Foreign Affairs

A Paradigm Shift in America’s Asia Policy

Washington must get more countries off the sidelines in its contest with China.

Senior Fellow
An F-35C Lightning II prepares to launch from the flight deck of the aircraft carrier USS Abraham Lincoln in Mirmar, California, on November 7, 2021. (Charles Allen via DVIDS)
An F-35C Lightning II prepares to launch from the flight deck of the aircraft carrier USS Abraham Lincoln in Mirmar, California, on November 7, 2021. (Charles Allen via DVIDS)

In 1988, U.S. Secretary of State George Shultz embarked on a three-week tour of Asia, stopping in Hong Kong and mainland China, Indonesia, Japan, the Marshall Islands, the Philippines, South Korea, and Thailand. Shultz sat through long meetings to assure his hosts of Washington’s enduring friendship and interest in the region—engaging in what the diplomat Nicholas Burns described in Foreign Affairs in 2021 as “weeding, watering, and watching over the diplomatic garden.” The gardening metaphor, adopted by Shultz himself, was meant not as a slight but as a recognition that U.S. interests would best be served by light-touch diplomacy. Economic and political liberalization, rather than heavy-handed pressure, the thinking went, would bring countries in the region into alignment with the world’s liberal democracies.

Two decades of peace and prosperity appeared to validate Shultz’s approach. The region’s traditional rivalries persisted and historical grievances remained unresolved, but as Asian countries prioritized economic development over military spending, the risk of conflict seemed low. The United States offered Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand open access to the American market, and in return it expected their governments to support its own strategic interests and naval presence in the region.

But Washington’s post–Cold War strategy in Asia is no longer viable. By focusing on trade and development, many Asian countries have not done enough to strengthen their militaries and have left themselves vulnerable to Chinese aggression. China has engaged in the most rapid peacetime military buildup by any country since the 1930s. And Beijing has exploited its neighbors’ neglect of defense spending and equivocal positions on important issues by expanding China’s military and paramilitary presence in contested areas such as the Taiwan Strait and the East China and South China Seas. China, with its natural advantages in size and scale, has used enormous subsidies and extended cheap credit to domestic firms to lower production costs at home and distort markets abroad. As Chinese firms crowd out their foreign competitors, China has absorbed the regional supply and value chains that once included companies in Japan, South Korea, Taiwan, and Southeast Asia—and has accelerated the hollowing out of the American industrial and manufacturing base. Until Washington strikes a different bargain with its Asian allies and partners, these unfavorable trends will continue.

The United States has already recognized the dangers of China’s market practices, and it is encouraging allies to invest in their militaries. But an effective strategy must go further. China’s military advantage over the rest of the region is widening, and Beijing is becoming more bellicose in its territorial disputes with several of its neighbors. If necessary, governments in Asia must be willing to take sides, and even to sacrifice blood and treasure to protect themselves from Chinese expansionism. Washington cannot strong-arm Asian partners into supporting its own defense priorities over Beijing’s, but it can provide them incentives to cooperate more closely with the United States. Turning currently neutral powers into active U.S. partners is essential to making the region safer and less vulnerable to China’s territorial and geopolitical ambitions.

Beijing Gains the Advantage

Over the last two decades, China has aimed to reduce the American presence in Asia and eventually ease the United States out of the region entirely. To accomplish this, Beijing has focused on weakening U.S. alliances and isolating countries such as Australia and Japan. Because of its geographical distance from the region, the United States relies on access to its Asian partners’ territory and assistance to keep its military in position. China, recognizing this vulnerability, has pressured these countries not to make security commitments to the United States or to build up their own defenses.

In essence, Beijing’s game plan is to clear the way for its own regional ambitions by taking formidable players off the board. If other Asian maritime states stay weak, inward-looking, and disinterested in strategic and military affairs, then China can more easily encroach on their territory and interests—and compel them to remain neutral in a contest between a revisionist China and a U.S.-led coalition.

China’s main tool for neutralizing its neighbors is economic. For example, with bilateral deals negotiated as part of the Belt and Road Initiative, China’s global infrastructure development project, Beijing tempts the ruling elites of countries such as Indonesia, Malaysia, and Thailand with the promise of immediate economic benefits. But China invariably comes out ahead in these arrangements—and the deals carry the expectation that the recipient of Chinese largesse will acquiesce, or at least remain impartial, to Beijing’s expansionist maritime claims and plans for technological dominance. China’s neighbors have become increasingly submissive as their economic dependence makes them less able to resist Chinese demands. Even though Chinese coast guards routinely harass Filipino or Vietnamese ships in contested waters, for instance, other Southeast Asian states are reluctant to criticize Beijing. In September, Cambodia vetoed an Indonesian proposal for the Association of Southeast Asian Nations to stage its first-ever exercises in the resource-rich North Natuna Sea off Indonesia’s northern coastline. China’s claims in the South China Sea include part of this zone.

It is in China’s interest for countries in the region to abstain from strengthening their military power. To that end, Beijing has prolonged multilateral discussions about how to manage the region’s territorial disputes—and used the extra time to change the facts on the ground. First, Chinese leaders dangled the promise of a code of conduct for the South China Sea, starting with negotiations in the 1990s that lead to a nonbinding declaration in 2002. Twenty-one years later, the parties have merely settled on guidelines for a binding agreement that has yet to materialize. In the meantime, China has rapidly modernized its armed forces and built militarized artificial islands in contested waters. With their defenses clearly outmatched, some smaller states have all but given up on balancing against China.

This lack of resolve is evident not just in Asian states’ aversion to calling out Chinese encroachment, but also in their military investments. As understandable as prioritizing economic development may be, it has come at the expense of these countries’ ability to defend their territory against a large, aggressive neighbor. Strategically important countries such as Malaysia, the Philippines, and Thailand have spent, on average, just 1.0 to 1.5 percent of GDP each year on defense for the last decade. Indonesia spends even less; its defense budget has remained below 1 percent of GDP every year since 1998. Among the major maritime players in Southeast Asia, only Singapore and Vietnam seem to take defense seriously. Their annual spending has averaged between 4–5 percent and 2.0–2.5 percent of GDP, respectively, over the past few decades.

Choosing Not to Choose?

Policymakers in Washington are often frustrated that more Asian states do not resist China’s routine denial of the rights of its smaller neighbors. But Washington’s frustration stems from a misunderstanding of Asian statecraft as it has evolved. Leaders in many Asian capitals have learned to maximize the benefits that they can extract from great powers. Southeast Asian countries, to use their common refrain, do not want to be forced to choose. They may bristle at a Chinese territory grab in the South China Sea, but they will not allow their outrage to disrupt their efforts to gain as much as they can from both Beijing and Washington.

This mindset explains the generally positive reception of China’s Belt and Road Initiative across the region. The countries formally participating in the BRI, including all the members of ASEAN and several Pacific Island nations such as Fiji and the Solomon Islands, signed up even though they were aware that Chinese firms would receive the lion’s share of the profits and that Beijing would dictate the rules and standards governing the projects. Modest gains were better than nothing, and they elected to approve BRI projects on a case-by-case basis. These countries have noted China’s growing power, the United States’ corresponding decline, and their own limited influence over the regional order. In their view, to ignore these dynamics and reject China’s overtures would be to court unacceptable risk and uncertainty. But for all these countries’ insistence that they not be forced to choose between the United States and China, their participation in the BRI and their determination to sit on the sidelines rather than balance against Chinese military power serve China’s purposes at the expense of the United States.

To be sure, Washington has made some recent advances in rallying Asian partners to resist Chinese influence. In 2019, for example, Singapore renewed a long-standing agreement to allow the United States the use of its air and naval bases. The city-state also responded positively to the AUKUS agreement—a defense deal among Australia, the United Kingdom, and the United States that includes provisions for Australia to acquire nuclear-powered submarines—and indicated that Australian submarines would be welcome in Singaporean ports. The Philippines announced in April that it would make four new bases available to American forces (in addition to five existing ones) as part of an expanded defense agreement. In June, the Philippines for the first time conducted joint naval drills with the United States and Japan near its Bataan Province, whose coast lies along the South China Sea.

These are meaningful developments. But they do not represent the hardening of coalitions or alliances. Both Singapore and the Philippines, similar to most other countries in the region, would still prefer a de-escalation in U.S.-Chinese competition. Both countries maintain strong ties with Beijing, and neither has indicated an intention to follow in Australia’s or Japan’s footsteps and join a balancing coalition with the United States to push back against China’s presence in contested areas.

Washington Pivots in Asia

Under the past two administrations, the United States’ regional policy has focused on enhancing existing alliances. The Trump administration began working with Australia and Japan, the United States’ two most willing Asian allies, on trilateral military cooperation and “friend shoring” supply chains for critical minerals. The Biden administration has continued these efforts and deepened military cooperation with Australia and the United Kingdom through the AUKUS agreement. Importantly, Biden has coaxed the Philippines and South Korea, allies who had drifted from the United States under the previous two U.S. administrations, to accept a greater share of the security burden associated with managing China.

But if Washington is to retain its position in Asia, it will need to convince those maritime states drifting further into China’s orbit to change their approaches to security. The United States can no longer separate economic cooperation and market access from its broader geopolitical objectives, as it did in the first two decades after the end of the Cold War. But Washington also cannot follow the Chinese example and use arbitrary threats and economic coercion to compel smaller powers to join its side. Historically, the United States’ bilateral defense agreements have allowed Washington to help shape the strategies of its allies in Asia. The same logic should now guide a policy in which Washington extends tailored agreements that combine economic and security imperatives to key countries in the region.

The United States has already tested the waters with such an arrangement. Biden’s groundbreaking AUKUS deal built on the Trump administration’s decision in 2016 to include Australia and the United Kingdom in the United States’ National Technology and Industrial Base, will eventually allow these nations to share military technology and jointly develop and deploy weapons. More than just a defense agreement, AUKUS established a platform for the three parties to share information and technology and to integrate industry and supply chains related to national security. This collaboration should also boost civilian industry and yield other economic benefits down the road.

The AUKUS agreement was made possible by decades of security and intelligence cooperation among Australia, the United Kingdom, and the United States. It thus may not be wholly replicable, as other U.S. alliances in Asia lack this bedrock of close ties. But AUKUS does represent a new paradigm in which U.S.-led regional arrangements align economic privileges and technological benefits with strategic and geopolitical interests. It is no coincidence that U.S.-Taiwanese trade negotiations are moving forward at the same time that Taiwan is accepting greater responsibility for its own territorial defense.

Putting Offers on the Table

The United States cannot force other countries to make the decisions it wants them to make, but it can help them overcome their reluctance. Washington can offer economic opportunities, such as market access or special carve-outs to export controls, that these countries will not want to miss out on. And it must condition these offers on Asian countries’ agreement to raise their own defense spending, support the military presence and operations of the United States and its allies, resist China’s economic and military policies when those policies harm their own interests, and stand behind other targets of China’s threats and punishment, including Taiwan. Cultivating ready partners will help the United States forge the regional order it wants. Whereas Beijing’s economic incentives once pushed countries to defer to Chinese security interests, Washington’s incentives will increase the ability and resolve of smaller states to advocate for themselves.

This is not a proposal to indiscriminately flood the region with cheap capital in the hope of purchasing temporary loyalty to Washington. Instead, privileged economic, trade, and technological cooperation arrangements will encourage hesitant countries to choose to work with the United States and its allies. That choice includes making investments of their own. A confident and proactive network of smaller states will impose constraints on China’s advances toward regional dominance.

Not every country in Asia will wish to engage with the United States in this way. Washington should thus devote its diplomatic attention and economic resources to those countries that have expressed interest in bulking up their defenses against Chinese encroachment and assisting their neighbors’ efforts to do the same. South Korea under President Yoon Suk-yeol, for example, has already entered discussions with the United States about coordinating efforts to secure critical supply chains and addressing China’s restrictive policies on semiconductors, robotics, and advanced manufacturing. A bargain that combines economic policies that serve these objectives with steps to deepen bilateral strategic and military cooperation would be an attractive offer for Washington to bring to Seoul.

The Philippines is another obvious candidate. Its recent decision to grant the United States access to additional military bases increases the coverage and credibility of the U.S. security guarantee included in the countries’ bilateral defense treaty. The northernmost of these new bases, specifically, allows U.S. forces to be stationed closer to the Taiwan Strait, while the southern bases provide direct access to the South China Sea. In return for a larger deployment of U.S. forces and a greater investment by the Philippines in national defense, the United States can offer to fast-track assistance with the Philippines’ 5G rollout, update the country’s air transportation network, and finance upgrades to its railways, ports, and health-care system.

Singapore is also an important U.S. defense partner, but it has enabled China’s economic ambitions by supporting the BRI and Beijing’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the successor to the Trans-Pacific Partnership, which had included the United States). It has also given China diplomatic cover by failing to criticize Beijing’s regional aggression—a noteworthy omission given the diplomatic authority Singapore holds. If Singapore takes a firmer stance against harmful Chinese economic and military policies, the United States could offer deeper collaboration in artificial intelligence, digital payment systems, biotechnology, and quantum applications—sectors that are crucial to the future of Singapore’s technology-based economy.

Current trends in the United States’ domestic politics and foreign policy will facilitate deals of this kind. As U.S.-Chinese technological decoupling proceeds, as Washington onshores or friend shores critical supply chains, and as both Democrats and Republicans encourage investment in the American industrial and technological base, the costs to smaller Asian countries of being denied access to U.S. industries and markets will increase. China’s practice of reserving benefits for state-owned firms and national champions at the expense of foreign entities, meanwhile, will only make the United States’ offerings more attractive.

The era of light-touch diplomacy is over. Washington cannot assume that merely promulgating American principles or lifting trade restrictions and lowering tariffs will win it security partners. If the United States is to resist China’s challenge on both economic and military fronts, it must rally its allies and friends in Asia. These countries’ past inaction served Beijing’s objectives, but their agency today will serve Washington’s

Read in Foreign Affairs.