China Programme Workshop

China Programme Workshop on New Dynamics in US-China Relations Mandarin Marina Hotel 4 June 2012

China Programme Workshop on New Dynamics in US-China Relations

Workshop Rapporteurs: Irene Chan and Zhang Hongzhou

Mandarin Marina Hotel 4 June 2012 S. RAJARATNAM SCHOOL OF INTERNATIONAL STUDIES, NANYANG TECHNOLOGICAL UNIVERSITY

Executive Summary Is there a power shift taking place between China and the United States? What are the available mechanisms which the United States and China can use to manage the sources of conflict in their bilateral relations? How do Asian states shape US-China relations?

These were among the crucial questions on US-China relations discussed at the workshop on the New Dynamics in US-China Relations, which was hosted by the RSIS China Programme at the Marina Mandarin Hotel on 4th June 2012. Held after the close of the 2012 Shangri-La Dialogue, one of the main objectives of the workshop was to provide constructive discussion on the latest developments and strategic trends in US-China relations. A total of 16 distinguished speakers from Cambodia, China, Hong Kong, India, Myanmar, Singapore, the Philippines, and the United States presented papers at the one-day workshop led the discussions on the strategic dimensions, sources of conflict and cooperation in US-China relations, and the role of regional states in shaping US-China relations. The workshop was also attended by a diverse range of academics, diplomats, and business leaders from the Asia-Pacific region.

The full-day workshop was organized into four thematic sessions to allow for an in-depth discussion on China-US relations. The first session set the stage for the workshop with a discussion of the strategic dimensions of the USChina relations, which also included an analysis of the power shift between the United States and China. The second session focused on the sources of conflict between China, particularly maritime security in the Asia-Pacific region. The third session deliberated on the management of US-China relationship, which included an analysis of the ASEAN’s efforts as a facilitator and an interlocutor to and in US-China relations. The last session of the workshop was divided into two sub-sessions to focus on the role which regional states play in shaping the US-China relationship. The case studies included in the session included regional middle powers of India, Japan, South Korea, and the ASEAN states of Cambodia, Myanmar and the Philippines.

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The workshop discussions resulted in the following preliminary observations: • As competition between the United States and China remains asymmetrical, particularly in terms of military and nuclear forces, it is difficult to ascertain that there is an actual power shift between the two countries at the global level. However, the regional balance of power does appear to show signs of tilting in China’s favour after the recent financial downturn.

• Strategic distrust between the United States and China endures due to differing perceptions and approaches to cooperation. The sources of conflict between the United States and China such as the South China Sea dispute, bilateral trade imbalance and China’s rapid military modernization will persist and intensify over the coming decades.

• The level of interdependency between both countries is too high for either country to risk conflict. Although the United States and China are using a myriad of bilateral and multilateral mechanisms to manage their relationship, both countries remain suspicious of each other’s strategic initiatives. It is imperative for China and the United States to seek more effective and constructive ways to manage their rivalry and differences.

• There is growing concern that the Asia-Pacific region is being divided by the US-China rivalry. The Association of Southeast Asian Nations (ASEAN) struggles to maintain its relevance in handling US-China rivalry, while key players such as India, Japan and Korea have gained salience in the US strategy to counter China’s increasing power.

OPENING REMARKS In his welcome remarks, RSIS Dean, Ambassador Barry Desker highlighted the importance of US-China relations in maintaining a stable and prosperous Asia-Pacific region, particularly in view of the Obama Administration’s pivot to Asia. He noted that the US pivot to Asia, if handled appropriately, has the potential to help the transition of China into a responsible great-power. The key question, he asked, is: what are the new dynamics in US-China relations that need to be understood properly and handled appropriately, especially in this decade? This workshop aims to provide a better understanding of the emerging dynamics associated with US-China relations.

Ambassador Desker commented that while competition between the US and China is beneficial for Southeast Asian countries, the challenge to ensure that the competition does not deteriorate into conflict. The United States has to be more proactive and innovative in engaging the Asia-Pacific region economically. With maritime territorial disputes brewing within East Asia, it has to avoid being caught by narrow national agendas of regional countries, while reassuring China of its policy initiatives. For China, the challenge lies in the assumption of more responsibility in the security arena, especially in safeguarding the global commons, as well as in controlling the temptation of limiting Washington’s involvement in Asia.

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session 1 The Strategic Dimensions in US-China Relations To Build a New Great Power Relation between China and the US [Translation]

Dr Yu Hongjun commented that 40 years of Sino-US relations have borne the most important bilateral relationship in the international arena. The leaders from China and the United States have maintained frequent meetings and established dialogue channels and coordinating systems that address political, security, defense, economic, science and technology, humanities, energy, and environmental issues. He remarked that the challenges which both countries face is normality in international politics and that management of such challenges will be a test of both countries’ wisdom and resolve. Recalling the remarks made

by Chinese President Hu Jintao at the Fourth US-China Strategic and Economic Dialogue, Yu stressed that US-China cooperation will bring about opportunities to both countries and for the world while confrontation will bring great harm.

Regardless of the international and domestic situations, both countries should continue to work on building a new great power relationship.

Yu put forth three points on establishing a new type of great power relationship between the United States and China. Firstly, he suggested that both countries should carefully preserve and make concerted efforts to create a long-term of accumulation of strategic mutual trust.

For China and the United States to create a healthy and sustainable relationship, they have to first deal with the hot issues in the international and regional arenas such as climate change, energy security and water security. He observed that most international and academic debates on US-China relations focus on mutual suspicion rather than on mutual trust and understanding, even though there exists

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a great deal of mutual trust and understanding between China and the United States. Both countries should respect and develop a deeper understanding of each other’s core interests and strategic intentions. China is taking the road of peaceful development and its success depends not only on China’s efforts but also on external respect, understanding and support.

Secondly, on the issue of economic cooperation and competition, Yu argued against US perception of Chinese exploitation of the trade imbalance. Cooperation with the United States has given China sufficient capital, technology, and advanced management experience to integrate into the international market, and trade and financial systems.

The opening up of China has provided greater investment opportunities for US companies, and inexpensive, highquality goods for US consumers. Since the global financial crisis, US imports into China have increased at a faster rate in comparison with other countries. He pointed out that the Chinese economy will not remain at the current energy-intensive and high carbon emission state as China is striving to bring about economic reform and to rectify the trade imbalance by increasing imports from the US. At the same time, the United States can help by easing export restrictions to China, particularly high-technology products.

Yu argued that US-China competition is not necessary a zero-sum game but one of healthy and benign competition with benefits for all.

Lastly, Yu concluded that there is a need for China and the United States to have a healthy interaction within the Asia-Pacific region as it is the region where both countries have the most overlapping interests. On the issue of US involvement in East Asia, Yu contended the security development in the region cannot be predicted and controlled by China and the United States. China’s efforts to promote greater regional cooperation should not be misconstrued as attempt to establish a regional hegemony.

China warmly welcomes continued US involvement in the Asia-Pacific as it does not have sufficient means to challenge US supremacy in the region. There is much potential for greater cooperation as both countries share many common interests in the Asia-Pacific region. Therefore, both countries must have the political will to give up the Cold War zerosum mentality and strive to have the positive interaction.

Yu commented that none of the regional countries wish to be caught between China-US rivalry and be made to choose sides as everyone prefers to have a peaceful and stable regional environment, greater prospects for development and prosperity and partnership for mutual benefits and cooperation.

session 1 The Strategic Dimensions in US-China Relations US-China Relations in an Era of Rebalancing

Dr Abraham Denmark began his presentation with a definition of power. He stated that power – the ability to secure oneself and influence the outside world to one’s own ends – is not built through the simple accumulation of wealth. Denmark opined that the concept of a power shift does not accurately describe what is actually happening in the US-China relations as many have mistakenly assumed that rising economic power and prosperity will automatically translate into greater political and military power, even though it is not necessarily the case. Denmark believes that at the global level, there is no competition between the United States due to the US’ unparalleled global power, its attractive soft power, its resilience in face of its economic problems and its dominant military power. Comparatively, China’s narrow regional focus and its domestic fragility make it a poor contender for global power.

He pointed that although there are indeed relative changes in the balance of power on the regional level, such changing power dynamics between China and the United States is not a new phenomenon. The new dynamics in the US-China relations is the changing perceptions of power have an important impact on international relations. The financial crisis and subsequent recession in the United States, and China’s successful weathering of these challenges, were seen by some as signs of the United States’ inevitable decline and China’s inevitable rise. Denmark commented that the

perceptions of this power shift are important to understand how China wants to perceive of its power around the world.

The sum of China’s powers was not sufficient to tip the scale on the regional level in any direction during the late 1980s and 1990s, but that is changing rapidly. China does have the ability to affect outcomes; to affect how the United States and the rest of the world perceives it; and how both countries are able to address shared and individual challenges.

Both the United States and China are, to differing degrees, undergoing efforts to rebalance their strategic orientations. Washington has signalled its intent to rebalance its strategic orientation toward the Asia-Pacific.

Denmark regretted the profound suspicions which the Chinese analysts have towards the United States’ rebalancing efforts. At the scholarly level within China, there is a robust discussion on Sino-US relations, how to translate China’s immense potential into global influence and contribution, as well as the new leadership’s approach to foreign and security policy. It is unclear how the academic debate will affect foreign policy outcomes due to China’s political system and lack of transparency. He stressed that both countries face very different challenges in sustaining their rebalancing efforts. The United States face budgetary constraints and domestic challenges to its ability to keep focus on the Asia-Pacific region. Given its preference to buy time and hide its capabilities, China faces domestic-political and cultural impetuses that make Chinese policy-makers concerned about engaging the world in a more positive way as a global player.

Both countries seek to avoid historical instability that has accompanied the rise of new powers, and desire cooperation and collaboration from the other in order to achieve policy objectives. However, Denmark is concerned that both countries are backing into potential rivalry and distrust. He pointed to the differences in approaches to building trust – China wants to resolve the big issues in order to cooperate while the United States wants to cooperate to address big issues – as a potential challenge affecting US-China relationship in the coming years. In conclusion, he emphasized on the importance of crisis management and open communication in building mutual trust as the problems arising from distrust are unavoidable.

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session 1 The Strategic Dimensions in US-China Relations From G2 to C2?

China-Us Strategic Rivalry in Asia-Pacific Region

Dr Richard Hu concurred with Dr Demark that there is a perception of power shift in the heated discussion of China’s rise. Giving a brief definition for the concept of regional order, he emphasized that regional order is dynamic and it is informed by prevailing institutions and norms. All these parameters underlying the new US-China relations are in the process of changing. As China and the US are search for a new way to define their relationship, Hu opined that G-2 is no longer viable. While the US-China relationship is maintained at a generally stable level over the past decade, there has been a dramatic increase in the range of contentious issues in contrast with the actual level of cooperation. He commented that Chinese leaders attributed to the increasingly complicated bilateral relationship to a mutual trust deficit, which hinders the further development of healthy regional order in the Asia-Pacific.

Hu felt that the notion of strategic distrust is more apt for analyzing the causes of the long-term mutual distrust between the United States and China. As continuous

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distrust may result in a new Cold War, leaders and policy communities on both sides have to readjust their perceptions of one another. China has rejected the notion of forming G-2 with the United States due to the negative implication of sharing global dominance with the United States and it acts as a constrain for China to develop relations with other countries. Although official Chinese discourse does not clearly define the Cs in future Sino-US relations, he contended that China’s alternative option of building a C-2 – the two in coordination with the US – grouping underscored its attempts to define the new type of relationship between major powers should look like.

China is trying to draw a new bottom line for the future bilateral relationship with the United States on the basis of consensus, respect and trust. He highlighted China’s condition for regional consensus is based on its insistence that the United States must respect core Chinese interests and concerns in the region.

Both countries face many challenges in finding a common ground and in reaching mutual consensus on the future regional order in the Asia-Pacific. For instance, China and the United States have disagreed on the use of the term “leadership” to define their partnership. The game of political semantics over G-2 and C-2 clearly shows that it remains difficult for China and the United States to see eye-to-eye with each other in the Asia-Pacific and in world affairs. The US-China relationship over the past two years tends to be event-driven and that does not bode well for the development of a healthy regional order. Hu stressed on the urgent need for both countries to have more substantive, direct and candid dialogue regarding each other’s strategic intentions. The power transition between China and the United States is inevitable, albeit gradual. Hu concluded that although power transition has historically led to major wars, the power shift in the 21st century could be a peaceful process as the new US-China relationship is not a zero-sum game and that there will not be a repeat of the level of competition between the Soviet Union and United States during the Cold War.

session 1 The Strategic Dimensions in US-China Relations Changes in Relative Strength between the US and China, and their Relations

In the first part of her presentation, Dr Zhou Qi compared the changes in relative strengths of the United States and China. While she agreed that there is no conclusive power shift between China and the United States on the global level, Zhou points that there is indeed a relative decline of US power and this relative decline plays an important role in reshaping US-China relations in the Asia-Pacific region. Zhou attributed the United States’ decline to the global financial crisis and the US budget deficit crisis. She contended that the budgetary constrain which the United States faces is clearly shown in the newly-formulated US military strategy which stipulated a cut in the US defense spending, and the concentration of more sophisticated equipment in Asia and the Middle East. As such, the United States has to cut down its own defense strategic objectives. By contrast, Zhou pointed that China not only effectively resisted the impact of the economic crisis, but has also played an important role in the stabilization of the world economy. China’s growing economic power vis-à-vis the United States, in her opinion, a good indication for the tilting of the balance of power in China’s favour.

Next, Zhou touched on the role of US strategic shift to the Asia-Pacific in raising tension in the US-China relations. In particular, she highlighted the differences in US and Chinese perspective of the United States’ involvement in the South China Sea disputes. To the Americans, the maintenance of regional stability and security in the Asia-Pacific is in its national interest. The current US policy is is not designed to target China, but strengthen cooperation with regional powers in order to resolve disputes, and maintain peace and stability in the region. However, the Chinese feels that US involvement in the South China Sea is a serious interference in China’s sovereignty. Beijing also holds the view that the main objective of the United States’ strategic shift to Asia-Pacific is to contain China. It believes that the United States uses the South China Sea territorial disputes as an excuse to instigate China’s neighboring countries to join the US bandwagon to counter China’s expanding influence.

On the issue of US-China strategic distrust, Zhou contended that values, ideology and political system are key causes of strategic suspicion. Although Great Britain was overtaken by the United States as the leading global power, and Japan was a close competitor against the United States in global economy, neither had difficulty reconciling their differences with the United States as compared to China. There are some fundamental irreconcilable differences between the US and Chinese value and political systems, as well as national interests and strategic intentions which will continue to dog US-China relations in the long term. Zhou suggested that despite the difficulty for both countries build up strategic mutual trust under the current circumstances, the two parties can still effectively manage their differences through a “difference management mechanism”. Zhou cited the China-US Strategic and Economic Dialogue is an important part of such a mechanism, which covers almost all fields of relations between the two countries, such as economic, political, security and cultural, in order to avoid and reduce the number of conflicts. She concluded that extensive dialogue between the United States and China, particularly military-to-military strategic and security exchanges, is a critical step toward long-term tension alleviation and conflict management as it helps to avoid misunderstanding and miscalculation in the US-China interactions.

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session 1 The Strategic Dimensions in US-China Relations Discussion During the discussion, a participant sought to clarify with Dr Denmark the differing approaches that the United States and China have towards building mutual strategic trust. In his reply, Dr Denmark reiterated that China’s approach is based on respecting each other’s core interests translates to conditions, such as stopping the sale of weapons to Taiwan and not doing things that China does not like, which the United States have to abide by in order to enable cooperation on policy issues on mutual interests.

However, the traditional American approach is to use small opportunities of cooperation on areas and issues that both parties agree on in order to build the relationship up to the point where there is enough mutual trust and understanding of each other’s intentions to begin addressing the bigger issues of disagreement. He stressed that this difference in perceptions and approaches of mutual trust is likely to pose a grave challenge to the US-China relations, unless one party changes its preferred approach to cooperation building or find ways to manage the differences.

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It was noted that the panel reached a consensus that while there is serious strategic rivalry between the United States and China in the Asia-Pacific region, there is no power shift at the global level. The United States is serious in implementing its strategic rebalancing and has done so with a range of new diplomatic, economic, political and military security initiatives. A question regarding China’s response to this emerging challenge to US strategic rebalancing was raised. Dr Hu and Dr Zhou replied that China views the US pivot to Asia as an indecisive strategy.

As Beijing is unconvinced that the United States is not targeting China, it is unwilling to dance to Washington’s tune. Dr Hu opined that the new Chinese leaders will readjust the existing US-China relations so that it will not be a zero-sum game with the co-existence of cooperation and competition. He believes that, while US-China relations will not lapse into a new Cold War, China’s relations with the rest of Asia-Pacific is complicated by its relations with the United States. Hence, it has to engage in regional institution-building and handle the South China Sea disputes cautiously.

session 2 US-CHINA RELATIONS: SOURCES OF CONFLICT and cooperation China, the US and Maritime Security in East Asia

Dr Li Jianwei discussed the impact of US-China interactions in the maritime domain in East Asia on their bilateral relations and on the region. She pointed that various threats to maritime security, such as piracy, drugs smuggling, human trafficking, trafficking of weapons of mass destruction and illegal fishing, are not new in East Asian seas. Disputes over sovereignty and sea dominion in the East Asian seas are preventing effective cooperation on those threats. Li commented that, as a result of domestic economic development within the region, the expansion of maritime interests and the unilateral development of marine resources in the disputed areas have added new dimensions to the traditional picture of maritime security in the region. She added that the change of regional geopolitics brought about by China’s rise and US strategic pivot to the Asia-Pacific is another new dimension to maritime security in East Asia.

Under the United Nations Convention on the law of the Sea (UNCLOS), both China and the United States enjoy similar rights in other countries’ maritime zones of

territorial seas, exclusive economic zones (EEZs) and continental shelves in accordance with the provisions of UNCLOS, including, inter alia, freedom of navigation and overflight in the EEZ. Both countries tend to invoke relevant provisions of UNCLOS or apply different interpretation to best suit their own national interests. Li listed the differing interpretations of the United States and China on military activities in China’s EEZ as the most controversial issue in USChina maritime relations. She contended that there is a vast difference in perceptions between Beijing and Washington.

Such differences have affected China’s will to cooperate with the United States. For example, China’s preference for bilateral negotiations and regional approaches to the maritime disputes is motivated its perception that the US will lend its support to other claimants in disputed areas in the East Asia Seas. Li also pointed that China does not aspire to match up with the United States in terms of naval power, but it wants reduce the capability gap. However, the US perceives that any reduction of the US predominance in the power relationship with China will negatively affect the balance of power. This creates two evidently diverging views on what constitutes an acceptable status quo.

Competition over sea control in China’s near sea area will increase the possibilities of incidents at sea between the Chinese and US militaries. This is detrimental to building trust between the two militaries and affects the overall framework of a healthy bilateral relationship. Therefore, both militaries urgently need to come up with certain arrangements to reduce such incidents, and effectively manage them when they occur. Li concluded that China-US relations are characterized by elements of cooperation and competition, which policies of both countries must carefully balance. Building up a new cooperative partnership is challenging, including in the maritime domain in East Asia. Moving forward, the key to a healthy US-China relationship lies in the effective management of tensions created by the differences in China and US perceptions.

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session 2 US-CHINA RELATIONS: SOURCES OF CONFLICT and cooperation Navigating an Uncertain Future: US-China Relations and the Maritime Security of the Asia-Pacific

Ms Stephanie Kleine-Ahlbrandt noted that China and the United States have different approaches of building cooperation. China reserves dialogue and cooperation for those who are proven friends whereas the United States feel that, in order to build cooperation, dialogue is most needed with those whom they have disagreements and whom they might not consider as friends. The South China Sea is an area of concern as there is no conflict management mechanism in place despite having many actors and increasing naval build-ups. China’s security interests in the South China Sea have led it to step up its diplomatic and military efforts to assert seemingly expansive maritime territorial claims.

China opposes US involvement in the South China Sea and attempts to internationalize the issue. The United States holds the view that having a multilateral approach is a logical way to solve the territorial disputes involving as many as five claimants. She highlighted the issue of EEZ maritime surveillance as another dangerous escalation point between the United States and China, given the 2009 USNS Impeccable incident which took place in the South China Sea.

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Kleine-Ahlbrandt highlighted the impediments in Chinese foreign policy-making towards the maritime security of the Asia-Pacific that have significant impact on US-China relations. Touching briefly on the background of China’s security concerns, she pointed that the Chinese are highly influenced by historical grievances, particularly invasions by sea and foreign occupation of major ports and harbours. The Chinese victim mentality, which has been reinforced through nationalism, propaganda and education system, has a significant impact on its irredentist claims in the South China Sea. Kleine-Ahlbrandt opined that it is dangerous to have a big country as economically and politically preponderant as China to suffer from the victim complex because it makes it difficult for China to understand how its actions are being perceived by smaller countries in the region.

China’s South China Sea policy is plagued by a lack of coordinating authority and a plethora of different ministerial and law enforcement agencies, as well as provincial governments. Many of these actors act with little regard for foreign policy priorities – some are aggressively competing for greater resources from the central government while others are motivated by parochial priorities. The result has been arbitrary acts of assertion and incidences at sea, rather than a coherent South China Sea policy. Kleine-Ahlbrandt added that the ineffectual coordination among actors is compounded by the weakening authority of the Ministry of Foreign Affairs (MFA). With the expansion of China’s global role, MFA’s responsibilities and authority are eclipsed by increasingly autonomous and powerful actors. For instance, the People’s Liberation Army, which significantly outranks the MFA in bureaucratic hierarchy, has made statements that the MFA was forced to retract or clarify to the international audience. She concluded that a weak MFA significantly impacts US-China diplomatic relations. Given the ever-expanding US-China agenda, more powerful actors are bypassing the MFA and setting the tone of the US-China relations. This raises concern as this complicates future bilateral cooperation and conflict management.

session 2 US-CHINA RELATIONS: SOURCES OF CONFLICT and cooperation Trends and Prospects in USChina Nuclear and Other Strategic Issues

Mr Elbridge Colby addressed the issue of nuclear weapons, missile defenses, and other strategic capabilities affecting the broader strategic relationship between the United States and China. For much of the post-Cold War era, the role of nuclear weapons has declined in favor of other capabilities in US extended deterrence strategy. The growing capabilities of the People’s Liberation Army and China’s assertiveness on regional issues in the Western Pacific and South China Sea, however, have led to increasing concern about the outlook of military balance in East Asia. He noted that, although outright conflict is unlikely, clashing US and Chinese interests, and disagreement over issues such as the status of Taiwan, how to resolve competing claims to disputed territory and waters in the East and South China Seas, and the power shift in East Asia will continue to be points of contention between Washington and Beijing. The United States retains its superiority in the global military balance, but its regional margin with China appears to be narrowing.

US power projection capabilities are increasingly strained by Chinese investments in Anti-access/Area Denial capabilities. Colby contended that the diminishing US military advantage provides the United States and its regional allies with greater incentive to fall back on nuclear forces in order to buttress their conventional defenses.

Such strategic trends constitute a complicating factor for regional stability, and therefore Washington, Beijing, and regional states should endeavour to mitigate and ameliorate the negative repercussions of tensions. Interstate rivalry between China and the United States cannot be extirpated but conflict can be avoided, and risk and

cost can be limited. He posited that, rather than seeking for a permanent solution, the best way of handling this potentially perilous situation is to manage it realistically and cautiously. The United States and China should adopt an impartial and coherent framework to evaluate strategic actions to mitigate the dangers of US-China competition.

He proposed the adoption of the concept of strategic stability, which is based on the premise that neither party has an incentive to use nuclear weapons, apart from the vindication of its vital interests in extreme circumstances.

Under the proposed mechanism, the United States would benefit from a greater transparency into Chinese nuclear forces and the principles for their employment and organization. The mechanism will provide Washington with a better understanding of Chinese views on the role of nuclear weapons and escalation, as well as into Chinese activities in the space and cyberspace arena, which have an impact on the asset operations of US strategic forces. Most importantly, it can also help to clarify Chinese red lines to minimize the potential of unintentional escalation, and allow for serious dialogue with key Chinese decision-makers.

On the other hand, China will also gain a deeper knowledge of the nature and progress of US ballistic missile defenses and its long-range conventional strike developments. This transparency will allow China to understand that these programs are not designed to negate China’s nuclear deterrent. China would likely seek to gain US acknowledgement of its ability to conduct a meaningful second strike while limiting the scope of US extended deterrence, including extended nuclear deterrence, though these objectives would meet US resistance. With a better understanding of each other’s strategic intent, both countries could also engage in confidence-building measures to demonstrate that their nuclear forces were not designed to pre-empt or disarm the other side.

Colby contended that, with his proposed concept, China would no longer have the need to build up its forces to match up the United States. Instead, it would allow for differences in the size and shape of strategic forces to suit their differing situations and international obligations and yet preserve the essential basis of nuclear deterrence and stability. Despite its vital and indispensable role for the United States, its allies and China, nuclear weapons remain tremendously dangerous to regional and global stability. He concluded that it is vital to secure both countries’ commitment to restrain the nuclear dangers associated with their political rivalry. Every effort should be made to minimize the risks which stem from apolitical aspects of nuclear force posture or planning.

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session 2 US-CHINA RELATIONS: SOURCES OF CONFLICT and cooperation Managing China-US Bilateral Economic Relations

Dr Sarah Tong began her presentation with an examination of the growing bilateral economic ties between China and the United States. Deepening bilateral economic ties can be observed from three areas – merchandise trade, trade in services and cross-border direct investment. Both countries share a robust relationship in merchandise trade. Over the past three decades, the United States was China’s most important export market before it was surpassed by the European Union in 2007.

Even then, the United States accounted for a fifth of total Chinese export. China’s development as a major market for the US export has helped to boost US share of the Asian market. Given its strong domestic and international service sector, the United States has an advantage in services trade over China. She contended that the growing trade in services has served to partially offset the imbalances between both countries. Rising rapidly from negligible volume of US$1.5 billion in 1992 to US$21 billion in 2010, China has become the United States’ seventh largest market for service export. Lastly, in terms of cross-border direct investment, Tong pointed that the US investment in China is still more substantial than Chinese investment in the United States as China only began its US investment a decade ago.

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The main characteristic of bilateral economic relations is the rising gaps in bilateral trade, which is particularly obvious in merchandise trade. The United States has incurred a huge trade deficit with China and this imbalance in trade has been left unaddressed, even with the relative easing of economic problems in the United States and Asia. The issue of market access in China has become a major concern in US-China trade relations, given that the rapidly rising US surplus with China in service trade remains insignificant to bridge the trade gap in commodities.

Tong highlighted that US businesses play ambiguous role in the oscillating US-China trade relations as foreign firms, including US firms, are the main contributors to the Chinese trade surplus.

The World Trade Organization (WTO) remains as the main venue for dispute resolution between China and the United States. Both countries have been actively using the WTO trade dispute mechanism to address their concerns and issues, with a greater frequency by the United States as compared to China. US complaints tend to be more broadly based on issues such as currency manipulation and intellectual property while China’s cases are mostly related to anti-dumping and countervailing duties issues.

As a the positive development in dispute resolution, Tong pointed to the active exchange and discussion between China and the United States through other international and multilateral bodies such as the World Bank, IMF and APEC. She also noted increasing US participation in Asian regional bodies and the recent establishment of the China-US Strategic and Economic Dialogue as essential steps in advancing a constructive, and comprehensive bilateral relationship. Trade disputes are expected to rise further despite greater economic interactions, as a result of both countries’ difficulties in sustaining growth and employment generation, and the mutual distrust. Tong concluded, on a positive note, that both countries’ recognition of their mutual dependence and continued constructive efforts will ensure that such problems remain relatively manageable.

session 2 US-CHINA RELATIONS: SOURCES OF CONFLICT and cooperation Discussion Several queries regarding the hotline between Beijing and Hanoi over maritime security and the South China Sea disputes were made. Ms Kleine-Ahlbrandt replied that China’s foreign policy-making apparatus makes it very difficult to establish a proper hotline. While Hu Jintao is the President of China, he is but one of the nine Politburo Standing Committee members. Decision-making at the top level is based on consensus and the functioning of a hotline will remain unclear for the Chinese leaders in the current policy-making environment as long as different actors are not given the ability to make decisions as they speak. The hotline between Beijing and Hanoi has only been used in March 2012 once since its establishment a year earlier.

Ironically, it was used by both countries’ deputy foreign ministers to affirm that they were closely coordinated and were implemented their leaders’ common consensus in strengthening relations rather than to address the hot issue of the South China Sea dispute.

Ms Kleine-Ahlbrandt also answered questions on the issues of Taiwan’s South China Sea claims, and oil and natural resources as a source of the South China Sea disputes. She replied resolution would indeed be easier to achieve if oil and natural resources were taken out of the equation. In her opinion, the resources and oil angle of the South China Sea dispute is not China’s top priority. Research has shown that Chinese oil companies were reserved about going into the South China Sea until recent years due to the high risks and costs of deep sea oil excavation.

The China National Offshore Oil Corporation’s newest deep sea drill is more likely a prestige project as China does not want to be the only country without a stake in the South China Sea.

The panel was also asked if the increased US presence in East Asia under its new rebalancing strategy is the result of the pressure asserted by regional allies on the United States to be more involved in the maritime disputes in East Asian seas. Dr Li replied that it is natural for China to feel ill at ease with the increased US military presence and overemphasis on security issues as it makes China wonder if the region is indeed insecure. Whether the United States will become more involved in the East Asian seas disputes, she opined that it will likely remain neutral for the foreseeable future.

In order to reduce and manage incidences at sea, China will put in effort to maintain open communications, especially at the operational level, with all stakeholders in the maritime disputes, including the United States.

A participant wanted to find out how successful China’s economic incentives as a foreign policy tool is and in what ways China uses its growing economic resources to influence other countries to change their strategic choices. Dr Tong clarified that economic cooperation has rarely been directly translated into or affected issues like territorial disputes. However, closer economic cooperation indirectly does contribute to greater friendship among neighbouring countries. If the objective is to promote China’s peaceful economic rise, the use of economic incentives as a foreign policy tool has seen relative success.

For the case of the China-ASEAN Free Trade Agreement, it did help in motivating more regional countries to go for wider-ranging agreements to include Korea, Japan and the United States in the economic integration to boost the prosperity and development of the region. However, she does not see economic activities going into strategic alliances for China or any other regional countries.

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session 3 How is the US-China relationship managed?

Managing US-China Relations: Taking the Sour with the Sweet

Dr Ralph A. Cossa discussed the management of Sino-US relations through drawing analogy from China’s traditional fish Sour and Sweet Fish. Although much has changed since the cold war era, he believed that China’s sweet and sour relations with its Southeast Asian nations and especially with the United States continues to this day as does American confusion as to how best to deal with China. He provided a broad overview of Sino-US relations over the past three years. Unlike his two immediate predecessors, President Obama did not set up an adversarial relationship with China during his presidential campaign. The Obama administration started out on a more positive note than his predecessors.

Cossa believes that the Obama administration came to power intent on taking Sino-US relations to a higher level of strategic cooperation, yet China was not prepared to take such a step. Beijing interpreted President Obama’s initial outreach as a sign of American weakness, as a result 2010 became what he described as “the year of living arrogantly” by the PRC. Nonetheless, Sino-US relations today seem to be generally on track with Washington having a more realistic interpretation of what is possible and Beijing having a greater appreciation of the US commitment to Asia. Both sides have accepted the sour along with the sweet, trying to manage the former while stressing the latter.

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With regards to the main mechanisms that the US and China have employed to manage their bilateral relations, he noted that there are a number of formal mechanisms that provide an opportunity for regular consultation and, of course, many opportunities for direct interaction between the two leaders and their senior ministers. The primary formal mechanism for managing the relationship is the aforementioned S&ED. At the working level, there is also the US-China Asia-Pacific Consultations. While military-to-military dialogue has lagged behind the diplomatic and economic efforts, there is also Defense Consultative Talks (DCT).

In terms of the effectiveness of these mechanisms, Cossa argued that without such dialogue mechanisms, relations could have been a lot worse. The list of accomplishments and agreements hammered out at the above forums speaks for itself. But when one discusses the relationship, the first word one hears, especially from the Chinese side, is “strategic distrust.” This has clearly not been eliminated. There are times when one wonders if it has even been diminished after years of explanations about respective policies. Unfortunately, two countries have not done a very good job of reducing strategic distrust at all. The US has provided briefings at the track one and track two levels about US capabilities and intentions only to hear the same Chinese accusations.

On the role domestic politics in each country’s management of bilateral relations, Cossa noted that domestic politics is not a determining factor in either country when it comes to the management of bilateral relations but it is a complicating factor, especially but not exclusively in the United States. Furthermore, he argued that while personalities of the leaders matter in the management of bilateral ties, national interests matter more. Whoever is in charge of US-China relations on either side will understand the importance of good bilateral relations to respective national security interests and will strive to sustain a positive relationship. There will be a learning curve, however, even if China’s policy is not a factor in the US elections and genuine pro-engagement officials are selected for the key jobs, as they normally are.

session 3 How is the US-China relationship managed?

Mutual Shape between Sino-US: the process of interaction

Dr Wang Fan began by claiming that both the United States and China are changing. Generally speaking, the United States is in relatively decline and China is rising rapidly. Sino-US relations are totally different from that of 30 years ago and the future trend of Sino-US relation depends on the process of interaction between two countries. It is uncertain whether power shift between the US and China exists. If it does exist, this shift is a gradual but not a sudden process. This power shift could be managed. Two countries need to emphasis regional hot points. The old saying goes as if the US and China could maintain stability, regional stability could be maintained.

However, if the regional hot points could not be controlled, US-China relations will face a lot of troubles and big challenges. The new challenge in this region is maritime security. As for China, it needs to claims that protecting its national sovereignty is not about challenge the US’s dominance and China need to deal with its sovereignty issues moderately. Both countries need to pay more attention to each other, learn from history which is the common teacher for the United States and China.

In the active process of mutual interaction and construction, one important factor includes US’s strategy towards China in the future. The strategy should not only be based on the US’s assessment of China’s development trend but also the mutual restrains and influences between China and the United States. Yet how to shape each other is the long existing problem on the construction of bilateral relationship between China and the United States.

The influence and the ability to shape each other has always been a matrix. However, China’s capability is continuously growing in the new era. With ever increasing degree of mutual interdependence, China’s ability to shape the United States has changed. The development of Sino-US relations depends on the process of mutual integration in the future and the future benefit is based on cooperation and mutual constrains.

Wang then touched on four preconditions affection Sino-US mutual construction. The first is the establishment of mixed games or multilateral games. Although zero sum mentality still exists, to a certain extent, more and more intertwined interests emerge in the expanding areas of cooperation. The second is the emergence of community awareness. Since the establishment of diplomatic ties, the leaders of two countries always stress the ideas and concept that the United States and China are mutually dependent on each other. Two countries are bound together for success or failure. The second precondition is the increasing degree of interdependence. In terms of relations between Former Soviet Union and the United States, the friendship is rather small as the United States has no investments to guard, no actual trade to lose, virtually no citizens to protect, few cultural contacts to preserve in the Soviet Union. However, by contrast, current Sino-US relations are totally different. The last is the promotion of culture integration. Two countries need to learn from history and learn from each other culture. Two countries should communicate and cooperate more on cultural fields.

He further pointed out that changing of Sino-US strategies towards each other provides opportunities for mutual integration and construction. From the US’s point of view, it is certain that the United States cannot effectively and completely contain China’s development which makes integration and engagement as the option left. China prefers mutual changes and mutual adaptation. China would like to promote the advancement of new levels of cooperation with the United States base on its own levels of development and progress. At the same time, problems brought by gap between China and the United States still bother two countries seriously. Whether strategic dialogue is effective and influential platform for China and the United States who are both strategic competitors and stakeholders to conduct mutual shaping and mutual constructive meeting should be examined. Although main uncertain factors still exist, there is no doubt that China and the United States will further strength and accelerate the process of mutual construction.

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session 3 How is the US-China relationship managed?

Managing Sino-US ties: The ASEAN way

Dr Tan See Seng reviewed and assessed ASEAN’s efforts as a facilitator and an interlocutor to and in SinoUS relations. Although ASEAN – a grouping of small and weak states – is unable to be the key driver shaping US and Chinese foreign policy marking in very direct and substantive ways, ASEAN facilitates useful and constructive exchanges between two great powers, building on current and existing arrangements. Historically, ASEAN was confronted with two strategic challenges immediately after the Cold War – China’s rise and prospect of the US withdrawal from Southeast Asia following base closures. This resulted in three major policy challenges including: 1) how to maintain stable regional power balance by keeping the US engaged in region; 2) how to keep Sino-US ties stable and peaceful and 3) how to preserve ASEAN’s centrality in regional architecture have become three major policy challenges for ASEAN. Therefore, the need to secure Beijing’s and Washington’s sustained commitment to ASEAN’s model of regional security through bilateral and multilateral modalities for dialogue and cooperation becomes the critical challenge for ASEAN.

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There is a need to know ASEAN’s origin and historical establishment in order to understand ASEAN’s game book. One needs to remember the gradual shift from Cold War “neutrality” (ZOPFAN) to post-Cold War “open regionalism” (ARF). In the post-cold war period, there is the ASEAN’s explicit acknowledgment that deep engagement of external powers is critical to ensuring Southeast Asia’s long-term peace, prosperity and security. In terms of ASEAN’s origin, the need to establish ASEAN is to secure Indonesia’s “buy-in” to an indigenous regionalism that assures Indonesia a place as regional leader in place of its recognition of the sovereignty of its fellow members.

Hence, the post-cold war strategy of socializing China into the ASEAN form has the historical precedent in the way ASEAN was able to secure Indonesia’s buy-in to regional cooperation framework. In that respect, ASEAN way could be defined as a model of regional security for “managing” extra-regional powers.

Some of the ASEAN-based modalities include individual ASEAN members’ bilateral ties with China and US. Second ASEAN Plus One/dialogue partner arrangements, intergovernmental multilateral institutions such as APEC, ARF, ADMM + 8, EAS; track 2 multilateral forums-Shangri La Dialogue for instance, and bilateral and multilateral military-to-military exchanges. These modalities are all important channels for regional interaction and cooperation, yet all have their limitations. Tan concluded that ASEAN’s contribution to cooperative security through providing multiple “facilitating meeting places” – and arguably the norms of engagement – where China and US could dialogue and defuse security dilemmas.

Multiple platforms also help maintain regional power balance through diffusing any one power’s ability to concentrate its power in any single arrangement.

Contributions to regional security discourse: definition of regional security environment; identification of threats, challenges and opportunities; appeals for strategic rebalancing and/or restraint; justification of ASEAN’s role and relevance. ASEAN Contributions have been at best modest –as moderator and events manager at best, but no less significant given ASEAN’s limitations.

session 3 How is the US-China relationship managed?

Discussion One question was raised on whether there is full swing change of US pivot. The panel responded that US’s pivot has changed little. In reality, the US has been pivoting towards Asia since the cold war. Hence the ‘pivot’ is more of PR and reassurance campaign. The fact is that the US has been here, is still here and will be still here.

The pivot is not entirely about China. In responding to the issue on how the US and China want to change each other, the panel replied that the US hopes China would change itself. The US is not setting standard for China, but hopes China could change according to its constitution and the declaration of UN and Universal code which China has signed up to. China wants the US to rethink its foreign policy, to be more patient and deal with complex issues not through unilateral ways, restrain itself and avoid zero sum games.

On the issue of whether there is relative decline of the United States, the panel does believe that the US is declining. Economically, the US is still the biggest nation in the world, but the thing is that US is facing more challenges. Thus its influence is at relatively decline.

Another question was raised on ASEAN’s unity. One of the speakers stated that the enlargements of ASEAN lead to division between old and new ASEAN. The problem is often from new ASEAN due to learning curve, but on South China Sea issue, the new ASEAN- Vietnam learned how to tone down the issues and deal with the problem, but the old ASEAN-Philippine does not remain committed to the ASEAN way. Furthermore, in the light of ASEAN’s desire for greater economic integration and with external region, a lot of problems are created for ASEAN which affected ASEAN’s unity.

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session 4 The Role of Regional States in Shaping US-China Relations Session 4A : Case studies of India, Japan and the Philippines The Strategic Triangle: India’s Opportunities and Challenges

Dr C. Raja Mohan examined the unfolding triangular dynamic among China, India and the United States. He made six major points in his presentation. First was the question of changing power distribution: whether it is real or just a perception. From the historical perspective, change is the only thing constant in life and therefore change is inevitable. The problem for policy makers is to assess the nature and direction of the change; for statesmen, it is a question of judgment and taking decisions in the context of uncertainty today exists between the US and China.

Second, he discussed the dilemmas India faces in dealing with the shifts in the US and China relationship.

Similar to ASEAN and rest of Asia, India likes the economic opportunities China presents, but it is also worried about the potential assertiveness of China’s military power. The difference between ASEAN and India in dealing with the US-China dynamic is that India is a single actor. Third, he underlined that in the past few years, there has been a substantive expansion of India’s bilateral relations with both countries. While the deepening economic engagement has given a measure of depth and stability to India’s ties with the United States and China, it has also brought new sets of conflicts with both–a massive trade deficit with China and a range of issues relating to

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outsourcing and other problems with the United States.

India’s political ties with the United States and China were underdeveloped during the Cold War. India has a strategic partnership with the United States while its engagement with China not acquired a similar tag. As India’s historic political disputes with the United States have begun to narrow, some of those with China have sharpened in the recent years. There is also another structural difference. India has no direct quarrels with the US, which is a distant power. India, in contrast, has territorial disputes with Beijing that continue to undermine the efforts at improving bilateral relations.

Fourth, Mohan touched on the evolution of Sino-US relationship from Delhi’s perspective. President Barack Obama took charge in 2009, India was anxious about possibility that he might change Washington’s new approach to India unveiled in the administration of George W. Bush. Delhi was suspicious that the Democratic Party’s foreign policy establishment would return to seeing India in terms of Pakistan rather than China. Obama’s initial emphasis was on offering strategic reassurance to Beijing by renouncing any effort to contain China, and facilitating Beijing’s full integration into the global order. Although the Administration itself did not use the term ‘G-2’, the concept gained traction as a descriptor of Obama’s initial policy towards China. Senior officials in Delhi publicly expressed their concerns about the potential consequences of a ‘China-first’ US policy in Asia and beyond.

Fifth, Mohan discussed various possibilities and outcomes of Sino-US relations and how India might respond to them. For instance, Mohan argued, India will be wary of a Cold War type of competition between China and the United States. It is also bound to resist any outcome that involves Sino-US condominium or G2 over Asia. Finally, he addressed the question of India’s ability to preserve strategic autonomy amidst rapidly evolving Sino-US relations. He believed that India has acquired a new salience in the US strategy towards Asia.

And as China’s rise affects India’s core interests and the gap in power potential widens in favour of Beijing, Delhi needs a stronger partnership with Washington. While Delhi and Washington are not likely to be allies in the traditional sense, the pressures on them to coordinate their Asian strategies are likely to mount amidst China’s rise and assertion. Mohan concluded his presentation by claiming that Beijing’s actions in the next few years will constitute the near-term driver of the new strategic triangle in Asia; the changing power distribution among the three will be the structural factor shaping it over the longer term.

session 4 The Role of Regional States in Shaping US-China Relations From Hub-and-Spoke to Cloud Cooperation: Reviving and Expanding America’s Alliance System in Asia

Dr Michael Auslin presented on the American perspective of US-Japan alliance. The policy debate in Japan and the United States is becoming less about China and more about Asia, which is a big different from that of decade ago. China may well be the catalyst for much of the policy discussions and debates, not all Japanese and US policies are about China; instead it is about Asia-the type of Asia both countries want to interact with and the type of Asia both want to see. He further argued that as Japan and the United States fail to resolve the differences they each have with China. Two countries began to look outwards, maybe some more traditional view of dealing with China.

He then moved on to discuss the way America structures its alliance. The American hub-and-spoke alliance structure has existed since the 1950s: 5 treat alliances and special relationship with Singapore. Japan has been the cornerstone for the alliance structure especially after 1991 when the United States pulled out from the Philippines. As the US is increasingly playing a role in the evolution of Asia security, political and economic environment, the appreciation of the sensitivity to the alliance will come back to the forum of Washington. The tension for the United States and regional partners, particularly Japan has felt intimately through the alliance relationship with the US is, first of all, the general question of entanglement vs abandonment. The second part is related. All regional countries face economic interdependence with China. No one wants to choose between the United States and China. However, if regional countries do not want to be forced to choose between the United States and China, they are nonetheless choosing at least from the security aspect.

Next, he discussed evolution of American Alliance structure. He believed the alliance structure should become more like cloud cooperation, meaning more diffused and integrated set of activities throughout the region. Alliance structure becomes more cohesive and integrated, rather than relying on a disparate set of bilateral alliances. A new alliance structure, based on increased political, economic, and military integration of liberally-oriented structure in Asia, is a more effective mechanism to both engaging China on a broader regional basis and to hedging against its increasing power and more assertive tendencies. This new alliance structure should combine political, economic, and military coordination and cooperation among like-minded powers with similar interests in the region in order to promote the combined strategy of engagement/hedging vis-Ă -vis China.

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session 4 The Role of Regional States in Shaping US-China Relations Unwanted Triangles: What is driving recent US-China-Philippines Relations?

Dr Aileen Baviera started her presentation by pointing out that any so-called “Philippine” perceptions of the US and China – their interests, capabilities, strengths and vulnerabilities, and most of all their intentions with regard to the Philippines – are quite diverse, and are evolving.

As in other countries, one might suppose, there are those in the Philippines who believe that China is at least a potential threat – if not an existential one - and those who see it as a sought-after economic partner and a neighbour one can turn to. In the same fashion, there are many in the Philippines who see in the United States a loyal ally and a special friend, and those who would argue that it has been a reluctant, untrusting and even unreliable big brother.

While there is no uniformity of views, she believes that under normal circumstances the general public opinion has been that China is benign and that it is good to have the US around, and that moreover Philippine relations with the two are not zero-sum or even necessarily connected. History could perhaps help better frame the issue rather than public opinion or elite opinion alone.

From a long historical view, cultural, trade and peopleto-people ties between China and the Philippines were strong from pre-colonial through the colonial and postindependence years, despite ideological differences. In contemporary times, the 1995 Chinese occupation of Mischief Reef caused Filipino leaders and the elite to worry about the long-term repercussions of a rising China.

Nonetheless, Manila took a multi-pronged approach to the management of its disputes with China, including bilateral confidence-building and multilateral consultations.

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By the end of the last decade, however, China’s growing assertiveness and increasing maritime projection capability had become an increasing source of concern. Following the Scarborough Shoal incident in April this year, the Filipino people are perhaps for the first time beginning to wonder if China should be viewed as a hostile country.

The Mischief Reef and Scarborough Shoal incidents have also pushed the Philippines closer to the US. Although historically, there was a Philippine-American War (18991902) and then US as a colonialist imposed unequal economic treaties that helped turn the Philippines into a dependent state, it was also the major patron of the country’s earlier modernization especially in the areas of education, culture, commerce and government. Together with Filipino guerrillas, US helped liberate Manila from three years of harsh Japanese occupation, and Filipinos expressed their gratitude by helping America fight its wars in Korea and Vietnam, thus building what was perceived by many Filipinos as not only a formal alliance but a special bond of friendship.

Between the receding memories of past American domination on the one hand and the growing fear of future aggressiveness of a giant neighbour on the other hand, a much stronger and unified tilt toward Washington has occurred. There is concern that China may no longer be the largely benign neighbour it had been for past centuries, and that as a new power it is not just throwing its weight around but is beginning to try to impose its will on neighbours, at least as far as territorial and resource claims are concerned. Nonetheless, while the alliance with the US is seen as a necessary element of hedging against such uncertainty, it is still not clear that the Philippines would be ready to transform the alliance into an instrument of hard balancing or containment of China. In the context of power transition theory and US strategies to forestall the rise of China as a peer competitor, she felt that the Philippines like the rest of the ASEAN region, would prefer a strategic scenario not of a single hegemonic power but an architecture where big powers are able to cooperate and take the lead in building cooperative security for the region. The best scenario for the Philippines is if both China and the US can get along and develop a predominantly cooperative relationship with each other, which would be conducive to Manila’s cooperation with both. Unfortunately, the current situation has led to triangular relations with the Philippines caught between two big powers in the middle of what promises to be a difficult power transition, with the US “rebalancing” towards Asia Pacific and China expecting to reap benefits from new-found power.

session 4 The Role of Regional States in Shaping US-China Relations Discussion A participant questioned if the United States could be the driver for new strategic triangle in Asia. The panel responded that the problem for India is fundamentally what China does in respect to what the US does, as the relationships of India with two powers are defined by geography and structure: China is the near power and the United States is the distant power. On the issue of whether the United States would adjust its formal access agreement with informal relations. One speaker responded that the Pentagon, particularly the Navy, is moving towards ‘places’ instead of ‘bases’, as bases are extremely expensive. Maintaining bases and building new bases are very difficult economically and politically. However, the US military still wants some kind of formal access agreement as informal agreement may be too loose.

Another participant queried about the possible impact if China also adopts diffused and integrated approach with its partners around the Asia pacific. One speaker pointed out that the United States and its alliances are worried about China’s adoption of string of pearls. China had diffused its operations with more partners not only in South East Asia but in Indian Oceans, which is a political concern for the United States and its partners. A question was raised about what will cause the United States to weaken its alliance structure. A speaker remarked that there are best case and worst case scenarios. Best case scenario the capability of the United States’ alliance reached the level that they can protect themselves, and outstanding territorial and other issues are resolved. The worst case scenario is that either the United States capacity declines to the degree that the US could not creditably fulfil its alliance commitment or the United chooses to disengage due to other reasons.

Questions were raised on whether the Philippines’ actions in the South China Sea are driven by the United States, and whether the US should try to restrain Philippines’ actions against China. In response, one speaker commented that the Philippines have pursued many major initiatives to try to manage the tensions with China ever since 1995 which was a time when Washington-Manila military cooperation was at a virtual standstill. This shows that the Philippines has acted on its own and not at US behest. The issues between China and Philippines should not be made about the US, as bringing in the United States may complicate the solution of the issues. The Philippines would certainly not want to see China and the United States sit together and discuss how the Philippines should behave. Despite the alliance or close relationship, each country would like to have some autonomy in dealing with issues in its own way.

Towards the end of the discussion, a comment was brought up regarding China’s attempts to use economic leverage against the Philippines over the standoff, using economic statecraft. One speaker highlighted that the issue of China’s ban on banana imports from the Philippines had been raised as early as two months before the standoff in connection with phytosanitary requirements. On the other hand, China issued a travel ban mainly out of concern for the safety of Chinese citizens, (who have never really been in danger since the start of tensions). Philippines’ banana growers and tourist agencies have been affected, but at this point the economic pressure is not as worrisome as the strident rhetoric and threats to the Philippines being published in Chinese media.

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session 4 The Role of Regional States in Shaping US-China Relations Session 4B : Case studies of South Korea, Cambodia and Myanmar China’s Strategic Imprint on the Korean Peninsula: Crisis Scenarios and Implications for the US-ROK Alliance

Dr Michael Raska began by claiming that there are some new dynamics between Sino-US relations. Old historical security threats and unresolved historical legacies such as Korean Peninsula, Taiwan, South China Sea have been amplified by a range of new security issues and problems including cyberspace and human security issues. At the same time, new dynamics are being amplified by the rise of China and the continuing strong presence of the United States in the region. China’s rise arguably presents a range of new strategic complexities and operational dilemmas for South Korea as well as the US-ROK alliance.

He argues that China’s strategic imprint – whether direct or indirect – has been also increasingly tied to the security and stability of the Korean Peninsula, exposing both opportunities and new challenges for South Korea as well as the US China’s geopolitical and economic rise coupled with its integration in the global community has given its diplomacy more leverage in managing tensions on the Korean Peninsula. Since 2003, Beijing has been more proactive in mitigating crises by providing critical

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economic lifeline - energy and food aid - to North Korea.

In doing so, Beijing has inherently prevented North Korea’s economic implosion, while simultaneously exerting pressure on Pyongyang to return to the stalled Six Party Talks and resolving North Korea’s nuclear issue through multilateral diplomatic channels. Yet, a contending view is that Beijing has aimed to avert a North Korean collapse to prevent a Korean reunification, which would likely undermine China’s regional geopolitical influence by removing traditional strategic buffer provided by North Korea. In short, China has been increasingly constraining the US-ROK foreign and defense policy options vis-àvis North Korea. He feels that Chinese military capability and its ambiguous strategic thinking is creating more problems for the alliance as it is uncertain that what China will do in a different types of crisis.

China’s emerging military capabilities may provide Beijing with a greater leverage and options to shape the direction and outcomes of potential crisis scenarios on the Korean Peninsula based on China’s terms. With regard to Korea, these may include: (1) protecting China’s militarystrategic environment; (2) maintaining security and stability along the Sino-North Korean border; (3) sustaining economic development and political stability in three Chinese provinces bordering North Korea; and (4) ensure that US forces deployed in Korea remain below the 38th parallel. Given the prolonged absence of viable regional cooperative security mechanisms, China’s power projection capabilities are thus likely to have a significant impact on the future of South Korea’s defense planning.

He argues that China’s evolving military capabilities could significantly alter the paths and outcomes of particular crisis or contingency scenarios involving North Korea, South Korea, Japan, and the United States. At the most basic level, the conflict-taxonomy on the Korean Peninsula can be conceptualized based on traditional conventional threats, amplified by a mix of low intensity, asymmetric and non-linear threats. China’s growing regional power projection, if sustained, will likely have a significant impact on regional security conceptions, and may shape the future defence planning trajectory of both South Korea and the United States presence on the Korean Peninsula.

In order to mitigate security uncertainties, tensions, and risks, it is imperative to enhance military diplomacy and dialogue between China, US, and South Korea that would provide mechanism for defusing potential crises.

For starters, this would entail the need to better understand the modalities and country-specific responses to various contingencies and crisis scenarios in and around the Korean Peninsula.

session 4 The Role of Regional States in Shaping US-China Relations China-US Relations: From Cambodian Perspective

His Royal Highness, Prince Norodom Sirivudh, discussed Sino-US relations from a Cambodian Perspective. China-US relationship is regarded as one of the most sophisticated and crucial bilateral link within the complex networks of regional and global relations and partnership. It is shaping the state of art of international political and economic relations in the Asia Pacific region.

ASEAN has limited role and power to shape the behaviour of the major powers. It is facing with serious challenge deriving from increasing strategic competition between China and US. The engagement of the US in the region by prioritizing its relations with the treaty allies really creates several layers of bilateral relations in the region.

Some countries in the region may feel to some extent a sense of strategic discrimination. Therefore, the US’s engagement needs to be comprehensive and transparent.

As a rising power, China needs to strengthen trust and confidence with its neighbours by increasing information sharing and transparency. China needs to engage much stronger with its neighbours on a wide range of issues at different levels. The comprehensive strategic partnership between China and ASEAN as a whole and between China and the individual member state of ASEAN are necessary.

Cambodia is neither pro-China nor pro-the US, instead it is pro-Cambodia itself. Cambodia as a member of ASEAN believes that only through strengthening the central and neutral role of ASEAN, we can maintain peace and stability in the region and beyond. At the 20th ASEAN Summit, the ASEAN leaders adopted four key documents including the Phnom Penh Agenda of ASEAN Community Building, Phnom Penh Declaration on ASEAN, One Community: One Destiny, Drug-free ASEAN, and Global Dialogue of Moderates. Under the theme “ASEAN: One Community, One destiny”, Cambodia tries to realize the people centered ASEAN with the emphasis on narrowing development gap through doubling economic growth, linking economic integration with poverty reduction, and creating an environment for the security and safety of the ASEAN peoples.

Cambodia is now chairing ASEAN. It tries to bring in the United States to balance the presence of China in the Cambodia, but the US does not come in terms of investment. Nonetheless, Cambodia has requested the Washington DC to improve relations with Cambodia. South China Sea, as a chair of ASEAN, Cambodia tries to bring up the issue in a very peaceful way and centrality of ASEAN is very important. South China Sea and Sino-US relations must not divide ASEAN. The reengagement of the US in the region must be more transparent and give more confidence of region to China. The triangle relationship between China-ASEAN-US is the most important cooperation framework in the Asia Pacific region in ensuring peace, stability and prosperity. The central role of ASEAN needs to be maintained and strengthened in order to have an equitable and dynamic equilibrium. There are both opportunities and challenges from the bilateral relations between China and the United States. What we need to do as small country like Cambodia is to maintain and strengthen our existing multilateral mechanisms and institutions driven by ASEAN. The destiny of ASEAN relies on its unity and centrality.

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session 4 The Role of Regional States in Shaping US-China Relations Engaging Two Giants: Myanmar’s relations with the US and China in the ASEAN Context

Dr Moe Thuzar presented on the broad trends in Myanmar’s relations with the United States and China.

She reviewed the evolution of Myanmar’s foreign policy.

Strategic neutrality has been the key element for Myanmar’s foreign policy in dealing with big power from the 1950s to 1980s. After 1988-the military coup, strategic alignment became the guiding prince for Myanmar’s foreign policy.

The years after 1988 saw an extended period of isolation for Myanmar, hence military junta who ruled Myanmar was very active to seek close relations with its neighbours.

Now Myanmar’s foreign policy has entered the era of strategic interest.

She discussed the new developments of Myanmar’s relations with both China and the United States after the 2011 reform. After Thein Sein’s visit to China in May 2011, The traditional brotherly relationship that Myanmar has historically emphasised with China has been elevated to a “strategic level”, where China supported Myanmar’s bids for the 2013 SEA Games and the 2014 ASEAN Chair.

Myanmar in turn pledged continued support for the One China policy and also supported China’s position regarding the South China Sea. China and Myanmar define

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strategic level cooperation as maintaining close high-level contacts, promoting strategic mutual trust, and continuing exchanges and cooperation between the executive.

However, in September 2011, Myanmar’s decision to halt construction of the Myitsone dam project with China, gave rise to speculation that the country was seeking to emerge from its long-standing and at times stifling embrace of friendship with China. In terms of MyanmarUS relations, diplomatic ties are now back on track after 20 years of stalemate. It is the time of building trust between Myanmar and the United States. One of the areas for trust building is the easing of the sanctions and economic cooperation. What is also noteworthy is more enhanced interactions may follow as part of Myanmar holding the country coordinatorship of ASEAN-US Dialogue starting July 2012. The country coordinatorship will rotate to Myanmar for the period 2012-2015, covering the year that Myanmar serves as ASEAN Chair. Myanmar’s coordinatorship of ASEAN-US Dialogue presents a two-fold opportunity. The US interest to strengthen its presence in the region through its engagement with ASEAN can be furthered through the ASEAN Dialogue mechanism, where ASEAN members can discuss the direction of ASEAN-US cooperation on shared concerns. Myanmar’s coordinatorship of the dialogue also presents an opportunity for ASEAN and the US to observe and monitor at first-hand the progress of reforms in the country.

The best balancing act, then, may be for Myanmar to continue her engagement with US and China in the context of ASEAN cooperation. ASEAN’s role in bringing about change in Myanmar may find a second chapter if Myanmar decides to pursue this path.

Myanmar is also a nexus for ASEAN’s engagement with China. Ultimately, Myanmar will look for her own survival.

Lessons from history may influence the administration to consider returning to the strategic neutrality of the country’s survival over the past decades: strategic neutrality with pragmatic affiliations. The country’s foreign policy reflects this even though neutrality is not explicitly stated. Myanmar’s 2008 Constitution states that the “Union practices independent, active and non-aligned foreign policy aimed at world peace and friendly relations with nations and upholds the principles of peaceful co-existence among nations”.

session 4 The Role of Regional States in Shaping US-China Relations Discussion

A participant asked a question on the possible changes of the US foreign policy towards North Korea and whether the United States have other choices besides economic sanctions. One speaker responded that North Korea is still in transition, there is still uncertain on where North Korea is going, and it is increasingly becoming a liability for China as China does not know how to persuade the North Korea to abide by the agreements two countries have signed. North Korea is a ticking time bomb for both China and the United States. Unless the United States and China sit together and work out the plans, this bomb will go off and there will be even large problems in Asia.

Another participant wondered where Cambodia is feeling more pressure than before to actually choose between the United States and China on certain issues, given the fact that Cambodia is the ASEAN chair this year.

One speaker responded that the pressure is not from China, but from neighboring countries. Vietnam and Philippines

are not happy as Cambodia is soft on issues such as South China Sea. Cambodia’s feels that ASEAN plus one dialogue is the most important forum to solve those issues. On the issue of Whether China has done something wrong to push Myanmar towards the US. A speaker replied that it is mainly because that the leaders of Myanmar successfully excises foreign policy of strategic neutrality in the shadow of all the giants, it does not have anything to with what China has done wrong or right.

A question was raised on the how Aung San Suu Kyi will view the relationships between China and the United States. One speaker pointed out that the Role of Aung San Suu Kyi is very important and her views on foreign relations are also very important. Aung San Suu Kyi is much aware the important of being strategic with neighbours. She admits that China is an important partner for Myanmar. Myanmar chooses to be friends with the United States and choose to be good neighbours with China.

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CONFERENCE PROGRAMME 8:30am

Welcome Remarks

8:40am Session 1

The Strategic Dimensions in US-China Relations

Chair: Tan See Seng (RSIS)

To Build a New Great Power Relation between China and the US

Yu Hongjun, China Center for Contemporary World Studies

US-China Relations in an Era of Rebalancing Abraham Denmark, National Bureau of Asian Research

From G2 to C2? China-Us Strategic Rivalry in Asia-Pacific Region Richard Hu, University of Hong Kong

Changes in Relative Strength between the US and China, and their Relations Zhou Qi, Chinese Academy of Social Sciences

10:10am

Coffee Break

10:30am

Session 2 US-China Relations: Sources of Conflict and Cooperation

Chair: Li Mingjiang (RSIS)

China, the US and Maritime Security in East Asia Li Jianwei, National Institute for South China Sea Studies

Navigating an Uncertain Future: US-China Relations and the Maritime Security of the Asia-Pacific Stephanie Kleine-Ahlbrandt, International Crisis Group

Trends and Prospects in US-China Nuclear and Other Strategic Issues

Elbridge Colby, Center for Naval Analysis Managing China-US Bilateral Economic Relations

Sarah Tong, East Asian Institute 12:00noon

Lunch

1:00pm

Session 3 How is the US-China relationship managed?

Chair: Richard Hu (University of Hong Kong)

Managing US-China Relations: Taking the Sour with the Sweet

Ralph Cossa, CSIS Pacific Forum Mutual Shape between Sino-US: the process of interaction

Wang Fan, China Foreign Affairs University Managing Sino-US ties: The ASEAN way

Tan See Seng, RSIS

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2:10pm

Coffee Break

2:25pm

Session 4 The Role of Regional States in Shaping US-China Relations

Session 4a – Case studies of India, Japan and the Philippines

Chair: Abraham Denmark (National Bureau of Asian Research)

The Strategic Triangle: India’s Opportunities and Challenges

Raja Mohan, Observer Research Foundation

From Hub-and-Spoke to Cloud Cooperation: Reviving and Expanding America’s Alliance System in Asia Michael Auslin, American Enterprise Institute

Unwanted Triangles: What is driving recent US-China-Philippines Relations?

Aileen Baviera, University of the Philippines

3:50pm

Session 4b – Case studies of South Korea, Cambodia and Myanmar

Chair: Ralf Cossa (CSIS Pacific Forum)

China’s Strategic Imprint on the Korean Peninsula: Crisis Scenarios and Implications for the US-ROK Alliance Michael Raska, RSIS

China-US Relations: From Cambodian Perspective HRH Prince Norodom Sirivudh, Cambodian Institute for Cooperation and Peace

Engaging Two Giants: Myanmar’s relations with the US and China in the ASEAN Context Moe Thuzar, Institute of Southeast Asian Studies

5:15pm

Concluding Remarks

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CONFERENCE PARTICIPANTS Panelists

Participants

Michael Auslin American Enterprise Institute

Zhang Hongtie Asia Europe Foundation

HRH Norodom Sirivudh Cambodian Institute for Cooperation and Peace

Jason Tan Attorney-General’s Chambers

Elbridge Colby Center for Naval Analysis

Dion Hallpike Australian High Commission

Yu Hongjun China Center for Contemporary World Studies

Mazrey Rahman Brunei High Commission

Zhou Qi Chinese Academy of Social Sciences

Mou Hong China Center for Contemporary World Studies

Ralph Cossa CSIS Pacific Forum

Jin Xin China Center for Contemporary World Studies

Wang Fan China Foreign Affairs University

Ding Xiaoming China Center for Contemporary World Studies

Sarah Tong East Asian Institute

Shen Jianguo China Center for Contemporary World Studies

Moe Thuzar Institute of Southeast Asian Studies

Gao Yang China Center for Contemporary World Studies

Stephanie Kleine-Ahlbrandt International Crisis Group

Ng Keok Boon Defence Science & Technology Agency

Abraham Denmark National Bureau of Asian Research

Gary Finchum DTRA-US Embassy, Singapore

Li Jianwei National Institute for South China Sea Studies

Anna LjunglĂśf Embassy of Sweden

C Raja Mohan Observer Research Foundation

Fink Andrej European Union delegation

Michael Raska RSIS

Renaud Bartolini French Embassy

Tan See Seng RSIS

Vineet McCarty High Commission of India

Richard Hu University of Hong Kong

V K Singh High Commission of India

Aileen Baviera University of the Philippines

Daljit Singh ISEAS

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Yang Fang Lee Kuan Yew School of Public Policy

Yeong Gah Hou National Security Research Centre

Cha Youngcheol Lee Kuan Yew School of Public Policy

Syed Hasan Javed Pakistan High Commission

Wang Runfei Lee Kuan Yew School of Public Policy

Trung Pham-Quang Private Investor G53 (Retired Managing Director ING Bank Asia)

Brian Job Liu Institute for Global Issues Yap Tian Seng Ministry of Education Kee Tai GOH Ministry of Health Aaron Tan Jin Hoe MINDEF Tee Pei Ling MINDEF Felicia Yip MINDEF Chung Li Na, Angelina MINDEF Ling Yi Chao, James MINDEF Grace Loke MINDEF Lee Sue-Ann MINDEF Hanson Mah Jun Ji MINDEF Shirley Loo MINDEF Albert Pek Yipeng MINDEF, Defence Policy Office Valerie Cher Ministry of Trade and Industry

Thea Martine Ottmann Royal Norwegian Embassy Trond Kaalsaas Royal Norwegian Embassy Li Mingjiang Convener-RSIS Lee Dong Min RSIS Kalyan M Kemburi RSIS Zhang Hongzhou RSIS Irene Chan RSIS Liu Liu RSIS Choong Pui Yee RSIS Han Nack Hoon RSIS Kwa Chong Guan RSIS Lim Shu Yin RSIS Lee Siang Jin RSIS Ho Tze Ern Benjamin RSIS

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Oh Ei Sun RSIS

Cho Khong Shell

Chong Siew Keng Catherine RSIS

Kozlowski The Embassy of the Republic of Poland

Gong Xue RSIS Keith Eric Flick RSIS

Nguyen Tung Lan Vietnam Embassy in Singapore

Tan Seng Chye RSIS

Christopher Len

Zou Yu RSIS Gennady Tolkachev Russian Embassy

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Tan Hwa Pheng

Goh Wee Lin Lim Choo Hoon Catherine Ropse Torres

ABOUT RSIS The S. Rajaratnam School of International Studies (RSIS) is a leading research and graduate teaching institution in strategic and international affairs in the Asia Pacific region.

RSIS is a professional graduate school of international affairs at the Nanyang Technological University, Singapore. RSIS’ mission is to develop a community of scholars and policy analysts at the forefront of security studies and international affairs.

Its core functions are research, graduate teaching and networking. It produces cutting-edge research on Asia Pacific Security, Multilateralism and Regionalism, Conflict Studies, and Non-Traditional Security, and International Political Economy, and Country and Area Studies. RSIS’ activities are aimed at assisting policymakers to develop comprehensive approaches to strategic thinking on issues related to security and stability in the Asia Pacific.

For more information about RSIS, please visit www.rsis.edu.sg.

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Centre for Non-Traditional Security (NTS) Studies S. Rajaratnam School of International Studies Nanyang Technological University, South Spine, Blk S4, Level B4 Nanyang Avenue, Singapore 639798 Tel. (65) 6790 6982 • Fax. (65) 6898 4060 • Email. NTS_Centre@ntu.edu.sg www.rsis.edu.sg/nts • www.rsis-ntsasia.org • www.asicluster3.com