As China’s power grows, the Asia we have known is passing into history, and a new and very different Asia is taking shape.

Barack Obama’s visit is a key moment in that transformation, because he is coming here to promote America’s view of how the new Asia should work.

America has a lot at stake. For 40 years it has been the region’s uncontested leader. Now China wants to lead instead, and is trying to ease America aside. That means the era of uncontested US primacy has passed. This is a big loss for America, for Australia and much of Asia, but it is the strategic price we must all pay for China’s economic miracle.

There are two competing visions of Asia’s future now. China’s vision is that America will slowly fade as a strategic power in Asia, leaving China as the region’s new uncontested leader. America’s vision is that Asia will divide into two camps, with China on one side and the rest, under US leadership, on the other. It hopes that if the rest of Asia stays strong and united by America’s side, China will eventually see the error of its ways and join the US-led camp as well, thus restoring America’s uncontested primacy.

Of course neither Washington nor Beijing describes their vision in such blunt terms. But behind the diplomatic drapery, these are clearly the plans to which each side is working. Washington has suddenly woken up to the magnitude of China’s power, and now understands that Asia, not the Middle East, is where it faces its most decisive challenge. That’s why Obama is making this trip. He is here to persuade America’s friends and allies to sign up to Washington’s vision of Asia’s future.

At APEC in Hawaii, Obama promoted the economic element of his vision. His Trans-Pacific Partnership initiative is aimed at building a new economic framework in Asia that includes America’s friends and allies and excludes China. It is not clear that is a good idea. Now Obama is coming to Canberra to promote the political and strategic element of his vision. He wants to draw America’s loose network of Asian allies and friends together into a more unified military coalition to confront China’s growing maritime power. That will be the underlying message of his speech to Parliament tomorrow, and it is the symbolism at the heart of the announcement he will make about US military training in Darwin.

Practically and operationally, the new rotational training deployments for US marines mean very little. Symbolically and strategically they mean a great deal. They show Australia’s willingness to join America’s military coalition against China. And make no mistake: this is all about China. For 40 years, despite our close alliance, Australia has been careful not to line up militarily with the US against China. That is why the Darwin announcement is so significant.

More broadly, taken together with Julia Gillard’s enthusiastic embrace of his Trans-Pacific Partnership, the new military arrangements signal Australia’s support for Obama’s overall vision for America’s role in Asia’s future. For Obama, this is an important win.

But is it a win for Australia? That depends on whether Obama’s vision will work, and on what the alternatives are.

For his vision to work, three things will have to happen. First, a lot of China’s Asian neighbours will need to decide that siding with America against China is in their interests. None of them want to live under China’s shadow, and all welcome US support, but none want to make China an enemy. Keeping them on side will be harder than it looks.

Second, America itself must decide whether taking China on like this is worth the cost. Economically, Obama’s vision of Asia’s future makes no sense, because America is as interdependent with China as everyone else. And strategically, Americans will have to decide whether they really are willing to back all their Asian friends and allies in any fight they pick with China. A small stoush in the South China Sea could become very costly and dangerous for the US.

These are issues that Americans themselves have not clearly addressed. Few of America’s political leaders, pundits or the public at large have yet come to grips with the new geometry of power, and the hard choices America now faces.

Third, for America’s plan to work, China will have to be persuaded to accept US leadership in Asia even as it overtakes America to become the richest, and hence ultimately the most powerful, country in the world. That seems highly unlikely. And if China pushes back rather than comes around then America’s vision of Asia’s future does not lead us gently back to the era of uncontested US primacy. It pushes us brutally forward towards a new era of unbridled strategic rivalry — a new Cold War, or worse.

If the only alternative to America’s plan to perpetuate its primacy in Asia is China’s vision of its own uncontested leadership, then we might reluctantly accept a new Cold War as the lesser of two evils. But these are not the only possibilities. A new Asia could evolve in which China exercises more power and influence than it has before, but does not dominate, and in which America no longer exercises primacy, but still plays a large and vital role. In short, an Asia in which the US and China share power.

This should be Australia’s vision of Asia’s future. We do not want to live under Chinse domination, but nor do we want to be squeezed by US–China rivalry. That is why, having given Obama a respectful hearing, we should explain why we take a different view. That is what good allies do.

Hugh White is professor of strategic studies at ANU and a visiting fellow at the Lowy Institute.

This article was originally published by the Sydney Morning Herald here.

1. Obama goes to China
2. Obama visits Australia
3. President Obama comes to Canberra – Weekly editorial

If 2009 was the year it became inescapably clear that China’s economic rise was powering an equally significant increase in its strategic and political weight, then 2010 was the year it became inescapably clear that China is using its new weight to test the US-led order in Asia. Whether intended by Beijing or not, the series of disputes over maritime issues in the South China Sea, East China Sea and Yellow Sea clearly signal China’s desire to rewrite the rules governing the exercise of power in the Western Pacific.  The rest of us now need to decide how to respond.

America, along with its friends and allies in Asia, has a big choice to make at the outset.  Do we agree to negotiate a new order with China that gives Beijing a bigger role and allows it to exercise more influence than it has for a long time? Or do we refuse to negotiate, and insist on preserving the old US-led order unchanged? This will be the key issue in Asia in 2011, and the implications of whichever decision is made will shape Asia for decades.

There are strong arguments for refusing to concede any space to China. The US-led order has been wonderful for Asia these past forty years, and China’s new assertiveness raises fears about how China would use any additional power, and how greedy for power it has become. Surely preserving the old order is safer than giving in to Chinese pressure to build a new one.

But the arguments in favour of accommodation are also strong.  They amount simply to this: whatever we do, China is now too strong to be contained within the old regional order.  The old order in Asia is based on uncontested American primacy, and now China’s challenge to America has become explicit, uncontested primacy and the order that has been built on it has already passed.

The choice is therefore not between preserving the safe old order or building a riskier new one: it is between allowing ourselves to slide into a new order which is certain to be intensely and dangerously contested, or trying instead to build one that has a chance of being relatively stable and peaceful.

This way of putting it makes accommodation look like the natural choice. But for many people it will still seem extremely risky. Four questions naturally come to mind.

The first question many will ask is whether China can be trusted as a negotiating partner at all. Is China a country we can ‘do business with’? Back in the mid 1940s, as FDR tried to negotiate a post-war order with Stalin, people asked the same question about the Soviet Union. George Kennan’s famous essay ‘The Sources of Soviet Conduct’ convinced them they could not. He argued that the Soviet leadership would never agree to build a stable and order with the US because a hostile and contested relationship with other centres of power was essential to the Communist regime’s claims to legitimacy with the Russian people.

Many people will be tempted to see China in the same light. But as soon as one compares China with the Soviet Union the differences become clear. The CCP’s legitimacy does not depend primarily on external enemies, but on internal success, especially economic success. It will also, increasingly, depend on China’s ability to exercise more power and influence abroad, as we can assume ordinary Chinese are proud do of their country and ambitious about its status. But that does not seem to preclude the possibility of negotiating with China about Asia’s future order in good faith.

The second question is whether we can concede anything significant to China without opening the way to eventual Chinese hegemony. It is always tempting to argue that we cannot – that if ever the US concedes its own primacy it in effect offers primacy to China.  But that need not be true. It is perfectly possible to conceive a new order in Asia in which China plays a much larger role than it would under US primacy, but still does not enjoy primacy of its own, and that is the kind of order we should be seeking to help evolve.

The third question then is how much to concede to China in the development of this kind of order. Clearly there are some things we should not be willing to give up, and some things that might be negotiable: where to draw the line? That’s a big question, but one thing is clear – under no circumstances should we concede more than is compatible with the basic norms of international conduct set out in the UN Charter. Those norms constitute the essential safeguards of national security which the survivors of the Second World War thought were worth fighting to protect, and their judgement still looks sound today.

The more difficult question is whether we would rule out compromises on anything beyond that minimum position. My hunch is that we should not – at least without very carefully considering whether anything beyond the most essential norms of international conduct are worth risking major conflict to protect.

And finally, the fourth question is whether it makes sense to start negotiating with China now about Asia’s new order, or wait a while until conditions might serve us better.  Again, the arguments for delay will always be attractive, but the arguments for moving fast are strong too. First, we cannot assume that time is on our side – as China grows and its strength approaches America more closely, it will be harder rather than easier to maximise the space we can preserve for America in Asia’s new order. Second, as time passes the US-China risks becoming more adversarial, making it harder and harder to get negotiations going.  America and its friends and allies have an interest in convincing China that it can negotiate with us to expand its role in Asia’s order, not perhaps as much as it would like, but enough to make negotiation more attractive to China than confrontation. But until that message is sent and received, it will be all too easy for China to believe that it has no option but to push for more space.

This prompts a final thought.  Many in America and among America’s friends and allies have taken some pleasure in watching China’s new assertiveness in Asia alienate its Asian neighbours, draw them closer to America’s side. But this is short-sighted. China, for whatever reason, has clearly overplayed its hand in 2010, and has suffered a reverse.  But that does not mean we have gained anything, unless we already see Asia’s future as a zero-sum game between US and Chinese blocs. If we still hope to make it a positive-sum game, as it has been for the past forty years, we should see China’s blunders this year as damaging to our interests too. No one wins if we all conclude that China’s growing power is something that we must inevitably fear.

Hugh White is professor of Strategic Studies at the Australian National University and a Visiting Fellow at the Lowy Institute.

1. China and the challenge to American power? – Weekly editorial
2. The challenge of China and China’s challenge – Weekly editorial
3. The challenge of China

Asia’s security and Australia’s future depend not just on the choices China might make, but on America’s choices too. Even if China overtakes it economically over the next few decades, the US will remain the second-strongest country in the world for a long time to come, and by far the most serious constraint on Chinese power. The way America chooses to use its power is as important as anything China decides, and America’s choices may be harder than China’s.

A peaceful new order in Asia to accommodate China’s growing power can only be built if America is willing to allow China some political and strategic space. Such concessions do not often happen. History offers few examples of a rising power finding its place in the international order without a war with the dominant power. Conflict is only avoided when the dominant power willingly makes space for the challenger, as Britain made way for America in the late nineteenth century. Will America do the same for China? Should it?

As America confronts these questions, it too faces a choice between influence and order. Like China, it wants as much influence as it can get, with as little disorder as possible, so it has to balance its desire for Asia to remain peaceful against its desire to remain in charge. Washington has not faced this choice before. Since Nixon went to China, US primacy has been synonymous with order, and the more influence America has had, the more stable Asia has been. Now China’s rise means that the region might be more peaceful if America settles for a more modest role. If instead America tries to retain primacy in the face of China’s power, it will provoke a struggle that upsets the region. It would be sacrificing Asia’s peace to preserve its own primacy.

America could easily find itself doing just that. After being in charge for forty years, many Americans cannot imagine that Asia can be peaceful except under American leadership. Conceding even a share of power to another country looks risky, and especially conceding power to China. It is easy to see any desire by China to expand its influence as inherently threatening, and the more repressive and authoritarian China’s government appears, the more threatening it looks. No one can be comfortable about a regime that represses dissent at home exercising more power abroad. But what is the alternative? Forty years ago Washington – and Canberra – decided to accept the Chinese Communist Party as the legitimate government of China. Since then, and partly as a result, China has grown to become a very powerful country indeed. As America continues to deal with China and to benefit from its growth, it faces the consequences of those decisions. Some of those are unpalatable. While continuing to accept the communists as the legitimate government of China internally, many Americans would now prefer to deny that China’s government can legitimately exercise its power internationally.

Unfortunately, Americans do not get to make that kind of choice now. They cannot separate China’s internal government from the exercise of its international power. China’s power, controlled by China’s government, must be dealt with as a simple fact of international politics. If Americans deny China the right to exercise its power internationally within the same limits and norms that they accept for themselves, they can hardly be surprised if China decides not to accept the legitimacy of American power and starts pushing back. These days it can push back pretty hard.

America, therefore, has to decide whether its reasons for trying to prevent China exercising its growing power on the international stage are strong enough to justify the resulting mayhem. That depends on whether China is willing to exercise its power within the rules accepted by the international community as a whole – broadly those set out in the Charter of the United Nations. So far the evidence suggests that it will. The fact that China’s government is repressive at home makes us uneasy, but it does not automatically mean it will behave unacceptably abroad. The mere fact that China wants to expand its influence as its power grows does not show that it intends to break the rules and use that power improperly. In particular, the fact that China’s ambitions might be contrary to American interests does not make them inherently illegitimate – unless you believe, as many Americans do, that acceptable international conduct is defined as the acceptance of American primacy.

Americans find that easy to believe because they have got so used to exercising primacy and they don’t want to give it up. It has become a matter of national identity, which makes it very hard to relinquish. What’s more, they do not yet accept that they will have to fight to keep it. Most Americans, even those who know Asia well, do not really accept that China poses a serious challenge to their power and role in Asia. They remind you that America’s eclipse in Asia has been predicted many times before, and the doomsayers have always been wrong. They say this time will be no different: America will bounce back from its present troubles, stronger than ever.

This is half right. It is true that America’s present problems will pass. The wars in Iraq and Afghanistan have been wasteful and demoralising, but they will not bring America to its knees. America’s economic problems are serious and debilitating, but it remains a remarkably innovative and vibrant place with an immense capacity for recovery and reinvention. If China’s challenge to America depended on American weakness, there would be little to worry about. But the story of Asia’s power shift is not about America. It is about China. This is not a story of American weakness, but of Chinese strength. Even if the War on Terror and the global financial crisis had never happened, even if America’s budget was in healthy surplus and its financial system in perfect shape, China’s economic transformation would still pose the biggest threat to America’s place at the apex of global power since it reached there in 1880.

China’s challenge is different because never before has there been a country with the potential to overtake America economically. Japan could not do it: with only one-third America’s population, Japan’s workers would have needed to be three times as productive as America’s to overtake it, and that was never going to happen. The Soviet Union’s bigger population gave it a better chance, but its economy never approached America’s level of productivity. China is different because its population is much bigger than America’s and its economy works much better than the Soviet Union’s.

Even so, all of us find it hard to imagine that America’s economy could ever be overtaken. It seems a contradiction in terms: an America that was not the world’s richest and most powerful nation would not be America. This is not true – America as number two would still be America – but it will take most Americans some time to accept this, and the process will be a painful one.

Hugh White is professor of Defence and Strategic Studies at the ANU.

This is extracted from the Quarterly Essay 39, ‘Power Shift: Australia’s Future between Washington and Beijing’.

1. China and the challenge to American power? – Weekly editorial
2. Why war in Asia remains thinkable
3. The geostrategic implications of China’s growth

President Obama’s visit to Australia is a bit of a puzzle. The superficial politics are obvious enough, at least for Rudd. The deeper dynamics are not. That is because we do not yet know what Kevin Rudd thinks of the US alliance. Of course he supports it; every Australian leader does. But he has not so far defined what he wants to do with it.

In this he differs from his predecessors. Bob Hawke and John Howard, in very different ways, each re-conceived the alliance, to suit their own policy aims and political purposes.

Politically, Hawke’s aim was to reconcile the US Alliance and the Labor Party. Thanks to Vietnam and myths about the Dismissal, the party that Hawke led to power in 1983 was deeply ambivalent about the alliance. Hawke knew that this had to change if Labor was to consolidate its credentials to govern, so he redefined the alliance to emphasise its direct support for Australian strategic interests and its consistency with Australian self-reliance. This not only mollified ALP activists, it also strengthened Australian support for the alliance more broadly, as American leaders came to appreciate. Hawke’s policy aims were more subtle: he understood the central importance of American engagement to Asian stability and hence to Australia’s security, and he looked for ways – like APEC – to strengthen that engagement as the Cold War faded. He increasingly saw the alliance itself in this way too, as contributing to Australia’s security by supporting American engagement in the Western Pacific, rather than simply being defined by the promise of US carrier groups coming to our rescue if we were attacked.

Both the political and the policy agendas were quite different for Howard. Politically, Howard’s aim was to undo Hawke’s work and restore the Coalition’s traditional advantage as the more reliable custodian of Australia’s most important relationship. He was therefore keen to tighten the bonds with America, hoping to reopen differences with Labor that he could exploit to their disadvantage. But he had a serious policy purpose too. He had a strong sense that the America of the mid 1990s, with the Cold War won and a long economic boom underway, offered Australia more than it had in the 1980s. This was the era of the hyperpower, with America emerging as the winner at ‘The End of History’. Australia already enjoyed an exceptionally close relationship with this hyperpower; surely, Howard reasoned, we could get more out of it. And so he made his own ‘Turn to America’ the centrepiece of his foreign policy.

What are the political and policy imperatives that drive Kevin Rudd’s approach to America? At first glance the politics look easy. Popular support for the alliance has recovered from the Iraq-driven lows of a few years ago, and one of Rudd’s great achievements in Opposition was to ride that wave of Australian hostility to George W. Bush and the War on Terror, without damaging his credentials as a strong supporter of the alliance itself. And Obama’s ascent seemed a gift to Rudd, putting Australia and the US on converging political and policy paths under two leaders with a lot in common.

But it is not turning out that way. Obama’s political gloss has dulled as his presidency stumbles. The resemblance between the two leaders is becoming less flattering to Rudd as a result, especially when Rudd starts to reveal the same failings that have come to characterise Obama – an inability to match smooth talk to real results. The risk for Rudd is that Obama will come to remind Australians not of the things they like about Rudd, but of the things they dislike.

On policy, it has been hard to work out quite what Australia should be asking of the US. One reason lies with Obama himself. The promise at the heart of his candidacy was that America didn’t need to change policies to solve its problems, but only to change its style. Iraq apart, Obama didn’t offer to do anything very different from Bush, but just that he would approach things differently. He is now finding that this is not enough. The source of America’s problems lies deeper than Bush’s dysfunctional leadership, in a pervasive mismatch between objectives and resources. And that is as true under Obama as it was under Bush. On almost every issue Obama has been unwilling either to scale back the objectives he inherited from George Bush, or to devote significantly greater resources to achieve them. The result is that, just like Bush, he finds himself declaring objectives he has no means to achieve – pacifying Afghanistan, denying Iran nuclear weapons and eliminating North Korea’s, managing Russia, brokering peace in the Middle East, and really getting out of Iraq. Where he does set new goals – like the elimination of nuclear weapons – he shows scant sign of doing anything serious to achieve them. As we can see from Rudd’s very lukewarm response on Afghanistan, there is nothing in any of this that offers much to Australia.

But there is one policy question which could and should shape the US-Australia alliance over coming years, and that is China. Bush ignored the implications of China’s rise for American power, and Howard was happy to go along with this. But Obama and Rudd do not have that luxury. Quite suddenly, the political and strategic implications of China’s economic weight have became impossible to ignore. If Obama did not understand this before he went to China last November, he certainly did by the time he returned from Copenhagen in December. The lessons he must have drawn from those two visits is that China expects to be treated as an equal, will not cooperate on any other basis, and there is little America can do without Chinese support. This of course should be the issue on which Rudd and Obama connect. Rudd does understand China’s growing power and its implication for the world, and it would be good for everyone if he could help Obama understand it too – not as a go-between, but as someone with the imagination to help Obama see how best America can maximise its future influence in Asia while avoiding strategic competition with China. That should be the big theme of their meetings here in Australia.

Rudd has dipped his toe in this issue, pressing Obama to deal with China through the G20. But that is small-time retail diplomacy; what is needed is a full-scale debate about Asia’s future order and America’s place in it. No doubt this is an unwelcome question for Obama, because it casts doubt on the future of American primacy, and no US president wants to do that. And it is unwelcome for Rudd too, because Australian voters don’t want to hear that America won’t be running Asia in the future the way it has in the past. So both continue to tiptoe around the biggest strategic question of the post Cold War era. If they do that, visits like next month’s will not deliver much.

1. President Obama comes to Canberra – Weekly editorial
2. Obama and Australia
3. Mr Obama visits Japan

No relationship in the world is more important than the US-China relationship. None is changing faster. And none is less clear in its long-term trajectory.

So it’s a strange and telling fact that Barack Obama has so far said nothing substantive about it, either as candidate or President. That makes this weekend’s visit to China an important event – without doubt the most important of his Asian trip. If he takes this opportunity to articulate a coherent, sustainable, realistic American approach to China’s growing power, then he will have done a great service to his country and the world – perhaps the most important he can offer. If he misses this opportunity, we can probably conclude that this President, for all his charisma, has no more intention then the last bloke of addressing the biggest challenge America has faced to its place in the world since the Cold War, and perhaps even since 1945.

My betting is that he will miss it. So far what little his Administration has said about China has followed the tradition set by his predecessor. Like Bush, Obama has left it to a Deputy Secretary of State to articulate America’s vision of the relationship. Like Bush’s Bob Zeollick, Obama’s Jim Steinberg tried to capture the future US-China relationship in two words. Zeollick’s phrase was ‘responsible stakeholder’. Steinberg’s is ‘strategic reassurance’. Both phrases reveal not an attempt to address the issues raised by China’s growing power, but a wish to evade them. ‘Responsible stakeholder’ embodies the hope that China’s role in the world can be defined by, and limited to, its participation in the global order led by the United States. It says nothing about how that role will reflect the extraordinary growth in China’s power, and the likely scale of that power in decades to come, and how US leadership will adapt. It says nothing about how China’s power will make a difference to its role, because every state is or should be a ‘responsible stakeholder’. It expresses the improbable wish that China will just become one of the crowd.

Jim Steinberg’s ‘strategic reassurance’, presented in a speech on 24 September this year, is no better. The concept rests, he said, on a ‘tacit bargain’ the US is ‘prepared to welcome China’s ‘arrival’ but ‘China must reassure the rest of the world that its development and growing global role will not come at the expense of the security and well-being of others.’ This precisely evades the two core questions.

First, what kind of conduct would he consider to be contrary to others’ security and well-being? If he means merely conduct contrary to the UN Charter, then everyone could agree, including China. But if he means any action that challenges US primacy in Asia in favour of a stronger Chinese role, then we are in very difficult territory indeed. In that case the tacit bargain is that China must accept US primacy indefinitely, as if its economy grows to equal America’s. Will China accept that bargain?

Second, what exactly does America do if China does not? Twenty years ago America and others could threaten to isolate China if we did not like how it acted. Does anyone believe that we would do that today, knowing what it would mean for the global economy? So what exactly does Steinberg and his boss have in mind?

The US – and broader Western – debate about China which is typified by these Deputy Secretaries’ phrase-making fails to come to grips with the stark political and strategic implications of China’s economic growth. People some how expect that we can all benefit from China’s remarkable growth to the front ranks of the global economy – as we have – and yet continue to regard China as at best a candidate for acceptance into the global community. The Economist this week bracketed Hu Jintao along with Mugabe, Chavez, Ahmedinejad and Castro, as leaders who might, indeed should, one day follow Honecker and Ceausescu onto the scrapheap of history, as if China is a failed dictatorship or a rogue state. How absurd. This country, for all its very real faults, has engineered the largest increase in human material welfare in history, and helped create the longest period of peace Asia has ever seen. And it has a fair chance of being the richest country in the world in a few decades.

Against domestic opinion in the US shaped by this kind of thinking, Obama’s visit to Beijing will most likely be judged by how forthrightly he presses his hosts on human rights. If he allows his agenda to be circumscribed in this way he will have missed a great opportunity. To grab it he should start talking, privately and publically, about how the US and China can work together – with Japan and eventually India – to build a new Asian order that recognises and accommodates and respects the reality of Chinese power.

Of course this won’t play well at home. But does that mean it can’t be done? Once before, when China was much weaker than it is today, an American President went to China to abandon old policy precepts and build a durable new order in Asia. We are all his beneficiaries. As Obama lands Beijing, the question is whether he has as much courage, intelligence and leadership as Richard Nixon.

1. Obama and Asia – Weekly editorial
2. President Obama comes to Canberra – Weekly editorial
3. Obama visits Australia

When the Berlin Wall fell it seemed to many that the end of the Cold War marked not just the end of a particular geostrategic episode, but the end of geostrategy as such. Now geostrategy is back. We are again exploring how the international order — the set of understandings and expectations that shape relationships between states — is formed by the perceptions and realties of power, and especially how changes in relative power affect the workings of the international order. Moreover, after a period during the Cold War in which geostrategic calculations were based more on military than on economic factors, we are rediscovering the centrality of economic power as the key driver of geostrategic relationships.

There is a simple reason for this: we are living through and period of remarkable economic transformation, which is driving shifts in relative economic weight of a scale and speed that we have not seen for many decades, if ever. And China is the key.

It is easy to underestimate the geostrategic implications for the international order of China’s rise. China’s relative economic strength has grown remarkably, and yet its place in the international order has not yet changed nearly as much. It is tempting to conclude that China’s economic growth has little geostrategic impact. This assumes however that geostrategic change follows steadily and smoothly as economic weight shifts. That is not necessarily so. The geostrategic consequences of economic change can be ‘sticky’: the status quo may persist for years as economic weight shifts, and then fall swiftly when the pressure becomes too great to bear.

The tipping point may not be far away. The Australian Government’s Defence White Paper released in May 2009 predicted that on some measures China’s economy could well overtake America’s to become the largest in the world around 2020. The precise date is questionable, but the trend is not. China’s growth may falter for any number of reasons, but it is more probable that America will no longer be the richest country in the world, well within the timeframes of today’s strategic and defence policymakers.

Of course America will continue to enjoy a significant advantage over China in many other aspects of power, including the soft power of culture and the hard power of armed force. It will be a long time, if ever, before China could emulate America’s position in recent decades as the world’s leading military power. But China does not have to replace the US as the global hyperpower in order to overturn the US-led global order of recent decades. China does not need to compete with the US globally in order to erode US primacy in Asia. And to do that China does not need to equal the US in military capability, but simply limit US options. In both these respects, the military-strategic competition between the US and China is asymmetrical, in ways that benefit China. The shift is already underway. American capacity to project power in Asia is slipping away as China develops the capacity to deny important areas of the Western Pacific — especially those closest to China — to the US Navy’s surface fleet.

Some will argue however that the true foundations of American primacy are not to be found in its armed forces or its economic output, but in its ideas, values and institutions. Clearly many of what Americans regard as American values are highly attractive to many others around the world, including in Asia. But do Asians believe that those values can only flourish in a global order dominated by the US? Not necessarily. They certainly seek many of the values that America champions, but they do not necessarily believe that only American global leadership can deliver them.

Of course American decline has been predicted before, but this time it is different. Never before has US primacy been challenged at its most fundamental source, by its eclipse as the world’s most productive economy.

The source of that challenge runs very deep. As China emulates the productivity of a modern advanced economy, its sheer scale ensures that it will end up again — as it was before the industrial revolution — producing more than anyone else. In geostrategy, destiny is not so much demographics alone, but the combination of demographics and labour productivity.

What does all this mean for Asia? Since the early 1970’s Asia has enjoyed the most prosperous and cooperative period in its long history, and in retrospect it seems clear that the main cause has been the stable and uncompetitive strategic relationships between Asia’s most powerful states — the US, China and Japan — based on uncontested US primacy. As the economic foundation of America’s primacy erodes, the Asian order which has been built upon it will change. There is no reason to expect that China will continue to accept US primacy as the basis of the regional order in Asia while its own power approaches and exceeds America’s. Of course China will want Asia to remain peaceful and harmonious: but it will not see American primacy as necessary for that.

There is no evidence that Beijing seeks the kind of ‘hard’ militarised hegemony that we associate with the Communist strategic policies of Stalin and Brezhnev. It is much more likely that China will seek a kind of ‘soft’ hegemony, something like America’s Monroe Doctrine. It is hard to see why Beijing should want anything more: but nor is it clear why, as their power grows, China would aim for anything less.

Much will therefore depend on how America responds to China’s rise. It could slowly withdraw, or it could share power with China, or it could try to maintain primacy by contesting China’s challenge. Whichever option America takes, Asia’s international order would very different. And the most risky of these outcomes is also the most probable. America is unlikely to withdraw from Asia, and would find it hard to share power with China, so the default option is strategic competition. That is a risky course. Do the costs and risks of sharing power with China outweigh the costs and risks of sustained strategic competition with a country of China’s immense strategic potential? China is not the Soviet Union.

America’s allies in Asia likewise face tough choices. Australians will need to decide whether to encourage America to contest the Chinese challenge, or share power with Beijing. And if America decides on competition, should Australia encourage them, or slide towards an uneasy and insecure neutrality? Either way Australia faces greater strategic risks than it has been used to since the 1960s.

See my full chapter here [pdf] from this year’s China Update: China’s New Place in a World in Crisis.

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1. Obama goes to China
2. China and the challenge to American power? – Weekly editorial
3. The strategic implications of the economic rise of China and India

At the heart of Australia’s new Defence White paper is a deep ambivalence about the future of American power. In some places it foreshadows that China could overtake the US on some measures to become the largest economy in the world as early as 2020, and it clearly explains that such a momentous shift in economic power would mean a decisive shift in strategic power too.

But in other places the White Paper expresses confidence that the US will remain the primary strategic power in Asia until 2030 or beyond.

Where between these conflicting messages does the Government believe the truth lies? The answer matters a lot for Australian defence policy and for our broader place in Asia. The United States has maintained uncontested primacy in Asia for almost 40 years. Since Nixon went to China, no Asian major power has sought to challenge or displace it as the region’s dominant power. This has been fundamental to the stability and prosperity East Asia has enjoyed ever since.

It has also been the cornerstone of Australia’s security. US primacy has limited the strategic risks we might have to face, either alone or in support of our ally. Under the aegis of the United States, Australia has enjoyed the privileges of middle power status without ever really having to maintain a middle power’s capacities — including a middle power’s military weight.

That means the future of America’s strategic position in Asia is central to the future of our defence policy. If we are confident US power will be sustained, our defence policy can remain much as it has been for the past four decades. If not, we have some tough choices to make.

The White Paper is surely right in the places where it says that long-term economic trends are working against the maintenance of US primacy. Strategic weight ultimately depends on economic power. There is good reason to believe that China can maintain the growth trends of the past thirty years for the next few decades, which should see it overtake the US economically — in PPP terms — if not by 2020, then by 2030. That is soon enough to make the questions it raises urgent. And already China is building military forces that challenge America’s maritime supremacy in the Western Pacific.

The first big question is how the US responds: does it concede power and influence to China, or does it compete with China to preserve primacy? No one should doubt that America’s instincts are to compete. As Secretary of State Clinton delicately put it, in answer to a question on the White Paper: ‘we’re not ceding the Pacific to anyone.’

That is not necessarily in Australia’s interests. We would prefer to avoid having to choose between the US and China, and my hunch is that most Australians would be willing to see the US share power with China if that will keep the peace. But it will not be up to us. So what should Australia do if the US gets drawn into strategic competition with China nonetheless? Should we support the United States in an intensifying strategic competition with China? Or should we move away from the US and adopt a more independent strategic posture?

This choice raises issues about Australia’s place in the world and in Asia which go far beyond matters of defence policy. But it has implications for defence policy nonetheless. Either option would require Australia to build up its strategic capacity — either to allow us to do more to support the US, or to do more for ourselves. We would in other words need to build forces that gave us the genuine strategic weight of a middle power. Those forces might look very different, and cost a lot more, than we have been used to in recent decades.

If we decide we want to remain a middle power in the Asian century, we have some hard thinking to do. What strategic interests do we want to protect, and how could we use armed force to protect them? What kinds of operations would we want to be able to undertake? What kinds of forces could undertake them most cost-effectively? And how much would they cost?

Predictably, having equivocated about the future of American power in Asia, the White Paper equivocates on all these issues as well. In some places it is highly conservative, harking back to the 1987 White Paper’s narrow focus on the defence of Australia. In other places it echoes the 2000 White Paper’s wider conception of strategic interests and objectives. It does not carefully consider how the eclipse of US primacy should reshape our strategic objectives, nor does it systematically examine the operational options we might need to achieve them.

As a result, the White Paper’s centerpiece proposals to expand Australia’s naval forces lack coherent strategic rationale. For example the huge investment proposed to expand Australia’s fleet of big warships from 3 to 11 is designed to provide Australia with ‘sea control’, according to the White Paper. But there is no explanation of why sea control is needed, and whether it can be achieved. ‘Sea denial’ is far easier to do, and would more cost-effectively meet Australia’s strategic objectives.

These are not easy questions. It is not clear whether Australia can afford the forces to give us the strategic weight of a middle power in the Asian century. But it is clear that we could only do it by spending every dollar as carefully as possible. That requires hard choices, based on rigorous analysis and an unwavering acknowledgement of the dynamics of Australia’s strategic environment. The new White Paper provides neither of these.

1. China’s Defence White Paper in brief
2. Obama and Australia’s vision of Asia’s future
3. Australia between the US and China

The launch of Kevin Rudd’s Asia Pacific Community was marred by failures of preparation and presentation. But we should look past these to consider the proposal on its merits, and we should do that in severely practical terms. What purposes is it intended to serve, and how well does it serve them?

It is important to approach these questions with an open mind. The region already has lots of regional multilateral forums, but as circumstances change, the region’s needs for international dialogue and cooperation change too, and so should its institutions. We should not for a moment assume that the forums that have served us well in the past will do so in future.

When Kevin Rudd first launched his APC proposal, the purpose he suggested it would serve would be to manage the transformation of Asia’s international system to accommodate the growing power of China and India. This is undoubtedly a major and urgent priority. It might be worth reminding ourselves exactly why that is so important, and why it might prove to be quite hard.

The decades since Nixon met Mao have been the best in East Asia’s long history. Peaceful relations among Asia’s major powers have provided the foundation for a harmonious regional order, which in turn has enabled a remarkable period of economic growth and social development nourished by an extraordinary expansion of economic interactions between Asian countries, and between Asia and the wider world.

Now, amidst many short-term challenges, we face a major long-term one: to ensure that as Asia transforms, we can preserve the harmony which has made it all possible. It is easy to assume that this will happen automatically, because it is so obviously in everyone’s interest that this should occur. But when we look at what will actually be required for Asia to build a new order that preserves and prolongs the peace of recent decades, the difficulties become plain.

As China’s power grows, its relationships with the US and Japan will change, and that will change the way Asia works. China has so far been very patient in pushing those changes, but that may only make the adjustments all the harder to manage when they come. As China’s economic power grows to approach America’s, and as its strategic power begins to impinge on US maritime primacy, the US will face a momentous choice: does it treat China as an equal, or does it contest China’s challenge to American primacy? And Japan too faces momentous choices: can it feel secure as US-China relations move towards equality, and if not what can it do?

Whatever happens, a new set of relations will need to be built between these three powers, and with India as well, which reflects and accommodates new power relativities. The best prospect is to construct a kind of concert among Asia’s great powers in which leadership is shared, but that is hard to do, because it will require big and difficult decisions from each of them. China would need to accept a continuing major US role in Asia, the US would have to accept China as a genuine equal, and both would have to accept a new more independent role for Japan as a major power in its own right, and all would have to accept India’s place as an equal players in Asia’s affairs. All therefore would have to make difficult and unpopular choices – just as Nixon and Mao had to in 1972. Their strong and shared interests in doing so will in every case have to confront and overturn deeply-held policy precepts and pungent domestic opposition.

The question then is how valuable would Kevin Rudd’s Asia-Pacific Community concept be in this process? Rudd is right that none of the existing regional multilateral forums will help: APEC is too wide and diverse, and Taiwan’s involvement is a major liability. EAS and ASEAN + 3 exclude the US. So if a regional multilateral forum can help to build Asia’s new regional order, Rudd is probably right that we need a new one with the kind of membership he envisages.

But that is a big if. At the heart of Rudd’s proposal is the idea that Asia’s new order can and should be negotiated between all the powers of the region – big, middle and small. He probably has in mind something like the San Francisco conference of 1945 which established the post-war global order. But of course that is not how it worked: San Francisco was only possible because the Big Three had already reached a clear understanding about the future relationships, hammered out in closed bilateral and trilateral conferences. And when that understanding fell apart with the Cold War, the system built in San Francisco fell apart too.

The plain fact – unpalatable though it may be – is that Asia’s new order will be negotiated between its most powerful states, and the painful process of compromise and concession will be best done away from the glare of big meetings. In its most important aspects it will not be negotiated in any literal sense at all, but will emerge as each major power remodel their policy to meet emerging realities. The challenge then is not to organise grand conferences, but to do whatever can be done to ensure that as the major powers adjust their relations to new power relativities, they do so in ways that produce a peaceful and harmonious region and not a contested and divided one.

There could easily be a role for Australia in that. As America’s closest ally in Asia we do – or at least should – have the capacity to help persuade Washington to define its role in Asia in ways that minimise the risks of strategic competition. There may well be merit in building a quiet regional consensus among the middle powers about the kind of order that we would like to see the major powers build. Australia will never play more than a modest role in all this, but our most vital interests are deeply engaged, and we can have no higher diplomatic priority than to do what we can to push things in the right direction.

For Australia, then, and for others, it boils down to a matter of priorities and focus. The APC is not a bad idea in itself, but it is unlikely to help us address the most urgent problems, and has become a distraction from them. Australia’s diplomatic resources are scarce indeed, and our reservoirs of political will are no deeper than they should be either. While we have been pursuing the APC, Australia has done nothing to help promote the emergence of the new Asian order on which our future depends. One reason is probably that the promotion of a new Asian order would be much harder than floating ideas for new forums. It will require us to have a serious talk to Washington about the future of its primacy in Asia, and that is a cat no one wants to bell.

Eventually – once the major powers have reached a sustainable new set or relationships – a regional forum of the kind Rudd proposes could indeed be needed, and will almost certainly emerge. But today it is important that APC not become a distraction from the region’s most urgent tasks.

Hugh White is a Visiting Fellow at the Lowy Institute and Professor of Strategic Studies at ANU.

1. Rudd in Singapore on the Asia Pacific Community idea
2. Realizing the Asia Pacific Community: geographic, institutional and leadership challenges
3. China and the enlarged East Asia Summit: the makings of an Asia Pacific Community?

Jane Golley is absolutely right to identify how important the US-China relationship is to Australia’s future, how seriously the future health and stability of that relationship is under pressure from both sides, and therefore how important it is for Australia to find ways to help improve it.  Moreover she is right to think that Australia can make a difference here: the US-China relationship is probably the most important in the world today, but arguably no country is better able than Australia to help shape it in a positive direction.  This is not because Kevin Rudd speaks Mandarin, though that helps.  It is because Australia is uniquely placed to speak to America about its role in Asia.  Japan is America’s most important ally in Asia, but Japan’s view of future US-China relations is shaped by its fear of China and dependence on the US, which together incline it to prefer Washington and Beijing to remain at odds.  Australia is not nearly as important as Japan, but we are America’s oldest and closest friend on this side of the Pacific, and if we choose to use it we should have more influence in Washington to encourage closer US-China relations than any other third party.

But there is a catch. I think it may be harder for Australia to play this role than Jane suggests, because what is at stake here goes beyond the very important economic policy debates she raises.  This is an issue of strategic power and each country’s status in Asia’s international order.  These issues pose very deep questions for Australia itself.  Before we can have much influence in Washington or in Beijing, we Australians need to decide what we think about them.  To be blunt, Australia has always believed that its security depends on the domination of the Western Pacific by a Western, and indeed Anglo-Saxon, power.  China’s rise, if it is sustained, may well pose a decisive challenge to US primacy in Asia. I have argued that Asia’s future peace is best preserved by the US accommodating China’s power and accepting a dilution of its primacy.  But America’s instinct is to contest China’s challenge and preserve US strategic primacy even as its economic primacy fades.  Australia faces a stark choice: do we go with our instincts and our history, and support the US in trying to sustain primacy against the Chinese challenge?  Or do we encourage the US to make space for China, remaining actively engaged in Asia to balance its power but not to dominate?

So far our leaders have dodged this choice.  John Howard tried to pretend we did not have a choice to make, but leaned towards accommodation until his final year when he plumped firmly for supporting US primacy against the Chinese challenge.  Rudd in Opposition also leaned towards accommodation, but in Government he too has so far stuck to the political safety of fence-sitting.  Our new government faces some big choices if it is to live up to its self-image as a government which reshapes Australia for the new century.  These choices include, as Jane implies, deciding whether we remain an open economy. They also include a choice about whether we can rethink our place in Asia, and find a new model for our security that replaces the one that worked so well in the European and American Centuries with one more suited to the Asian century.

1. China and the challenge to American power? – Weekly editorial
2. Australia and China and the mutual benefits of the relationship
3. China’s rise and the importance of Australia-China youth dialogue

Peter Drysdale knows more than anyone about how to get things moving in the Asia-Pacific, so I pay a lot of attention to his views on the Rudd’s Asia-Pacific Community idea, and especially his critique of the sceptical views I have expressed about it. However I do not think we are as far apart as he suggests on the question of the right starting point for institution-building. Our differences are over how close we are to having reached those starting points, and over whether Rudd’s initiative brings us any closer.

First, I agree with Peter that the place to start building new institutions in Asia is not with a complex set of agreements on values, but with a much more austere set of rules – “the simplest rules of engagement for dialogue”, as Peter says in his post. Peter reads my call for a common set of principles as referring to a common set of values, but on the contrary I mean just the opposite. What we need to do is to agree that we can build a dialogue of equals on strategic questions despite differences in values. That is precisely what ‘’the simplest rules of engagement’’ for discussion need to cover. At its simplest this is something very basic indeed – all of the major powers need to agree to treat each other as equals, with equally legitimate political systems and international interests. Without that, the basic conditions for a cooperative dialogue about Asia’s strategic future cannot be met. Instead we will get a forum in which differences are aired and amplified.

Second, this may seem a minimalist condition, but we are still a long way from satisfying it yet in Asia. Simply ask any American leader whether they are willing to treat China as an equal, or any Chinese leader whether they are willing to treat Japan as an equal. In both cases the answer will almost certainly be ‘’no’’. Until the answer is ‘’yes’’, we have a problem.

Third, I’m not sure Rudd’s suggestion does much to help overcome it this problem. Conceptually the idea seems, to put it mildly, under-developed. The counterproductive use of the EU metaphor seems to suggest that not much thought has gone into what it should look like in its own right. Tactically, launching an idea like this without some serious consultation with key players more or less guarantees it will be dead on arrival, as I suspect it already is.

Peter’s boundless energy and optimism has often proved the sceptics wrong about what can be achieved cooperatively in Asia, and I hope Peter is right again this time, and I am wrong. But this is power politics we are talking about here, and it’s a zero-sum game. Alas the pessimists are usually right.

1. One more word on regional architecture
2. Where does Australia really want regional architecture to go?
3. Positioning Asian regional architecture internationally