2015 Asia Risks in Retrospect: Is Potential Conflict Giving Way to Tacit Rule Making?

2015 Asia Risks in Retrospect: Is Potential Conflict Giving Way to Tacit Rule Making?

From defense spending, banks, trade pacts, and historical baggage, take a look back at the main events and risk in the Asia-Pacific region in 2015.

In 2015, East Asian relations became increasingly complex. The central dynamic has been the rivalry between a rising China and the United States and Japan. Unlike Xi Jinping’s predecessor, Hu Jintao, China has ceased in its quest for harmony in its interstate relations and replaced it with a thinly guarded goal of being the leading global power.

While Xi and his allies are understandably buoyed by China’s epic success since Deng Xiaoping’s ‘Four Modernizations’, and may wish to restore Chinese centrality, this is simply unrealistic. The capabilities of China’s competitors are too vast, especially since China’s economy is still dependent on them to buy Chinese exports. However this doesn’t mean that China cannot assume a role as a major great power or even as a superpower in coming years.

What we’ve seen as 2015 came to a close is less bluster and confrontation over disputed areas and more constructive engagements with regional powers like Japan and South Korea. China’s development and acquisition of modern weapons continues apace, but the PRC has also chosen to shrink its armed forces by 300,000.

2015 sees creation of Asian Infrastructure Investment Bank

Both security and economic issues for the region are shaped by competing attempts at influence by China on one side and the U.S-Japan alliance on the other. While early last year the PRC chose to initiate the Asian Infrastructure Investment Bank to compete with the Japanese and U.S dominated Asian Development Bank, we later saw commitments by the leaders of the World Bank and the Asian Development Bank to cooperate.

Several regional players and even Western European states joined in the Chinese effort despite refusals by the United States and Japan . It’s unclear what China’s motives were in forming the bank, but surely one driving factor was the continued refusal of the U.S Congress and therefore the IMF to allow China to increase its voting shares. This has since been corrected as Congress and soon the IMF will now increase China’s voting shares and adopt China’s renminbi as a currency for special drawing rights.

Another impetus was China’s long standing belief that they represented the interests of other developing countries. This first came up in the context of a BRICS development bank for emerging markets. While the BRICS effort has lost momentum with economic downturns in Russia and Brazil the outcome should be different for the AIIB. One can assume that China will remain committed to the new bank if only to provide some funding for projects employing Chinese firms that have lost business due to China’s slowing growth rate. It will also provide investment opportunities for India and other regional members; drawing them closer to China.

TPP Signed in 2015

The new Trans Pacific Partnership that was finally agreed upon is now being reviewed for approval by member state legislatures. It was conceived as an instrument to allow Pacific Rim nations trading options other than those dominated by China. It contains labor, environmental, and intellectual property standards that are much more stringent that those found in China. While the elimination of 18,000 tariffs across these 12 states will certainly provide new markets for producers and more competitive prices for consumers there’s also a strategic dimension.

President Obama was quite clear that the TPP would guarantee continued American access to trade in a region that comprises 40% of the global GDP. He further argued that without this agreement the trade rules in this region would be written by China. China has also developed a Silk Road development plan and bilateral and multilateral ASEAN FTA initiatives in the region, but hasn’t rejected joining the TPP at a later time.

Defense Budgets and WWII Baggage

2015 saw China’s defense budget and its development and acquisition of more modern weapons systems continue apace. This raised concerns in late 2014 and early 2015. The rise in Japan’s defense budget and their planned acquisition of further Aegis ships, F 35s and a new generation of Mitsubishi fighter aircraft also suggested a possible rise in conflict. Japan’s new interpretation of their pacifist constitution as permitting “collective security” or joint allied operations also pointed to the potential for escalation.

One driving factor has been unusually confrontational national leadership. Both Shinzo Abe and Xi Jinping are nearly primal nationalist archetypes. Abe’s maternal grandfather was in Tojo’s cabinet and was freed by occupation forces only after first being suspected as a Class A war criminal. He went on to found the Democratic Party which merged into the dominant Liberal Democratic Party in the 1950s. His paternal grandfather and father were also prominent in the LDP.

Abe is unrepentant about WWII and is tired of apologies. He even recanted on previous Japanese apologies to Korean “Comfort Women”. He also visited the Yasukuni shrine honoring Japan’s war dead including WWII war criminals.

Xi has emphasized China’s “century of humiliation” at the hands of Japanese and Western colonialists and the need for security through a dominant China. Both men took office in faltering economies facing popular demands for change. Their respective ‘Chinese Dream’ and ‘Abenomics’ reforms have yielded small return: nationalist appeals fill the gap in both countries.

Their island dispute in the East China Sea has led to numerous confrontations between fighter aircraft and between naval and coast guards ships. On the positive side there have been ongoing discussions to create a Maritime Communications agreement to prevent accidental clashes at sea or in the air. However, both sides cannot agree whether to include the Senkaku/Diaoyu islands in said agreement.

There have also been an increasing number of summits or leadership meetings. In November 2015 there was a trilateral summit between China, Japan and South Korea in which all three announced that their relations were “completely restored”. They also committed to continued efforts to denuclearize North Korea. Japan and North Korea also agreed to resolve issues concerning Japan’s use of Korean “comfort women” sex slaves during WW II. The meeting declared that regular summit meetings would be held in all three countries in the future. It clearly resulted in better relations than a strained Xi-Abe meeting held at the APEC summit earlier in the year.

Inter-China Milestone

Xi Jinping and Taiwan’s Ma Ying-jeou met in Singapore as private parties in November 2015. It was the first meeting between the PRC and ROC in 66 years. While the meeting can be seen as evidence of Xi’s support of the KMT’s opposition to Taiwanese independence this was still a historic meeting.

The dependence of China, Japan, and South Korea on each other as major trading partners, and the fragility of the overall Asian and global economies has led to more productive discussions. Since more productive relations came about after repeated military probings by Japan and China it’s fair to anticipate that some tacit rules between the parties could develop to curtail armed confrontations and near misses in the future.

Early probings often settle into rules to prevent confrontation. If this is not the case it explains why everyone continues to arm up.

Categories: Asia Pacific, Politics

About Author

Lawrence Katzenstein

Lawrence Katzenstein has taught at the University of New Orleans and the University of Minnesota. Through an affiliation with the Humphrey Institute he was one of the trainers for the initial Chinese WTO delegation. He has been an exchange professor at the Consolidated Universities of Shandong Province and an embedded social scientist with the U.S. Army in Iraq. He earned a B.A. in political science from CCNY and an M.A. and Ph.D in political science from Rutgers University. While at the University of Minnesota he also completed a teaching post doc in International Business.