³

In 2016, Singaporean Prime Minister Lee Hsien Loong visited U.S. saying all countries should respect international law and accept the result of the Arbitration of the South China Sea.

Singapore’s support of the U.S. disadvantaged China in regional affairs and hurt Singapore-Sino relations. China was irritated and began to treat Singapore coldly.

In November 2016, nine Singaporean armored troop carriers were seized by Hong Kong customs en route back from Taiwan. China lodged a protest with Singapore.⁷⁴

On May 14, 2017, the paramount leaders from 29 countries attended the Belt and Road Forum for International Cooperation in Beijing.⁷⁵ The Chinese decision not to invite Singapore’s Prime Minister highlighted the strained ties between the two countries.⁷⁶

Hedging again in the U.S.–China competition

In 2013, China replaced Malaysia as Singapore’s largest trading partner.⁷⁷ Singapore shows much interest in Chinese initiatives. On June 29, 2015, Singapore signed the agreement with China and 48 others to found AIIB.⁷⁸ Singapore has its advantage in international finance and wants to play a role in the Chinese Belt and Road initiative.⁷⁹

Obviously, Singapore has great interest in Sino-U.S. relations. As the Trump Administration gave up the strategy of rebalance in March 2017, Singapore also changed its position and began to engage China. It is the hedging strategy popular in ASEAN countries. By diplomatic shuttles, Singapore took on a hedging role before U.S. rebalancing towards the region.

On June 11, 2017, Singaporean Foreign Minister Vivian Balakrishnan began his two day visit to Beijing. During his visit, he praised Singapore–China relations saying that they were in “good working order” and that both countries had agreed to work together on the Belt and Road Initiative (BRI).⁸⁰

On September 19, 2017, Singaporean Prime Minister Lee Hsien Loong arrived in Beijing for a three-day official visit to China. The mission was to patch up Singapore–China relations.⁸¹

On October 19, 2017, speaking with CNBC ahead of his visit to the U.S., Lee Hsien Loong said Singapore did not want to pick sides between the U.S. and China.⁸²

The changed Philippines

The anti-China Aquino III Philippines

Aquino III was the Philippines President from 2010 to 2016. The Philippines led by him deeply enhanced bilateral relations with the U.S. and made Philippines a strategically pivotal point in the West Pacific for the U.S. At the same time, Sino-Philippines relations deteriorated to unprecedented proportions.

In 2013, Philippines filed its dispute with China on the South China Sea issue to the Permanent Court of Arbitration in The Hague.⁸³ Then, the Philippines united U.S., Japan and Australia to pressurize China to abide by the ruling of the Court.

The Duterte Philippines

Duterte has been the President of Philippines from June 30, 2016. He changed the pro-U.S. stance of Aquino III and made Philippines take on a hedging role again in terms of the U.S.–China competition.

On August 23, 2016, Duterte said he expected talks with China on the dispute of South China Sea and he would not raise the ruling result of the Arbitration in “ASEAN Summit 2016.”⁸⁴

On October 18, 2016, Duterte began his four-day visit to China.⁸⁵ The visit also showed Duterte’s efforts to engage China.

Generally speaking, ASEAN is changing to the state that China wants. Of all the 10 countries, Cambodia openly supports China; seven have been actually supporting China while the other two have changed to actually supporting China. The changes of ASEAN in this direction means the regional situation becomes more advantageous for China than for the U.S. The change would disadvantage U.S. in the future competition with China.

Conclusions on the U.S.–China Competition in East Asia

For East Asia and the states in it, the competition between the rising China and the hegemonic U.S. is a long-term trend. U.S., China and others should prepare their strategies and policies. U.S.–China cooperation is also a long-term trend as serious conflict between the two is not in the interest of all regional countries. Their strategies and policies should also be prepared.

In general, competition with cooperation between U.S. and China in the past and now should also be the trend in the future. It is the overall background for regional relations. If regional countries participated in regional relations from this context, they would benefit from regional development; if they could not, their interests might suffer from the strategic misjudgment.

The overall background is set, but the specific strategies and policies different countries adopt would be different.

U.S. strategies and policies

National interests lay the foundation of American strategies and policies in the U.S.–China competition. If U.S. competed with China, it would be for its interests. If U.S. cooperated with China, it would also be for its interests.

For U.S., China rising is a trend that is difficult to reverse. But how to deal with the rising China to best realize U.S. interests would depend on U.S. calculations. By reasonable calculations and for its interests, it would be possible for U.S. to establish practical strategies and policies.

As serious conflicts might not occur in U.S.–China competition in nuclear times, perhaps cooperative competition or competitive cooperation is reasonable for U.S. to develop relations with China.

Competition

Although reversing China rising is difficult, the U.S. could compete with China. If there was U.S.–China competition, concessions would be made between the two. By the concessions, U.S. could gain its interests. If the U.S. could gain its interests, the consequence of China rising would be less negative.

The interest-driven competition should be conducted with reasonable thinking. The concessions made with China are win–win games. It is impossible for the two countries to gain their respective interests at the same level and at the same scale. Sometimes U.S. gains more, while sometimes China does. For the U.S., gaining less does not mean that it is losing the competition.

In competing with China in the times of China rising, U.S. has realized the two longest periods of economic growth in history.⁸⁶ From May 1991 to March 2001, U.S. realized an economic growth for over 120 months. From June 2009 to now, U.S. has been showing continuous growth for 108 months, which is still in progress. The economic history reveals that China rising brings chances for U.S. economy, so it would be possible for U.S. to be benefited if it could take into future the reasonable competition of the past.

Cooperation

Cooperation is a reasonable way for the U.S. to prevent the U.S.–China competition from deteriorating into serious conflicts. It could balance the negative effects of the competition to regional and U.S.–China relations.

At the global, regional and bilateral levels, U.S.–China cooperation has been realized in the past. In the future, the cooperation at these three levels is still necessary. In global affairs, U.S. and China could cooperate in terrorism, global warming, and so on. Their cooperation is necessary for the world to resolve these problems.

In regional affairs, U.S. and China could cooperate in North Korean denuclearization, reaching an inclusive multilateral trading agreement.

In bilateral affairs, U.S. and China could cooperate to manage the U.S. trading deficit with China, lessen the impact of Taiwan on their relations, and so on.

Chinese strategies and policies

Since the Chinese economic reform in 1978, China has been rising for four decades. The peaceful rising quickly shortens the power gap between China and the U.S. It also makes the U.S. feel disadvantaged. Compared to the past, the rising of 40 years makes Sino-U.S. relationship more competitive. For China, rising in the competition with U.S. is a long-term trend. Chinese strategies and policies should thus be made according to this trend.

Peaceful rising is the Chinese core interest in development. For maintaining the momentum of rising, China should manage well the relations between peaceful rising and its competition with the U.S. For preventing the competition from deteriorating into serious conflicts, China should keep a low profile in the rising and take steps to lessen the tensions in the competition.

At the same time, China should study the U.S. more. Although the U.S. competes with China by bringing up strategies like “rebalance” one after the other, it does not mean U.S. has no management of its competition with China. Perhaps the U.S. also does not want serious conflicts with China. It is possible for peace, stability and opportunity to coexist with competition in future U.S.–China relations.

China is stronger now than in the past. The still rising power will make China stronger in the future. China would have more capabilities to compete with the U.S., to react to new challenges, and to propose new initiatives. At that time, China should be more discreet in its dealings with other countries. U.S. setbacks in the War on Terror (2003–) and the Iraq War (2003–2011) are lessons for the rising China. Being the stronger power does not mean discretion is not a virtue of a state. If China hopes not to push its interests and rise into danger, discretion should be set as the precondition of Chinese competition with U.S.

Other regional countries’ strategies and policies

For other regional countries, there are two situations to face in the coming future. One is still the fact of China rising and its consequence. It changes power distribution between China and other regional countries. The other is U.S.–China competition. No regional countries could keep themselves from the consequence of the competition. For better realizing their interests, strategies and policies should be prepared.

Hedging is better than taking sides

U.S. and China are both important for regional countries to realize their respective interests. Supporting one side against the other is dangerous for their interests. Both U.S. and China could compose sanctions against the countries taking the side of its major competitor. At the same time, taking sides has negative effects on regional relations. On the one hand, taking sides would make one side more advantaged and more aggressive. Regional relations would thus be made more competitive and more complex. On the other hand, taking sides could not help settling the hot issues in U.S.–China competition. So, regional countries should look before they leap to taking sides.

Compared to taking sides, hedging is a better option. To some extent, hedging means to be neutral in the U.S.–China competition. On the one hand, the neutral position of regional countries would make the competition the business of the two powers directly involved. The negative consequence of the competition would be limited at a bilateral level, and so regional relations would be less disrupted.

However, the neutral position could help the success of mediating diplomacy by regional countries. Neutral position constitutes the legitimacy of mediation. It is a constructive stance in regional affairs. Both U.S. and China might see the good intentions of regional neutral mediators. As U.S. and China accept their mediation, the tensions in the competition would be lessened and regional stability could be maintained.

¹“Country Report: U.S.,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=58151 (accessed on July 6, 2018). “Country Report: Russia,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=58866 (accessed on July 6, 2018). “Country Report: Japan,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=57703 (accessed on July 6, 2018). “Country Report: South Korea,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=57568 (accessed on July 6, 2018). “Country Report: India,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=58276 (accessed on July 6, 2018). “Country Report: Australia,” see https://countryreport.mofcom.gov.cn/record/view110209.asp?news_id=57784 (accessed on July 6, 2018). “China becomes ASEAN’s largest trading partner,” see http://wtocenter.vn/news/china-becomes-aseans-largest-trading-partner (accessed on July 6, 2018). “Country Report: South Korea,” op. cit.

²“The US Rebalance Towards the Asia-Pacific: Leon Panetta,” see https://www.iiss.org/en/events/shangri%20la%20dialogue/archive/sld12-43d9/first-plenary-session-2749/leon-panetta-d67b (accessed on August 23, 2016).

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⁸“Asian Infrastructure Investment Bank: Australia sixth-biggest shareholder in China bank,” see http://www.abc.net.au/news/2015-06-29/australia-sixth-biggest-shareholder-in-new-china-investment-bank/6580682 (accessed on July 7, 2018).

⁹“IMF agrees to include China’s RMB in benchmark SDR currency basket,” see http://www.cnbc.com/2015/11/30/imf-agrees-to-include-chinas-rmb-in-benchmark-sdr-currency-basket.html (accessed on September 1, 2016).

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³⁰“Trump appears to rule out rejoining the TPP: ‘I don’t like the deal,’” see https://www.cnbc.com/2018/04/18/president-donald-trump-says-he-doesnt-like-tpp-deal-for-us.html (accessed on June 23, 2018).

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³⁴“China fights back against Trump, imposes tariffs on $50 billion worth of U.S. goods,” see http://business.financialpost.com/news/economy/china-to-impose-tariffs-on-50-billion-worth-of-u-s-goods-in-retaliation-against-trump (accessed on June 25, 2018).

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⁴³“China’s Lighthouses in Spratlys Beckon Recognition from Passing Ships,” see http://www.reuters.com/article/2015/10/17/us-china-southchinasea-idUSKCN0SB00Z20151017#PVv5LIeOqhIRpHgB.97 (accessed on November 30, 2015).

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⁴⁵“UN Unveils Blacklist to Fight North Korea Sanctions-Busting,” Xinhua Net, see https://www.nytimes.com/2018/03/31/world/asia/north-korea-united-nations-sanctions-blacklist.html (accessed on June 26, 2018).

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⁴⁹“Bishop issues warning over South China Sea,” see http://www.skynews.com.au/news/top-stories/2016/07/13/china-sea-to-be-resolved-peacefully--bishop.html (accessed on September 8, 2016).

⁵⁰“Foreign Ministry Spokesperson Lu Kang’s Regular Press Conference on July 14, 2016,” see http://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/t1381622.shtml (accessed on September 8, 2016).

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⁵³“Russia backs China’s call for US to stay out of South China Sea row,” see http://asia.nikkei.com/Politics-Economy/International-Relations/Russia-backs-China-scall-for-US-to-stay-out-of-South-China-Sea-row (accessed on September 8, 2016).

⁵⁴“Russia to Join China in Naval Exercise in Disputed South China Sea,” see http://www.nytimes.com/2016/07/29/world/asia/russia-china-south-china-sea-naval-exercise.html?_r=0 (accessed on September 8, 2016).

⁵⁵“President Xi Jinping Delivers Important Speech and Proposes to Build a Silk Road Economic Belt with Central Asian Countries,” see http://www.fmprc.gov.cn/mfa_eng/topics_665678/xjpfwzysiesgjtfhshzzfh_665686/t1076334.shtml (accessed on September 9, 2016).

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⁵⁸“Japan to join US in South China Sea patrols,” see https://edition.cnn.com/2016/09/15/asia/japan-south-china-sea-patrols/index.html (accessed on May 22, 2018).

⁵⁹“What’s in the Japan-Philippines Maritime Patrol Near the South China Sea?” see https://thediplomat.com/2018/05/whats-in-the-japan-philippines-maritime-patrol-near-the-south-china-sea/ (accessed on May 22, 2018).

⁶⁰“CPTPP: 11 countries sign Pacific Trade Deal in Chile,” see http://santiagotimes.cl/2018/03/09/cptpp-11-countries-sign-pacific-trade-deal-in-chile/ (accessed on June 30, 2018).

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⁶²“Australian Military Plane Flies Over Disputed South China Sea,” see http://www.defensenews.com/story/defense/2015/12/16/australian-military-plane-flies-disputed-south-china-sea/77458100/ (accessed on September 11, 2016).

⁶³“EU should push back on Beijing in South China Sea, says Foreign Minister Julie Bishop,” see http://www.smh.com.au/world/eu-should-push-back-on-beijing-in-south-china-sea-says-foreign-minister-julie-bishop-20160907-grbaaq.html (accessed on September 11, 2016).

⁶⁴“THAAD in South Korea: What Does It Really Mean for China,” see http://thediplomat.com/2016/07/thaad-in-south-korea-what-does-it-really-mean-for-china/ (accessed on August 24, 2016).

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⁶⁶“China lashes out as South Korea puts an American anti-missile system in place,” see https://www.cnbc.com/2017/03/17/thaad-anti-missile-system-makes-china-lash-out-at-south-korea.html (accessed on July 10, 2018).

⁶⁷“North Korea says inter-Korean summit will be a ‘new milestone,’” see https://www.cnbc.com/2018/04/28/north-korea-says-inter-korean-summit-will-be-a-new-milestone.html (accessed on June 30, 2018).

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⁶⁹“China and Russia are quasi allies. On strategic affairs Russia and India have serious conversations only at top level,” see https://blogs.timesofindia.indiatimes.com/Globespotting/china-and-russia-are-quasi-allies-on-strategic-affairs-russia-and-india-have-serious-conversations-only-at-top-level/ (accessed on July 11, 2018).

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⁷²“Cambodian PM Backs China’s Call to Settle South China Sea Dispute in Bilateral Talks,” see http://nsnbc.me/2016/06/21/cambodian-pm-backs-chinas-call-to-settle-south-china-sea-dispute-in-bilateral-talks/ (accessed on August 26, 2016).

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⁷⁴“China protests to Singapore over troop carriers in Taiwan,” see https://www.reuters.com/article/us-hongkong-singapore-taiwan-china-idUSKBN13N0GU (accessed on July 12, 2018).

⁷⁵“PM Lee not invited to Belt and Road forum, is S’pore in trouble,” see https://mothership.sg/2017/05/pm-lee-not-invited-to-belt-and-road-forum-is-spore-in-trouble/ (accessed on July 12, 2018).

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⁷⁷“China No 1 trade partner of Singapore in 2013,” see http://www.chinadaily.com.cn/business/2014-02/20/content_17295790.htm (accessed on September 11, 2016).

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⁸²“We will be asked to pick a side’ if US–China tensions rise, says Asian leader,” see https://www.cnbc.com/2017/10/19/singapore-prime-minister-lee-hsien-loong-on-us-china-relationships.html (accessed on July 12, 2018).

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