What remains of the Asia Pivot?
President Obama’s defining policy sought to open markets via the Trans-Pacific Partnership (TPP) and park a large portion of the US Navy in China’s backyard. The idea was to pull Asian economies toward the United States, away from China, and to build US force projection capabilities, thus assuring allies in the region that US power was in East Asia for the long run.
Fast-forward to the Trump administration and we see a very different situation: mercantilism is on the rise, allies and would-be allies like South Korea, Australia, the Philippines, and Vietnam are striking out on their own with more independent foreign policies, and US military power is being openly challenged by North Korea and, to a lesser extent, by China in the South China Sea.
Much of the geopolitical groundwork predates President Trump, so it’s unfair to the blame at his doorstep. Yet Trump’s governing philosophy will only accelerate these trends going forward.
Is the era of US primacy in East Asia drawing to a close? And if so, what comes next?
China
China is increasingly the most important bilateral relationship in East Asia, and perhaps the entire world so far as the United States is concerned. The economic linkages are a mixed bag: The U.S. runs a trade deficit of $347 billion with China, yet China represents the United States’ third-largest export market behind Canada and Mexico. Put simply, China is an important market for US companies and it has the potential to become a downright lucrative one should the Middle Kingdom transition toward a consumption-based economy and away from its current export-driven model of growth. Yet there are major trade distortions on the Chinese side that are coming into sharper focus given the size of the bilateral trade deficit. Chief among them is China’s huge state-owned sector that floods global markets with cheap goods that are often subsidized by the government, albeit indirectly. There’s also the renminbi’s peg to the dollar (too low in the eyes of the Trump administration), China’s lax intellectual property enforcement (at least as it pertains to Western companies), and the various bureaucratic soft barriers the regime tends to throw up against foreign competitors.
Beyond the economic realm, U.S. and Chinese interests are more directly opposed. China under Hu Jintao and Xi Jinping has been seeking ever more strategic space in its immediate neighborhood. This expansion has frequently encroached on space claimed by the U.S. (under freedom of navigation) and its allies. China has also been seeking to increase its influence within US-dominated international and regional institutions, or to supplant them entirely by creating new ones. The latest and most prominent example is China’s creation of the Asian Infrastructure Investment Bank.
