China’s lonely power

Late yesterday, the Lowy Institute released a fascinating new study by John Lee (a former colleague of mine at The Diplomat) into whether or not China will be able to convert its growing economic power into strategic dominance. Regular readers will know that the schism in Australian policy on this topic has been a bugbear of mine for some time. The Great Straddle, as I call it, is the uncomfortable position we find ourselves in with the left leg of our economic dependence  headed in one direction as the right leg of our defense posture goes entirely in the other, leaving us in perennial danger of a nasty rip in the trouser.

But there is some reassurance today from Dr Lee. He argues that the architecture of US strategic power is so entrenched and that the motives for Asian nations to trust China are so paltry that US hegemony is assured for many years to come. Here’s a snapshot:

In August 2010, China officially surpassed Japan to become the world’s second largest economy. As the Lowy Institute’s Power and Choice observes, economic size matters. China’s rise and subsequent influence is built on the back of an economy that has been doubling in size every decade for the past thirty years. As a result, the capacity of the People’s Liberation Army (PLA) ‘for sophisticated, high-intensity operations along China’s maritime periphery has improved dramatically in recent years’, while China’s ‘interests, actions and intentions are assuming prominence in the calculations of other regional powers – not only major ones like the United States, Japan and India.’

The common and generally correct assumption is that lasting strategic influence is built on the back of economic power. Today, however, Beijing is confronted with the uncomfortable reality that it has been unable fundamentally to shift the strategic alignment of even one major Asian capital. While China has emerged as the largest trading partner for countries such as Japan, South Korea, India and Australia, all these countries have begun ‘hedging’ against China’s rise, with varying degrees of intensity, by deepening strategic relations with America and each other. A similar dynamic is at work among the countries of Southeast Asia, despite the landmark China-ASEAN Free Trade Agreement coming into force in January, 2010.

By contrast, China’s only true allies in the region are weak or failing states – North Korea, Burma and Pakistan. This makes China one of the ‘loneliest rising powers in world history’. The reality of China’s relative strategic isolation suggests two related conclusions. First, America will remain the preferred security partner and pre-eminent strategic actor in the region for a number of reasons that will be difficult to alter. And second, China’s capacity for translating economic size into strategic leverage is problematic now and likely to face sharp limits into the future.

This is one of those occasional papers that inverts conventional thinking in a powerful way.

The argument holds up well, but misses a couple of points that I think are important. The first is that it assumes no serious ongoing decline in US economic clout, as least to the extent that the US military, especially navy, isn’t inhibited. In general I agree that that is unlikely. But there are still things China can do to crimp the US military-industrial complex, the most potent being to create an alternative reserve currency in the yuan.

The second is that Lee’s representation of the Chinese as a lonely power is accurate if you’re confining your view to the Pacific theatre and the likelihood or not of some direct Great Power conflict there.

It is less accurate if you look away from the Pacific. China’s Shanghai Cooperation Organisation (SCO) is a kind of proto-Nato and it’s mutual defense agreements stretch across the entire Asia continent west of China:

Moreover, the SCO includes a lot of oil reserves and holds very significant strategic positioning vis-a-vis the Middle East.

With the world approaching, at, or past, peak oil, that raises the prospect of very serious Great Power proxy conflicts in oil rich regions in the future. Whilst that’s better than open war at our doorstep, it’s still not a great prospect and may represent the tear in the trouser that I fear. What would we do if two Middle Eastern states went to war with China on one side and the US on the other? With both demanding diplomatic allegiance or else?

Third, there is a downside to Dr Lee’s assessment. Great Powers, especially rising Great Powers, have a tendency to demand a certain amount of strategic respect. If Dr Lee’s assessment of the Pacific theatre is correct, then that does not necessarily imply less conflict. I agree that the US is not engaged in active containment of China. But it has certainly surrounded it. If the respect coming from the other direction is insufficient to satiate its strategic self-regard, China may simply decide to push back one of these days, just because it can and deserves it.

Still, all of that is no doubt distant, so I’m happy to have been reassured that the national trouser is safe enough for the time being. Enjoy, Lonely Power, Staying Power:

Lee, Lonely Power_Snapshot 10

Houses and Holes
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  1. I think that the assessment of a Chinese reserve currency and retention of military dominance in the region are both unlikely. The US is going to have to make some huge budget cuts and they are likely going to leave the western pacific exposed.

    That said, I’m less than confident that China can retain a mercantalist model or manage without considerable social unrest in the years to come.

  2. China is facing a real demographic demon, unlike us (see Rumple’s post today). By the end of this century they will have a population around 500 million, having had an unfavorable demographic profile for most of the century. The US will also have a population around 500 million, having had both a favorable demographic profile and the privilege of being host to many of the best and brightest from the developing world. Guess who is going to be dominant.

  3. Two things to note about that graphic on the SCO – taken from Wikipedia by the looks of it:

    1) The green countries are the ones in formal agreement. The blue are “observer” status – this essentially leaves the members as China, Russia, and some of the former Soviet Central Asian republics. Not exactly wielding clout.
    2) Iran is the only Middle Eastern state in that block, as an observer at that, and they’re never going to be likely to get US backing. A proxy war between Iran and [other Mid-East State with significant oil reserves] would be pretty clear cut for the Australian political agenda, no matter how much we’re tied to Chinese economic interests.

    • Yes, should have made those points about the SCO.

      I’m not sure why you see China. Russia and the “stans” as lacking power.

      I’ve no doubt Australia will choose the US of A in any stoush. The historic and cultural ties ensure it, if ANZUS doesn’t. But, my point was about the price we’ll pay, not that we’d be forced to choose.

      • I don’t think that anything is ensured and I don’t see Australia as really anything other than a token ally to the US.

      • Sorry, could have made that point clearer – Russia & China have clout, but the ‘stans certainly wouldn’t make a major impact, to my mind – looks more like a former-communist bloc. None of the Euro-sympathetic former Soviet republics are participating – Azerbaijan, Georgia, Ukraine etc – and India juts out like a sore thumb in that list of countries even with observer or dialogue status. Smells much more like a cold-war-revivalist club.

        As for the price to be paid, I think that really depends on whether over the period of the current economic climate Australia chooses to double down on China or diversify.

    • United States cannot even give jobs to 300m people – most of which have chronically bad healthcare and education. USA has practically infinity other problems right now, none of which look like they will be solved anytime soon.

      I really do not see how and why USA’s population is going to increase to anywhere near 500m. If anything it will drop.

      • The U.S was in a worse state in 1939 in terms of jobs and education that it is now.

        It took them less than 5 year to turn that around. You’d be naive to write them off.

        • I wouldn’t normally write them off. But it seems to me that more and more corporates in the US are headed by bean counter and lawyer types who rush off to Washington to get some regulations bent in their favour.
          Most of Silicon valley is busy sueing each other off for silly patent infringements. Patents are created with a broad description to cover everything under the sun – the purpose is to prevent rivals from actually producing a product that remotely resemble what is described in the patent.
          And when they are not sueing each other, they are busy “restructuring” and “offshoring” to drive costs down even further.
          Even “Do not be Evil” Google has a lobbying office in Washington these days. They have mastered the Double Irish sandwich and all other accounting tricks in the book to avoid paying tax.

          • Yup invert a congressman and shake and out falls 3 lobbyists.
            How many mlionaires in congress? All of ’em although it is very hard to prove for tax purposes.

      • Immigration. Despite its problems, the US is still a magnet to all the poor of Central and South America and to the emerging middle class of developing countries. It is still a country where those with determination and a willingness to work hard can better themselves.

      • MontagueCapulet

        The USA doesn’t have to to grow economically to increase its population, it just has to be more attractive than Mexico.
        Besides, there’s almost 90 years left of the twenty-first century. The USA could go through a twenty year depression and then see another long period of progress like the post-war boom.
        I think a revitalised post-depression USA is still the odds-on favourite for the next superpower.

        • Monty,
          If I read correctly you are alluding to the US not being a super power for a small period of time, and then bouncing back?

          I can’t buy that. I just can’t swallow The US being any less than 18% of global GDP. But they must do better politically and diplomatically.

          And militarily, well WOW!

    • Maybe in George W. Bush’s universe. But not on planet earth. I won’t bother listing the many, many happy relationships between democracies and autocracries (especially those with oil). Unless you mean something other than a “realist” strategic partnership by “friends”.

      • I’d prefer the term “ally of convenience”. As Gadaffi found out, friendship can be fickle…….

        • “I won’t bother listing the many, many happy relationships between democracies and autocracries (especially those with oil)”

          Every country in the world has a happy relationship with China. But the list of China’s friends is much shorter and doesn’t include a single democracy.

          I’m not a George Bush supporter. I’m just stating an observation that’s been true throughout the 20th century – democracies and autocracies don’t trust each other. Hence China’s lonely status.

    • US & Saudi Arabia

      Countries choose the most strategic friends; ideology and system of governance is irrelevant.

  4. Global hegemony for either of these nations / competitors wont be achievable.
    Wont stop em trying though.
    V.expensive and v. futile.

  5. Yes but Vladimir Putin’s ‘Eurasian Union’ could easily swing the balance in Central Asia back from Beijing to Moscow. Also, China’s allies are erstwhile in the extreme. Burma has just reneged on an important hydroelectricity deal, Pakistan is exporting terror and polio to Xinjiang, while North Korea is more interested in milking subsidies and favours than standing by its patron.

    5,000 years of Chinese history have left its neighbours cold.

    • Hey excuse me Feller,

      Just asking for your two cents.

      Nth K is a pain in the bum regionally speaking,yeah?, how come Seoul hasn’t gone as hard as they can with diplomacy to Beijing?
      Use fair trade / technology JV or some such
      to push Sth K as a great ally.
      To sideline NK altogether.

  6. The US will remain dominant until it retains its military power, but it has to choice to make between being militarily strong or – economically strong. It won’t be both in long term.

    My bet is that it can’t contain forever the likes of Russia and China. Just as well – or will would all pay the price for bowing to a superpower!

    • “militarily strong or – economically strong. It won’t be both in long term.”

      It can if it agitates other countries.

      Lend Lease between 1940 – 1945 made it strong militarily and economically.

  7. H&H,

    Many thanks for bringing this issue up. It is something I have been thinking about for many years now. Just were how will Australia handle a situation like that politically, economically and defensively?

    I have thought of Taiwan as the trigger before. The Chinese claim it (probably legitmately as well). The US have said they would defend it. Where does that leave us?

    How do you handle a situation were our resources, which we need to sell to support the economy, are being turned into weapons against our military partner?

    • Politically, the bogan will be easily swayed. Murdoch will do the job there.

      Defensively, a piece of piss. China still doesn’t have a blue water fleet. Culture and history also indicate Indonesia will not join them. Without Indonesia, Australia could repulse any conventional Chinese threat by itself, let alone requiring U.S assistance.

      That said, I’m not saying Australia can do anything to retaliate.

      Economically it can be a bit funny. Straight away it would seem we would be surrounded by a host of neutral countries. It would be easily to ship our bulk goods to a neutral NZ, or neutral Indonesia, and have them ship away under neutral flags, and get inbound goods in the reverse manner. Obviously war-profiteering would occur and we’d be paying a premium. I would expect a violation of neutral flags from China then things would get interesting.

      Strategically our biggest risk is the NW shelf, it is very vulnerable.

      • PS first chinese aircraft carrier is in the trials ?? stage.
        How many more will there be?
        Will the Chinese go that road?

        • I’m well aware of the stage of their aircraft carrier. Our former carrier, HMAS Melbourne was still a floating vessel for some time, and used by them, they got it out of a HK scrap yard.

          However, once they have that, they will then need support vessels to create a CBF to be a threat to us, and then they will need to learn the doctrine, of which only two nations really have a working knowledge of blue water, CTOL projection.

          Anything less than CTOL will not be a threat to us.

          Now those two nations are our allies, one will not care to see them gain this doctrine efficiently. The other will be easily convinced not to share.

          Then once they do that, this staggering arms build up for a carrier battle fleet or two will see an arms race across all of east Asia. Taiwan or Japan won’t take this lightly.

          Unless the Chinese signal “No worries, we’re after the skippy poofters south of the equator”, then we’ll be conscripting for 25 submarines and 40 squadrons of aircraft.

          Then if they still progress, where are they going to land? Somewhere between Darwin and Exmouth, capture a city of two and then be faced with the logistics of a 2,500km trek across the desert against the best spec ops in the world at desert warfare.

          Seriously, we can lose the NW easily, but in conventional warfare, we are virtually invasion proof.

          • They’ll cajole / threaten us via trade.
            No need for sabres drawn or CBF steaming our way.

            However a CBF in the South China sea to impress Uncle Sam could be on the cards. Dumb but possible . Dumb because it will create an ever closer alliance between Taiwan Japan perhaps Sth Korea.
            Dumb coz Taiwan is the prize.
            The Beijing Boys will have to find another way.

          • I agree with us putting all our eggs in the one basket is another strategic weakness.

            Another reason to implement a mining tax.

            I’ve raised the point in a previous thread, but it was the last one.

            Rarely do strategic and economic interest diverge, and they are divergent in Australia that’s for sure.

            While we probably wouldn’t consider an rapport with current day China savoury, I believe its political evolution will see it akin to a Singapore on steroids. That would be much more palatable.

            That would then be an interesting scenario.

      • Thanks Rusty Penny,

        Yes, the NW shelf, that is something worth considering. Appreciate you thoughts.

        I agree China doesn’t have a blue water fleet (yet). But I suspect it is not that far off.

        Their ‘carrier buster’ missile could cause the US Fleet considerable headaches if the rumours are to be believed.

        Anyway… Hopefully it won’t happen, but it is worth thinking about.

        • Carrier busters are to the military are what the Fed Reserve regulations are to economics, fighting the last war.

          Western allies are so far progressed in UAV’s, they will soon be expendable devices launched from submarines.

          Blue water fleet, well for a nation that historically has never had it, as opposed to Australia which started the RAN in 1911 as a blue water fleet, and we learnt it from the best.

          The physical hardware is easy, the doctrines are hard. China will find out the hard way, probably pissing money up the wall hard earned by their peasants.

  8. Suppose the end game for Taiwan was writ when HK was handed back?
    The HK issue has been a grand success for Beijing.

    • Not really. The HK handover ended up being a convoluted mess the poms had no choice in honouring. The Island and Kowloon Peninsula were ceded in perpetuity, but the New Territories section was ceded to the British 60 years later under a 99 year lease. This meant an untenable situation come 1997 where HK would have been split in two, hence the handover of the whole box and dice. HK was just a convenient outpost for the poms. Taiwan on the other hand is self-governed (as opposed to HK’s benevolent oligarchy under the British) and has considerable military defences.

      • So Beijing got a good deal and HK still does what HK has always done.
        No military action involved.
        Looks like a template for Taiwan to me.
        Not that I’ll be alive to see the idea tested.

  9. Devilled Advocate

    Wow Stavros – seriously?

    You always struck me as an erudite well informed punter until this comment.

    Thats the sort of comment I would expect from a blue rinse One Nation Suppoter….


  10. Rusty Penny,

    The US has not won any war since Vietnam! It is a failing state – it can not fight a war without NATO, its economy, its currency is weakening every year.
    Oh well, nothing last for ever.

    • MontagueCapulet

      They chose not to win. By defining winning as “convincing the locals to become just like us”. If winning was defined as extermination, they could have won in a few months.
      So their “failure” is actually compassion.

      • Yeah, this is a good point. If it was like WWII where sheer metal and muscle was largely forced to be used the US would be unmatched with resources and firepower.

      • Their compassion was a woftam of epic scale.

        They could not introduce free markets to SE Asia.

        SE Asia co-invented free trade.

    • Gulf War I, and as far as needing NATO, please, the USA military is NATO, even the brits are useless now.

      It did not win Vietnam because of (lack of) political will.

      In terms of military might, there has never been a military force as omnipotent as the Americans. If there was a desire to absolutely crush an enemy, there would be nothing anyone could do about it. If based purely on military means. And even understanding MMT shows they can afford any military venture they would desire as well.

      Again, the clusterf*ck that is current day Iraq and Afghanistan is to do with their lack of real political will.

      To combat Germany and Japan, the entire country went on a war footing, and once conquered, they had massive occupation forces for up to 20 years.

      In today’s terms, that would require over 500,000 soldiers in Afghanistan for 10-20 years.

      It worked then because they had people the calibre of Roosevelt, Truman, Eisenhower and Marshall in charge. They still exist, they just aren’t in power at the moment.

      It isn’t being able to be implemented now due to the lack of political will. Like much of the western world, they want stuff without paying the proper price for it.

      Much like Britain and France was hoping not to pay the full price of quelling Hitler in 1936 to 1938, but when push comes to shove, due to their history of ingenuity, inventiveness and industry, I know who I’d put my money on.

      • “It did not win Vietnam because of (lack of) political will.”

        You may not think this if you have spent any time at all in Viet Nam, where they regard the American War as just part of a long struggle for national liberation and self-determination. The people of Viet Nam fought the French, the Japanese, the English, the Americans (and ANZACS) and then the Chinese before moving onto the Khmers. During the course of these wars, millions of lives were lost and every imaginable hardship was endured. It is a complete misreading of the conflict to say the Americans failed because they lacked will. There is no meaningful sense in which the Americans could have triumphed in Viet Nam.

        Considering the US justified their involvement on the basis that they were protecting the people from aggressors, if “victory” had come to mean killing possibly tens of millions while quelling open civil disorder at home, the “defensive” rationale would have had a very hollow ring to it. This would not have been construed as a victory so much as a repudiation of everything America claimed to represent.

        The Viet Nam War really only served to illustrate one thing: you can unleash as much death and destruction as you like, in the end peace will come. So the question of what kind of peace emerges is ultimately the most important one. For the people of Viet Nam, a peace that meant continued colonial servitude was not worth having. They fought for a hundred years for just that reason. Nothing the Americans had could possibly have changed their minds.

        In this respect, the Americans are being too hard on themselves when they rebuke themselves for having lacked will. They simply made some (tragically costly) mistakes. Eventually, they had the good sense to realize it. Fortunately for everyone, luckily they lacked the “will” to inflict completely indiscriminate annihilation on the Vietnamese peasantry.

        • There is only one rule to winning a war.

          That is to diminish the means of the enemy to wage war to zero.

          It can be done by destroying its military in the field.

          It can be done by preventing it from access to material it requires to wage war.

          It can commit efforts where the enemy and its supporting populace no longer has the will to wage war.

          Now the U.S did not do all it could to destroy the enemy in the field, otherwise it would have sent 15 million soldiers into Vietnam.

          It did not do all it could to prevent supplies, otherwise it would have belt up on China as well.

          It probably could not have averted to populace to supporting the action, unless they did punitive strikes.

          However, the statement the U.s couldn’t have won Viet Nam, I believe to be a myth to excuse the shortcomings of baby boomers involved in fighting that war.

          After the Tet offensive, the Viet Cong could not wage any more combat, it was the last roll of the dice and their manpower in the field was virtually diminished. It just so happened to diminish the support of the U.S civil populace so that the U.S could no longer wage its already poor effort. But at that point, the VC military in the field was spent.

          What was shown more to the last two, when the VC tried to push for more excesses in Paris, the U.S launched Linebacker II that the VC came crawling back. If Linebacker II was launched again and again and again, we would have easily seen a different result.

          That is purely military terms.

  11. War is never compassion. It is aggression and no political brainwashing will ever change that.
    People with basic human values don’t believe that what is happening in Iraq, Afghanistan and Libya equates ‘winning’ and ‘compassion’. It is nothing more than economic oppression in the name of democracy.

  12. The problem in the US is that their ‘social contract’ is broken. By this I mean the Reagan Promises have not delivered for Americans.

    Reagan basically talked American workers into going along with dismantling the New Deal, proposing instead to make Americans freer and better off by cutting taxes, deregulating and removing collective bargaining rights. That he was able to achieve this and make Americans feel good about themselves at the same time says a lot about the nature of American political culture. Doubtless, the end of the cold war also emboldened the right, who successfully challenged the post-war compromise and then moved to implement a neo-liberal, laissez-faire agenda in nearly every industrial society.

    Well, it’s 30 years since Ronald Reagan came to power, and you would have to say his program has failed to bring prosperity for the vast majority of Americans. Despite the digital revolution, which has transformed the basis of the US economy and propelled a 120% rise in real US GDP, real median disposable incomes in the US have barely budged at all. This means that nearly all the productivity gains of the last generation have been captured by business, while households have seen their recurrent and future incomes stagnate or slowly atrophy.

    This is a profound and multidimensional issue in America, as it is elsewhere. Fundamentally, social order and a well-functioning political structure depend on a widely shared belief that the system is a fair one – that everyone will have a reasonable chance to support themselves, take care of their families, enjoy some of life’s pleasures and have an equal say in social and political affairs. In a society in which abundance is a commonplace and democracy is birthright, these are practically universal values. And yet, the reality is that tens of millions of Americans live in poverty, even if they are in work. The proportion of working-age Americans in work is now just 58% of the total. Of these, roughly one-quarter are thought to be under-employed, while the persistence of high unemployment is the worst since WW2. Even though the recession of 2008/9 is supposedly over, incomes for most Americans are still in decline.

    In my opinion, Americans, for all their amazing energy and optimism, are developing a sense that they have been embezzled by their system. This lies at the heart of their bitter political stalemate. The antagonisms of the Tea Party and the protests of OWS, as much as the apathy and demoralization of the poor, reflect the decay of prosperity, the corruption of their political machinery and the impotence of their justice processes.

    Neo-liberal political dominance in America having institutionalized poverty and inequality, is also eroding the source of their economic vitality and will ultimately immobilize their democracy.

    This is a far bigger threat to American political legitimacy and strategic supremacy than the rise of China, India or any other emerging economy. In the end, unless America can re-work its social compact in favour of those who are now excluded and marginalized (which means, increasingly, the majority of working Americans), America will lose its unity, its sense of purpose and, ultimately, its influence in the world.

    If the imperial adventures in Iraq and Afghanistan prove anything, it is that military power has a temporary reach and, by itself, only a limited ability to effect durable change. We might say that military power is destructive, and therefore is to be feared. But it does not have creative and self-sustaining power which is the essence of economic force. In my mind, it follows that military power will prevail only if it is supported by economic capacity and political legitimacy. It therefore follows that the US must address its internal “dishesion”, if I can coin a term.

    This is a serious issue for the Republic, not only for the present time, but for the century to come.

  13. “… clusterf*ck that is current day Iraq and Afghanistan is to do with their lack of real political will.

    To combat Germany and Japan, the entire country went on a war footing, and once conquered, they had massive occupation forces for up to 20 years.

    In today’s terms, that would require over 500,000 soldiers in Afghanistan for 10-20 years.”

    What you are really saying is that in order to show you have the necessary “will”, you have to be prepared to act against your own best interests and in contradiction of everything you claim to believe.

    It is very misleading to see these matters in terms of “will” or “strength”. What is vital is to understand what interests are at stake and to match resources to their strategic importance.

    What is really very clear is that neither Iraq nor Afghanistan are strategically important to the US or, for that matter, to Australia. They are politically significant, but that is not the same thing. Picking the difference is not that hard, but making wise choices is nonetheless almost always difficult.

  14. “What you are really saying is that in order to show you have the necessary “will”, you have to be prepared to act against your own best interests and in contradiction of everything you claim to believe.”

    No, what I am saying is unless you have the will to do what is necessary, don’t start war in the first place.

    I supported the action in Afghanistan, but unless there was the will to put 1.5 million troops on the ground (U.S and allies), as well as an occupation force of 500,000 for up to 20 years, then don’t go in.

    The U.S claimed many things with Iraq, which I see as a mistake of epic proportions. None of which served their national interest, but swerved the interest of a handful of Ayn Rand acolytes.

    “It is very misleading to see these matters in terms of “will” or “strength”. What is vital is to understand what interests are at stake and to match resources to their strategic importance.”

    Very few national interests were at stake in the U.S. after 9/11 other than killing a handful of nutjobs. There was no national interest in Iraq.

    “What is really very clear is that neither Iraq nor Afghanistan are strategically important to the US or, for that matter, to Australia. They are politically significant, but that is not the same thing. Picking the difference is not that hard, but making wise choices is nonetheless almost always difficult.”

    I would say the outcome in Iraq was the worst possible outcome. Old school British diplomacy, I believe, would have seen it a massive advantage.

    However once in, Australia does have political interests in being their, and gained a lot for very little cost.