China looms large whatever way one looks at it. Its economy is the world’s second-largest after the US, with its GDP projected to grow to US$42 trillion in a dozen years compared with the US’ annual output of US$24 trillion.
Of course, it is not as simple as that when one considers the size of their respective populations, with China’s population — whatever might be the growth rate during that period — likely to remain four times that of the US.
Still, China’s projected annual output at about US$42 trillion by about 2030 puts substantial resources at the disposal of its government to project its power through trade, foreign investment and raw military power. Even now, it is throwing its weight around, with regional countries grudgingly adjusting to the new realities of power.
Economic growth set aside, one crucial factor that has helped China to project power has been the diminution of the US’ power, particularly in the Indo-Pacific region. With the US distracted in Afghanistan and the Middle East, China has been steadily pushing the boundaries of its territorial and political sway.
An important example is the assertion of sovereignty over South China Sea islands; proceeding to occupy the islands, as well as dredging up new ones to establish military facilities and station advanced weaponry, such as missiles and bombers, to deter those with competing claims. In the process, the South China Sea has been turned into a virtual Chinese lake.
If China is able to secure the South China Sea, with its vital trade routes, it will control trade flows, as well as naval and related military movements that might be considered hostile.
While the US has been preoccupied elsewhere, China has been expanding its control of South China Sea waterways, disregarding objections by the US, as well as Australia and countries in the region. The US has sent occasional naval patrols, but China is undeterred.
The question is: Will the US confront China?
In one way, it is doing that already by imposing tariffs on Chinese exports, with China hitting back with its own list of restrictions on imports from the US.
US President Donald Trump has threatened to increase US tariffs as much as it takes, raising the specter of a trade war. If unchecked, this might create the momentum for a larger conflict beyond trade issues.
Coming back to the South China Sea, the US is keen to co-opt Australia to counter China.
China is also financing infrastructure projects in South Pacific countries, which Australia regards as its backyard. The argument is that such projects are not productive, but are designed essentially to subvert the sovereignty of small countries by saddling them with unsustainable debt.
In an interview with Peter Hartcher, international editor at the Sydney Morning Herald, US Assistant Secretary of Defense for East Asia and Pacific Security Affairs Randall Schriver reportedly emphasized the need to impose “costs” on China for militarizing the artificial islands it has built in the South China Sea.
What these costs might be and how such might be done was not specified.
“We [the US] fundamentally approach economic relationships and capacity-building in a different way to the Chinese,” Schriver said. “It’s not predatory, it’s clean and transparent, but we’ve got to show up, we’ve got to do it” to counter China.
Elaborating on China’s game plan, Schriver said: “You will see a little more assertiveness” by the Chinese armed forces on the seas, with “more challenges, more shadowing” of other countries’ naval vessels “signaling that you are in Chinese territory.”
That, in Schriver’s view, is China’s “trajectory,” and the US would counter with a variety of measures, including freedom-of-navigation operations by its navy to maintain access to international waters.
Schriver called on Australia to be part of it without being too demanding, by emphasizing that: “Australia needs to work through its comfort level. We have a shared interest in support for international law, for international norms,” and he cautioned that “we have to be consistent [in countering China] — any slippage will be pocketed by China.”
The US is apparently consulting with other countries to counter China in the South China Sea and the South Pacific, although Schriver did not identify any other country that the US might be interacting with in this regard.
“In my discussions with counterparts [in other like-minded countries], there’s a sentiment that we want to co-operate” to give small South Pacific countries an alternative to China’s “predatory habits,” he reportedly said.
Combined with the emerging trade war between the two countries, the US’ determination to counter China is indicative of the worsening situation in Indo-Pacific region.
China would have preferred another five to 10 years to consolidate its position, both economically and strategically. Economically, it would have liked to broaden its economy to reduce its overdependence on exports, for which the US is a major destination.
The US’ offensive in the trade war can lead to social unrest in China from increased unemployment in export-dependent industries.
The Chinese government is sensitive to this because the Chinese Communist Party’s implied compact with its people requires that it improve economic conditions while it maintains its monopoly on political power.
The charged military situation in the South China Sea might compound domestic uncertainty.
How it will unfold is anybody’s guess.
Sushil Seth is a commentator based in Australia.
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