The Economics Of... America and The New Silk Road
America can serve as a counterweight to the regulatory power of China’s growing influence in East Asia. It is important that the United States sets a collaborative tone in a new age of geopolitics while China’s economic authority begins to eclipse our own.
Background
Throughout the course of the twenty-first century, America has watched China grow from a reliable export mogul to a global economic superpower in its own right. At this point, the U.S. must admit that it is no longer a unilateral global authority and consider China as a generally peaceful co-habitant in our sphere of international influence. A modern fashion of geopolitics, “[t]he path to becoming or remaining a great power has become primarily an economic path” (Overholt). Militant warfare has been replaced by the (relatively) more peaceful economic warfare. China’s geographic proximity to developing or underdeveloped countries is a major concern for global human rights defenders because it heightens potential for economic coercion in East Asia. Modern representations of East Asia include geographic China, Taiwan, Japan, Mongolia, North Korea and South Korea (Mobley). The Association of Southeast Asian Nations (ASEAN) “plus three” (China, Japan, South Korea) is a leading geopolitical group of the East Asian Community. This community has diverse perspectives on current regional agreements and development projects such as the CPTPP and the BRI.
The Trans-Pacific Partnership Agreement is the coalition formed among East Asian states and developed world nations to form an agreement to liberalized economic relations. America’s decision to sign the TPP in 2016 allowed our government to ensure that American economic concerns, such as wage standards in Chinese manufacturing, were being addressed to limit China’s expanding regional authority. That is until, however, new leadership revoked America’s commitment to the trade agreement after our 2016 presidential election. In 2017, President Trump’s withdrawal from the TPP created a scramble for the remaining eleven countries to reformat the partnership into the “Comprehensive and Progressive TPP” (CPTPP). One of Trump’s main justifications of his decision was to incentivize independent development in the region, which prompts legitimate questions about America’s appropriate role in East Asian political economics. The nations Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam signed this reformed trade agreement in 2018. A major geographic consideration for this trade agreement is China’s territory and population, which makes up the vast majority of the East Asian region. While their Belt and Road Initiative is a purposeful investment in East Asian economic infrastructure, international discussions must still examine its domestic and international motivations. The BRI is one of China’s alternative regional integration approaches, and it has a primary goal of expansive structural investment to jumpstart regional trade. The BRI’s purpose of formation is “investing in infrastructure, opening transport and economic corridors, and connecting China to other countries” (Mobley). The unilateral goals of China’s BRI projects, especially those related to building a system of trans-pacific Chinese military bases, are equally important American geopolitical concerns when considering participation in the CPTPP or BRI projects.
There are three main policy issues evaluated in the case of the United States’ consideration to integrate its economy with East Asia. The first of these is in protecting human rights and preventing regional coercion. Second, the issue of questioning America’s authority to participate politically or economically in East Asia. Finally, negative domestic opinion on economic involvement with China, an issue that U.S. presidents have considered for decades.
Key Issues
America’s diplomatic struggles with China as a developed actor cloud the outlook of our potential CPTPP membership. Xi Jinping has asserted that China will actively support developing a global governance system. This is concerning to the United States as China begins to earn its share of our international influence. Furthermore, China’s recent strategic measures undermine America’s contribution to the TPP and restore diplomacy with Japan. This may or may not have something to do with Japan’s infrastructure investment plan Partnership for Quality Infrastructure (PQI), India’s Act East Policy (AEP), or our United States’ Blue Dot Network (BDN) (Tay and Wau). The famously complicated relationship between our nation and China in the twenty-first century is rooted in our economic competition and cultural disconnection. “The greatest modern policy disagreements between the U.S. and China include the $345 billion trade deficit (as of 2019), intellectual property rights, and technology transfer” (Rudd). These are all issues that have major economic implications for American businesses. Intellectual property is important to preserving America’s spirit of innovation and entrepreneurship. There are not many economic drawbacks to joining the CPTPP because it is a liberalization of trade, but take a moment to consider the protectionist motivations behind President Trump’s reversal of commitment to the agreement. Protectionism in trade is typically the recognition of middle class citizens’ fears of low comparative advantage, especially in wages for blue-collar workers. China is an especially threatening trade partner in the manufacturing space as a result of their low industry wages. Our willingness to join CPTPP during an expansionist period for China to serve our diplomatic obligation to global human rights will inevitably shift resources away from national economic interests. The benefits of international peacemaking, like diplomatic power, can compromise domestic strategy. For sustainable growth, however, our nation must participate in international trade agreements like the CPTPP to experience the full economic benefits of our comparative advantages.
America would benefit economically and strategically from CPTPP membership because of the positioning advantages from participation in East Asian political diplomacy. Not only would we regain access to mega trade deals with privileged information and influence, but we regain international trust. Our efforts in existing regional and bilateral geopolitical agreements will be more fruitful after healing our international reputation. Our access to diplomatic opportunities and international funding are major economic advantages of American CPTPP membership, especially while China invests in a major regional economic development plan. Your administration would be making a powerful statement in resuming involvement in this trans-pacific agreement because of the weight that America’s political participation holds as a global leader. Some Chinese analysts even insist that America’s involvement in the Asian-Pacific (Indo-Pacific) region is enough reason for China to join the CPTPP. Additionally, our presence in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership guarantees representation of our national interests in an area with great potential for economic coercion. While our economic and strategic leadership in East Asia is controversial, the diplomatic obligations of a democratic superpower require American examination or oversight of global projects with such a large humanitarian risk like the Chinese expansionist BRI in the Indochina Corridor. Cooperatively, China recently extended an offer for co-chairmanship in the ASEAN Regional Forum “intersessional” meetings on Maritime Security. Sharing that regulatory role are nations Indonesia, India, and Cambodia, and our United States. Participating in trans-pacific partnerships is strategic for the United States because it engages Chinese in East Asian development, especially because regional prioritization would deter the influence of bilateral donations on our partners in China.
The 21st Century Maritime Silk Road Initiative (MSRI), the “road” referred to in “the Belt and Road Initiative,” is a BRI project located in the Indochina Corridor of East Asia. Its development plan follows a “port-park-city” model of special economic development zones to attract foreign business and develop Chinese military bases. America’s support of the BRI would be to risk supporting a system of highly invasive foreign industrialization by China. The major national expense for East Asian states who agree to BRI projects would be surrendering one's own military and economic autonomy to the decisions of China. America is known for prioritization of democratic principles in international relations, these of which are threatened by a system of East Asian debt burdens to China alongside Chinese strategic positioning of “port-park-city” construction. The Free and Open Indo-Pacific strategy (FOIP), an American attempt to counter the influence of BRI, is considered to be a “tool of rivalry” (Gong). The stated intentions of the Indo-Pacific agreement with America are in preserving autonomy and humanitarian peace in the region as it experiences industrial pressures from China. The US–Japan Business Council endorsed the FOIP by promoting the Indo-Pacific Infrastructure Trilateral Forum on the topic of boosting India’s private sector (Gong 42). The United States and Japan recognize India’s concerns for economic sovereignty under China’s expansionist plans. India is also hesitant to support the BRI because of the Maritime Silk Road Initiative’s silence on regular multilateral forums within these development zones. America’s involvement with China’s Belt and Road Initiative, particularly the MSRI in the Indochina Corridor, has diplomatic risks in the event of humanitarian violations for which we have regulatory responsibility.
On the other end of the spectrum, if America stays involved with the BRI we can have access to trade forums and learn China’s methods for economic growth through infrastructure investment. China’s government heavily stimulates its local economies with state-owned enterprises (SOEs); “[s]ince 2016 SOEs have received 83 percent of loans, mostly from state-owned banks” (Mobley 65). The BRI is a current extension of China’s dedication to its own economic growth, evident in the scope and scale of its fundraising resources: the China Development Bank, the Export-Import Bank of China (Exim), the Asian Infrastructure Investment Bank (AIIB), and the Silk Road Fund. The Chinese government’s resourcing from the AIIB legitimizes the BRI projects and promotes the vision of China as a “responsible international actor” (Mobley). Some political analysts would go as far to encourage America to join the AIIB itself in addition to the CPTPP and involvement in the BRI. America would further benefit from association with the BRI because of its plan’s unilateral growth mechanisms that China is hoping will address national economic separatism between their rural areas and urban developments. The strategic downsides to BRI participation can only limit America’s role, not eliminate it completely, as we face an obligation to protect East Asia’s strategic and economic autonomy from political coercion. A collaborative solution to regulating China’s BRI projects is a multilateral development of standards for transparency and accountability in China’s newfound economic authority. International collaboration is a strategic victory for America, the archetype of democratic structures, particularly in the peacemaking effects of legitimizing Asian political economics.
China has a history of alternative integration approaches, like the modern BRI, that provides context for America’s involvement in their current projects and discussions. China’s history of these approaches is interpreted as “trying to create new platforms that Beijing can control or substantially influence” (Wang). The AIIB itself is a Chinese alternative to the Asian Development Bank or World Bank, an institution which has gained so much legitimacy as to attract consideration of American membership. The Free Trade Area of the Asian Pacific (FTAPP) is another alternative integration approach by China that mimics the TPP (CPTPP) itself. The main issue Wang identifies is China’s continued membership of recognized political organizations in addition to its own alternative organizations. China’s modern alternative integration approaches will hopefully remain a vague threat of global dissent, if not simply an international nuance.
Conclusion
There are a variety of solutions for the three identified issues related to America integrating its economy with East Asia, some of which have been discussed as key issues in this policy paper. Firstly, the concern for human rights protection and regional coercion prevention can be addressed if America becomes actively involved in BRI forums. Trade forum representation is crucial to ensure their common standards move away from bribes, tied aid, and subsidies in East Asian dealings. The second identified issue was in justifying America's influence in East Asia, which has historically been a fulfillment of obligation as a democratic global superpower. If China seeks to successfully share our global sphere of influence, they must accept the responsibilities of a world leader such as, most relevantly, avoiding the aggravation and restrictions of mature economies. A concrete solution to addressing this issue is participating in CPTPP discussions about Chinese expansionist plans, at least on a preliminary basis, to protect the national sovereignty of Maritime Silk Road development zones. The third and final identified issue was how to deal with domestic backlash from dealing with the Chinese economy. Despite our disagreement on various human rights issues and China’s trade advantage, our government should encourage domestic championing of China’s denuclearization and environmental priorities as a political partner. Globalization continues to encourage the development of multilateral agreements and global industries, which America cannot avoid while maintaining a reputation of collaboration, liberalization, and sustainable growth.
Works Cited
William H. Overholt, “China and America: A New Game in a New Era” (Institute for National Strategic Security, National Defense University, 2021) 36.
Terry Mobley, “The Belt and Road Initiative” (Air University Press, 2019) 52.
Simon Tay and Jessica Wau, “The Indo-Pacific Outlook: a new lens for ASEAN” (Singapore: East Asia Forum Quarterly, 2020).
Kevin Rudd, “U.S.-China Relations in 2019” (Center for International Relations and Sustainable Development, 2019) 14.
The Honourable Dato Erywan Pehin Yusof, “Chairman’s Statement of the 28th ASEAN Regional Forum” (Association of Southeast Asian Nations, 2021) 14.
Xue Gong, “China’s Economic Statecraft: The Belt and Road in Southeast Asia and the Impact on the Indo-Pacific” (Institute for or Regional Security, 2020) 39.
Terry Mobley, “The Belt and Road Initiative” (Air University Press, 2019) 55.
Zheng Wang, “China’s Alternative Diplomacy” (The Diplomat, 2015).
This post is based on my response to Professor Jason Foley’s prompt in his “Globalization” course assignment at Northeastern University in the College of Professional Studies.