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Monday, May 26, 2008

China-led East Asia Integration Spurs Economic Boom

Ellen L. Frost

Yale Center for Study of Globalization/Washington, D.C.

Although the balance of power in Asia is stable, the balance of influence is shifting in favor of China. Will china's rising influence translate into political domination, forcing Asians to choose between Beijing and Washington and undermining their national autonomy? Can the United States accommodate China's legitimate interests and compete peacefully for influence? What can other Asian's do to recapture lagging U.S. attention and ensure a stable, peaceful and prosperous environment?

The major cause of China's growing influence is the giant chugging sound of China's economy. China has become the number-one or number-two trading partner of virtually every country in the region.

Despite the significant of these changes in Asia's strategic landscape, for many years now U.S. attention has fixated on the Middle East. High ranking U.S. officials are preoccupied with Islamist terrorists, the war in Iraq and recent developments in the Israeli-Palestinian conflict.

Since Asia is stable and peaceful, the president and his top aides pay little or no attention to regional diplomacy in Asia. The consequence of this high-level neglect is a widespread perception that the U.S. has lost interest in Asia, especially Chinese influence is growing.

Conscious of residual wariness, Chinese leaders go out of their way to reassure their Asian neighbors that Chinese intentions are entirely peaceful. Unlike Washington, China has projected a sympathetic and listening attitude, offering aid and trade deals without immediately demanding anything in return.

Beijing has settled virtually all of its land-based disputes and put its maritime territorial disputes in the East and south China seas on the back burner.

The subtle risk posed by the shifting balance of influence is that in the absence of constructive engagement on the part of the U.S., Washington's voice will gradually lose resonance compared to Beijing's. Other Asians already conform to China's wishes when it comes to the Dalai Lama and proposed Japanese membership on the UN Security Council.

None of these issues are vital to them, but all stir up core Chinese feelings and threaten – at least symbolically – China's perceived vital interests. On less volatile issues, China's leverage is implicit. If the U.S. Were to largely relinquish its role in Asia, China's new influence would likely tilt the outcome of negotiations on trade, investment, the treatment of Chinese firms, energy, climate change, maritime territorial disputes, security relationships, votes in the UN and other international bodies and other issues more heavily in China's favor.

The competition for influence is by no means zero-sum and has many positive aspects. But Beijing's long-term behavior, intentions and identity are unknown. If China's political system softens into more open, predictable and participatory governance based on the rule of law – something like Singapore's "authoritarian capitalism" – Chinese goals, values and interests are likely to be largely congruent with those of the U.S. and its friends and allies in Asia. If not, some degree of tension will remain.

Realistically, the U.S. president and his top appointees will not have much time for sustained regional diplomacy anywhere outside the middle east until the next administration scales down U.S. forces significantly in Iraq. Small steps are possible, however.

They include scheduling more high-level visits, signing the ASEAN's Treaty of Amity and Cooperation (TAC), revitalizing U.S. participation in the Asia-Pacific Economic Cooperation Forum (APEC), actively supporting the Asian integration movement instead of merely tolerating it, and devoting significantly more resources to regional health and education.

Meanwhile, what can Asians do to strengthen their position as a region – and to recapture constructive, high-level U.S. attention? While waiting for the next U.S. administration, Asian governments could launch or intensify several initiatives. Freeing up trade and investment is an obvious choice – and specifically focusing on Asia's impressive maritime assets.

In my book, Asia's New Regionalism, I argue that we are witnessing the resurgence of a pre-colonial "Maritime Asia" – the sweep of coastal communities, port cities and towns, and waterways connecting Northeast and Southeast Asia, India and now Australia. Maritime Asia is the locus of Asian wealth and power.

It is where 60 to 70 percent of Asians live, the biggest cities are and globalization driven investment is concentrated. The world's six largest ports are all Asian.

To take better advantage of this asset, Asian governments should explicitly build Maritime Asia into their vision of integration and work with local officials, business representatives and civil-society, groups to remove barriers impeding its natural flow. These include border taxes, tariffs, quotas, corruption, crime, antiquated transport links, duplicative security checks and restrictions on labor mobility.

For example, Asian governments should extend and develop a legal framework for ASEAN's "Single Window" program, which aims at limiting the cargo clearance of container ships at any major port to one 30-minute stop and validating it for the entire region.

To protect this asset, Asian governments need to become far more active in global efforts to stem climate change.

Implementation of market oriented policies on the production and consumption of carbon-based fuels, enforcement of existing cross-border agreements on air pollution, the adoption of appropriate domestic regulatory mechanisms, and a cooperative approach to energy supplies would ease the threat.

As long as China's economic development remains vigorous, Chinese influence will continue to rise. This is a fact of life that other Asians have accepted; the U.S. must accept it as well. Closer cooperation within the wider Asian community, combined with renewed U.S. engagement, can help ensure that China's new influence is exercised in a way that conforms to regional norms, enables other Asian governments to retain their sovereignty and permits Asian companies to compete effectively in the global economies.

The writer is visiting fellow at the Peterson Institute for International Economics and adjunct research fellow at the National Defense University. She is the author of Asia's New Regionalism.

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