Monday, November 29, 2004

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It's a beautiful day in China's neighborhood

One of the themes of the book I've been working on (and on... and on, and on...) is that great powers create regional intergovernmental organizations that allow these states to advance their regulatory and political preferences among the most vulnerable states they can find. I label these kind of international governmental organizations as "neighborhoods."

Looks like China is trying to create its own neighborhood, according to the AP:

Rising power China moved Monday to expand its influence in a region long dominated by the United States, signing an accord with Southeast Asian nations aimed at creating the world's largest free trade area by 2010 — a sprawling market of nearly 2 billion people.

China's concerns about securing vital sea lanes and feeding its booming economy's ravenous appetite for oil and raw materials were seen as key motivations for the trade pact with the 10-nation Association of Southeast Asian Nations at the group's annual summit in Laos....

"China is using its huge market as a bait to lure ASEAN countries away from U.S. and Japan and build closer relations," said Chao Chien-min, a China watcher and political science professor at Taiwan's National Chengchi University.

"I think what Beijing has in mind is to forge good economic and trade relations now and then increase exchanges in other areas, particularly in the military and security arena," Chao said.

No need to hyperventilate -- as the story notes, the U.S. remains the primary economic presence in the region. This is more interesting as a harbinger of the future.

posted by Dan on 11.29.04 at 03:03 PM


Hey Daniel,

I am kind of working on a similar theory for developing country coalitions in the GATT/WTO negotiations for my undergraduate honor's thesis. Thanks for the article heads up, will definitely be footnoted in my paper. Do you happen to have or know of any working papers on this topic or on related ones?


posted by: Daniel on 11.29.04 at 03:03 PM [permalink]

One interesting thing about this case is that the US is inadvertedly helping China build its 'hood. Bush went to the APEC summit in Santiago wanted to talk about terrorism, terrorism, and maybe a little more about terrorism, with a soupcon of Kim Jong-Il. Not to mention the delegation that forms a little mini-state around the President. The Chinese go to similar summits and quickly cut economic deals. Who are the other countries in the region more likely to want to talk to in the future?

posted by: P O'Neill on 11.29.04 at 03:03 PM [permalink]

As I think I commented in Dan's last post about China - I am not too concerned about China creating its own neighborhood. Because China is joining our neighborhood a lot faster than it can create its own neighborhood and convince SE Asia to join it in lieu of ours.

posted by: Al on 11.29.04 at 03:03 PM [permalink]

The arrival of China as an economic and strategic competitor isn't augured by a "harbinger of the future." It is here today, as evidenced by the U.S. trade deficit, the impact of surging Chinese demand for oil, and American reliance on China as an intermediary with North Korea.

The U.S. preoccupation with Iraq and its dramatic decline in world opinion means the United States is not focusing on rising competitors (EU, China, India, etc.) and their "regional neighborhoods."

For more, see:

"The End of the Unilateral Moment: Five Global Challenges for a New American Internationalism"

posted by: Jon on 11.29.04 at 03:03 PM [permalink]

Reminds me of:

"China is not, as is invariably said, in transition from communism to a freer and more democratic state. It is, instead, something we have never seen before: a maturing fascist regime."
-- Michael Ledeen, "From Communism to Fascism?"

He also said that China is a civilization masquerading as a nation-state. I liked that!

posted by: The Sanity Inspector on 11.29.04 at 03:03 PM [permalink]

Michael Ledeen says a lot of things. Why he gets paid for saying them, I don't know.

Hopefully the U.S. will continue to think about China, Russia, and other "great powers" even as we do whatever we're doing in the Middle East/Persian Gulf area.

It's interesting how the tactic of terrorism, and the potential for WMD, have thrust countries like Iraq and Iran into the front ranks of international politics. It seems to me that we're still struggling the find a way to deal with this development, and I hope we don't neglect the "real" great powers while we deal with the new threats.

posted by: Andrew Steele on 11.29.04 at 03:03 PM [permalink]

"A civilization masquerading as a nation state" is exactly the idea that eventually will make many nations in Asia nervous about China. All of them have ethnic Chinese minorites, some of them quite large and most of them powerful economically. The idea that their Chinese heritage compromises in some way their allegiance to their own countries is not a comforting one; it has led to persecution of ethnic Chinese minorities in the past and may impose limits on the enthusiasm of regional governments for increasing Chinese influence.

That leads to what I think is the key point about the future of China in the Asia-Pacific region. Taking Dan's argument about powerful nations creating "neighborhoods" (which, incidentally, I'm not completely clear about: what else would they do?); I'm reminded of Dean Acheson's summary of the situation that faced him as a new Secretary of State in America's own backyard:

"In that area of special American worry, the Good Neighborhood, there was plenty to worry about. Here Hispano-Indian culture -- or lack of it -- had been piling up its problems for centuries. An explosive population, stagnant economy, archaic society, primitive politics, massive ignorance, illiteracy, and poverty -- all had contributed generously to the creation of many local crises, tending to merge into a continental one."

The point is that in our case policy objectives in Latin America were (and to a large extent still are) defined negatively, in terms of things like currency collapses, wars civil and otherwise, and mass migration of peoples that we did not want to see happen. Can we say the same about China's objectives in East Asia and the Pacific now?

I tend toward the view that it's too early to draw hard conclusions; China is flexing economic muscles now because it has them, and its government has not decided on geopolitical objectives 20 years down the road. But from our point of view what China might be capable of doing in the future is more important than what it wants to do now.

posted by: Zathras on 11.29.04 at 03:03 PM [permalink]

Conservatives used to believe in the law of unintended consequences. I suppose our fixation on Iraq is a good example of this. Seems to be speeding up China's movement towards superpower status. We burn through staggering amounts of money and wear our military out on an adventure of dubious strategic value, driving ourselves deep into debt, while China quietly builds its economic and diplomatic power across the world.

posted by: Brian on 11.29.04 at 03:03 PM [permalink]

Coming from an Australian perspective, ASEAN is nothing new; it's just another step in the inevitable march towards the liberalisation of global trade. And shock horror that SE Asia might be marching at its own pace within its own region!

Really, I don't think its helpful to view that everything China (and Asia in general) does to benefit itself economically as part of some sinister plot to usurp US hegemony. ASEAN is just a logical progression both for China and the region.

posted by: Red Peter on 11.29.04 at 03:03 PM [permalink]

I completely agree with Red Peter.

Also, what is the word "neighbourhood" supposed to cover that the term "economic hegemony" doesn't already cover?

posted by: Sergiy Grynko on 11.29.04 at 03:03 PM [permalink]

So ASEAN made a deal... so when China will be in WTO what it will be said?

Btw following the case of Chinese sub in Japanese territorial waters, Japan made it well heard that next defense plan will take in account the "Chinese threat"

posted by: lucklucky on 11.29.04 at 03:03 PM [permalink]

Apparently lucklucky is unaware that China is already in the WTO ...

Anywho, ASEAN is also working on similar deals with India, Japan, NAFTA, and South Korea. China just signed theirs first by a year or two. This is just the progression of global free trade. NAFTA and the EU were there first, that's all.

On a strange note, China has yet to create a free trade area _within_China_. There are tariff barriers and other restrictions between Chinese provinces, so if they don't fix that it will soon by the case that trade between Beijing and Singapore will be more free than between Beijing and Shanghai.

Mr. Drezner - your thesis on "Great Powers" and "neighborhoods" is too small. Everyone's "neighborhood" is the globalized world. There is no stretch of land on earth that isn't America's or China's "neighborhood." The future is about harmonization of national (and regional) rule-sets into one global rule-set, either bilaterally or multilaterally through organizations like the WTO.

posted by: Brock on 11.29.04 at 03:03 PM [permalink]

Just a bit of follow up...

From the Drudge report today,

First, a bit of over-reactive scare for Lou Dobbs -

Second, some EU comments -

We aren't the only ones "worried" about this. Whether we should or shouldn't be, I don't know. Besides the likely economic crisis that China should suffer soon, I don't think there is much to worry about. I think the largest thing we need to worry about is to what level this regression will be (slow-down/Asian Tigerish style vs. collapse of USSR proportions). I think both cases have certain lessons we can apply and use to forecast. Will it be because of lack of Chinese banking regulation and corruption, or will a larger legitimacy problem arise from their lack democratic checks and will a constructed super-state fragment. To what degree will it affect our economy, the EU’s, and the rest of the world’s?

From a post above by the Aussie, I don't think we need to read sinister goals into these actions too much. They need us as much as we need them, as much as they need EU, as much as we need the EU, etc . . . As Tupac would say, “I'm tryin to make a dollar out of fifteen cents.” We should all be glad that this “rival” is at least playing our game. Mmm.. Got to love the sticky power.

posted by: Daniel on 11.29.04 at 03:03 PM [permalink]

What's the "sticky power"? You mean market integration?

I saw both those headlines from Drudge today.

The EU is only "worried" that they won't be able to keep funding their lavish social programs in the face of Chinese competition. It's really a foolish worry. They can keep their social spending high if they like. What they really need are competetive labor markets. Their labor laws are the reason all of Continental Europe is Detroit writ large.

I'm not so sure what the point of the story about China is. That they make lots of cheap stuff? Not exactly news.

Of course, if the yuan were allowed to float, this "problem" would largely be alleviated. That is a real problem, and a real worry is that China will go into a funk when they set the yuan afloat. They're going to have to do it eventually. Let's just hope it's more graceful than the '97 crash.

I think the chance of China pulling a USSR is pretty slight. They're already in a much more stable position than the former-USSR states are. They have a functional market culture which will allow them to recover gracefully from most obstacles. They really a civilization more than a nation, and even a break-up would not be the end of the world. Ethnically and civilizationally "Greater China" includes Taiwan, Hong Kong, Singapore, and large chunks of the Thai, Malaysian, and Phillipine economies - not to mention Australia and California.

I guess I just don't see why people get so worked up about it. Trade makes everyone wealthier and makes the world more politically (and militarily) stable. It's been said that two democracies have never gone to war - but neither have two nations with links as deep as ours. If China and the US ever went to war, the first thing they'd have to do is write off the half a trillion dollars they have invested in US Gov't debt. That's a pretty good safeguard, IMHO.

posted by: Brock on 11.29.04 at 03:03 PM [permalink]

Sticky power is a type of spin on Nye's soft power argument that Walter Russels Mead put forward in Foreign Policy magazine March/April 2004 issue. That article contains a discussion of the distinctions between hard, soft, and sticky power, but in essense it is very close to market integration. Get enough people playing your game, and even if they have rival ambitions their scope will be somewhat limited because of the interdependence or if they attempt to buck the system ( a la Germany prior to WWI), you will still have many friends tied into yours.

His article is an interesting way to put into scope market integration, but he notes that sticky power is just a tool along with hard and soft.

posted by: Daniel Adams on 11.29.04 at 03:03 PM [permalink]

Speaking as another Aussie, I completely agree with my compatriot above. Australia and New Zealand, two great allies of the US, are also included in these free trade agreements you mentioned above. Empowering your allies (real ones) surely isn't a bad thing. China will remain dependent on the minerals and energy Australia exports to her, and vice versa (though not to the same degree). I think the sticky power thing is a very useful analogy.

posted by: Stan on 11.29.04 at 03:03 PM [permalink]

Stan: Except as a New Zealander, I can say we are not the 'great' allies like the Aussies.

We don't support the war in Iraq; we hate their farm subsidy and their tariff on our farm products; and we don't allow US nuclear-powered warships in our territorial water. Oh, and they exclude us from that Free Trade Agreement the Aussie is going to get.

(Yeah, basically our country is inhabited by a bunch of lefties.)

And as a Chinese, yes, I actually agree that it's moving closer to a mature fascist regime than a liberal democracy and China IS a civilisation (or what remains of it after The Cultural Revolution) posing as a nation state. It's the people's pride in their ancient civilisation that's holding the Chinese government up.

And the government itself is not slow in exploiting that. That's why the ordinary mainland Chinese are so hung-up about Taiwan and Tibet. Their view is that Taiwan's independence is an insult to the motherland. Why? Because they've been brainwashed from birth.

posted by: Weco on 11.29.04 at 03:03 PM [permalink]

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