Saturday, December 27, 2008

The changing balance of power in Asia

One of the two questions most commonly raised during my trip to Australia in late November and early December was whether is the balance of power in Asia shifting away from the United States and towards China.

The short, but inadequate, answer to that question is probably yes, as both Fareed Zakaria (in The Post-American World) and Kishore Mahbubani (in The New Asian Hemisphere: The Irresistible Shift of Global Power to the East) have recently argued. But the degree to which power is shifting is not yet clear. It is true that the United States has lost significant amounts of soft power over the last six or seven years, as a result of the perceived unilateralism and the violations of human rights associated with the “war or terror.” Its economy has entered what is almost the most serious recession in decades – and that recession is likely to be both deep and unusually protracted. Its military is still the strongest in the world, but it is overextended in Iraq and Afghanistan, and the military budget is likely to come under significant pressure during the current recession.

However, the U.S. may recover along most of these dimensions, if the new Administration acts wisely. U.S. soft power had already begun to revive in the latter years of the Bush Administration, and may well revive further if the Obama Administration restates a commitment to multilateralism, international law, and a wider range of traditional American values. Although the American economy will likely take up to two years to recover, a stimulus package that includes smart investments in human resources and physical infrastructure, and that promotes new high-value added industry and services, could make it more productive than ever. The U.S. military will still face a long-term challenge in Afghanistan, but at the same time will be reducing its presence in Iraq.

Moreover, the rise in China’s power should not be overstated – either how far it has come so far or how far it is likely to go. China is developing the infrastructure to project its soft power, but it has not yet fully developed the message that infrastructure will be expected to communicate. Although China’s military is a powerful defensive force – and has the ability to complicate any American intervention in a crisis in the Taiwan Strait – it is only just beginning to develop an effective offensive or power projection capability. China has experienced three decades of double-digit economic growth, but its economy is severely imbalanced and faces the challenges of an aging population, environmental degradation, and growing inequalities. And China’s economy is suffering from the collapse of its own asset bubble, as well as the impact of the global financial crisis.

So there is almost certainly going to be a gradual shift of relative power away from the United States and toward the emerging economies of Asia. But it is unlikely that the power shift will be so swift and decisive that China will replace the U.S. as the regional hegemon, as some Australians are now worrying. Asia is an extremely crowded region geopolitically, including give five major powers (China, India, Japan, Russia, and the U.S.), two significant middle level powers (Australia and South Korea), plus the ASEAN grouping. For Beijing to dominate so complex and vibrant a region would require not only a spectacular success on China’s part, but also the simultaneous weakening of a large number of its neighbors. The odds of that outcome are relatively small.

Still, America continues to maintain its traditional interest in not seeing Asia dominated by any other power, particularly a power that might take positions hostile to that of the U.S. Advancing that objective in the face of China’s rise cannot depend solely, as some Americans seem to believe, on waiting for China’s economy to falter and for America’s economy to experience the normal cyclical recovery. It will require a concerted effort by the U.S. to build a new economic infrastructure, advanced industrial and service sectors, and a sophisticated work force suitable for the 21st century. It will also require comparable efforts by other Asian countries to maximize their economic productivity and competitiveness