China's rise, Asia's dilemma.

• Author: Lee, Chung Min

FOR THE past decade, reaping the benefits of the dynamic Chinese economy has dominated Asia's China strategies. This is hardly surprising. While China's real GDP in 2004 was well below the GDPs of the United States and Japan, if one uses purchasing power parity figures, China became the world's second-largest economy with a $6.4 trillion GDP in 2003, according to recent data published by the World Bank. Of course, China still confronts a litany of economic problems such as endemic corruption, mismanagement of state-run firms and banks, widening underemployment and the prospect of colossal environmental disasters. But this has not prevented Japan and South Korea from becoming China's first- and fourth-largest export markets and its first- and fourth-largest importing partners. Meanwhile, since 1999, trade with the Philippines has grown by 565 percent, with Malaysia by 258 percent and with Vietnam by 281 percent.

Yet the more ominous face of China cannot be ignored. Beijing continues to downplay its increasingly sophisticated force structure and insists that its defense budget of $30 billion pales in comparison to the Pentagon's $420 billion budget. But external estimates, including U.S. intelligence assessments, place China's actual defense budget in the range of $50 billion to $80 billion. Over the past decade, China's official defense budget has increased at an average of around 11 percent per year. The People's Liberation Army's (PLA) emphasis on key force modernizations, including more robust submarine forces, a new generation of fighter aircraft and an array of asymmetrical capabilities, means that over the next two to three decades it will come close to becoming a so-called "theater peer" of the United States.

In turn, for the past decade, the United States has attempted to re-engineer its key alliances in the Pacific. While the revamping of "America's Asian Alliances" began in the mid-1990s, an important shift is now occurring: Washington is trying to push Japan, Australia, South Korea and various ASEAN states to consider "unnamed over-the-horizon" threats, clearly implying China.

Given the dramatic growth of the Chinese economy since the late 1980s and the continuing surge in northeast Asian and Southeast Asian trade with China, it is not surprising that most of China's neighbors have concentrated their attention on managing their commercial ties with China. How a rising China might affect their geopolitical and strategic position has received much less attention, however. Crafting policies that are essentially devoid of effective responses to China's geopolitical ambitions or are variations of "pre-emptive accommodation" will have serious and potentially negative consequences for Asian security and stability. The full spectrum of China's strategic capabilities and intentions must be taken into account to ensure more realistic and effective policies toward China.

THE LEADING Asian states find themselves in three strategic quandaries produced by the rise of China. First, Asia's relative strategic weight in the global balance of power is once again becoming equated with that of China's own strategic disposition. While China's longer-term ascendance as the next superpower is replete with significant hurdles, so long as Asia's future paths depend increasingly on China's own trajectory, the blurring of "Asia" and China will accelerate, which in turn is going to pose progressively higher-threshold dilemmas for Asia and the international system.

Second, rarely (if ever) has the rise of a great power posed such promises and hazards at the same time. The continuing rush to join the Chinese economic bandwagon means that most of China's major trading partners have tended to downplay sensitive political and military issues. While understandable in the context of substantial economic incentives, it vitiates efforts to counter-balance China's strategic ambitions.

Finally, the forging of viable coalitions to deny, delimit or even contain China's power projection capabilities and potentially irredentist strategies has so far proven illusory. While pressures can be mounted on China from various corners, no Asian country today or in the foreseeable future is likely to contest China directly at the cost of trade ties. As China moves in earnest to build a blue-water navy, only two other regional navies--India's and Japan's--would have the wherewithal to constrain China's maritime forays. None of the Asian powers, with the notable exception of India, has indigenous nuclear forces to match China's--and whatever nuclear capacity India bears will be constrained by its primary emphasis on deterring Pakistan.

Proponents of active engagement often point out the absence of viable alternatives when dealing with China. Moreover, they maintain that once the People's Republic becomes "a large Taiwan" (that is, when China becomes a full-fledged market economy and political democracy), Beijing will be highly unlikely to contest the status quo. But it is not clear whether a fully democratized China will necessarily become less nationalistic and shed potentially aggressive geopolitical aspirations. To the extent that Chinese elites...