by Jon Western
As tensions persist between China and Japan over the disputed islands in the East China Sea, the United States faces the almost impossible task of simultaneously reassuring and constraining its regional allies, while ensuring that it does not escalate its own tensions with Beijing. On one level it is hard to see how China and Japan could become so consumed over a small set of remote islands and it remains unclear how serious the crisis is. Yet, over the past several months, Chinese and Japanese ships have been patrolling the same waters with both laying territorial claims to the area. And, earlier this fall, U.S. Defense Secretary Leon Panetta warned that the escalating tensions and close proximity of Chinese and Japanese vessels could lead to some triggering event and conflict.
The island dispute, however, is only a small part of the much larger geostrategic dance and set of regional challenges associated with China’s rise. In September 2012, The Economist wrote that all sides see their posturing as part of the future power alignment in the region:
The islands matter, therefore, less because of fishing, oil or gas than as counters in the high-stakes game for Asia’s future. Every incident, however small, risks setting a precedent. Japan, Vietnam and the Philippines fear that if they make concessions, China will sense weakness and prepare the next demand. China fears that if it fails to press its case, America and others will conclude that they are free to scheme against it.
Washington has not taken a position on the sovereignty of the islands, but it has publicly announced that the islands fall within the commitments of its mutual security agreements with Japan. Nonetheless, Japan, South Korea, and other U.S. allies remain anxious. One cause for concern is China’s assertiveness. The other is potential U.S. global retrenchment in the face of its internal debt and decade-long wars in Iraq and Afghanistan. In the absence on a comprehensive regional security framework, the United States has long played the role of regional balancer by providing its allies with an extensive set of bilateral security arrangements. With America’s current debt burden, public exhaustion with the wars in Iraq and Afghanistan, and continued sluggish economic trends at home, uncertainty about America’s commitment and overall strategic posture is creeping into the discussion. Many in the region worry that America’s departure from Afghanistan in 2014 might lead to a retrenchment from global responsibilities, in a fashion similar to that which followed the American withdrawal from Saigon in 1975.
High levels of uncertainty about China’s future have also exacerbated concerns about the future of American power in East Asia. It has been widely projected that China will continue to rise and may overtake the U.S. economy in the next half century. This led to a number of claims and concerns about the potential for conflict during this anticipated hegemonic transition or hegemonic parity.
Today, however, there are now increasing signs and worry that China will not keep up the same pace. While it may eventually reach and surpass the size of the U.S. economy, China faces a number of internal contradictions and challenges. Projections suggest that growth rates are likely to hover between six and eight per cent rather than the 10 and 12 per cent rates sustained over the past two-and-a-half decades. China’s high domestic savings rate and low domestic consumption rate create extensive dependency on exports. The government is under intense pressure to ensure adequate job growth to absorb new migrants. And in at the beginning of a new leadership transition, the Communist Party is under pressure to control corruption and widespread economic criminal activity.
Longer-term trends suggest even greater challenges. Despite China’s impressive economic gains, the shear size of its population means the country’s per capita GDP is still well below the world average -- just above US$5,000 per year. Even if, or when, its aggregate GDP catches up to that of the United States, it will continue to face much higher levels of inequality than found in the West. Furthermore, a number of social challenges are looming that will create significant long-term fiscal pressures. China’s population is aging with nearly 30 per cent of its population projected to be over the age of 60 by 2020. It currently does not have a comprehensive social security system to provide levels of care and support for this aging population once they leave the workforce. Likewise, environmental degradation and the associated affects on public health have not been addressed. The government has deferred efforts for comprehensive reforms on all of these fronts. But, it is clear it will need to address them, and they will require significant fiscal outlays.
All of this will put increasing pressure on the Communist Party and threaten its legitimacy and control. If history is any judge, we may well see greater regional and global aggressiveness both to demonstrate its power and deflect domestic dissent.
This is the context of America’s current “pivot” to Asia. Thus far, the Obama administration has redeployed a modest number of naval assets to the region. It also has publicly confirmed that the disputed islands fall under the mutual defense treaty with Japan and that the United States would side with Japan in any dispute. Yet, unlike Europe, the region is not well institutionalized to help manage diplomatic or security challenges. A recent study from the London School of Economics warned, for example, that ASEAN has little capacity to cope with a significant conflict between Washington and Beijing.
This puts a much greater burden on Washington to develop a more comprehensive strategic posture. In a recent study, the Washington-based Center for Strategic and International Studies concluded that thus far the United States has fallen short. It argued:
The top priority of U.S. strategy in Asia is not to prepare for a conflict with China; rather, it is to shape the environment so that such a conflict is never necessary and perhaps someday inconceivable. It is therefore critical that the United States can achieve and maintain a balanced combination of assurance and dissuasion to shape the environment. 
Identifying and reaching that delicate “balanced combination” is not going to be easy, given the dynamic nature and interconnectedness of events in the region, and the fluidity of perceptions and uncertainty about the future of U.S. and Chinese power in the region. Nonetheless, this is really the only viable approach, and the island dispute does demonstrate that is now time to think much more comprehensively about how to avoid escalating conflicts, and ensure long-term stability in East Asia.
About the author: Jon Western is Five College Professor of International Relations at Mount Holyoke College in Massachussetts. He served in the U.S. Department of State during the Clinton Administration, and is the author of Selling Intervention and War: The Presidency, the Media, and the American Public (Johns Hopkins University Press, 2005). He is a long time contributor to Current Intelligence.
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 “Can Asia Really Go to War Over These? The Economist, September 22, 2012.
 “U.S. Force Posture Strategy in the Asia Pacific Region: An Independent Assessment,” Center for Strategic and International Studies, Washington D.C., July 27, 2012.