Thayer Consultancy Background Brief

ABN # 65 648 097 123

China-United States Rivalry in
North-East and South-East Asia
June 28, 2018

We are preparing a report on how China may be modifying its policies to become more
accommodating towards North-East and South-East Asia in response to escalating
friction with the United States over trade and increased rivalry in both regions. We
request your assessment on the implications of this shift.
Q1. Do you think China-U.S. rivalry in North-East and South-East Asia is intensifying?
ANSWER: The trends are mixed. On the positive side, China and the United States
share an interest in the complete denuclearization of the Korean peninsula,
preventing a trade war and avoiding naval and air incidents in the South China Sea.
On the negative side, China has declared that both Taiwan and the South China Sea
are “core interests.”
The Trump Administration is required by the Taiwan Relations Act (passed after the
U.S. recognized the People’s Republic of China,) to provide arms of a defensive nature
to Taiwan and for the Defense Department to prevail in a conflict with China. Congress
has passed the National Defense Authorization Act 2018 providing for arms sales to
Taiwan and for the U.S. to participate in combined military exercises with Taiwan.
Another Congressional act provides for U.S. officials to travel to Taiwan.
Both China and the United States are at loggerheads over the South China Sea. Xi Jin-
ping reiterated that it was a core interest and China would not give up one inch of
sovereignty. This may be viewed as a bit of posturing as the U.S. is not asking China to
give up any territory. Rather, the U.S. is opposed to recent militarization by China
including the installation of electronic jammers, anti-ship cruise missiles and surface-
to-air missiles in the Spratly and the temporary deployment of a nuclear capable
bomber to Woody Island in the Paracels.
China accuses the U.S. of militarization through stepped up freedom of navigation
operational patrols. The Trump Administration has conducted seven, more than
double that of the Obama Administration. The Trump Administration is also
conducting continuous bomber presence patrols over the South China Sea with B-52s
and B-1 stealth bombers from Guam flying towards China’s east coast and operating
in the waters around Okinawa. Two B-52s based on Diego Garcia in the Indian Ocean
have also overflown the South China Sea. And the U.S. has deployed up to three carrier
Battle Groups to the region, including one now visiting the Philippines.
 2

Given unresolved tensions over China’s trade surplus with the U.S. and U.S. tariffs on
Chinese goods it looks like tensions will continue to simmer if not rise.
Q2. Is China tweaking its policy towards ASEAN countries to be even friendlier - after
it softened its hard-line stance towards the Code of Conduct following the Arbitral
Tribunal ruling - as a result of this? What areas will this be, would it be in muscle flexing
e.g. in sending fewer ships to areas of contention in the South China Sea such as
Scarborough Shoal or protesting less over Vietnam's oil exploration activity? Or would
it be through giving more aid or speeding up Belt and Road projects?
ANSWER: China definitely changed policy towards the ASEAN states after the Arbitral
Tribunal ruling. It agreed to consultations on a Code of Conduct that led to a
Framework of a COC. This is now being discussed at a meeting just held in China.
Possibly two more meetings will be held this year. China is using these negotiations to
cut the U.S. out of the picture.
At the same time, China maintains its present posture with the rotational deployment
of both Coast Guard vessels and military warships to the South China Sea, especially
in waters around the Spratly islands. As noted above, China has continued to militarize
its artificial islands arguing this is defensive in nature.
China uses its military and para-military ships to intimidate littoral states. China uses
economic inducements towards the Philippines. China also uses political and
diplomatic pressure on Vietnam to stop oil exploration in the waters around Vanguard
Bank.
The signature policy of Xi Jin-ping is, of course, the Belt and Road Initiative. China
hopes to win over regional states with offers of infrastructure investment and
economic inducements. Nonetheless, China is unlikely to reduce its paramilitary and
military presence in the South China Sea.
Q3. How do you see countries in the region responding? Would they be happy to
accept what China has to offer?
ANSWER: According to U.S. officials, regional states are expressing their concerns over
China’s military activities and growing political influence to the United States. This is
obviously done in private. Vietnam is the most vocal in opposing Chinese militarization
and welcomes U.S. freedom of navigation patrols. It is significant that Vietnamese
military personnel are participating in the current Rim of the Pacific Exercises in
Hawaii.
There are divided signals coming from the Philippines President Duterte has adopted
a non-provocative stance towards China, while defence and some diplomatic officials
voice public concern over China’s actions such as seizing the fish catch of Filipino
fishers in the waters around Scarborough Shoals. Other officials have voice concern
over China’s militarization of its artificial islands. Duterte is mulling joint oil exploration
with China.
Malaysia’s newly elected Prime Minister Mahathir has called for the reduction of
warships in the South China Sea and advocated the use of smaller patrol boats to deal
with piracy. Mahathir may be voicing indirect concerns about the permanent
 3

deployment of Chinese ships near Luconia Shoal. He has also staked a claim to 4 or 5
features calling them Malaysia’s.
All states in Southeast Asia will review any Chinese offer of assistance and investment.
But the widespread anti-China demonstrations in Vietnam indicate that Vietnam will
be less enthusiastic than other ASEAN members.
Q4. Do you see countries in the region leaning towards China because of its overtures
and because of the unpredictability of Donald Trump and therefore their uncertainty
over the U.S.' policy towards the region?
ANSWER: Not all of ASEAN’s members are responding in the same way. Cambodia and
the Philippines have chosen to bandwagon with China, the former with greater
intensity than the latter. Laos and Myanmar have also trimmed their sails to
accommodate China’s economic influence.
U.S. criticism of Cambodia over undermining democracy, and Myanmar, over the
Rohingya issue, have put obstacles in the way to better relations with Washington.
Donald Trump’s unpredictability is one factor but his protectionist policy towards
trade is the major factor influencing regional states. Some ASEAN members have
joined the TPP II, while all ASEAN members support the Regional Comprehensive
Economic Partnership initiative. The oppose protectionism.
Q5. What do the countries in the region stand to gain with this increase in rivalry
between the U.S. and China? What do they stand to lose?
ANSWER: A senior Vietnamese officials once explained Vietnam’s view to me in this
way. Vietnam prefers the “Goldilocks formula.” U.S. China relations should not be too
hot (friendly) or too cold (hostile). Either extreme puts pressure on Vietnam to take
sides or being marginalized. Vietnam would prefer to leverage differences between
Beijing and Washington to its own advantage and thus prefers to leverage off
differences between them.
The Philippines hoped to gain economically from closer relations with China and to
benefit from an improved attitude by Beijing towards Manila. President Duterte
harbors deep suspicions about the United States alliance; he is being wooed by the
U.S. at present. But the Philippines does not have a strategy like Vietnam to leverage
off China-U.S. differences.
All regional states stand to lose if China-U.S. rivalry increases tensions and if a trade
war breaks out as a result. China-U.S. rivalry threatens to marginalize regional states
and ASEAN as well. No regional state, with the possible exception of Cambodia, wants
to be forced to choose side. U.S.-China rivalry divides ASEAN members and thus
undermines ASEAN centrality in Southeast Asian affairs.
Q6. What about the North-East Asian countries the Koreas and Japan, how much
would they welcome a friendlier China? Overall, how will the increasing rivalry
between China and the US impact on each of these countries?
ANSWER: Both South Korea and Japan have come to accept as a matter of pragmatism
that China is the economically dominant player in Northeast Asia and that China has a
legitimate role to play in the complete denuclearization of the Korean peninsula. Both
South Korea and Japan have to contend with a protectionist Trump Administration
 4

and its demands that both South Korea and Japan contribute more to the security of
Northeast Asia. Both Tokyo and Seoul face economic pressure from Washington,
Tokyo is subject to steel and aluminum tariffs, while Korea is under pressure to
renegotiate KORUS, its bilateral trade agreement with Washington.
Both South Korea and Japan seek firm reassurances from the Trump Administration
that U.S. alliance commitments to their defense are ironclad. South Korea wants to be
consulted in advance about any alteration in security planning by the United States.
Japan wants to ensure that its concern over kidnapped citizens and North Korean short
and medium range ballistic missiles are addressed.
Tokyo and Seoul in their own way are open to improved relations with China. South
Korea wants relief from China’s punitive trade policy. Japan wants to hedge against
any backtracking by President Trump resulting from his unilateral, impulsive and
transactional nature.

Suggested citation: Carlyle A. Thayer, “China-United States Rivalry in North-East and

South-East Asia,” Thayer Consultancy Background Brief, June 28, 2018. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
mailing list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.
Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.