Chinas march

Published : Jan 29, 2010 00:00 IST

in Singapore

THE political buzz in East Asia on New Years Day was all about China, especially its booming economic ties with the Association of South-east Asian Nations (ASEAN). Politically resonant was the celebration of the inauguration of a China-ASEAN free-trade area, the biggest in the world in terms of population and the third largest in turnover.

As a result, Beijings equation with the non-sovereign territory of Taiwan under the One-China principle was not as intense a political subject this time as at the start of 2009. In greater focus now was the fortification of Taiwans economic links with mainland China rather than any political formula for the eventual reunification of the two sides.

In a sense, it was no surprise that economics defined the mood at the start of 2010 in East Asia, a region hit by the United States deep financial crisis. Significant, too, is the growing sense of East Asian togetherness in the evolving context of Chinas continuing rise as an economic powerhouse with potential political influence of global proportions.

Beijings enormous foreign exchange reserves, the result of a consistent export-led growth, remain the envy of countries around the world. And, a new talking point in East Asia is that of multi-lateralisation or, more precisely, the likely enlargement of the Chiang Mai Initiative (CMI) later this year. The CMI is basically a currency pool of the ASEAN+3 countries (China, Japan and South Korea).

While ASEAN has 10 nations in its fold, the +3 is the not-so-elegant but critically important label for the associations key partners in East Asia. Of them, China is generally predicted to overtake Japan as the worlds second largest economy sometime in 2010. While the U.S. will still maintain a big lead over all others, Chinas importance to the other East Asian countries is widely expected to grow in relation to that of the U.S. in this domain.

No less significant, too, is the fact that the U.S. is not a party to the CMI. And, China and Japan have played a big role in formulating the somewhat recent decision to expand the CMI currency pool. The move was a direct response to the recent outbreak of the U.S.-induced global financial and economic crisis, which has not blown away fully as of now.

In this perspective, several East Asian countries tend to look favourably upon Chinas contribution to the current augmentation of the currency pool under the CMI banner. For Beijing, therefore, 2010, the year of the Shanghai World Expo, has begun on a bright note of recognition on two major counts: the actual opening of the China-ASEAN free-trade area and the ongoing expansion of the CMI.

In recognising the rise of China, evident in these and other domains, its East Asian neighbours do not necessarily discount the continuing importance of the Japanese economy to them. However, they appreciate the sheer magnitude of Chinas rise, buffeted but not destabilised by the lingering U.S.-induced global economic crisis. They are also struck by the novelty of the economic feats of a country other than Japan, the first in Asia to get industrialised.

The first signs of Chinas march over Japan and even the U.S., in the balance of economic powers of relevance to East Asia, came into focus during the recent Singapore summit of the forum of Asia-Pacific Economic Cooperation (APEC). And, Beijings latest economic indicators of the external kind, in relation to the ASEAN as also the CMI and Japan, only serve to underline this trend. East Asian political leaders and experts are, of course, mindful of the possibility that a decisive U.S. economic resurgence, with a credible degree of irreversibility, will alter the global dynamics with some implications for East Asia as well.

On balance and at present, though, three clear trends point to a possibility of the emergence of a new ecosystem of inter-state interactions across East Asia. The trends are the ongoing ascendance of China as an economic power with potential political and military clout of a very high order; the moves by Japanese Prime Minister Yukio Hatoyama to articulate his countrys interests as a rightful Asian power rather than as a mere ally of America in Asia; and the continuing decline of the U.S. as a global economic superpower. Of these, the trend relating to the American decline is still subject to some hedging bets by the East Asian leaders and opinion-makers. However, Hatoyamas positive view of Chinas unabated rise is already altering the East Asian political dynamics in a way that does not please the U.S., even under a different kind of leader like Barack Obama.

Such an emerging reality enhances the prospects of a firm evolution of a new East Asian ecosystem of inter-state relations. These prospects will still be dependent on China continuing to stay the course of becoming an economic superpower with political and military prowess of a high order. Chinese leaders such as President Hu Jintao have, of course, made no prediction about this. However, all that is known now about the political signs on the East Asian horizon is that the region is gradually coalescing into a possible system, which will be entirely outside the U.S. sphere of influence.

The new realities the emergence of an actual China-ASEAN free trade area and the likely expansion of the CMI signal a message that East Asia is beginning to fend for itself, quite autonomously of the U.S. At the same time, there is no sign now that the U.S. is willing to stage a retreat from East Asia in much the same way as Britain withdrew from the East of Suez region decades ago. In fact, an important political nuance is implicit in the current tough bargaining by the U.S. with Hatoyama to try and retain its military bases in Japan with their current core-profile and functions intact. Even Obamas Washington wants to retain East Asia, or at least sizable pockets within it, as a sphere of U.S. influence, if not also as a U.S. sphere of infleunce.

The new East Asian ecosystem is also totally different from the idea of a new regional order of whatever political complexion. Usually, a new international order, whether in a region or in the global arena, is brought into being by a rising power or an emerging group of powers by persuasion or even force. By contrast, an East Asian ecosystem, seen as a possibility now, will be the result of an evolutionary process of accommodation and adjustment among the countries in the region. Hatoyama has already indicated to Hu Jintao how Japan wants to be realistic about the rise of China.

The Japanese leader, after returning to Tokyo from a visit to India late in December 2009, said his country should look towards Asia for economic linkages. At the same time, he said, Japan would seek to retain its ties with the U.S. for security reasons. Such a bifocal view reflects the challenges that Hatoyama faces as he tries to wean Japan away from the U.S. and towards the rest of Asia, more especially the eastern seaboard of the continent. There is also a positive air about the new links with the rest of East Asia that he now wants. Hatoyamas ideas of a new East Asian Community and a common Asian currency, both not yet thought out fully, can only help the evolution of a regional ecosystem of inter-state equations.

If Hu Jintao himself has not said anything that might raise visions of such an ecosystem, the reason has much to do with the current course or direction of Chinas diplomacy in East Asia.

Former ASEAN Secretary-General Rodolfo Severino is of the view that neither China nor Japan seems willing at this stage to let the other assume leadership in East Asia. This, in his view, cannot be conducive to the emergence of a new East Asian order. As a result, ASEAN might continue to set the agenda for pan-East Asian affairs, something that the association is now doing as a driver of regional economic cooperation. Moreover, Severino says that such a state of affairs suits China, which is able to command influence across East Asia without actually appearing to be doing so.

Aside from Severinos views in the exclusive context of the ASEAN primacy, Chinas art of a subtle exercise of power can, in fact, facilitate the evolution of a new East Asia ecosystem of inter-state ties. No alarm bells over leadership issues will then go off. However, neither Beijing nor Japan has indicated whether a new concert of powers can or will emerge from the current trends.

At present, China, Japan and South Korea form a critical core as partners of the ASEAN as a collective entity. Can they act as a new concert of powers in East Asia? Or, will India be co-opted for any such concert of powers? Indias free trade agreement with the ASEAN came into effect on January 1. With this, New Delhi has enhanced its credentials as an East Asian player.

An answer to the larger question about a concert of East Asian powers for the evolution of a regional ecosystem will be determined by the future of the Japan-U.S. equation as well. An expert in this domain like Michael J. Green has traced the evolution of post-imperial Japans reluctant realism in coming to terms with and seeking to shape global order after the end of the Cold War.

A relevant but converse question is whether the U.S. will need some reluctant realism to accept the gravitation of Japan towards the rest of Asia and away from Washington.

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