Commentary |
29 February 2020

Middle Powers Will Determine the Future of the Asian Order

In Asia, power is shifting. The changing balance of power is setting the stage for prolonged great power competition. As the US-led rules-based order decays, the question is what regional order – if any – will replace it.

Hervé Lemahieu
Hervé Lemahieu

In Asia, power is shifting. The changing balance of power is setting the stage for prolonged great power competition. As the US-led rules-based order decays, the question is what regional order – if any – will replace it.

Here I offer three thoughts on the emerging Asian order, and how middle powers can shape it. I argue:

  1. The United States under President Donald Trump and China under President Xi Jinping are both – in different ways – choosing paths that challenge the architecture of global politics.
  2. Small and middle powers have the most to lose from a transition away from an open and consensual order to a world where ‘might makes right’ at the expense of international norms, rules and institutions.
  3. However, far from being hapless victims, middle powers have the requisite means to stabilise the regional balance of power in their favour. But they will need to step up.

1. In Asia, the open, rules-based order is giving way to intense competition between two superpowers.

The 2019 Lowy Asia Power Index showed that the current order is giving way to intense competition between two superpowers: one established, the other emerging.

The US remains the dominant player. But China is closing the gap. This portends an intensifying, potentially decades-long, great power competition with uncertain implications for regional order.

Under most scenarios, the United States will not be able to halt the narrowing power differential in Asia between itself and China. Nor, however, will Beijing simply grab the sceptre of unipolarity off the Americans.

It is increasingly likely that neither power will be able to exert undisputed primacy in our region:

  • China is a formidable regional military power and now has weaponry that could assail US and allied bases in Asia, as Ashley Townshend, Brendan Thomas-Noone, and Matilda Steward recently noted.
  • However, the United States is still the dominant global military power – reflected in its unmatched military reach and the depth of its global defence networks.
  • A levelling in the military balance in Asia may actually paradoxically push great power rivalry below the threshold of conflict, rather than provoke a full-scale war between the United States and China.
  • Under such a ‘cold peace’ scenario, a more hazardous variant of globalisation will still involve both the United States and China, even if the two become less dependent on each other. This is because there are fewer ideological compulsions among third countries and economic advantage counts for more than during the Cold War.

This emerging great power competition has already resulted in an erosion in support for international norms, rules and institutions.

Beijing’s growing military assertiveness in the South China Sea has discredited the process by which international rules and norms are established and enforced:

  • In January 2013, for instance, the Philippines— in a classic act of middle power diplomacy—initiated proceedings at the Permanent Court of Arbitration in The Hague. These challenged China’s claims to approximately 90 per cent of the South China Sea. In July 2016, the court found overwhelmingly in Manila’s favour. Despite being a signatory to UN Convention on the Law of the Seas (UNCLOS), China has refused to comply with all but two requirements of the court’s eleven-part ruling.
  • Since then, Beijing has continued to undermine the Convention on the Law of the Seas through its unlawful land reclamation around contested features of the South China Sea – developing military facilities on some of these features, including the installation of powerful surface-to-air missiles.

Meanwhile, the Trump Administration appear unable to close a widening gap between the rhetoric of wanting to uphold a US-led rules-based order and the US President’s unilateralist foreign policy:

  • Key decisions made by the Trump Administration indicate a rejection, at least in part, of the rules and norms to which we have become accustomed. These include the withdrawal from the Trans-Pacific Partnership, the Paris Agreement on climate change, the UN Human Rights Council, the Iran nuclear deal, and the imposition of quotas and tariffs including on allies and partners against the multilateral trading system. 
  • Just as damaging is the fact that the Trump administration is confronting China in a way that weakens, rather than strengthens the rules: The White House has taken a distinctly unhelpful unilateralist approach to confronting China – instead of working with allies, and within institutions, to corral China back within the rules.

Even where the United States and China have sought to manage their differences, albeit temporarily and partially, they have done so in ways that further erode the multilateral system:

  • The 15 January US–China “Phase One” trade agreement is a form of managed trade policy that works against the spirit of the World Trade Organisation. The accord is not so much a ´free trade’ agreement as a purchase agreement. China has committed to importing $200 billion more from the United States this year and next, compared to the baseline of the country’s imports from the United States in 2017. If Beijing succeeds in meeting this target, it will almost certainly be at the expense of smaller countries that export to China.
  • Meanwhile, the Trump administration’s blockade of the WTO’s Appellate Body may cause irreversible damage to the multilateral rules-based trading system, not fix it. The US helped to create the WTO, whose crown jewel is a dispute settlement system that has been essential for ensuring open and fair trade. However, the US administration’s blockade on appointments to the WTO’s top court—the Appellate Body – amounts to a serious blow to global economic governance. As of December 2019, the Appellate Body had too few members to decide cases and effectively ceased to function.

2. Small and middle powers have the most to lose from this transition away from a ‘rules-based’ to a ‘power-based’ order.

  • Small and middle powers need an open, rules-based world to flourish. Rules and international stability allow countries regardless of size to compete on an even footing.
  • Unrestricted great power competition brings us closer to a world in which military power and economic size, not principles or rules, dictate the terms of engagement.
  • When rules and norms are no longer consistently upheld and adhered to, countries are made more vulnerable to ‘grey zone’ coercion by larger neighbours who feel less inhibited to exploit their economic or military asymmetries for geopolitical gain.
  • In Asia, such a system will almost certainly favour China as Beijing seeks to cement a Sino-centric and deferential web of international relations in its neighbourhood.

As Edward Luce has put it, “In a stable ecosystem, smaller species thrive. In a dog-eat-dog world, everything starts to look like dinner”.

3. Middle powers are capable of forging a favourable – and preferably peaceful – balance of power in the region. However, they will need to step up.

A dog-eat-dog world isn’t inevitable.

Our Asia Power Index data indicates that the neither the United States, nor China, will be able to exert undisputed primacy in our region.

Asia has a ‘long tail’ of major and middle powers – including the world’s third and fourth largest economies India and Japan, as well as pivotal Southeast Asian states. These players will only become more important in an age of great power competition.

  • In general, middle powers in Asia will remain averse to taking categorical sides with the United States or China if this means dividing into rival blocs. They are interested instead in practical outcomes in their favour.
  • Any China pushback will likely to be issue-specific – such as on the role of Huawei in 5G markets – and reflect varying national interest calculations and negotiating leverage.
  • This pragmatic issue-driven approach to decisions will almost certainly persist, unless and until there is a severe security deterioration in Asia such as the outbreak of an open war.
  • However, countries of our region must do more than simply navigate the slipstream of great power competition. When two superpowers are gridlocked, the actions of the next rung of powers can constitute the marginal difference.

Middle powers must do what they can to shape the outcomes they want. Japan in particular is already making strides in this direction:

  • Tokyo has resuscitated the Trans-Pacific Partnership, along with ten other countries in the region minus the United States.
  • Japan has also proven a capable rival to China for infrastructure investment, which eases developing countries’ dependence on Chinese lending.
  • Japan has the most outsized influence in Asia – according to our analysis of the Power Gap – which measures what countries have, in term of their capabilities, against what they do with what they have, in terms of their international influence.

The Power Gap makes clear that the most successful middle powers are those that generally work through multilateral institutions and form coalitions with other powers to tackle international challenges.

More middle powers need to follow suit by being proactive and independent in in an era of deepening Sino-American strategic competition. By doing so, they can uphold the rules-based order – or at least slow its demise.

To step up effectively, middle powers should:

  • Deepen working ties and co-ordinate on achieving their goals: our data shows that middle powers are most effective when they forge deep links with each other, and co-ordinate on their shared interests. This means striking new deals, creating new ad-hoc coalitions, and, where sensible, creating new institutions and forums. For example, Ivo Daalder and Jim Lindsay have suggested that a G-9 of middle powers could meet annually at leader or ministerial level, or form an informal caucus within existing institutions. A recent case in point is how the European Union and a group of 16 countries, including Japan and Australia, are forming a grouping to settle their trade disputes using an appeals and arbitration system to replace the WTO Appellate Body stymied by the United States.
  • Strengthen their economic resilience: as the weaponisation of economic interdependence increases, middle powers should prepare themselves to weather this. They need to inoculate themselves, as best they can, against potential economic coercion attempts. This means diversifying their trade flows, broadening their energy mix and strategic reserves, and taking concrete measures to secure their political processes from outside influence.  
  • Respond collectively to acts of coercion: as important as co-ordinating on achieving shared goals, is co-ordinating on shared responses to breaches of the rules. As we shift to a power-based world – where the strong will try more frequently to coerce the weak – the credible threat of a collective response will become more important to deter predatory behaviour. For example, middle powers could coordinate a more robust collective response over China’s unlawful detention of Canadian citizens Michael Kovrig and Michael Spavor.
  • Signal their resolve through defence partnerships: this is already happening. As China’s presence in contested spaces has grown, so are efforts by other powers to create a military and strategic counterweight in response. Most middle powers – especially those in Asia – understand that the era of cheap security is over. But there’s still more to do. Defence partnerships can act as force multipliers of autonomous military capability. They also function to deter would-be military adventurism in the region.   
  • Refrain from copycat ‘zero-sum’ competition: Testy relations between Japan and South Korea – two US defence allies – sank to new lows last year when they became embroiled in a trade war that resembled tactics seen between the United States and China. Yet moving away from the ‘positive-sum’ economics of globalisation towards the ‘zero-sum’ logic of trade wars is a risky path for all. The logic of middle power diplomacy is that it is in our self-interest to set an example of upholding a global rules-based order. While competition is inevitably an aspect of international relations, unless it is balanced by the objective of cooperation, our collective peace and stability will be made vulnerable.
  • Push back against ‘with us or against us’ rhetoric: as our data shows, no side will ‘win’ primacy in Asia. There’s no ‘choice’ between the U.S. and China. And there’s certainly no ‘choice’ to thwart China’s rise. These dichotomies are false, and potentially very destructive for the small and middle powers caught in the crossfire. Moreover, as recent developments in digital technologies show, if the United States doubles down on ‘with us or against us’, then it might be unpleasantly surprised by which side some Asian countries take – especially those which are heavily economically dependent on China.  
  • Work to bind both the United States and China to the rules: the real ‘choice’ is between China rising in a context where it’s governed by rules, or China rising in a rule-less context. Instead of ‘choosing’ between the US and China, middle powers should work towards binding both superpowers to the rules. For example, Japan and the EU have engaged the United States to find new ways to strengthen global rules on Chinese industrial subsidies distorting global trade within a WTO framework. Plurilateral efforts of this kind will prove more effective than unilateral actions for forging a favourable – and preferably peaceful – balance of power in the region.

Finally, and most of all, middle powers need to believe in themselves and in each other. Our research shows that they have the power to shape Asia’s future if they have the will to do so.