BEIJING - On October 10, China's state-run Xinhua news agency saluted the meeting between Chinese Premier Wen Jiabao, Japanese Premier Yukio Hatoyama and South Korean President Lee Myung-bak, as "a new starting point for tripartite cooperation".
The meeting explored the idea of a free-trade pact, inched closer to deeper regional integration, and foreshadowed a possible Asian union modeled after the European Union.
China, Japan, and South Korea declared they were "committed to the development of an East Asian community", agreeing to expand cooperation across a wide range of issues, including climate change and sustainable growth.
Economic forces and threats were at work. Recovery from the financial crisis shows strong signs in Asia, carried by China, while the economy is still very sluggish in America and Europe.
David Goldman, who writes for Asia Times Online under the pseudonym Spengler, believes that unless something changes very soon, the United States - still by far the largest global economy - is headed for a long period of stagflation (stagnation plus inflation) [1] like the one that began in Japan in 1989.
The United States' present and foreseeable economic difficulties contrast sharply with the numbers coming out of Asia, where in the second quarter Japan showed clear signs of improvement. These two trends - the difficulties of the US and Asia's improvements - if confirmed over the next couple of years could become a major objective force driving regional integration.
So far, Asian growth has been driven by massive national stimulus packages, mainly by China's trillions of yuan of credit to large companies. This, however, cannot be sustained for too long without badly damaging the account books of every country. Then, if in a couple of years the US is not clearly out of its present quagmire, greater Asian trade integration could represent the alternative.
Still, China may be less than keen to embrace this solution. The first difficulty for China is choosing the members of future regional integration. China, Japan, and South Korea agree on having the Association of Southeast Asian Nations' members on board. But they disagree on the participation of India. However, if push came to shove, it would hard for China to argue against India's participation in a regional free-trade agreement.
On Sunday, just days after the failure of its bid to host the 2016 Games, Japan renewed its Olympic Games ambitions, proposing to host them in 2020 in Hiroshima and Nagasaki, the two cities bombed by atomic bombs by the US in 1945. This bid is a masterstroke. It is a bid for a future Nobel Peace Prize, as it aims to celebrate peace and a world free of atomic weapons. Domestically, it proves Hatoyama's determination and dynamism as well as his speed in taking the initiative, which could help in expanding his support ahead of next year's crucial Upper House elections. It nudges the world to pay closer attention to the North Korean issue, and it shows Asia that - despite the fact that next year China should become the number-one economy in the region - Hatoyama's Japan can still take a leading role in the area and still has many political tricks up its sleeve.
Although China has greatly improved its performance in international forums, it still prefers bilateral talks. Proposed free-trade agreements have trade issues bordering on politics that could easily entangle relations between China and private entrepreneurs involved in China, its heavily industrialized Guangdong province or the Philippines, as well as places like China's Zhejiang province or Southeast Asian nations such as Thailand. For a very control-conscious Beijing, it could be a nightmare, something that could block China from developments in other regions.
Then, in theory, a grand entente cordiale with America - in practice, a group of two between the US and China - could work better for Beijing. China would be a junior partner, but it would have a major political "discount" in the ties. In its dealings with the US, despite all the ideological preconceptions about Chinese communism, China could start anew, putting aside its past.
The US does not have the many years of hatred or fear about Chinese historical "hegemony" that one finds in many Asian countries and with which China will increasingly be confronted as its economy and power grow in the coming decades. Asian countries are not really scared about the threat of a future Chinese invasion - this has rarely occurred in the past, and it looks much less likely now. However, there is real concern about Chinese bullying, and thus the widest cooperation of neighbors - including India, the only country that population-wise can be compared to China - could help to minimize this possibility.
The two options, the Asian community and the proposed "group of two", composed of the US and China, are not mutually exclusive - they could be carried out at the same time and possibly will. Still, the real issue is which one will be fast tracked. This will largely depend on what the US decides to do next month, when Obama goes to Beijing for a summit with his Chinese counterpart.
The United States could be interested in the emergence of an Asian community, which could help bind a growing China. In different conditions and in a different historical situation, an Asian free-trade agreement could serve to rein in China. However, the centerpiece of the European Community, predecessor to the European Union, was eliminating German leadership. Divided after World War II and saddled with enormous guilt, Germany (still the largest economy in Europe) no longer aspired to lead Europe, and this task fell on the two members, the United Kingdom and France, which were in the EC but also had national interests that were larger and different from those of the community. US influence on the European Community was then much larger than what met the eye.
Few of these conditions are met in Asia. China will not easily give up its political aspirations. Nor is India willing to be controlled by America or Japan. Being an island and fearing a possible squeeze between China and America, Japan may also be inclined to take what it hears from the US with a pinch of salt. Without a rather quick American economic recovery and with all of Asia having witnessed the US battered and mired in Iraq and Afghanistan, any Asian free-trade agreement could be more detached from the rest of the world. Despite their many differences, Asian countries might decide it is more practical and efficient to sort out their differences among themselves, as they did for centuries, rather than with the external aid of the US.
Of course, the US will not then disappear from Asian radar screens. But with less economic clout because of the lasting financial crisis, bad performances on the battlefields in Iraq and Afghanistan, and an increasingly confused stand on ideological issues such as human rights and democracy, the US could become a dwindling presence in Asia, while inter-Asian politics may be on the upswing.
If this American crisis lasts more than four or five years, Washington might find a different Asia by the time it has the muscle to come back. Asian countries may simply get used to handling themselves with less US involvement and thus might desire even less of an American future commitment in the region.
These are very real issues for Obama to consider before the next Beijing summit. A strong US strategic and industrial commitment with China could help to balance pan-Asian trends, and new Nobel Peace laureate Obama might want to proceed with this commitment, having already recognized that the US-China relationship may be the most important in the world now.
However, the devil may be in a mountain of details that could easily disrupt the whole process. The details range from strategic issues like North Korea, Iran, Taiwan and Afghanistan to trade, the environment, security, and ideological issues, not to mention concerns about the future role of the dollar, the yuan, and the global financial system.
These are huge questions that can't be ignored or swept under the carpet, nor can they be painstakingly addressed one by one before building future ties. Each of these details has the power to scuttle the whole relationship and shape the future in one way or another. Yet each of them remains only a part of the bigger political picture about the future of Asia and America.
It is unclear if there is or can be a formula to bring China and the US closer together, taking into account the details without being too constrained by any of them. Still, finding this formula in the next months or years could be crucial to moving China more towards Asia or more toward America. The ball is in Obama's court.
Note
1. See Inner Workings (http://blog.atimes.net/?p=1168). (2009-10-15 Asia Times)
