Chinese President Xi Jinping. Photo: Reuters / Tyrone Siu
Chinese President Xi Jinping. Photo: Reuters / Tyrone Siu

It was precisely when Xi Jinping first took office in 2012 that American observers started to formulate questions on China’s role in East Asia that were unimaginable just a few years before.

These questions implicitly acknowledged that the East Asian order had now morphed into a dual one, and wondered whether this was a transition to the full switch to China’s regional hegemony.

The 1997-98 financial crisis taught the affected East Asian countries that the US could not play the role of economic security net in their part of the world. This inability became even more evident in the subsequent global financial crisis of 2008-09, when the US could barely defend itself from the worst consequences of the economic meltdown.

The lack of effective US leadership in East Asia since the 1990s is a direct consequence of two rebalancing policies, as Washington, first, cast a wider, more scattered geopolitical net beyond East Asia across the Pacific region within the frameworks of the Asia Pacific Economic Partnership (APEC) forum and the Trans-Pacific Partnership (TPP) Agreement, and second, focused its economic-growth strategy on global market liberalization rather than regional regulatory integration.

In the aftermath of the global financial crisis at a time of sluggish economic growth and faltering leadership in the West, a geopolitical power vacuum began to emerge in the East, where several American partners begrudgingly started to consider China as a possible gap filler, or even as a viable alternative to the disappointing leadership of the US.

The current situation is in stark contrast with how the East Asian order was arranged during the Cold War years, where the US provided military and economic dominance through a system of defense alliances with the major trading actors in the region, Japan, South Korea and Taiwan.

In essence, the old East Asian order was based on the US hegemony built around the exchange of security for trade, as the stability and continuance of the American order traditionally depended first and foremost on the US ability and willingness to provide its Asia-Pacific allies with a security bulwark against destabilizing actors at both the geopolitical and economic levels.

However, with the demise of the Soviet Union and the rise of China’s market economy, the East Asian order is now in an evolutionary phase, as it is in essence parting geopolitical ways from the US “Pacific pivot” and looking southwest for economic growth opportunities across the Indian Ocean and the Caucasus.

This multipolar East Asian rebalance is further evident in the shifting hierarchies between the security order still dominated by the US and the economic order overtaken by China. It is significant that a new split East Asian order is emerging at a time of growing multilateral trade and investment integration led by China through the Regional Comprehensive Economic Partnership (RCEP) negotiations and Belt and Road Initiative.

Yet this economic process is simultaneous with rising geopolitical tensions on the Korean Peninsula and in the South China Sea, as well as in Iran and Pakistan, where the competing security visions of the US and China become more evident.

In the middle of this hegemonic duality, or competition, between the US and China, there are the East Asian and also Pacific countries that have long been reaping the gains of China’s economic partnership without giving away the American security patronage.

Japan and Australia best exemplify these countries caught “between the eagle and the dragon“, for instance as they simultaneously strive to revive the TPP and warily embrace the RCEP in Xi Jinping’s world trade game, while keeping vast numbers of US troops and nuclear armaments in their soil.

Countries like Japan and Australia indeed do not wish for the day to come when they have to choose a bundled security-economic dependency between either the US or China in Cold War-like dynamics.

At any rate, the outcomes from the 19th Congress of the Chinese Communist Party will show more of Xi Jinping’s roadmap and timeline in the world trade game. The key question is for how long China is going to be satisfied with economic dominance alone and thus offer geopolitical restraint to its trading partners in the region.

It would not be difficult to imagine that China will soon gradually use its trade and investment might to push smaller Asian countries away from their strong bilateral security ties with the US in exchange for tighter multilateral economic cooperation under Chinese leadership, as it has already occurred during Xi Jinping’s tenure with the Philippines, Cambodia and Myanmar.

This may be argued on the basis of the long-held views of the Chinese elites, who regard the US as a declining power and China as its natural heir in the region.

After all, it is well established in political science and economic literature that hegemonic actors rise as they use asymmetric trade relations to turn economic dominance into a military one for geopolitical gains.

In the lead-up to the 19th National Congress of the Chinese Communist Party starting on October 18, this is the third in a series of four 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.

This series is an edited excerpt 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, and the second one here.

Giovanni Di Lieto

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.