Simon Leitch*

Brisbane, Friday 12 June 2015 (Alochonaa): For decades China has been expanding its military and economic reach, giving it increasing diplomatic leverage year on year. Provided China does not fall into the deepest of recessions or suffer a collapse of central authority as other dictatorships have in recent years, Beijing’s authority will continue to be extended into disputed maritime zones in the South China Sea and East China Sea. Here are some reasons why:

1) China Isn’t Easily Distracted…Unlike Some

Despite the incessant talk of American decline, the USA remains the only power capable of unilaterally thwarting Chinese territorial ambitions or bringing together a coalition to do so. So when the Obama administration started talking about a ‘pivot to Asia’ many pundits started to talk up the prospects of Sino-American rivalry in the region, and the South China Sea was typically listed as a hotspot that would draw in renewed American attention. Unfortunately, rumours of an American pivot to Asia have been greatly exaggerated. In the time that the USA has been pivoting to Asia, the USA has been bombing Libya, Syria, Yemen and Iraq, bolstering the armies of the Persian Gulf in various ways, engaging in never-ending nuclear negotiations with Iran, fighting on in Afghanistan, sending special forces and drones to Africa to chase guerrillas, and, last but not least, enduring a humiliating year trying to deter Russia from dismantling Ukraine. If we add to these distractions the problems caused by economic crises and budgetary woes at home, we are left with a picture of a great power in no condition to oppose Chinese ambitions in distant waters.

Even in Asia itself there are many distractions for the USA. Disputes between China and Japan over the Senkaku Islands create a separate complication, as does the USA’s tacit alliance with Taiwan. Even North Korea, that small, backward and insular dictatorship which could easily be ignored, continues to pull Japan, South Korea and the USA into multi-year cycles of negotiations to nowhere. North Korea negotiates, misbehaves, gains concessions for its bad behaviour, misbehaves again and then goes back to negotiation to restart the cycle for the next president. Amazingly, the world continues to play along and, because of China’s role in the farce that is North Korean diplomacy, China’s diplomatic leverage is immeasurably enhanced.

2) China Uses Issue Linkage…Unlike Some

I have always admired the bravado of Chinese diplomacy. For the Chinese, despite the vague language or plausible deniability of their diplomatic threats and warnings, there are actions and there are obvious consequences. For instance, any states or organisations which formally recognise the reality that Taiwan is independent from the PRC will find themselves sanctioned immediately. Similarly, if a foreign head of state or government meets the Dalai Lama, China’s trade with that state takes a dive.

With control over its large state owned enterprises, as well as its banks and trade barriers, Beijing is easily able to punish errant states, individuals or organisations with unilateral sanctions in ways liberal-democratic states simply cannot. Witness the fumbling attempts of Western democracies at sanctioning Russia for invading Ukraine, and the multitude of industry lobby groups who beat a path to their government’s door to dissuade them from enacting costly but effective sanctions regimes.

In Beijing this doesn’t happen the same way because China’s adversarial nationalism is one of the bedrocks of the dictatorship, meaning that the regime is strengthened by standing up to foreigners in otherwise petty disputes over islands, Taiwan, the Dalai Lama or some historical controversy. The disenfranchisement of some niche industry group is irrelevant to the broader contours of Chinese politics, and the government, with control over the media, education and most of the public discourse, can easily push the blame for any economic hardship onto others (note how Russia has successfully done the same thing for the past year).

Conversely, some of China’s opponents have been trying to isolate their disputes with China from other areas of foreign policy. They want to pretend that there isn’t a dispute, build better relations and hope that somehow, miraculously, they will wake up one day to find that Beijing has forgotten what all the fuss was about. Perhaps China will democratise and suddenly drop its irredentist claims, or perhaps the leadership in Beijing will simply learn that their claims are far-fetched revise them to something acceptable to others. More fanciful, perhaps China will realise (and care) that their image and international standing is hurt by their reliance on guns and money to win arguments that could easily be settled (though not in China’s favour) by international law.

None of these scenarios are very likely. China has been doing well in its strategy of ‘creeping assertiveness’ and is paying essentially no costs for its claims. Beijing doesn’t need to change course. China’s economy has been growing incredibly fast for the past twenty years, it has sucked up the world’s manufacturing through currency manipulation, cheap labour and big infrastructure, whilst it has extracted technology through espionage, forced technology transfers and open market purchases. At no stage have its territorial claims provoked a single response that Beijing should be concerned about because only issue linkage by some major economies, or by ASEAN collectively, would make China reconsider the cost-benefit ratio to its claims – and that, I am willing to bet, will not happen now given the strength of the pro-China business lobbies.

3) China is the Rising Power, So Costs on China are Proportionately Decreasing

Let’s step into fantasy land for a moment and assume that because of China’s claims in the South China Sea other states move to sanction it. There was a time when this would really have hurt Beijing. Had the USA or Japan placed extensive unilateral sanctions on China in in the 1990s the effect would have been devastating. China’s trade was not highly diversified, its ability to retaliate with import restrictions was minimal, its foreign exchange reserves were low, its dependence on trade as a percentage of GDP was high. In other words, China’s export-led industrialisation could have been held hostage to other states demands twenty or thirty years ago, but today it is a different story.

Smaller states like Thailand, Taiwan (which controls some far off southern islands) or the Philippines have now become dependent on China as the centre of East Asian economic integration. As their economies have grown, so too has China’s but Beijing’s relative dependence on any individual trading partner has diminished. China can now source materials from all over the world and has a massive GDP with a reduced dependence on foreign trade, making it harder for unilateral sanctions to work. If one state sanctions China then China can look elsewhere for goods and services – the costs of punishing China for its behaviour cannot be shouldered by one state and a coalition probably won’t form amongst the diverse and squabbling pack of China’s rivals.

Consequently, the risks to China’s economy are mild and decreasing over time, so there is no reason to think that China will have a change of heart as it becomes more powerful and other states become relatively less capable of opposition…which brings us to issue four.

4) China Knows Risks are Minimal…Unlike Some

I am always struck by the way Western politicians implore countries like China, Russia or North Korea to stop their “risky behaviour” and use diplomacy whenever they flex their military muscle. In this case, so the story goes, China is using its military to shove oil rigs into disputed waters, harass foreign vessels, arrest fishermen and establish island bases and, somehow, this is dangerous because other states might respond with military force. In other words, China’s foreign policy behaviour might start a war and, therefore, China should restrain itself.

I have always been sceptical that other states will actually fight China over the South China Sea if Beijing sticks to its low-key, creeping strategy and pretends in all public forums to be acting conservatively. Just as I saw absolutely no risk of war in Russia’s invasion of Ukraine, and no risk of war in North Korea bombing Yeonpyeong Island, so too do I see no risk in China gradually asserting de facto control in the South China Sea. Of course, there is the possibility that if I see no risk of war then the Chinese could also see no risk of war, yet the assumption that China must necessarily realise that its actions are dangerous and should be stopped seems to drive much of the opposition rhetoric and response. Recent announcements by US Defense Secretary Ashton Carter that “everyone knows” that there is no “military solution” to the South China Sea dispute is bizarre and otherworldly, as China almost certainly doesn’t believe this for a moment – they have been progressively engaging military solutions for decades. For there to be no military solution to the dispute there would have to be the possibility of a military stalemate or serious consequences, and that isn’t likely.

Furthermore, and related to point three, is the fact that China’s military power is constantly increasing, which means the costs of fighting China rise higher year on year. Again, some of the ASEAN states could fight China in a territorial dispute but it is hard to see what they would gain. Chinese naval forces are now too strong to defeat in the South China Sea itself without American support, and American support simply will not come unless China decides to launch an unprovoked and obvious attack on American vessels or aircraft. In fact, the sinking of the South Korean corvette, the Cheonan, should demonstrate that there are ways militaristic, nationalist dictatorships that are not afraid of punishment can actually inflict damage yet avoid war.

In time, China will have control of the South China Sea, whether this is formally recognised by other powers or not. Moreover, I think it is highly likely that the PRC will one day control the Japanese Senkaku Islands for similar reasons, and it will probably blockade or sanction Taiwan into nominal submission as well. What China does when its bout of irredentism is over I cannot say, but the lines of East Asian politics for the next half century will be heavily defined by how China’s expansion into these zones pans out.

*Dr. Simon Leitch is the Editor in Chief,  Foreign Policy and International Affairs, Alochonaa. He taught International Relations and Security Studies at Griffith University.  His research interests are in foreign policy and strategy with a particular interest in the interaction of the great powers.

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