US Secretary of State Rex Tillerson (left) talks with Chinese President Xi Jinping during a meeting at the Great Hall of the People in Beijing on September 30, 2017. Reuters / Andy Wong / Pool
US Secretary of State Rex Tillerson (left) talks with Chinese President Xi Jinping during a meeting at the Great Hall of the People in Beijing on September 30, 2017. Reuters / Andy Wong / Pool

As early as November 2014, President Xi Jinping openly advanced the idea of a major-power diplomacy with Chinese characteristics, in other words to secure national interests with a more assertive foreign policy in reflection of China’s rising economic power.

It is becoming increasingly clear that Xi’s world trade policy is to assert regional leadership for China’s autonomous integration and upgrade in the global economy. Therefore, it is reasonable to expect that China’s foreign policy and strategic interests will eventually seek to translate this trade leadership into regional security and then political dominance, also at a global level, as East Asia carries the bulk of world economic growth.

Nevertheless, there is an increasing co-dependency between Chinese and regional trade dynamics, particularly in the natural-resources sector and in foreign direct investments tied to global supply chains.

On the one hand, this co-dependency restrains China from exceedingly aggressive foreign policy, but on the other is pushing China’s strategic interests out of the East Asian shell to seek control of its external economic environment well into South and Central Asia.

As China currently benefits from a stable, open and secure system of free trade, it is likely that in the second half of his tenure President Xi will still tolerate the Association of Southeast Asian Nations (ASEAN) as the formal lead of the Regional Comprehensive Economic Partnership (RCEP) process, and the US security dominance in South and Central Asia for as long as it takes to entrench deeper regulatory integration in East Asia that is compatible with China’s strategic interests.

This means that China is likely to channel its economic dominance to embed further its Asian neighbors into globalized markets. To do so, Xi’s administration has accelerated its major pan-Asian infrastructure and institutional projects, most notably the Belt and Road Initiative and the Asian Infrastructure Investment Bank (AIIB), which promises to compete with the Western-centric World Bank and Japan-led Asian Development Bank.

Infrastructure projects, investments and even humanitarian aid, more than an arms race, are thus fueling Xi’s “major-power diplomacy with Chinese characteristics”, with the immediate result that subregional clusters of Asian countries are becoming more and more embedded in China’s economic and strategic policy.

Nevertheless, it should not be underestimated that the Southeast Asian countries that are not thoroughly aligned to Beijing see the RCEP as “the second-best option” to a trade deal including the US and the other countries across the Pacific, as Malaysian Trade and Industry Minister Mustapa Mohamed has said.

It is thus clear that the Southeast Asian countries are not particularly keen to cut ties with the US; however, the conflictual and transactional approach adopted by the Donald Trump administration is causing unwelcome uncertainty in the ASEAN region.

This leads to hopes that accepting Xi Jinping’s world trade game is the best way to secure regional economic stability and possibly preserve the US-China détente initiated in the 1970s.

Nevertheless, it should not be overlooked that Xi’s endgame is firmly to establish a breeding ground for a pan-Asian coalition outside of the United States’ control.

At this stage, it would be going too far to envisage this coalition as an alternative “Chinese world order” in open competition with that of the US.

For the moment, it rather appears that Xi’s measured use of free trade and economic integration fits and feeds into a broader historical shift that is rebalancing the geopolitical Asian order toward a multipolar normative framework to be based more on interdependent markets than on the security patronage of a single hegemon.

At any rate, a completed Asian rebalance and convergence toward China’s interests will take the current world order into uncharted waters.

In the lead-up to the 19th National Congress of the Chinese Communist Party starting on October 18, this is the fourth and last in a series of pieces on the RCEP in the context of Xi Jinping’s world trade game. This series seeks to understand whether and to what extent Xi’s China is leading the RCEP negotiations to pursue its own geopolitical paradigm shift in Asia, which is to avoid the creation of a regional anti-China alliance under US auspices in the short term, and to create an alternative to the American world order in the long term.

These briefs are edited excerpts from the author’s research paper forthcoming on Geopolitica Rivista (Volume VI-1), a peer-reviewed journal published by the Italian Institute of Geopolitical Studies (ISAG).

The first article in the series is available here, the second one here and the third one here.

Dr Giovanni Di Lieto teaches international trade law in the International Business program at Monash University in Melbourne, Australia, and engages in expert analysis on the geopolitics of trade and investment for media, industry and government outlets. His professional career developed as a commercial law practitioner in Italy, and then as a global value chain specialist across the US, Europe and China.