Two years ago, our friend Michael Auslin published The End of the Asian Century. Michael argued that, contrary to conventional wisdom, Asia is not on its way to global domination and China is not on its way to displacing the U.S.
Now, in an essay for Foreign Policy, Michael finds that the prospects for Asia in general, and for China in particular, have diminished further since he published his book. China’s decline seems undeniable, as does President Trump’s contribution to it:
Donald Trump’s trade war with Beijing, including 25 percent tariffs on nearly half of China’s exports to the United States, accelerated China’s economic decline. The country’s growth rate last quarter was the slowest in nearly three decades, since its economy took off in the early 1990s. Even if the 6.2 percent growth figure can be trusted, it reveals not only the effect of Trump’s trade actions but the general weakness of an economy in which meaningful reform has stalled and inefficiencies are as prevalent as ever.
Chinese exports to America have collapsed. Its exports to the rest of the world have shrunk, too. Meanwhile, dozens of major companies, from Google to Dell, are reducing or eliminating their production in China, exacerbating the slowdown and reshaping global supply chains.
Worse for China’s economic future, perhaps, is a recent report that the country’s total debt, from corporations, households, and the government, now tops 300 percent of GDP—and much of it is caught up in opaque and complicated transactions that could become a ticking time bomb.
China also faces non-economic challenges:
China’s ongoing attempts to squeeze Hong Kong and Taiwan’s democracies reveal just how tenuous political stability in the region really is. In Hong Kong, seven weeks of anti-China, pro-democracy protests are coming dangerously close to forcing Beijing to decide whether or not to intervene. If it deploys troops to restore order, it could lead to the bloodiest clashes since Tiananmen Square 30 years ago.
The rest of Asia has taken note. “China’s economic slowdown, increasing repression at home, and threatening behavior in the South China Sea and elsewhere are making Asian nations warier of the power than ever before,” Michael explains.
How should the U.S. respond to the opportunity presented by China’s woes?
Washington should unabashedly offer an economic alternative, such as greater development aid and fair bilateral trade with strategic nations. Along with allies like Australia and Japan, and partners like India, now is also the time to attempt to build a maritime alliance of interests that more closely links together regional navies and coast guards with U.S. and allied forces. U.S. Secretary of State Mike Pompeo’s new Commission on Unalienable Rights, which focuses on the role of human rights in U.S. foreign policy, offers another potential building block for a community of like-minded nations throughout Indo-Pacific.
Is President Trump capable of pulling this off? Given his heavy-handed approach to dealing with our allies, I’m not sure. However, Trump’s approach to China has been the correct one, and if a Democrat replaces him in 2021, the U.S. will be back in the business of making life easier, not harder, for our Chinese adversaries.