South Korea

China’s cash and American troops are inspiring fine balancing act from US allies in East Asia

David Zweig says China’s economic clout and America’s security commitments are factors as Australia, South Korea and the Philippines try to keep both world powers on their side

PUBLISHED : Sunday, 30 July, 2017, 4:32pm
UPDATED : Sunday, 30 July, 2017, 5:18pm

China’s rise within an international system dominated by the US has dramatic implications for all of East Asia. Unlike during the cold war, when states had to choose between the United States and the Soviet Union, most countries in East Asia today find themselves as the third corner of a triangular relationship between themselves, the US and China.

How they balance those ties will greatly affect the shape of the region in the coming years.

The American corner exudes military strength, as the US “hegemon” remains the key ally of many countries in the region. Some alliances, established in the 1950s, ­survived the collapse of the Soviet Union. So, while the US remains an important economic partner for the region, its primary function is to protect its allies from external threats. Even Vietnam, Myanmar and Indonesia, who are not America’s security allies, see US ties as a hedge against China.

The last corner, China, is now the major trading partner of most countries in the region; the “Belt and Road Initiative” will only intensify its ­regional economic leverage. Moreover, China now uses its economic clout as leverage over states in the region, hoping to get their ­foreign policy decisions to coincide with Chinese interests.

Three countries highlight the ongoing dynamic. Australia, South Korea and the Philippines are all formal American allies, and US troops enhance their national security. All three also depend on Chinese trade and investment for their economic well-being. Yet the trio respond somewhat differently to these external pressures.

Australia is the most conflicted of the three. Under the 1951 Australia-New Zealand-US (ANZUS) Security Treaty, its military ties with the US remain vibrant. Australia responded to Barack Obama’s “pivot” to East Asia by agreeing to rotate 2,500 US marines through Darwin. Prime ministers from Kevin Rudd to Tony Abbott and Malcolm Turnbull have criticised Chinese activity in the South China Sea. Australia is also building nine submarines to ­enhance its ability to coordinate ­naval activity with the US.

Australia’s dependence on China’s economy is astonishing

As well, Australia’s dependence on China’s economy is astonishing. In 2016, nearly 33 per cent of exports went to China, far more than any other major country in the region. Chinese purchases of raw materials shielded Australia from the 2008 global financial crisis. A powerful business lobby supports China, while shifts in Chinese gross domestic product directly affect key Australian companies and their stock prices. Not surprisingly, some Australian officials have expressed somewhat pro-China positions that are at odds with US perspectives.

In 2004, foreign minister Alexander Downer, after meeting Chinese premier Wen Jiabao ( 溫家寶 ), denied that ANZUS committed Australia to fight alongside the US in the event of a US-China war over Taiwan; however, the George W. Bush administration forced prime minister John Howard to nullify that assertion.

Just as the Howard government gave China one of its key global goals, “market economy status”(Australia is the only US ally to have done so), in 2013, prime minister Julia Gillard established a renminbi-Australian dollar swap mechanism that treats the renminbi as a reserve currency, weakening the US dollar. Her defence white paper did not mention China as a military threat to Australia or the region. In line with Australia’s debate over its “China choice”– accommodate China’s rise or join the US in containing it – in 2013, foreign minister Peter Varghese said: “China has every right to seek greater strategic influence to match its economic weight”, and that peace will depend in part on “the extent to which the existing international order intelligently finds more space for China”. Still, Australia ­remains committed to ANZUS.

South Korea’s defence treaty with the US dates back to 1953, and 30,000 US troops are stationed there to deter a major North Korean attack. Former president Park ­Geun-hye deployed the US Terminal High Altitude Area Defence (THAAD) system to shoot down the North’s missiles, and large annual joint military drills are held every year. While some Koreans, including current president Moon Jae-in, prefer a softer line towards the North, that state’s military threat keeps the South firmly within the US security orbit.

China’s use of its economic power to punish South Korea for trying to enhance its own security has backfired

But last year, China was South Korea’s largest trading partner, taking 25.1 per cent of its total exports. China is a key source of tourists for Korea, while Koreans form the largest contingent of foreign students in China. And Korean enterprises ship cheap goods manufactured in China back home.

China, worried that THAAD undermined its own security, ­inflicted serious damage on the Korean economy to force it to place China’s security over their own, and that of the US. President Moon, a leftist who wants Chinese support for his moderate approach to the North, has halted further deployment of THAAD and, due to his own ideological predilections, may dismantle the programme entirely. But China’s use of its economic power to punish South Korea for trying to enhance its own security has backfired: today, more Koreans hate China than hate their traditional target of animus, Japan.

Events in the Philippines have been the most quixotic. Then president Benigno Aquino, a stalwart supporter of US security ties, responded to Obama’s “pivot” by giving the US access to five airfields, several of them a short jump from reefs claimed by China in the South China Sea. In 2014, with strong US support, he challenged China’s claim to much of the sea at the Permanent Court of Arbitration, ratcheting up his face-off with China.

However, although Philippine dependence on China’s economy lags well behind the other two states – exports to China are only 10.8 per cent of the total – economic opportunities presented by improved China ties are enhancing relations.

President Rodrigo Duterte came to power determined to challenge Beijing on its claims in the South China Sea. But within months, he created his own pivot, announcing that he would “distance” himself from the US and lean to China.

Philippines drops tough talk against China to hail new era of economic ties

He set aside the arbitration court’s historic rejection of China’s “nine-dash line”, leaving sovereignty aside. Duterte seeks huge Chinese investment in infrastructure and fishing rights in the waters off Scarborough Shoal, which China had blocked. According to the Philippine trade minister, this “realistic and practical” approach to China yielded quick benefits, as exports to China and Hong Kong grew in the first six months of 2017 by 34 per cent, while the Philippines’ global exports grew by only 14 per cent.

While Manila’s military and foreign affairs bureaucracy prefer strong links with America, expanded trade and investment, and a more moderate Chinese position on its territorial disputes with the Philippines, could further weaken Philippine relations with the US.

Duterte obtains dual defence support from China, US

Clearly, China’s economic clout and America’s security commitments are factors, as these states balance ties with both powers.

Nevertheless, leadership changes shift each state’s position within the triangle. Who governs Australia shapes the country’s “China choice”. In South Korea, shifts between leftist and rightist leaders, whose strategies towards the threat from the North differ, best explain how it manages relations with the two world powers. Finally, Duterte’s dislike of America and his desire to enhance domestic economic growth has triggered a massive redirection in the Philippine-US-Chinese triangle.

David Zweig is chair professor of social science and director of the Centre on China’s Transnational Relations at the Hong Kong University of Science and Technology