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Exploring the Prospect of China's Peaceful Emergencein East AsiaRenato Cruz De CastroPublished online: 07 Aug 2010.

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Exploring the Prospect of China’sPeaceful Emergence in East Asia

RENATO CRUZ DE CASTRO

Abstract: Using Pedersen’s concept of cooperative hegemony, this article exam-ines the prospect of China’s peaceful emergence in East Asia. It notes that Chinahas the essential characteristics to become a cooperative hegemon, spearheadingan asymmetrical federation among its neighbors in the region. It also observesthat China presently employs a number of foreign policy strategies that willenable it to effect a peaceful emergence except in one respect—its ability toaccommodate the presence and interests of two hegemonic powers in East Asia.In conclusion, the article asserts that the peaceful emergence of China is possibleif it can tactfully manage its relations with the United States with respect to Tai-wan, and develop an innovative approach in dealing with Japan, the current coop-erative hegemon in East Asia.

Key words: China, East Asia, hegemony

major development in the contemporary international system in the pastdecade of the twentieth century has been the People’s Republic of China’s

(PRC) rapid emergence as a regional power. Despite its teeming population andlarge rural/agricultural base, China transformed its command and slow-growingautarkic economy into a dynamic market-driven one that has become the world’smost formidable exporting juggernaut. To date, the PRC has attracted nearlyUS$500 billion in foreign direct investment (FDI). This has fueled an eightfoldgrowth in exports amounting to US$380 billion from 1990 to 2003.1 The Chinese

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economy is now growing at an average rate of 9 percent annually. It is expectedto be double the size of the German economy by 2010 and to surpass the Japan-ese economy, the second largest economy in the world, by 2020.2

The PRC is now a major player in the global economy and the power behindthe recovery of East Asian economies after the 1997 Asian financial crisis.China’s continuing economic growth will remain a major issue among its neigh-bors in the next few decades as it pursues a policy of projecting its “great powerstature.” Chinese officials now see the country as more in league with the majorpowers and less with those of the less developed and developing countries of theworld.3 Beijing reaffirms its readiness to embrace the current international sys-tem by establishing its foreign policy on the foundation of partnership with theworld centers of power, rather than by setting itself against them. This article ana-lyzes the prospect of China’s peaceful rise in East Asia in particular, and exploresthe prospect of its emergence as a global power in general. It tackles central ques-tions of whether the emergence of a new power will be destabilizing and what isthe likelihood that states in East Asia can and will peacefully incorporate this ris-ing power into the existing international order. Furthermore, this article examinesthe factors hindering or facilitating the PRC’s intention to exercise leadership inEast Asia in a peaceful manner. It also raises the following questions: What arethe necessary conditions for the peaceful emergence of China? What strategieshas China adopted to effect its peaceful rise? How effective are these strategies?And what are the possible obstacles to China’s peaceful emergence?

The Theory of Cooperative Hegemony

The notion of rising powers and its destabilizing consequences is the maintheme of various cyclical and long-cycle theories of international relations.These theories explain international conflicts through a time pattern whereby bigpowers dominate the system, suffer decline, and then are challenged by new andemerging powers.4 Hedley Bull maintains that the international system lacks themechanisms for peaceful change, thus states have become notoriously depen-dent on war as the agent of social change.5 Martin Wight observes that greatpowers are by nature expansive and generally refuse to lose or give up territo-ries without a struggle.6 Emerging power with its conflict-prone outcome is thesubject of Paul Kennedy’s popular 1987 work, The Rise and Fall of the GreatPowers. According to Kennedy, the triumph of any rising power and the declineof another are usually the results of lengthy fighting by these states’ armedforces.7 Kennedy notes that there is a very strong correlation between the even-tual outcome of a major war and the ability of both emerging and declining statesto accumulate and mobilize productive resources.

A Danish scholar, Thomas Pedersen, however, raises the prospect of a peace-ful and orderly power transition if an emerging power will assume the role of a

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cooperative hegemon.8 In Germany, France, and the Integration of Europe: ARealist Interpretation, Pedersen explores the possibility that an emerging powercan gradually exercise leadership through international institutions and theacceptance of other hegemons in the international system. Pedersen cites theGerman unification in the nineteenth century and Germany’s emergence in theEuropean Union after World War II as instances of a cooperative hegemony. Acooperative hegemon is usually a big state lacking the resources to act as a glob-al power on its own, thus deciding eventually to merge with regional neighborsso as to find its place in the global pecking order. Pedersen discusses the char-acteristics of a cooperative hegemon and the necessary strategies it should applyto effect a peaceful transition of power. Accordingly, a cooperative hegemonrequires: (a) a grand strategy based on the assumption that it is a relatively weakpower faced by a bigger (maybe declining power); (b) a huge population densi-ty interested in a high degree of regional institutionalization; and (c) exposedgeopolitical locations, and corollary to this, a history of conflictive relations withits neighbors. To effect a peaceful transition of power in the system, the coop-erative hegemon should form an asymmetrical federation with the other statesin the system. This process involves giving one (or two states) a special role. Inturn, this state (or two states) must be willing to share power and capable of exer-cising soft power.

The cooperative hegemon should pursue certain foreign policy strategies tomaintain the system of asymmetrical federation. These are:

1. Directional leadership—This involves the exercise of regional leadershipthrough resources and bargaining skills. A cooperative hegemon prefers to usesoft power, and relies to a considerable extent on the intellectual and entre-preneurial leadership that produces intellectual and entrepreneurial leadershipin producing intellectual capital.

2. Use of overbalance rather than the balance of power—A cooperative hegemonemphasizes cooperation; thus, it seeks to neutralize the balance of powermechanism. It avoids appearing too strong so that smaller states will not findit necessary to balance against it. An essential element in effecting coopera-tive hegemony is precisely the reduction of fear to prevent the formation ofcounter-hegemonic alliances among the smaller states.

3. Use of side-payments and power-sharing—A cooperative hegemon uses eco-nomic influence to effect cooperation from smaller states. A strategy of coop-erative hegemony expectedly includes the granting of side-payments, an effec-tive way to obtain quick results in a negotiation. Cooperative hegemony alsoimplies a willingness to share power, which is to offer an institutionalizedvoice opportunity for smaller powers. Regional powers, with a tradition ofpower-sharing and federalism, are, therefore, ceteris paribus best equipped toimplement a strategy of cooperative hegemony.

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4. Acceptance of dual hegemonies—The strategy of cooperative hegemony maybe pursued by one or two big powers in a region. A dual hegemony createsspecial problems since there will normally be an imbalance of power betweentwo powerful states in the hegemonic core. The two hegemons can be expect-ed to interact with intra-hegemonic tension spilling over into the relationshipbetween the core and the periphery and with smaller states being tempted tobalance one hegemon against the other to improve their standing in the sys-tem. The process of dual hegemons is simply difficult to maintain and man-age considering that their development might be uneven in terms of popula-tion, material resources, military power, and other forms of soft power.

China as a Cooperative Hegemon

An important characteristic of a cooperative hegemon is that it is a regionalpower with limited military but vast economic capacity and extensive extrater-ritorial economic activities. A cooperative hegemon is interested in gainingsecure access to markets of neighboring states and finds it beneficial to createan extended home market out of the national markets of its neighboring states—China fits into this category. Despite reports of arms buildups, China’s militarycapability falls short of the capacity to operate as a military hegemon, especial-ly in the maritime territory of the Asia-Pacific region.9 The People’s LiberationArmy’s Navy (PLAN) is not equipped to be more than a coastal naval forcestruggling for influence against an overwhelmingly land-based military, and lim-ited purchases of state-of-the-art equipment. China’s main strategic concerns—Taiwan’s possible declaration of independence and possible U.S. military inter-vention—might push it to resort to force. However, the PLA might find its forceshard-pressed to cope with such strategic exigencies.

The PLA’s existing force structure, operational doctrine, training, deployment,and equipment afford it little chance of winning a limited, high-tech war.10 It isstill plagued by strategic gaps, particularly in its air component, integrated logis-tical support, integrated combat system, and industrial technological support.11

Currently, China has the largest armed forces in the world (almost 3 million).However, it will find it difficult to transform the PLA into a modern military forceunless it either greatly increases military spending or drastically cuts the size ofits forces, which is politically hard to do. The PLA can defend the Chinese home-land, but its capacity for power projection and offensive action is minimal takinginto account the low quality of its forces, the logistical difficulties of mobilizingthese forces across the country’s vast expanse, and reduced focus on rearmamentand military buildup.12 China does matter militarily at a regional level, but thePLA is still constrained by several factors:13 (a) the inability to master and takefull advantage of its new and advanced weapons system from Russia; (b) the inca-pacity to implement software reforms enabling it to conduct joint operations; and

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(c) its current thrust on applying military action to coerce, if not invade, Taiwanand to prevent it from asserting its independence. It will take some time for Chinato catch up with the United States’ and Japan’s military capabilities and defensebudgets. Doing so will require massive changes in China’s military organizationand a significant shift in Chinese expenditure priorities.

Beijing sees economic growth as the key to the development of its overall, com-prehensive power, and does not simply rely on the military instrument to ensureits security. From its perspective, military power is necessary to defend China’seconomic interests and development. However, economic security cannot beobtained through the military capability alone.14 The country’s political leadershipbelieves that as China becomes more integrated into the global economy, the scopeof national security has to be broadened to include the economic aspect. Economicsecurity can only be achieved through economic growth. Chinese political leadershave formulated a three-step strategy for the country’s economic developmentbased on the projection that the Chinese economy will become a moderately devel-oped country by the middle of the twenty-first century. To accomplish this goal,Beijing attaches special importance to the creation of a favorable environment forrapid economic growth. The PRC does this by enhancing regional and global eco-nomic cooperation, diversifying its external economic links, playing the marketcard, and actively participating in regional and global production networks.

China’s participation in transnational manufacturing networks has facilitatedits emergence as a newly industrialized country. Between 1988–90 and 1995–96,China doubled its world market share for a number of exports products such asclothing, textiles, footwear, and office and computer equipment.15 This was madepossible by the fact that China’s economic growth is entwined with a new net-work of production and services that have been developed based on the linkagesof FDI in the Asia-Pacific region. The dynamic Chinese economy is part of anintra-regional economic activity particularly involving the exchange of parts,components, and other intermediate products, that reflects an intricate intra-regional networks whose production process are subdivided among differentcountries. Taiwanese and Hong Kong companies link Western investors with fac-tories in China that are contracted to manufacture electronic products exported toWestern Europe and the United States. Offshore companies also build factoriesin China. They typically concentrate on low-value-added, labor-intensive indus-tries, which represent the final stage of a production process spanning from themost industrialized global economies such as the United States and Japan to inter-mediate states such as Taiwan and China.16 There is now a sophisticated sub-regional division of labor among East and Southeast Asian economies, includingChina, in the production of electronic and electronic goods.17

Beijing has joined a number of significant global and regional economic forafor which it qualifies, such as the World Trade Organization, (WTO), the Inter-national Monetary Fund (IMF), the Asian Development Bank, the World Bank,

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the Asia-Pacific Economic Cooperation (APEC) Forum, the Asia-Europe Meet-ing (ASEM) dialogue, and the ASEAN Plus Three (APT) Process. Participationin these multilateral organizations enables Beijing to extend greater influenceover the course of economic globalization or a form of “managed” globaliza-tion.18 This move is aimed at ensuring that China’s economic opening would beachieved through a controlled process, thus avoiding indiscriminate exposure tothe global economy that could jeopardize the PRC’s economic security in thelong-run. Beijing’s membership in these economic groupings is seen by one notedSinologist as a means of “providing one of the most important channels to par-ticipating in spontaneous economic globalization, but also to allow it more spaceto exert its influence on the management of this economic globalization.”19 Chinahas become very adept in enhancing its economic security by manipulating glob-al market forces. It is now looking at Regional Free Trade Arrangements (RTAs)as means of integrating the Chinese economy to East Asia. The PRC hopes thatRTAs can further stimulate the growth of its export-driven economy since theywill lead to greater economic harmonization among member-states through insti-tutional arrangements, and foster the collective management of the internationaleconomy to prevent any crisis (contagion).20

Another important characteristic of a cooperative hegemon is that it should havea state with a high population density interested in a high degree of regional insti-tutionalization. China’s rapid economic development is fueled by its huge popu-lation. In the late 1990s, China’s 1.2 billion population was growing at the rate ofaround 1 percent per year, the equivalent of adding to the number of the Chinesepeople the population of a large European country every five years.21 A key fea-ture of the reform period of the 1980s and 1990s has been the explosive growth ofthe rural sector that led to the dispersal of industries from the urban areas. But theindustries did not really go to the rural areas but to the suburbs, causing the expan-sion of the urban centers. The reforms brought economic benefits to the cities butproduced great disparities between the largely integrated urban areas in the east-ern parts, and the fragmented, rural economies in the western parts of the country.At present, China produces 57 percent of its gross domestic product (GDP) in itseastern seaboard areas, 26 percent in the central region, and only 17 percent in thewest.22 Millions of people flock to the cities from the countryside, causing anunemployment rate of 8 percent in the cities.23 China needs to create twenty mil-lion new jobs a year to absorb the eight million people who have lost their jobs instate-owned enterprises, and absorb the millions of jobless peasants from the coun-tryside. This could only be done if China can continue and enhance its role as the“world factory.” Its high economic growth rate is highly dependent on a numberof external factors such as its exports and imports, capital inflow, and the generalcondition of the regional and global economy.

The final characteristic of a benign hegemon is that it has an exposed geopo-litical location, and a history of conflictive relations with its neighboring states.

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Throughout its history, China has considered its northern frontier as a source ofthreat, while viewing the south as an opportunity for expansion. From the northcame nomadic herders and barbaric horsemen who regularly ravaged Chinese set-tlements. In contrast, the south consisted of river basins, valleys, and plains suit-able for agriculture. The southeast region has become one of the most dynamicareas because of the economic reforms of the 1980s and 1990s. Made up of theCantonese-speaking southern coastal region of the Pearl River delta, the core hasbecome the site of Special Economic Zones (SEZs) and a haven for investmentsfrom Hong Kong. The Guangdong province has been the powerhouse of the Chi-nese economy since the 1980s. Along with Shanghai, these growth areas haveattracted high-tech and capital intensive investments from European, American,and Japanese multinationals.24

In effect, a version of the nineteenth century treaty-port pattern of economicdevelopment is reasserting itself in the twenty-first century.25 This has also madethe center of China’s rapid economic growth and development extremely vulner-able to any seaborne attack. Despite the central government’s efforts to dispersekey industries and resources to the hinterlands in the 1960s, Beijing now is verymuch concerned that northern and, more important, southeast China are vulner-able to concentrated missile and air strikes as well as maritime blockade.26 Cur-rently, China’s geopolitical thinking is underscored by Beijing’s fear that the U.S.Navy can contain growing Chinese military clout in East Asia by pinpointing andexploiting the PRC’s vulnerability in the southeast coastal region. The PLA isaware that the U.S. Navy can attack this area in case there is any Chinese attemptto forcefully assimilate Taiwan or actively consolidate its territorial claims in theSouth China Sea. China’s lack of an integrated air defense system could leave thesoutheastern region open not only to the U.S. Navy’s carrier task force, but alsoto retaliatory attacks by the Republic of China’s (ROC) Air Force. This realityexplains China’s sensitivity to any shift in the East Asian balance of power andits current efforts to maintain a minimum degree of strategic parity with the majorpowers in the region. The Chinese political leadership admits that the UnitedStates, with its forward-deployed naval forces and bilateral security alliances, isin a position to significantly affect China’s security environment.27

In addition to its Southeast seaboard, China has fourteen land borders, someof which remain problematic, since bordering states are not necessarily benignand friendly to Beijing. This geographic feature, along with the bitter memoriesof “the century of humiliation,” fostered the belief among the Chinese that theircountry would always be the target of sinister motives of other countries. Theseare actually the major powers that are interested in China’s great market poten-tial, massive source of cheap labor, rich resources, and strategically importantlocation.28 Conscious of its vulnerability, Beijing adopted a national securitystrategy primarily focused on the use of military force against perceived externalthreats. Chinese leaders, from Mao Zedong to Deng Xiaoping, have viewed the

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search for national security primarily as a matter of using military power todefend China against foreign invasion and coercion.29

From 1950 to 1979, the PRC has used military force several times to resolvea number of international conflicts. In terms of motives, Beijing’s use of forcefell under three categories: (1) to deter perceived superpower threats such asinvolvement in the Korean War; (2) to defend China’s territory from encroach-ment or to recover territories to which it laid claim; and( 3) to maintain the region-al balance of power such as the 1979 Sino-Vietnam border war. As followers ofthe realist notion that war is the extension of policy by other means, the leadersof the Chinese Communist revolution relied mainly on the use of force to ensureChina’s security and resolve international disputes. This, however, changed in the1980s as Beijing started to modernize and refine its earlier realist strategy of set-tling issues. Beijing’s current policy of attracting foreign investments and ensur-ing access to global market demands a stable international environment for Chinaand good relations with its neighboring countries. A way of pursuing this policyis resolving many border disputes peacefully and promoting diplomatic, cultur-al, and trade ties with its East Asian neighbors.30

China’s Strategies for Cooperative Hegemony

In contrast to traditional hegemony, asymmetric federation is “soft” hegemony,which is basically a reformulation of Keohane’s notion of an order in world poli-tics created by a single dominant power.31 Asymmetric federations are typicallydecentralized associations of states with a weak formal political leadership.32 Incontrast to a traditional hegemon that relies on preponderant economic resourcesand sufficient military resources to deter or rebuff potential challengers, a cooper-ative hegemon rarely possesses the same military capability and depends more ona contractual relationship with the smaller and weaker states in the federation. Asan aspiring cooperative hegemon, China utilizes four major strategies to foster eco-nomic interdependence and prevent defections from the arrangement.

Directional Leadership

Prior to the late 1990s, China’s foreign policy was characterized as generally pas-sive and reticent.33 Beijing’s sought many rights and privileges of a great powerwithout assuming a sense of leadership and the concomitant responsibilities.34 Beinga latecomer in the twentieth century international system, China was perceived asuninvolved in making rules and formulating the norms of an international systemsuitable to China’s interests.35 This changed in the late 1990s when Beijing beganplaying a less confrontational, more sophisticated, confident, and constructive rolein regional and international affairs. Adopting these changes in foreign policythrusts, it started influencing the dynamics of the East Asian affairs in limited ways.

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Beijing’s offer of a new direction for the region became manifest when itannounced and began implementing its “New Security Concept” in 1998. As thebasis of China’s new foreign policy, this framework contains the PRC’s intentionsto safeguard its independence and sovereignty, to create an international envi-ronment favorable to its economic reforms and modernization efforts, and tomaintain world peace and foster common developments. It boldly calls for theestablishment of a new world order that will ensure China’s long-term stability.The concept reiterates China’s nonparticipation in the arms race, its refusal to bedrawn into an arms race, and its stance against hegemonism, power politics,aggression, and expansionism by a single country.36 It also advocates the multi-polarization of the world and urges the United Nations to play a dominant role inthe world especially in resolving disputes through negotiations.

The new security concept provides both a vision and a direction in East Asianregional affairs in three ways. First, it offers an alternative security blueprint tothe U.S.-dominated bilateral system of alliances that has become a landmark inthe regional security terrain since the 1950s. The concept envisages a new mul-tilateral regional security framework devoid of any alliance structure.37 It indi-rectly criticizes U.S. alliances thinking, encourages Asian states to pursue poli-cies independent of U.S. hegemony, and emphasizes China’s new approaches toits East Asian neighbors with rhetoric and actions designed to weaken Americaninfluence. However, such tacit criticism of the U.S. position in East Asia hasstopped in the aftermath of 9/11.38

Second, it paves the way for an unprecedented wave of Chinese diplomaticactivism—economic, political, security, and cultural initiatives in the region.Since the mid-1990s, China has expanded the number and extent of its bilateralrelations, organized and joined various economic and security arrangements,deepened its participations in key multilateral organizations, and helped addressa number of global security issues. Chinese diplomacy has impacted on the PRC’srelations with South Korea and the ASEAN. Beijing’s willingness to accommo-date some of the political concerns of South Korea and Southeast Asian statesgenerated goodwill among the officials of those East Asian countries.39

Third, to foster new forms of relationships devoid of power politics in EastAsia, China has doubted and questioned the importance of military power in inter-national relations. Chinese officials and scholars argue that with the end of theCold War, security concerns should no longer focus on military defense. Rather,states must tackle a much wider range of security challenges, such as drug traf-ficking, terrorism, organized transnational crimes, environmental degradation,civil and ethnic conflict, and resource scarcity.40 The policy concept also calls fora widening of the parameters of security to include nonmilitary issues (such aseconomic and environmental problems), and social problems (such as poverty,natural disasters, crimes, social discrimination and unemployment).41 China nowadvocates a comprehensive security strategy in which military security is only

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one component. In fact, Beijing would rather rely on diplomatic and economicmeans to address its international security concerns, while considering militarymeans as less relevant.42 The inclusion of these nontraditional security challengesis primarily aimed at making the highly militarized/realist American approach tosecurity anachronistic, and fostering cooperation among East Asian countries inaddressing nonmilitary threats at the expense of U.S. influence in the region.

Overbalance Instead of Balancing

Cooperative hegemons seek to neutralize the balance of power mechanism notthrough counter-balancing acts but through cooperation. Faced with a more power-ful hegemon with more resources and a powerful military, a cooperative hegemonwill not form a counter-hegemonic coalition. Rather, it may set up a formalizedcooperative substructure with the regional system to neutralize the more powerfultraditional hegemon.43 Since the 1940s, China has always seen the United States andits bilateral alliances as a stumbling block to the former’s regional influence andnational security. Beijing frequently complains about the pressure generated bypower politics and a traditional hegemon, referring concretely to the United Statesand its allies’ machination of international events and trends at the expense ofChina.44 The PRC also contends that American diplomacy and military power canbe used to contain Chinese power by pinpointing and exploiting the country’s strate-gic vulnerabilities even before the PLA can respond.

To preempt U.S. efforts to geopolitically confront China, Beijing has advancedits new security concept. A key element in this concept is the establishment offriendly ties and cooperation with all countries including the United States.Although critical of U.S. hegemony, Beijing believes that the world will be unipo-lar and that U.S. preponderance will persist for decades. It maintains that Chinacannot (and will not) challenge U.S. global domination and will accept U.S. hege-monic power but not necessarily its behavior.45 Chinese military modernizationis primarily targeted at any possible exigency in the Taiwan Strait, but not nec-essarily against the overall U.S. strategic posture in East Asia, and definitely notfor any conflict in the Korean peninsula. China makes no attempt to forge anti-U.S. alliances or undermine America’s alliances in East Asia. More significant-ly, the PRC admits that many countries in East Asia basically support the U.S.role as a balancer in the region, particularly to prevent Chinese and Japanese com-petition for regional leadership.46

China did not threaten to exercise its veto in the United Nations Security Coun-cil on the Iraq issue, in marked contrast with France and Russia. Clearly, the“fourth-generation” Chinese leadership is cautious in handling bilateral relation-ships with the United States.47 American preoccupation with Iraq has not funda-mentally altered the Chinese view of the United States, as Chinese officials andanalysts re-echo that Washington should not view China as a challenger to Amer-

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ica.48 Complementing its moderate approach vis-à-vis the United States, China hasembraced multilateralism. Starting in the second half of the 1990s, China beganengaging ASEAN member-states in numerous economic and security fora. At the2003 ASEAN summit, Beijing proposed the establishment of a new security body.Under the framework of the ASEAN Regional Forum, a network will be estab-lished to increase dialogue among the East Asian armed forces. China’s efforts arecollectively considered a “Gulliver Strategy,” aimed at restricting any assertiveU.S. policy by tying it down through a multilateral framework and constraints.49

United States officials are surprised by China’s moderate approach vis-à-visAmerican preponderance in international affairs, and its acceptance of U.S. lead-ership in East Asian matters. However, they seem oblivious to China’s calculationof its subtle approach. Beijing knows that mobilizing the national economy andmilitarizing society to balance American power and influence in East Asia willprevent China from attaining its goal of comprehensive security essential to eco-nomic development. Chinese leaders are making sure that “its economic interestsare free from interruptions or threats poised by any internal or external elements.”50

They are aware that any attempt to balance the United States will be costly eco-nomically and socially. In addition, the hesitant and low-key “Gulliver” approachvis-à-vis American power enhances the PRC’s image as a responsible power. Assuch, Beijing ushers East Asia into a new era of peace and stability, and renderspower and alliance politics outdated in the region.

Side-payments and Power-sharing

Economic influence is the primary instrument that a cooperative hegemon usesto elicit cooperation from smaller states. A cooperative hegemon, thus, is expectedto apply the provision of side-payments, a quick way of effecting an asymmetricalfederation. A cooperative hegemon also should be able to share power with small-er states by giving them an institutional voice opportunity in an asymmetrical fed-eral structure in a region.51 China dispenses side-payments and provides institutionalvoice to the smaller states in East Asia through: (a) its rapidly growing economy;(b) the institution of the ASEAN Plus Three Process; and (c) the ASEAN Region-al Forum. The PRC uses its booming economy to dispense opportunities to ASEANcountries and to draw them to its growing political orbit. The progressive coastalareas of China in particular are projected to become an important market for rela-tively high quality exports of ASEAN.52 For example, Thai exports have been grow-ing very rapidly in recent years. In 2003, Thai exports to China grew by about 60percent, an indication of Thai exporters’ success in exploiting the huge and lucra-tive Chinese market. If this trend and Chinese economic prosperity continue, thePRC will become a major market for Thai exports.53 For Beijing, the significanceof bilateral trade is more than the economic value. It also includes the dependencyinvolved or how far other import sources or market outlets can be substituted.54

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In dispensing side-payments to the smaller ASEAN states, China relies on theinstitutional framework of the APT process. China’s diplomats regard the APT asthe “main channel of East Asian regional cooperation,” which signifies its rela-tive importance to other regional fora.55 Through the APT, the PRC has consoli-dated its bilateral links with the ASEAN countries. Under the Chiang Mai APTagreement, China inked an US$1.5 billion currency swap with Malaysia in2002.56 Beijing has also pledged to finance some Philippine infrastructure pro-jects and to purchase liquefied natural gas from Indonesia’s West Papua Province,a commercial deal that is valued at $US25 billion.57 The most consequential side-payment by China to the ASEAN states is its offer of an FTA.

China’s expects to complete an ASEAN-China FTA within a ten-year period.This will involve Beijing’s extensive liberalization of its market to offset the neg-ative impact of investment divergence away from ASEAN as a result of the PRC’sentry into the WTO. An ASEAN-China FTA will create the world’s largest sin-gle market, comprising nearly 1.7 billion consumers, a GDP of US$2 trillion anda two-way trade amounting to more than US$1.2 trillion. An FTA between Chinaand the ASEAN states may lead to a 48 percent increase in ASEAN exports toChina and a 55 percent increase in Chinese exports to ASEAN.58 To make its FTAproposal attractive to the ASEAN member states, Beijing is offering an addition-al concession in the form of its “Early Harvest Program,” which involves Chinaopening some sectors of its own market before the ASEAN countries would rec-iprocate. This will give the ASEAN economies a comparative advantage in cer-tain food and agricultural sectors in a relatively short-term period.59 Someobservers, however, have noted that this move is merely symbolic since this con-cession was already made by China under its WTO protocol. Also, consideringthe difficulty in implementing the ASEAN Free Trade Agreement (AFTA), themember-states may not be able to deliver their commitments under an FTA withthe PRC. Nonetheless, an ASEAN-China FTA can cement an economic relation-ship between the ASEAN member states and Beijing at the expense of Tokyo andmore significantly, the United States.60

China has relied on multilateralism to foster consultation with the smaller statesin the region. China was earlier averse to dealing with multilateral institutions. Itfeared that regional groupings could be used by some countries to punish and con-strain the PRC. During the second half of the 1990s, Beijing reinvigorated its par-ticipation in the ASEAN Regional Forum (ARF). China quickly adjusted to theARF’s incremental style by using its soft approach in containing inter-state dis-putes. In 1996, it improved deteriorating relations in Northeast Asia, with the Unit-ed States, as well as with ASEAN over the Mischief Reef Incident in 1995. Bei-jing prevented the ARF from being used as a means to balance and restrict China,boosted ASEAN’s leadership role by containing the United States and Japan, andprojected the PRC image as a good neighbor.61 To prove its point, Beijing hasbecome extremely pragmatic in managing its territorial disputes with ASEAN

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states over the Paracel and Spratly Islands. Though the PRC still clings to its his-toric claims over these islands, it is willing to settle these territorial disputesthrough peaceful means based on international law. Furthermore, after four yearsof intensive negotiations, ASEAN and China signed a declaration of code of con-duct in 2002. The declaration expresses the intention of both sides to demonstrate“restraint” in the South China Sea. Significantly, the final draft included most ofthe texts proposed by ASEAN and little of what was offered by China.62

Acceptance of Dual Hegemonies

The strategy of cooperative hegemony occurs with two or more powerful statesin the system. However, dual hegemonies create special problems since theremight be an imbalance of power between the two hegemonies and/or the biggerhegemon may not be prepared to offer the emerging cooperative hegemon nomi-nal or almost real political parity. The East Asian security equation is largely but-tressed by the United States. Immediately after World War II, the United Statesbecame proconsul for occupied Japan and a big brother for the entire region,replacing the Europeans and the Japanese in influence.63 At present, only the Unit-ed States possesses the political and military capabilities to deter military aggres-sion and thereby provide the essential foundations for nation building, economicadvancement, and regional bonding in East Asia.64 On the other hand, most statesin East Asia consider and favor the United States as the regional stabilizer, broker,and balancer.65 Since the end of World War II, the naked power of the United Statesin the region has been maintained by its preponderant maritime superiority.66

Supporting the U.S. security role in East Asia is Japan. Washington considersTokyo as the cornerstone of American strategy and defense posture in East Asia.The creation of a stable, friendly, and economically powerful Japan that wasclearly subordinate to, and dependent on, the United States has been a funda-mental American goal since the early 1950s.67 Dependent on the American secu-rity umbrella, Japan has emerged as the cooperative hegemon because of itscumulative investment and economic assistance to, and trade relations with, theEast Asian states.68 Tokyo’s coordination and orchestrating efforts align thediverse interests of East Asian states to form consensus on to intraregional andglobal economic issues.69 When the Cold War ended in the early 1990s, China’semergence as a potential regional power, the nuclear crisis in Korean Peninsula,and the current U.S. war on terror, have slowly pushed Japan to increase its mil-itary capabilities and assume a more active security role like a traditional hege-mon. Tokyo has modernized the Self-Defense Force (SDF) and has engaged in alimited range of security missions. However, it continues to rely on the UnitedStates for its traditional security requirements.70

As a potential cooperative hegemon, Beijing considers a strategic engagementwith Washington as encouraging and sees the need to participate in managing the

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region with the United States.71 Chinese officials acknowledge Washington’spower and leadership in East Asian affairs. This recognition of the Americanhegemonic position and unique status in the post–Cold War era, Beijing believes,will make the United States more accommodating of the Chinese mainland’sinterests in the Taiwan issue. The PRC considers Taiwan as a province. China hasalways kept military pressure on the island to prevent it from asserting its inde-pendence. Beijing has announced that it will use every possible means, includingforce, to preserve its national territorial integrity.72 However, Washington willnever give Beijing carte blanche with regards to Taiwan. United States policy isfocused on preventing a worst-case scenario in which Beijing invades the islandto settle the problem.73 Washington sees China as bent on modernizing its mili-tary forces, both to improve its ability to win a conflict over Taiwan and to counterAmerican high-tech capabilities in case the United States intervenes in a cross-strait crisis.74 Any Chinese military action against Taiwan will undermine a veryimportant United States interest in East Asia—the need to limit Asia-Pacific con-flicts that could escalate into large-scale regional wars.75 As East Asia’s traditionalhegemon, the United States regards even the smallest change in the status quo inEast Asia with suspicion.76 Any effort by China to alter the status quo by launch-ing military action against Taiwan will be construed in Washington not only as aserious military challenge to American strategic might but as a blatant attempt bythe PRC to increase its influence in East Asia at the expense of the United States.Washington suspects that Beijing’s increasing military budget is earmarked for aplan to roll back America’s military presence in East Asia. Taiwan is the singlemost important issue causing tension in U.S.-China relations in the past fivedecades and it will continue to be a bone of contention for both countries far intothe twenty-first century.

Another issue that will test China’s resolve to effect an asymmetrical federa-tion in East Asia is its abnormal relations with the region’s reigning cooperativehegemon—Japan. Beijing and Tokyo established diplomatic relations in Sep-tember 1972, when the latter broke official ties with Taipei and signed a com-muniqué recognizing the PRC as the legitimate Chinese government. Conse-quently, economic ties dominated the Sino-Japanese relationship focusing onmarket exchange, raw materials exploitation, disbursement of official develop-ment assistance, and technology transfer. However, this relationship graduallychanged as the two countries became powerful and assertive almost at the sametime. As strategic competitors, the two countries created an unprecedented situ-ation in the East Asian security equation.

China views Japan as a major rival for control over the maritime territory itclaims, and as an increasingly powerful offshore balancer challenging its emer-gence as the region’s foremost power. Specifically, Beijing is concerned thatJapan will soon become a major military force that can counter or balance China’srising power.77 China also fears a U.S.-Japan cooperation on missile defense tech-

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nology, which could be shared with Taipei.78 Japan’s attitude toward China ismore complicated. On the one hand, Japan welcomes China’s rapid economicgrowth, which can lead to greater economic cooperation between the two coun-tries. On the other hand, Japan is apprehensive not only of a rising China but alsoof a nuclear-armed North Korea and the tension over the Taiwan Strait. Respond-ing to these threats to regional security, Japan agreed to develop, with the Unit-ed States, its missile defense system, as well as its maritime and air capabilities.These developments have bared the necessity of amending the constitutional lim-its on the improvement and deployment of the Japanese maritime self-defenseforce. The slow changes in Japan’s defense policy and posture reflect the pre-vailing wary attitude in the country toward China—it is unlikely for Tokyo to fullyembrace Beijing’s stated pacific intentions until Chinese military doctrine,deployments, and force improvement reflect its genuine peaceful intention.

Conclusion

Beijing can emerge as a peaceful and cooperative power except in one veryimportant aspect—its ability to resolve its disputes with East Asia’s current hege-mons. Beijing sees the United States as a global and traditional hegemon in EastAsia and is willing to share management of the region with Washington. How-ever, Beijing is asking for a concession that Washington will never give—a freehand in resolving the Taiwan issue. Certainly, Beijing will encounter difficultiesin managing any potential U.S. military intervention in a crisis. Thus, it is mod-ernizing its military forces to deter Taiwan from declaring independence, and tothwart any U.S. military action in a crisis scenario. This arms modernization, inturn, is interpreted in Washington as part of Beijing’s long-term goal of easingthe United States out of East Asia. China’s abnormal and tense relation with thecurrent cooperative hegemon—Japan—can also derail Beijing’s quest for apeaceful rise. China has been less accommodating to Tokyo than toward Delhi,Seoul, and the ASEAN states. On one hand, China sees Japan as major competi-tor for leadership in East Asia and an increasingly powerful and assertive offshorepower that can contain China in the future. Japan, on the other hand, sees a ris-ing China, along with other regional concerns, as a grave threat to its security.Consequently, Japan has found it necessary to strengthen its security alliance withthe United States. In addition, Beijing’s erratic relationship with Tokyo poses aunique and complicated problem for China’s peaceful emergence in East Asia.

Any mismanagement of China’s relations with the United States and Japanmay undermine its efforts to emerge as a major power in East Asia. As historicalcases can attest, power transition is a very delicate process. The emergence of anew power will eventually alter the configuration of relative power in the system,presenting the status quo and small powers with both dangers and opportunities.It is ideal if this process occurs in a slow, incremental, and stable manner, and

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never in an atmosphere of crisis and tension. However, China’s unaccommodat-ing behavior vis-à-vis Taiwan and Japan raises the following questions: (a) IsChina a rising status quo or a revisionist power?; (b) If China is indeed a risingrevisionist power, what is the extent and nature of its revisionist demand?; (c) Willthe rising power develop the capability, and more important, the intention tochange the system by the force of arms?; and (d) How, if at all, can the risingstate’s desired changes affect the interests of the other powers in the region?

As the emerging power, China needs to assure East Asian states that its exter-nal strategy to emerge as a regional power is reasonable and legitimate. Region-alism in East Asia dictates that China cannot simply adopt a cynical view regard-ing its ascendancy nor apply naked force to effect the necessary changes in theregion. Beijing has to use an innovative, moderate, and flexible approach in man-aging the Taiwan issue with the United States and in dealing with Japan. If thePRC can develop and implement an appropriate strategy in handling Taiwan andJapan, then it can be likened to a “skillful leader that can subdue its protagonistwithout fighting, capture cities without laying siege to them, and overthrow king-doms without lengthy operations in the field.”79

NOTES

Paper presented at the international conference on China’s Peaceful emergence in East Asia, Febru-ary 25–26, 2005, 4th Floor Yuchengco Seminar Room, Don Enrique T. Yuchengco Building, De LaSalle University, 2401, Taft Avenue, 1004 Manila.

1. David Hale and Lyrin Highes Hale, “China Takes Off,” Foreign Affairs 82, no. 6 (November/December 2003): 36.

2. James F. Hoge, “A Global Power Shift in the Making: Is the United States Ready?” ForeignAffairs 84, no. 4 (July/August 2004): 2

3. Evan S. Medeiros and M. Taylor Fravel, “China’s New Diplomacy,” Foreign Affairs 82, no. 6(November/December 2003): 32.

4. James E. Dougherty and Robert L. Pfaltzrafff, Jr., Contending Theories of International Rela-tions (New York: Addison Wesley Longman, 1997).

5. Hedley Bull, The Anarchic Society: A Study of Order in World Politics (New York: ColumbiaUniversity Press, 1995).

6. Martin Wight, Power Politics (Middlesex, UK: Penguin, 1979).7. Paul Kennedy, The Rise and Fall of the Great Powers (New York: Random House, 1987).8. Thomas Pedersen, Germany, France and the Integration of Europe: A Realist Interpretation

(New York: Pinter, 1998).9. Stuart Harris, “The People’s Republic of China’s Quest for Great Power Status: A Long and

Winding Road,” in China under Jiang Zemin, ed. Hung-mao Tien and Yun-han Chu (Boulder, CO:Lynne Rienner, 2000).

10. Wu Xinbo, “China: Security Practice of a Modernizing and Ascending Power,” Asian SecurityPractice: Material and Ideational Influences, ed. Muthiah Alagappa (Stanford, CA: Stanford Uni-versity Press, 1998).

11. Harris, “The People’s Republic of China’s Quest,” 168.12. See David Bachman, “Military Modernization and Civil-Military Relations in China: Toward the

Year 2020,” American Asian Review 19, no. 3. (Fall 2001): 1–14. http://proquest.umi.com/pdweb?index=246&sid=6&srechmode=1&.

13. See Bates Gill, “China as a Regional Military Power,” Does China Matter? A Reassessment, ed.Barry Buzan and Rosemary Foot (London: Routledge, 2004).

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14. For a comprehensive discussion of China’s notion of comprehensive security see Richard Weix-ing Hu, “China’s in Search of Comprehensive Security,” Twenty-First Century World Order and theAsia Pacific: Value Change, Exigencies, and Power Realignment, ed. James C. Hsiung, 309–25 (NewYork: Palgrave, 2001).

15. Amar Bhattacharya, Swati Ghosh, and W. Jos Jansen, “Has the Emergence of China Hurt AsianExports?” Applied Economics Letter 8 (2001): 4.

16. See Shaun Breslin, “China in the Asian Economy,” Buzan and Foot, eds., 114–15.17. Yu Chen and Edward K. Y. Chen, “Geoeconomic Implications of China’s Emergence for East

Asia—With Special Reference to Hong Kong,” (unpublished monograph, February 3–4, 2004), 5.18. Thomas G. Moore, “China’s International Relations: The Economic Dimension,” The Interna-

tional Relations of Northeast Asia, ed. Samuel S. Kim, 125 (Lanham, MD: Rowman and Littlefield,2004).

19. Samuel S. Kim, “China in World Politics,” in Buzan and Foot, eds., 49–50.20. Zhang YunLing, “China’s Economic Emergence and Its Impact,” (unpublished monograph, Bei-

jing: Institute of Asia-Pacific Studies, Chinese Academy of the Social Science, 2004).21. Alan Hunter and John Sexton, Contemporary China (New York: St. Martin’s, 1999).22. Hale and Hale, “China Takes Off,” 41.23. Ibid., 41.24. Ibid., 92.25. Hunter and Sexton, Contemporary China, 63.26. William T. Tow, Asia-Pacific Strategic Relations: Seeking Convergent Security (New York: Cam-

bridge University Press, 2001).27. Wu, “China: Security Practice,” 135.28. Ibid., 116.29. Hu, “China’s in Search of Comprehensive Security,” 311.30. Wu, “China: Security Practice,” 121.31. Hunter and Sexton, Contemporary China, 178.32. Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy

(Princeton: Princeton University Press, 1984). 33. Pedersen, Germany, France, and the Integration, 48.34. Medeiros and Fravel, “China’s New Diplomacy,” 22.35. Ibid., 24.36. Ministry of Foreign Affairs of the People’s Republic of China, “Main Characteristics of China’s

Foreign Policy,” http://www.china-embassy.org/eng/zmgx.zgwjzc/t35077.htm.37. Remy Davison, “China in the Asia-Pacific,” in The New Global Politics of the Asia-Pacific, ed.

Michael K. Connors, Remy Davison, and Jorn Dosch, 63 (New York: Routledge, 2004).38. Robert Sutter, “Asia in the Balance: America and China’s Peaceful Rise,” Current History 103,

no. 674 (September 2004): 285.39. Ibid., 284.40. Hu, “China’s in Search of Comprehensive Security,” 312.41. Ibid. 42. Wu, “China’s Security Practice,” 154.43. Pedersen, Germany, France, and the Integration, 50–51.44. Wu, “China’s Security Practice,” 137.45. Medeiors and Favel, “China’s New Diplomacy,” 33.46. Alastair Lain Johnson, “China’s International Relations: The Political and Security Dimensions,”

The International Relations of Northeast Asia, ed. Samuel S. Kim (Lanham, MD: Rowman and Lit-tlefield, 2004).

47. Davison, “China in the Asia Pacific,” 65.48. Sutter, “Asia in the Balance,” 286.49. Ibid., 287.50. Hu, “China’s in Search of Comprehensive Security,” 313.51. Pedersen, Germany, France, and the Integration, 55.52. Chalongphob Sussangkarn, “The Emergence of China and ASEAN Revitalization,” Annual Bank

Conference on Development Economics Europe (Brussels, Belgium, May 10–11, 2004), 5.

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53. Ibid., 6.54. Harris, “The People’s Republic of China’s Quest,” 59.55. Moore, “China’s International Relations,” 118.56. Davison, “China in the Asia Pacific,” 60.57. Ibid., 60.58. Ibid. 59. Sussangkarn, “The Emergence of China,” 7.60. See Eng Chuan Ong, “Anchor East Asian Free Trade in ASEAN,” Washington Quarterly 26, no.

2: 57–72.61. Barry Buzan, “How and to Whom Does China Matter?” Buzan and Foot, eds., 155.62. Medeiros and Fravel, “China’s New Diplomacy,” 26.63. James C. Hsiung, “The Asia Pacific Region: Challenges in the New Era,” Twenty-First Century

World Order and the Asia Pacific, ed. James C. Hsiung (New York: Palgrave, 2001).64. Roger Buckley, The United States in the Asia-Pacific since 1945 (Cambridge: Cambridge Uni-

versity Press, 2002), 221–22.65. Jorn Dosch, “The United States in the Asia-Pacific,” in Connors, Davison, and Dosch, eds., 28. 66. Ibid.67. Muthiah Alagappa, “International Politics in Asia,” in Alagappa, ed., 89.68. See Richard F. Doner, “Japan in East Asia: Institutions and Regional Leadership,” Network

Power: Japan and Asia, ed. Peter J. Katzenstein and Takashi Shiraishi (Ithaca: Cornell UniversityPress, 1997), 197–233.

69. Ibid., 199.70. See Thomas Berger, “Japan’s International Relations: The Political and Security Dimensions,”

Kim, ed., 135–69.71. Harris, “The People’s Republic of China’s Quest,” 173.72. Wu, “China’s Security Practice,” 152.73. Chen Jian, The China Challenge in the 21st Century: Implications for U.S. Foreign Policy (Wash-

ington, DC: United States Institute of Peace, 1998), 18–19.74. See James F. Hoge, Jr. “A Global Power Shift in the Making,” Foreign Affairs 83, no. 4

(July/August 2004): 5.75. Tow, Asia-Pacific Strategic Relations, 173.76. See Ivan Eland, “Is Chinese Military Modernization a Threat to the United States?” Policy Analy-

sis 465 (January 23, 2003): 4. 77. Sebastian and Martin Fackler, “Marching on to a New Role,” Far Eastern Economic Review 167,

no. 2 (January 15, 2004): 19.78. Christian Caryl, “Fuel to Fire,” Newsweek, November 29, 2004.79. Sun Tzu, The Art of War, ed. James Clavel (New York: Dell, 1983), 16.

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