π Economics π Geopolitics
The technology war between China and the USA

Indo-Pacific: can trade succeed in preventing war?

Richard Robert, Journalist and Author
On March 23rd, 2022 |
4 min reading time
Pierre Grosser
Pierre Grosser
Professor of History at Sciences Po Paris
Key takeaways
  • The decentralisation that facilitated Asia-Pacific trade was initially a compromise between the United States and Japan – whose economic power they feared.
  • Since the 1990s, the rise of China raised questions, but their assimilation into the market nonetheless continued.
  • It was around 2007 that, faced with a strong China, America and India became closer giving rise to the “Indo-Pacific”.
  • Over the past ten years, Chinese policy in the region has become more assertive, and the fears that had surrounded the rise of Japan have resurfaced.
  • Recently, this space, which was designed to neutralise (economic) conflict, has once again become a zone of economic, political, and strategic confrontation.

The Indo-Pacif­ic is increas­ing­ly per­ceived as a zone of con­fronta­tion, where­as it was pre­sent­ed for sev­er­al decades as a mod­el of “soft trade”, with geopo­lit­i­cal rela­tions calmed by com­mer­cial exchanges. Was this mod­el an illusion?

Pierre Gross­er. No, but it has a his­to­ry. The term “Asia-Pacif­ic” emerged in the late 1980s. The geo-eco­nom­ic cli­mate was marked by the end of the Cold War, with a tri­umphant Japan tak­ing the place of the USSR as the num­ber one chal­lenger against the Unit­ed States. At the time, Wash­ing­ton per­ceived that there was a risk of an “Asian refo­cus­ing”. Whilst Amer­i­cans saw that there was a place to be tak­en in what was then described as the “Pacif­ic cen­tu­ry”, the pow­er of Asian economies also appeared as a chal­lenge to them. Back then, the Pacif­ic was an area of trade, but which increased the deficits of the Unit­ed States

APEC (1989) was a way for the Unit­ed States and Aus­tralia to avoid the cre­ation of an Asian block and to devel­op an open region­al­ism that would facil­i­tate Asia-Pacif­ic trade. Japan agreed because its lead­ers feared being accused by Wash­ing­ton of return­ing to the Asia-tism of the 1930s, dom­i­nat­ed by Tokyo.

In the 1990s, sum­mits were held reg­u­lar­ly, and a large free trade area devel­oped; a real­i­ty has not dis­ap­peared. Nev­er­the­less, with the WTO cri­sis in the 2000s and the grow­ing dif­fi­cul­ty of nego­ti­at­ing glob­al trade agree­ments, mul­ti­ple bilat­er­al agree­ments were signed between coun­tries of the region, and now broad­er agree­ments (but Trump refused the TPP nego­ti­at­ed by Obama).

Does China’s entry into the game dis­rupt this “soft trade” paradigm?

It is made pos­si­ble by Pres­i­dent Clinton’s deci­sion in the mid-1990s to dis­con­nect trade and human rights – a way to turn the page on Tianan­men. Chi­na’s entry into the WTO in 2001 appears at first to be a con­fir­ma­tion of this vir­tu­ous cir­cle between trade, peace, and democratisation.

Com­pared to the 1980s, when Japan had been a real threat (at the end of 1988, it con­trolled 50% of the world’s semi­con­duc­tor sales and there was talk of a “Pearl Har­bour” of elec­tri­cal com­po­nents), the ear­ly 2000s seem to have been marked by a cer­tain naivety about Chi­na. No one imag­ined at the time that Chi­na was mov­ing upmar­ket tech­no­log­i­cal­ly, or that it would have a destruc­tive impact on West­ern indus­tri­al jobs.

At the end of the 1990s, how­ev­er, sev­er­al debates raised cru­cial ques­tions. Between 1996 and 2000, a first dis­cus­sion con­cerned Chi­na’s acces­sion to the sta­tus of great pow­er, and a book even raised the pos­si­bil­i­ty of a con­flict. But this strate­gic and mil­i­tary debate was soon closed. At the begin­ning of the Bush pres­i­den­cy, the Amer­i­cans decid­ed to focus on the “peer com­peti­tors”, includ­ing Chi­na. But the attacks of Sep­tem­ber 11 put the reflec­tion on the Chi­nese chal­lenge in the back­ground. Today, the Amer­i­cans are won­der­ing whether they have made the wrong ene­my by exhaust­ing them­selves in the glob­al war against terrorism.


When did Amer­i­cans start to have doubts?

The finan­cial cri­sis that began in 2008 opened a new stage: very quick­ly, West­ern­ers realised that their economies were suf­fer­ing while Chi­na was accel­er­at­ing. Admit­ted­ly, there was a form of equi­lib­ri­um: the Amer­i­cans bought Chi­nese prod­ucts cheap­ly, and the Chi­nese in return bought Amer­i­can pub­lic debt. This macro­eco­nom­ic duo was once pre­sent­ed as a “G2”, at the top of glob­al gov­er­nance. But the Chi­nese part­ner is increas­ing­ly per­ceived as a rival.

The Chi­nese chal­lenge is then for­mu­lat­ed through new images, such as the “string of pearls”, which describes Bei­jing’s more “assertive” pres­ence in the Chi­na Sea, with land recla­ma­tion that allows for the trans­for­ma­tion of sim­ple islets into islands, and espe­cial­ly Chi­nese activism in the Indi­an Ocean: Sri Lan­ka, Burma.

This con­text explains the accel­er­at­ed con­cil­i­a­tion between the Unit­ed States and India. For the first time, the theme of the Indo-Pacif­ic emerged. At the ini­tia­tive of Japan­ese Prime Min­is­ter Shin­zo Abe, the Quadri­lat­er­al Secu­ri­ty Dia­logue (Quad) was launched in 2007, an infor­mal coop­er­a­tion between the Unit­ed States, Japan, Aus­tralia, and India. The piv­ot to Asia, which was ful­ly affirmed by Oba­ma in 2011–2012, had in fact begun under George W. Bush.

Does this piv­ot mark a major turn­ing point?

Yes, even if it must be under­stood that it is not direct­ed against Chi­na, which the Amer­i­cans need on issues such as nuclear pro­lif­er­a­tion (North Korea, Iran). The piv­ot reflects first and fore­most the ambi­tion to focus on Asia, by rein­vest­ing in region­al organ­i­sa­tions (ASEAN, Shangri-La Dia­logue). Oba­ma speaks of a “rebal­anc­ing”, but in terms of deployed troops the change is not very sig­nif­i­cant: with the con­se­quences of the Arab rev­o­lu­tions and the emer­gence of Daech, the Amer­i­cans are not with­draw­ing from the Mid­dle East. What is per­haps more sig­nif­i­cant, then, is the Silk Roads project launched by Bei­jing in 2013, which marks a new stage in Chi­nese asser­tion. But this is not a breakthrough.

It is under Trump that the switch takes place, with a speech by Vice Pres­i­dent Pence in 2018 that marks a break. Euro­peans are out of the game: only the British are inter­est­ed in the Indo-Pacif­ic and, start­ing with Hol­lande and then under Macron (part­ly in the con­text of strength­ened ties with Aus­tralia, which then take the form of mil­i­tary coop­er­a­tion), the French, part­ly to main­tain their sta­tus as a world pow­er with regards to the Unit­ed States. The lat­ter took up the (Japan­ese) theme of a “free and open Indo-Pacif­ic”, which in this new con­text was dia­met­ri­cal­ly opposed to Beijing’s ambi­tions in the Chi­na Sea. The ques­tion of Tai­wan is resur­fac­ing. Since the begin­ning of the pan­dem­ic, Chi­na seems to have been busy putting its inter­nal affairs in order. The ques­tion of con­fronta­tion remains open, with the Unit­ed States accused of look­ing for a new ene­my and of want­i­ng to replay the Cold War so as not to be over­tak­en by Chi­nese pow­er, and Chi­na of want­i­ng to place itself at the cen­tre of the world and bend it to its interests.

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