Both sides to blame for the US–China confrontation

Acting US Defense Secretary Patrick Shanahan continued the long tradition of past American defence secretaries by underscoring the United States’ ‘enduring’ commitment to the region, presenting an exhaustive list of US military, political, and economic assets in Asia, and describing America as a ‘resident power’ and ‘Pacific nation’. 

In contrast to many of the voices now coming out of the Trump administration, Shanahan struck a more optimistic note about the US–China relationship. Though he outlined a list of complaints about China’s militarisation of disputed features in the South China Sea, influence operations, ‘predatory economics’ and ‘state-sponsored theft’ of technology, Shanahan also argued that competition with China does not mean conflict, and suggested that his own thirty-year career as an engineer with the Boeing Company made him determined to ‘solve problems’ rather than put up walls.

China’s response was delivered by Defence Minister Wei Fenghe, the most senior Chinese official ever to attend a Shangri-La Dialogue. Against the backdrop of the stalled US–China trade negotiations, Wei made clear that China welcomed talks with the United States but that ‘if they want a fight, we will fight till the end’. Wei also put forward an unapologetic declaration of China’s core interests, prioritising the argument that China would not tolerate secession by Taiwan. Wei’s strident language was a warning directed at the Trump administration, which in May held the most senior meeting in decades when Taiwan’s National Security chief, David Lee, met with White House National Security Adviser John Bolton.

Behind the theatre of these speeches, Amy King explains in this week’s feature article that the real take-away from the Shangri-La Dialogue is that ‘there is no appetite in the region for a “new Cold War” between the United States and China’. In the march towards growing confrontation, there is blame to be found on both the US and Chinese sides. Whether either side recognises this, and understands how their own behaviour is contributing to inflame the confrontation, remains to be seen. But there is no doubt that the remarks by Shanahan and Wei failed to reassure allies and regional states in a number of ways.

In China’s case, Wei adopted Xi Jinping’s rhetoric, depicting the world as at a crossroads, with peace, development, and openness lying in one direction, and conflict, exclusion and isolation lying in the other. Most in the region welcome China’s commitment to development and share Chinese concerns about US protectionism and its undermining of the multilateral order. But their agreement with China on these issues does not mean that they are willing to line up wholeheartedly with China’s worldview. China’s rhetoric has only limited appeal for the simple reason that, whatever the United States’ faults, regional states want ongoing US engagement in Asia because of their discomfort with a more Chinese-centred order.

That discomfort is felt most keenly on the issue of the South China Sea, about which questions were raised again and again at the Dialogue by officials and analysts from around the region. Wei’s answers to these questions indicated that China continues to view the South China Sea dispute primarily through the lens of its relationship with the United States. Because US military assets pose a threat to China in the South China Sea, Wei argued, China is justified in deploying its own military facilities, including on territories such as Mischief Reef that have been declared part of the Philippines’ Exclusive Economic Zone by the Permanent Court of Arbitration.

Such a response provides little comfort to regional states that China is willing to acknowledge the existence and preferences of other claimants, or respect international law. China has undoubtedly enhanced its maritime security through the establishment of military facilities on contested islands and features in the South China Sea. But the trade-off for doing so is that the region is now much warier about China’s ambitions and its willingness to abide by international law and norms. China will need to do much more to convince regional states that its ‘win-win’ policies are indeed in the interests of all.

On the US side, Shanahan spoke to the region’s long-standing interest in economic security, stating that ‘economic security is national security’. But regional states will have been puzzled by his declaration that ‘the United States does not want any country in this region to have to choose or forgo positive economic relations with any partner’. That’s a statement that is utterly undercut by the Trump administration’s efforts to force allies and partners to choose sides This includes ‘poison pill’ trade agreement clauses that would prevent Japan and other regional states from pursuing trade deals with US-deemed ‘non-market economies’ like China, and warning allies that they may lose access to US intelligence if they allow Huawei technology into their 5G networks⁠.

Shanahan’s efforts to convince regional allies and security partners to do more to support the US-led order in Asia is also undermined by Trump administration adversarial trade policies. Its trade war with China and its assault on the WTO dispute settlement system threaten the multilateral trade regime. On all of the trade war, China is largely right and the United States is wrongly acting against the region’s own interests. 

Just days before Shanahan arrived in Singapore for the Shangri-La Dialogue, the Trump administration placed Singapore, Vietnam, Malaysia, Japan and South Korea on a watchlist of countries that manipulate their currencies to obtain trade advantage. And less than 24 hours before Shanahan described India as a ‘major defence partner’ in his speech, the Trump administration removed India’s status as a developing country, thereby opening the door to placing tariffs on trade with India. These are precisely the states that the United States wants as part of its networked coalition to bolster a ‘free and open Indo-Pacific’, but it is undermining incentives for that cooperation by punishing them on trade.

The region is also not optimistic about the prospects for a US–China trade deal, with the US approach to trade negotiations undermining incentives for Chinese cooperation. The heavy-handed approach to Huawei makes it more not less likely that China will view state-led industrial policy as a necessary economic development tool in a hostile world. Meanwhile, the Trump administration shows little recognition that its desire for a ‘strong’ deal with China will need to be balanced by the reality that China’s 19th and early 20th century history of being subjected to unequal treaties by foreign powers will make it particularly difficult for Xi Jinping to sign a deal perceived as ‘unfair’ or as undermining Chinese sovereignty.

We now face a stalemate between the United States and China. As King argues, there are signs that key regional states are beginning to take steps to preserve the security and economic order, with Indonesia, South Korea and Japan each taking the initiative to effect change at the WTO, on the North Korean nuclear issue, and on regional approaches to infrastructure. But much more will be needed — across issues ranging from cyber to maritime security and trade — if the region is to avoid the worst consequences of the growing confrontation between the United States and China. Sitting back and waiting for Trump and Xi to find common ground is no longer an option.

The EAF Editorial Board is located in the Crawford School of Public Policy.