Asia-Pacific Regional Security Assessment 2021

Key Developments and Trends

The International Institute for Strategic Studies (IISS), The International Institute for Strategic Studies (IISS)

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000474497
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: National Security
• Index: Politics & International Relations

The Asia-Pacific Regional Security Assessment 2021 provides insight into key regional strategic, geopolitical, economic, military and security topics.

Among the topics explored are:

• US?China decoupling and its regional security implications;

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• Japan's security policy and China;

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• India's emerging grand strategy;

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• Southeast Asia amid rising great-power rivalry;

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• Australia's new regional security posture;

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• NATO's evolving approach to China;

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• The United Kingdom's 'tilt' to the Indo-Pacific; and

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• Emerging technologies and future conflict in the Asia-Pacific.

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Authors include leading regional analysts and academics Kanti Bajpai, Gordon Flake, Franz-Stefan Gady, Prashanth Parameswaran, Alessio Patalano, Samir Puri, Sarah Raine, Tan See Seng, Drew Thompson, Ashley Townshend, Joanne Wallis and Robert Ward.

CHAPTER ONE

US–CHINA DECOUPLING AND ITS REGIONAL SECURITY IMPLICATIONS

DREW THOMPSON

Drew Thompson is Visiting Senior Research Fellow at the Lee Kuan Yew School of Public Policy at the National University of Singapore.

When United States President Joe Biden entered office in January 2021, the US–China relationship had reached its lowest point in decades, characterised by diminishing trade, investment and exchanges, as well as strategic mistrust that precluded cooperation and engagement on even mundane issues. Biden’s predecessor, Donald Trump, surrounded himself with advisers who were deeply sceptical of Beijing as a cooperative partner. His administration declared that China was a rival and strategic competitor, believing that 40 years of engagement had failed to liberalise China or produce reciprocal benefits for the US. In this atmosphere of distrust, amid a trade war that left both parties deeply dissatisfied, the notion of ‘decoupling’ emerged as an abstract synopsis for the bilateral relationship’s trajectory, often repeated in breathless media reports. Chinese media quickly denounced the term, affirming that China was a staunch supporter of integration and that only the US sought decoupling, turning ‘decoupling’ into a pejorative description of US China policy.¹ President Trump’s administration, including vice president Mike Pence,² denied that it sought decoupling as an objective, though Trump could not resist tweeting in June 2020 that ‘complete decoupling’ remained a policy option. Third countries whispered their fears that decoupling and US–China competition would destroy hard-won gains in global development and prosperity.

What is decoupling in the context of the US–China relationship? Trump’s tweet posited that decoupling is a maximalist position, though one could argue that it is also a process of disengaging, in which case it is a scaling trend rather than an end state. The Biden administration need not adopt Trump’s all-or-nothing perspective and could instead pursue an interests-based approach to decoupling that targets areas central to US national security. In public discourse, the term has been used most often in the context of the US–China economic and technology relationship, applied specifically to policies that encourage US companies to diversify supply chains or shift manufacturing out of China, in some cases to encourage re-shoring of manufacturing facilities to create jobs in the US. In other instances, decoupling has been used to describe US intentions to eschew Chinese technology through export controls or influence the choice of technology standards selected by third countries, such as 5G suppliers. Increased tariffs on Chinese products, export licencing, domestic-sourcing requirements and other industrial policies and trade barriers would motivate companies to sever relationships and shift production or supply chains outside China – both in the tech sector as well as broader goods categories – either because of changing economic conditions (such as rising labour costs and tariffs) or uncertainty and risk of further government intervention in the tech sector. Conceptually, decoupling can also be applied to other aspects of the relationship, including government-to-government or people-to-people ties. Here, decoupling could involve fewer exchange students or the cancellation of bilateral programmes such as the Peace Corps or Confucius Institutes. Similarly, it could reflect political disengagement, such as reducing bilateral cooperative activities or the frequency and scale of political dialogues.

Neither the US nor China has a stated policy objective of decoupling. However, both countries are actively seeking to scale down commerce and engagement to protect better their own interests, having calculated that integration and interdependence present unacceptable risks that outweigh the benefits. An example of such moderating behaviour would be restrictions on graduate-student exchanges in academic research laboratories because the benefits are outweighed by fears of intellectual-property theft and disclosure of state secrets, or concerns that the other side would gain an advantage or close a gap. Decoupling has become a hyperbolic term that correlates to fears of unequal gains in a bilateral competitive relationship.

This competitive dynamic between the world’s two largest economies is concerning for other countries that want to continue to benefit from the existing international order underwritten by the US as well as gain benefits from engagement with China. While they fear the potential consequences of this competition, these countries retain considerable agency with both powers, creating opportunities for hedging and balancing strategies, including partnering with other powers such as Japan, or amalgamating as in the case of the Association of Southeast Asian Nations (ASEAN). These strategies will also shape perceptions and choices made in Beijing and Washington, making them relevant to the question of whether decoupling will come to characterise the US–China relationship over the course of the Biden administration as it did under former president Trump. Biden’s advisers signalled early in the transition period their intent to focus on building US strength domestically and rallying allies and partners globally, distinguishing their strategy from Trump’s ‘America First’ policy. This promised return to a more familiar and predictable US foreign policy will reassure allies and partners. It may also generate sufficient trust to strengthen bilateral alliances and multilateral groupings, such as the Quadrilateral Security Dialogue (also known as the ‘Quad’), convincing states to hedge less and take concrete actions to support US efforts to underwrite the existing rules-based order in the region, now characterised as the ‘Free and Open Indo-Pacific’.

In the first 100 days of the Biden administration, its approach towards China and the issue of decoupling has taken a back seat to domestic issues, including the COVID-19 vaccine roll-out and dealing with a surge of migrants at the southern border and worsening race relations. The outcome of an internal review of the previous administration’s policies and actions, including tariffs and the Phase One trade agreement, will determine the extent to which the new administration’s stance will affect US companies’ calculations on diversifying trade and investment away from China. However, Washington’s policies are not the only factor influencing whether decoupling will accelerate or reverse under Biden.

Then US president Donald Trump speaks at a White House news conference, 18 March 2020

(Alex Wong/Getty Images)

CHINA’S QUEST TO DECOUPLE

China’s drive for self-reliance reflects the Chinese Communist Party’s (CCP) dual imperatives to retain absolute control over domestic policymaking and the ability to maintain a stable balance of power with countries on its periphery. Historically, Chinese leaders sought self-reliance compelled by the fear of either foreign dependence and entanglements, or foreign influence that threatened the orthodoxy of political and social systems. This orthodoxy was relaxed only during periods when the perceived need for foreign capital, expertise and technology outweighed the threat it presented. Mao Zedong distinguished the CCP from Chiang Kai-shek’s dependence on foreign allies, stating in 1945: ‘We stand for self-reliance. We hope for foreign aid but cannot be dependent on it; we depend on our own efforts, on the creative power of the whole army and the entire people.’³ However, following the CCP’s victory in the Chinese Civil War in 1949, the Soviet Union provided extensive aid and technical assistance to help Beijing rebuild the shattered country, becoming one of China’s most important trade partners. This economic and industrial interdependence lasted until 1960, when the Sino-Soviet split resulted in the recall of Soviet technical advisers in China and an abrupt decline in bilateral trade, ushering in a new era of self-reliance for China. This isolation continued until Deng Xiaoping’s open-door policy of 1978 brought in a new wave of foreign capital, technology and trade, propelling China from poverty to prosperity and culminating in CCP Secretary General and Chinese President Xi Jinping’s December 2020 declaration that absolute poverty had been eliminated in China. However, despite the obvious benefits of openness and economic integration, under Xi China is re-entering a period of self-isolation and self-reliance that furthers its economic and political decoupling from the US and the world.

China’s wariness of economic integration and dependence is fuelled not only by a history of geopolitical tensions and competition with its neighbours, but also the CCP’s culture of identity politics and ‘othering’. The CCP’s perception of its relations with non-party citizens within the country also informs its assessments, fuelled by concerns about domestic and international threats to the CCP’s continued rule. Domestically, the CCP fears social discontent could topple the party should it prove unable to maintain sustainable and equitable economic growth, or should poor governance render it unable to deliver public goods. Therefore, self-reliance and absolute control over the economy enables Beijing to reduce or even eliminate this risk by making reforms that protect the party, unencumbered by international obligations or dependencies.

Mao Zedong speaks at the seventh National Congress of the Chinese Communist Party in Yenan, Shanxi province, April 1945

(Sovfoto/Universal Images Group via Getty Images)

Chinese President Xi Jinping says China is entering a ‘new era’ of opportunities and challenges in an address to the CCP’s 19th National Congress at the Great Hall of the People in Beijing, 18 October 2017

(Wang Zhao/AFP via Getty Images)

Extensive internal studies and essays, including ‘The Ten Grave Problems’ published in 2012⁴ and more recent study sessions convened regularly by Xi for the CCP Politburo and other party elites, have identified an array of threats and risks against which the party must actively guard.⁵ The heightened perception of risk and threat has led to multiple speeches by Xi, many of which invoke war metaphors and revolution-era political themes such as ‘struggle’ and ‘hardship’ to signal to cadres the political importance of mitigating threats and risks to the party. (These threats and risks are described as originating domestically as well as abroad and are often intertwined.) Several of Xi’s speeches and directives on preventing risk were compiled, triggering extensive internal discussion in CCP schools and theoretical journals on managing risk, further raising threat perceptions throughout the party and government.⁶

The extensive internal messaging campaign about domestic and international threats to the party (which often morphs into accusations that foreign forces are instigating domestic actors) fosters a corporate culture of distrust towards foreigners and non-party members within the CC...

Table of contents

• Cover
• Title Page
• Copyright Page
• Table of Contents
• Common Abbreviations
• Introduction
• Chapter One US–China Decoupling and its Regional Security Implications
• Chapter Two Japan’s Security Policy and China
• Chapter Three South Korea’s Security Beyond the Peninsula
• Chapter Four India’s Emerging Grand Strategy After Galwan: Bridging the Power Gap With China
• Chapter Five Southeast Asia’s Struggle for Autonomy Amid US–China Rivalry
• Chapter Six Australia’s New Regional Security Posture
• Chapter Seven Strategic Competition and the Pacific Islands
• Chapter Eight NATO, China and International Security
• Chapter Nine The United Kingdom and Indo-Pacific Security
• Chapter Ten Emerging Technologies and Future Conflict in the Asia-Pacific
• Chapter Eleven Urban Security Challenges in Asia
• Chapter Twelve COVID-19 and Asia’s Security Landscape
• Index