Wondering just where the U.S. stands in Asia? It’s an important question to businesses, given the huge economic growth there and its disruption of the post-World War II global economic order. The rise of China in particular has raised speculation that it seems destined to unseat the U.S. as the world’s preeminent economy.
Foreign Affairs presents two differing views of what’s happening in Asia. In “Washington’s Eastern Sunset: The Decline of U.S. Power in Northeast Asia,” Jason T. Shaplen and James Laney (both formerly involved in South Korea, Laney as U.S. Ambassador from 1993 to 1997), argue that the U.S. is on the wane. Immediately following that is “Winning Asia: Washington’s Untold Success Story,” in which Bush Administration diplomat and Georgetown University professor Victor D. Cha says that the U.S. remains the dominant power in Asia, thanks to a quietly sensible strategy by George W. Bush.
What both articles agree on is that Asia is becoming more open to free trade, and the U.S. will continue to have influence in the region. Where they differ is on how much, and whether U.S. political strategy is effective.
The stakes are large – Shaplen and Laney note that Asia has three of the world’s 11 largest economies, and three of its four largest standing armies.
Some other stats from their article:
- this year, China’s trade with Japan surpassed Japan’s trade with the U.S. China had passed the U.S. in South Korea in 2004.
- U.S. gross domestic product since 2001 is 0.6 percent higher than it would be if it weren’t for trade with China.
- China is something of a pass-through economy — about 65 percent of the value of China’s exports to the U.S. come from raw materials, parts and goods that China imports from other Asian nations.
- China and Japan hold 47 percent of U.S. debt.
- Japan’s population peaked in 2006.
- China’s will not peak until 2030, and Shaplen and Laney assert that China’s major policy emphasis for the foreseeable future will be on its domestic affairs – it needs to keep its economy growing rapidly to support its population growth.
Shaplen and Laney are much concerned by the potential tensions between China, Japan and South Korea. Unspoken is the impact these might have on the U.S. economy. The two authors think that the U.S. needs to move beyond its preferred method of bi-lateral agreements, and embrace, as well, multilateral forums, free-trade agreements and soft-power projects (they cite the use of the U.S. hospital ship Mercy on goodwill missions after the Indonesian tsunami and in other parts of southern Asia). They say that “Washington is behind the curve – and behind China. If it does not move quickly, it will find its stature in Northeast Asia greatly diminished, at precisely the time when the region takes its place at the center of the world stage.”
In a classic glass-half-full article that feels like a rebuttal of Shaplen and Laney, Cha looks at the same landscape and sees an effective policy approach on the part of the U.S. “…the Bush Administration’s record in Asia is far better than its record elsewhere,” he writes. He cites the U.S. China Strategic Economics Dialogue, which he says has made progress on increasing the value of the yuan against the dollar (the yuan is up 9.4 percent since mid-2005) and on reducing software piracy. Despite Congressional saber rattling on dumping and other issues, he says of the Dialogue, “nevertheless, these talks signal a U.S. commitment to manage trade tensions through negotiations, rather than through trade wars.”
He notes that the U.S.’s free trade agreement with South Korea, which he believes Congress will approve, is the largest bilateral trade agreement ever signed by the United States. He lauds the Bush Administration both for its bilateral trade agreements with Asian nations and its support of an Asian free-trade zone, arguing that
breaking down trade barriers in Asia (particularly in the service sector, which accounts for 80 percent of U.S. GDP) will help the U.S. service and industrial sectors expand their global market share; while this will lead to new jobs in Asia, many will be created in the United States as well.
In fact, Cha is less at odds with Shaplen and Laney than it might seem. He, too, wants to see the U.S. support more multilateral efforts, both for promoting free trade and for regional security. Cha is also worried about the U.S. blowing it in Asia, especially if China-bashing becomes a major campaign plank in the coming presidential elections here in the U.S. He’s concerned by what candidates have said already about China’s trade imbalances, currency undervaluing and other issues. He’s also troubled by opposition to the Korean free trade agreement.
In times of uncertainty, a unified business front usually has great influence over policy. What seems clear from these two articles is that there is a path business can agree to follow, if it will choose to do so.
