The United States's shift towards Asia is being tested by global economic realities, say Ernesto Gallo & Giovanni Biava.
The United States announced an important shift of geopolitical focus in late 2011, namely an intention to "pivot to (East) Asia". The process since then has been far from smooth, as the eruption of crises in other parts of the world have demanded attention (Syria and Ukraine, for example). Barack Obama's visit to four countries in the region in April 2014 (Malaysia, the Philippines, Japan, and South Korea) is a signal that the change of emphasis still occupies a big place in Washington's thinking. The feeling, however, is that the "pivot" idea has lost momentum. Does a United States have a grand strategy in Asia, or indeed elsewhere? It seems difficult to detect one.
The Asean bloc is a case in point. Washington has friends in the region, both old (Philippines, Indonesia) and new (Myanmar, which the US president visited in 2012, and even Vietnam). But Obama has done little to support them so far. The Philippines is waiting for a strong response to its concerns over China’s aggressive posture in the South China Sea disputes; Malaysia is interested in trade and investments; Vietnam attempts to balance American, Chinese, and even Russian influences. None is sure of Washington's long-term position.
Most south-east Asian countries host important and wealthy Chinese communities. In Malaysia, they produce an estimated 60-70% of GDP, and dominate Indonesia’s (and of course Singapore's) economy. Investments from mainland China are also booming; Vietnam in 2013 is a notable case. Beijing is interested in establishing an Asean bank, in which it would aim to be the major shareholder. Where capital markets are concerned, the failed merger in 2011 between the stock-exchanges of Sydney and Singapore suggests that China would necessarily be part of any Asian "superbourse". At present, though, national interests make it hard to envisage an east-Asian Wall Street that could be a catalyst for investments in the whole region.
The Tokyo-Seoul axis
Japan has promoted its own national interest in permitting the merger of Tokyo and Osaka's stock-exchanges in January 2013 into the Japan Exchange Group. The problem here is that Japan’s pursuit of national interests seems to have gone too far. The US might benefit from having a strong regional ally, but Japan's prime minister Shinzo Abe is pursuing a more nationalistic line that worries Washington (and, in the case of his visit to the Yasukuni shrine in December 2013, antagonises China and South Korea too). Abe’s plan to raise military expenditure, adopted in December, is a mixed blessing for Washington. At the same time, South Korea is annoyed at the US's apparent leniency towards Tokyo and cannot accept Abe’s provocative visit to the shrine. It will become clear whether Obama’s visit to both countries can put an end to their disputes and reaffirm America’s control; what can be said at present is that it does not look an easy task. For even apart from historical rivalries, several other issues are at stake.
South Korean citizens maintain a positive opinion about US influence (58%, according to a BBC poll in 2013), yet relations between Seoul and Washington might come under strain as well. The US always tries to accommodate both Japan and South Korea, but the difficulties are being increased by the structural problems of America’s economy. There is no clear solution to the North Korean issue, though one is much needed. After all, Kim Jong-un’s rule might still bring short-term advantages to many parties, whereas a united Korea might become a strong competitor of Japan itself. In a sense, Pyongyang still indirectly benefits the military-industrial complexes in both China and the US, and represents a useful target for the latter and the western media. Moreover, South Korea seeks a free-trade agreement (FTA) with China, which is by now her largest commercial partner. Disentangling such a complex web of interests is not simple.
The Beijing hub
China itself is at the heart of America's dilemma. Beijing is the US’s biggest foreign creditor, but in 2013 its exposure to US debt contracted. China is also buying gold and gradually planning a key role for the yuan / renmimbi, which is already traded in Chinese banks (ICBC, Bank of China, and China Construction Bank, among others) in London and Luxembourg. The evolving relation between the US dollar and the yuan will probably define the future of the relations between the two giants. Considering that the Asia/Pacific is the major trade and industrial region of the world, all countries would be affected by a US-China confrontation. A power-sharing solution is badly needed, but Washington has to recognise that an FTA (like the Trans-Pacific Partnership, TPP) can hardly exclude China, nor (again) can an Asia-Pacific superbourse be made without China.
Negotiations for the TPP are going on, but despite Obama’s promise to fast-track them little has been achieved. The pace is slow, and the US has failed to reach an agreement even with Japan due to disputes on protectionist measures on some agricultural products. Japan might first conclude a free-trade agreement with Australia, and other Asia-Pacific countries (including Malaysia) have remained rather sceptical. Does it even make sense to organise a free-trade area which excludes China; and what significance would it have, considering that China is the world’s largest trading country? The US is obliged to manage a number of problematic allies whose interests are often at odds with both Washington and each other. That can only be done with difficulty.
Perhaps America thinks it can afford to lag behind, considering that its economy is recovering and in 2013’s last quarter it grew by 2.4%. But the US can barely be satisfied with just a degree of economic recovery and domestic stabilisation, however much that comes as a relief after the damage done by the financial crash. In principle, Obama’s pivot can still work if the US truly realises that the Asia-Pacific is the 21st-century’s main economic and political hub. But in themselves, speeches or visits to the region won’t make the pivot happen; only deeper economic and political links will ultimately do so.