The future of US hegemony in East Asia
Rising China? No!
East Asian international orders:
Before we deal with the future, I would like to briefly survey the past.
In the century prior to Industrial Revolution and Western onslaught, international relations in the region were fairly undeveloped due to the isolation of Japan and the limited amount of international intercourse between China and the non-Asian world. At times, Japan was actively involved in continental affairs (Hideyoshi invasions, wako piracy). It was also the recipient of Korean and Chinese culture but East Asia never had an international order similar to the one that developed in Europe after the Westphalian settlements and set the tone for world politics in the following centuries.
From the mid-19th century to 1945, the international order in the region was based on the peaceful or violent balance of power between a few major players. Periods of peace punctuated by wars. Some equilibrium was achieved after the Russo-Japanese War. It was anchored on the Anglo-Japanese alliance, a weak China, limited Russian and US power but unclear how stable this situation was. Anyhow it was shattered by World War I which led to the dramatic decline in British power and concomitant rise in Japan’s, as well as to the Bolshevik revolution and increased Chinese nationalism. From 1919 to 1945 Northeast Asia was either at war or preparing for conflict.
From 1945 to late 1980s, Cold War and partial US primacy. Despite the partial nature of US hegemony – due to the Soviet challenge – the key elements of US hegemonic system were in place by the mid-1950s:
Japan-US, ROK-US, and Taiwan-US alliances.
(Taiwan relationship special, evolved as China shifted from foe to friend to potential antagonist.)
ROK alliance. Bulwark against communist expansionism, provided opportunity for South Korea to develop economically and politically.
Japan alliance. Performed several tasks:
- Provided military anchor for US in Asia.
- Solved the question of Japan’s relations with Asia which had been unresolved since Meiji and led to Japan’s near destruction in Showa. The US alliance would provide Japan security, sparing it the need to get militarily involved in Asian affairs.
Thus allowed Japan to participate economically in Asia without the baggage of imperialism.
Evolution since 1945.
- Economic rise of Japan, ROK, and Taiwan from poor to rich nations.
- Political transformation of ROK and Taiwan into liberal democracies.
- Evolution of China’s position from enemy, to ally against the Soviet Union to potential adversary but with important economic ties to the US and Japan.
- Collapse of USSR. Less of a radical event than it was in Europe, even prior to 1991 almost all of productive Asia in the US camp and Soviet Union did not have satellites in the region while the Russian Far East was an unpopulated poor region.
But what has remained unchanged has been American primacy.
It has created, for the first time since the Industrial Revolution, a peaceful international order in the developed regions of Northeast Asia, allowing countries to trade with each other and the rest of the world under the umbrella of the US-led military alliance systems which allows them not to worry about their neighbors or other powers attacking them.
It has disconnected economics from international politics.
What are basis of US primacy in Asia?
- Enormous US military superiority
- Partnership, not vassal-like relations, with Asian allies, primarily Japan and ROK (Taiwan special).
- Wealthy Japan. Ensures that America’s no. 1 partner is strong.
Challenges to US hegemony? Rising China, declining Japan, and US policy failures
For China to evolve into a superpower it would need to become a First World economy, which would requires liberal institutions. These do not mean democracy but a set of property rights enforced by an impartial state bureaucracy. Such a society also needs a strong state, that is one capable of raising taxes and enforcing the law. The creation of such a liberal and strong state is what took place in Japan under Meiji, though it collapsed in early Showa and had to be reestablished by SCAP.
China does not have such a system. No secure property rights. Communist party is above the law, the state and party officialdom is corrupt to the core. Also state is repressive but fails to perform basic third-party enforcement mechanisms. Entrepreneurs depend more on their contacts and symbiotic relationships with corrupt officials that on contracts.
Yet, China has grown considerably since the late 1970s, so why can’t it keep growing under the current system?
First, the more advanced an economy becomes, the more it requires effective liberal institutions to succeed. “Socialism with Chinese characteristics” may exist but there is no such thing as “Liberalism with Chinese characteristics.” Regardless of culture, all liberal economic systems follow the same basic rules. Those that deviate most from them perform less well than those who do not.
Second, with economic reform, the state has become weak. Tax receipts as a proportion of GDP are low (though rising), very little revenue is raised through the income tax, and corruption is undermining the state and party apparatus.
Third, over time, the political economy of China has led to an accumulation of defects caused by the pervading corruption of officialdom, creating what one scholar calls “booty socialism.” Other consequences of these failures are non-performing loans, problems with state-owned enterprises.
Fourth, political stability is at risk. Traditional Marxist-Leninist dictatorships are stable but the Chinese system is different. The private sector gives many Chinese some economic independence, contacts with foreigners are common, information flows have been liberalized, and the police state is “softer” than it used to be. As a result, the regime now faces unrest from peasants and workers and has been unable to fully tame Falun Gong. Therefore, China faces many of the threats that societies in transition confront, namely the inability of the political system to institutionalize peaceful and effective means to channel rising expectations and increasing social mobilization. At the same time, the Chinese political system suffers degeneration. The Communist Party fails to attract the best talent in the country, there is a decline in ideological beliefs, and there is an improperly institutionalized intrusion in politics of previously politically uninvolved groupings.
Some may think that all these problems will be solved once China overthrows communist rule and evolves along democratic lines as South Korea and Taiwan have done. Such analysis, however, fail to take into account several factors.
First, before democratization, South Korea and Taiwan, were already liberal. They had, as a result of Japanese colonialism and American influence, a liberal system of property rights and, especially in the Korean case, a strong state with an effective bureaucracy.
Second, China is not a western society. Though such a remark may sound like cultural imperialism, the fact is that liberalism is a western invention. It can function effectively in Asia, which is why Japan and Singapore are wealthier than many western nations, but history shows that Asian states that successfully adopted a liberal system did so as a result of prolonged western influence. Japan was forced by the unequal treaties under Meiji to adopt western legal codes and was for seven years under American rule following the Pacific War. Singapore and Hong Kong are creations of British colonialism. Korea and Taiwan spent decades under Japanese rule, which imposed on them western legal and bureaucratic norms, and after 1945 fell under considerable American influence. China, however, would have to achieve a liberal transformation on its own. Empirical and theoretical evidence, however, indicates that this will not be the case. In the past hundred years, only a very small number of nations have transitioned towards liberalism, and all have done so as a result of western occupation or massive western influence. As Douglas North has demonstrated, path-dependence is such that it makes it very hard, in fact almost impossible, for nations that are not liberal to become liberal.
We have established that China lacks the ability to challenge American primacy. The second question that needs to be answered about the future of American hegemony concerns Japan.
Asia, even if we limit ourselves to Northeast Asia, is too large, too populated, too rich, for American primacy to be possible without a local partner. That partner has to be Japan because it accounts for a majority of the region’s wealth. South Korea and Taiwan play an important role but Japan is irreplaceable in America’s security architecture in the region.
Therefore, when thinking about the future of American hegemony in Asia we must ask ourselves where Japan is going.
For a reader of the Financial Times, The Economist, or for that matter Japanese publications, it is difficult to be optimistic. Every day seems to carry with it stories of huge non-performing loans, wasteful government spending, and of an absence of alternative to the moribund LDP. In addition, Japan’s dire demographic situation adds more worries about the nation’s future.
There are indeed many reasons to be pessimistic about Japan. Nevertheless, and this may surprise you, it is easier to be optimistic about Japan than about China. Why? Japan, unlike China, has functioning liberal institutions. Japanese enjoy the rule of law, the bureaucracy is effective, the state apparatus has the capacity to enforce the law, and there is a general agreement on the constitutional order (proposed amendments to the constitution do not put into question its basic framework). Therefore, though Japan needs major reforms, the country does not require, as China does, an entirely new political and economic order.
Japan, however, does face major challenges. You are all better informed about Japanese politics and economics than I am, but I would like to briefly explain to you how Japan looks to an outside observer.
The number one issue for Japan is demographic. A solution will require a combination of three remedies: increased fertility, a more effective use of women in the labor force, and immigration.
The other issue is what I would put under the title of failed political economy. It is the web of relationships between politicians and businesses and the failure of corporate governance that produce, among others, useless public infrastructure projects, protection for economically uncompetitive industries, exceedingly high levels of non-performing loans, low levels of foreign investment, and other ailments.
It is important to realize that though these problems are economic their solution will come from the political arena. Misguided government investment programs are the result of political decisions. Protection for agriculture and small businesses reflect the influence of these industries on the ruling party. Non-performing loans are caused in part by the absence of effective corporate governance legislation. These problems can only be tackled if Japanese politics are transformed. Japan needs a government that has both the willpower and the capability to tackle these issues effectively.
As of now, it is not possible to say if Japan will be able to renew itself. The changes that need to be undertaken are not as profound as those of the Meiji Reformation. But in Meiji Japan, the forces of renewal had the advantage of operating under tremendous foreign pressure, which materialized itself in the form of the unequal treaties forced upon Japan by the vastly more powerful western powers. Today, though gaiatsu may play a role, Japan will have to find the energy for renewal within itself. Though one may note that the challenge is probably less daunting than that faced by the country’s unifiers when they transformed a nation riven by civil war into the peaceful and prosperous Tokugawa shogunate.
Partnership with the allies
The third element of American hegemony is the partnership nature of America’s alliances. America’s allies in Northeast Asia – and Europe – are rich and autonomous. They are not like the colonies of traditional empires nor are they like the small impoverished Caribbean islands where the US can exercise its influence almost unilaterally.
The US is more powerful than Japan, having an economy about twice the size and a military vastly greater than Japan’s. Nevertheless, the US cannot successfully manage its Japan relationship, and therefore its hegemony in Asia, if it does not take into account Japanese interests.
The behavior of the Bush administration, where it seems to relish in ignoring the interests and wishes of its allies (Kyoto Protocol, International Criminal Court, arms control agreements, Israel-Palestine, Iraq) raises serious questions about America’s ability to maintain strong relations with its allies. So far, this has been more of a problem in Europe, which is more directly affected by the Iraq issue and other international treaties, than with Japan, though the Japanese relationship is not unaffected by the behavior of the Bush administration.
In conclusion one can make two observations. First, there are no external threats to American hegemony in Asia. Second, the two main challenges for the US-based international system in the region are internal: Japan’s ability to renew itself and America’s willingness to manage its alliances effectively.