David Blair: Will Liberal Hegemony Lead to a Cold War in Asia?

April 04 , 2022

David Blair is vice president of the Center for China and Globalization(CCG) and an economist specializing in macroeconomics, monetary policy and entrepreneurship.

The system of liberal US hegemony set up after World War II had very beneficial effects for Western Europe, Japan and some other countries. During this period of Pax Americana, there was no direct great power hot war and prosperity in many countries soared. The peaceful environment in Asia and open trading system in Asia and the open world trading system was also fundamental to China’s economic rise over the last 40 years. But, it should not be forgotten that this US-led international order was crafted as a military-strategic counter to the Soviet Union, which was labeled as an evil enemy. The rise of China poses a key challenge to US-dominance in that China’s economy is a rival to the US economy in a way that the Soviet economy never was. China’s increasing military capabilities also limit the ability of US forces to project power easily in Asia. Nothing in the history or military doctrine of the US suggests that it will recognize that it has few real interests in the region and thus adopt a policy of restraint. More likely, we are entering a dangerous period in which the US focuses on economically and strategically constraining China.

There are many terms and phrases used to describe the predominant US strategic theory since World War II. These include liberal hegemony, American leadership, “America as the indispensable nation,” “rules-based global system,” and so forth. There are slightly different implications among these terms, but they all describe a world, or large part of the world, where the US is militarily and economically dominant and uses its power to impose a more or less liberal and benevolent international system.

This American-led system has paid off for the US, its allies, and much of the rest of the world. The transformative economic growth and technological innovation during the so-called “thirty glorious years,” roughly from 1945 to 1975, would not have been possible if the US had not provided Western Europe and Japan both military protection and easy access to its markets. Similarily, the peaceful environment in Asia and the open trading system was also fundamental to China’s economic rise over the last 40 years.

Yet, there are big questions about whether this system can be maintained over the next decade as China continues to rise economically and militarily. How will the US respond to China’s increasing ability to thwart US power projection capabilities? Will there be an arms race combined with US attempts to forge cold-war-style alliances that designate China as the main potential enemy? Or, will the US decide that it has few hard, real interests in the region and is not willing to pay the price of maintaining a US-led international system in the area?

And, how will the US respond to China’s continued economic and technological growth? Will the US accept that China may become the largest economy and most advanced technological innovator in the world? Or, will the US see China primarily as a strategic competitor whose economic and tech capabilities must be limited?

There are only two ways to sustain American commitment to a liberal world order regime. One way is to make maintenance of this international regime relatively cheap and easy. Basically, the US becomes the policeman in a not very dangerous world. The other way is to convince the American public and elites that maintaining the liberal world order is part of an overall fight against an enemy, preferably an evil enemy. We don’t have any history of something in-between these two extremes. Make no mistake, traditional concepts of a liberal world order depend on American hegemony.

The grand task going forward is to try to find a middle ground between American withdrawal from Asia versus a new economic and military cold war. Unfortunately, post-WWII history gives no precedent for such a system.

1.The Pax Americana and the Cold War

The American-led system has secured a long Pax Americana in the sense that there have been no great power wars and both Western Europe and East Asia have been largely peaceful. General public opinion in many countries recognizes the benefits of this system. A Eurasia Group survey published in April 2020 found that across Asian countries, with the exception of China, 77% of respondents agreed that the United States would be preferable as a global leader for their country and 79.1% of respondents said that US leadership was better for the world overall.

In China, almost half the respondents said that US influence in the region was very or somewhat negative with just 6.8% reporting a very positive view.

But, Americans themselves are even less favorable to a US-led international order. In another Eurasia Group poll, published November 2019, 57.6% of American respondents said that the US should reduce its military presence in Asia while transitioning regional allies to defend themselves. 47.1% said that the US should refrain from military intervention when Americans are not directly threatened and only 19.4% would support a US-led response to humanitarian abuses abroad.

The US was willing to maintain large military expenditures and economic generosity to allies during the long cold war largely because there was an enemy that was perceived to be evil. In his inaugural address on January 20, 1961, President John Kennedy famously said: “Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, in order to assure the survival and the success of liberty.”

And, as Kennedy predicted, the Cold War cost the US a lot of blood and treasure. The long wars in Korea, Vietnam, and, after the Cold War, in the Middle East have cost trillions of dollars and many lives. They have also had very damaging effects on US institutions and culture. Are Americans willing to pay a huge price to protect an international system if neither American interests nor core ideals are at risk?

The first Gulf War seemed to confirm the idea that future military intervention by the US and its allies would be quick, easy, and relatively painless. It created the illusion that the US military would be able “to intervene easily, far from our homeland and close to the homeland of our enemies.” But, this dream that we were approaching Frank Fukuyama’s “end of history” did not last long.

For a while, until roughly 2010, it looked like the ideal international regime might exist in East Asia. The US military in the region was so dominant that intervention was unnecessary and many thought that the nations in the region, especially China, would move toward liberal domestic regimes.

There are some vague ideas that there might be an EU-led system, but that assumes that the world is a very peaceful place. In the early 1990s, there was a brief period where it looked like we might be entering a world system resembling a European Union writ large: (1) where military conflict looked impossible in much of the world, (2) where US and allied military power was so overwhelming that police-like actions could easily manage the rest of the world, (3) where disagreements among nations were settled by multilateral rules-based organizations, and (4) where the US/Western European democratic capitalist system looked so superior that most of the world was expected to converge on this model. None of those conditions holds true today.

In his well-known 2014 book Restraint: A New Foundation for U.S. Grand Strategy, Barry Posen of MIT argued that liberal hegemonists believe that “the United States can only be truly safe in a world full of states like us…” In the early 2000s, many Americans believed that China was on an inevitable path to become “like us” and thus was not an adversary. But, now few American strategists see China on a this path and thus see it as a strategic rival and probable future cold or hot enemy.

The US has no vital interests in Asia in the sense that the long-term livelihoods of average American people would be drastically harmed if current ties with Asia were reduced. As Chinese production has risen over the past 20 years, many Americans have gained from cheaper imports of a large variety of goods, interest rates and inflation rates have probably been reduced, and tech supply chains have been optimized. But, going back to the trade status quo as of 1995 or even 1975 would not be devastating to Americans. Many would gain as factories moved to North America. In the very extreme case that all trade would be cut off, mines in Nevada and other places would need to reopen to supply so-called “rare” earths, raising gadget prices a bit. A rational purely economic calculus of US interests would not find these impacts to be worth fighting, or even risking, a war over.

The major issues at stake in Asia center on the economic interests of US allies and on maintaining American liberal hegemony there, not on direct US economic or homeland-protection interests.

American military strategy has long been based on the idea of force projection— that US forces have the capability to intervene all around the world. For decades, the US could intervene in East Asia with little fear of being countered, except in Korea. As we saw in the 1996 Taiwan Straits incident, the US could intervene without firing a shot, so there was little danger of escalation. In the late 1990s, the US could thus maintain a liberal hegemony regime in East Asia without too much risk or expenditure and did not need an enemy to justify its military expenditures.

Now, US intervention in East Asia would be both highly risky and vastly expensive. Recent Chinese investments in “carrier-killer” missiles seriously weaken the US ability to project power in seas adjacent to China. China often points out that it spends a fraction on defense of what the US does, but that is irrelevant. The strategic goals that each country hopes to achieve with its forces are what is really relevant. To reach its goals, the US has to build and maintain the capability to project power across an ocean and intervene against a Chinese military with rapidly rising power to destroy US Navy ships.

One danger is that we are getting into a spiraling arms race. China is building anti-carrier weapons. Leading the US to build up its forces. Leading to more Chinese arms expenditures and a vicious cycle.

Another danger is that neither side can predict its own behavior or that of the other side if an incident occurs. If some kind of incident occurs at sea, will China shoot at US carriers? What happens if they sink one? Will the US attack missile batteries on Chinese territory? The risks of unwanted war and escalation are very real.

Are these risks and costs worthwhile for the US? Probably not if we are just propping up a vague international trading regime. But, the American people can probably be convinced to support this strategy if they can be convinced they are opposing another evil empire.

Neither side appears to want this outcome. Almost everyone in China recognizes that the country has benefited greatly from US-led liberal hegemony in the region and that American military withdrawal could make the region much more risky. But, most Chinese also support the military buildup that is a factor in changing the system. Would China really benefit from pushing the US out of East Asia? Similarly, few in the US look forward to another cold war or more military misadventures in Asia, but we seem to be adopting policies that lead in that direction.

2. What Will Be the Strategic Doctrine of the Biden Administration?

As of this writing in March 2021, we are starting to get confirmations that the new Biden administration is seeking to maintain traditional views of American liberal hegemony in Asia. While maintaining flexibility and seeking to smooth relations with China, Biden appears to be building a Quad (US, Japan, Australia, India) quasi- alliance in preparation for a long cold war.

Many observers in China saw the start of the Biden administration as the start of fundamentally improved US–China relations compared to the Trump era. This was based on the idea that American strategists who support Biden see the role of the US as managing a rules-based world order that would open US markets to Chinese goods and would not be very interested in limiting the economic, technological, or military rise of China.

This is a clear misreading of post-World War II US strategy. That strategy had elements of liberalism in that it promoted trade, primarily among US allies, and sought to impose a rules-based order—though the US was frequently excepted from the rules. The often-ignored part of this strategy was that it was, at its core, an anti-Soviet alliance.

The “Interim National Security Strategic Guidance” issued by the White House on March 3, 2021 (referred to hereafter as the National Security Strategy Document, NSSD) gives little hope to those who believe that US–China relations will move back toward the amity that prevailed during the George W. Bush or Reagan administrations.

The Biden administration is certainly more interested in alliances than was the Trump administration, but the NSSD makes clear that these are primarily seen as alliances against China. The document repeatedly says that it is targeted against “an increasingly assertive China and destabilizing Russia.” It states that the key agenda is to “strengthen our enduring advantages, and allow us to prevail in strategic competition with China or any other nation” and to “out-compete a more assertive and authoritarian China over the long-term.”

The NSSD also makes clear that President Trump’s interest in trade agreements that focus on working-class jobs in the US will continue. It says: “our trade and international economic policies must serve all Americans, not just the privileged few. Trade policy must grow the American middle class, create better jobs, raise wages, and strengthen communities. We will make sure that the rules of the international economy are not tilted against the United States. We will enforce existing trade rules and create new ones that promote fairness.”

Two key paragraphs of the NSSD lay out the Biden administration’s view that China is the main threat to the international system:

Taken together, this agenda will strengthen our enduring advantages, and allow us to prevail in strategic competition with China or any other nation. The most effective way for America to out-compete a more assertive and authoritarian China over the long-term is to invest in our people, our economy, and our democracy. By restoring U.S. credibility and reasserting forward-looking global leadership, we will ensure that America, not China, sets the inter- national agenda, working alongside others to shape new global norms and agreements that advance our interests and reflect our values. By bolstering and defending our unparalleled network of allies and partners, and making smart defense investments, we will also deter Chinese aggression and counter threats to our collective security, prosperity, and democratic way of life.

At the same time, revitalizing our core strengths is necessary but not sufficient. In many areas, China’s leaders seek unfair advantages, behave aggressively and coercively, and undermine the rules and values at the heart of an open and stable international system. When the Chinese government’s behavior directly threatens our interests and values, we will answer Beijing’s challenge. We will confront unfair and illegal trade practices, cyber theft, and coercive economic practices that hurt American workers, undercut our advanced and emerging technologies, and seek to erode our strategic advantage and national competitiveness….We will support China’s neighbors and commercial partners in defending their rights to make independent political choices free of coercion or undue foreign influence. We will promote locally-led development to combat the manipulation of local priorities. We will support Taiwan, a leading democracy and critical economic and security partner, in line with long- standing American commitments. We will ensure that U.S. companies do not sacrifice American values in doing business in China. And we will stand up for democracy, human rights and human dignity in Hong Kong, Xinjiang, and Tibet.

Notice that this wording is not very different from official documents of the Trump administration. For example, then US Secretary of Defense Jim Mattis at the 2017 Shangri-La Dialogue in Singapore stated: “by further strengthening our alliances, by empowering the region, and by enhancing the US military in support of our larger foreign policy goals, we intend to continue to promote the rules-based order that is in the best interest of the United States, and of all the countries in the region.”

It is important not to misconstrue the currently poor state of US–China relations as a partisan issue that started with the Trump presidency. The so-called “pivot to Asia” was an Obama administration initiative, started by Hillary Clinton when she was Secretary of State.

It is often thought, especially after the Vietnam War, that Democrats are less warlike than Republicans. That does seem to be the case among ordinary voters. But, there is little evidence that the Democrat party foreign policy elites are less aggressive than Republican party elites. Foreign countries should be wary of using political party affiliation to predict the international behavior of an American leader.

It is also hard to predict the Biden administration’s actions in East Asia from previous actions of the President. He voted for the 2003 authorization of the war with Iraq and reportedly supported air strikes against Bashar Al-Assad’s forces in Syria. On the other hand, he claims to have argued strongly in the White House, as Vice-President, against the toppling of Gadaffi in Libya. And, in an interview with Politico, he said the US should not use force unless the interests of the country or its allies are directly threatened, whether it can be done efficaciously, and whether it can be sustained.” So, President Biden himself has, at times, adopted somewhat restrained and realist views but has also supported interventionist policies. His administration, like the Obama administration, seems to aim to maintain American-led liberal hegemony in the region and seems to plan to use local allies in a cold-war-like system.

Kurt Campbell, who, as assistant secretary of State for East Asia during the Obama administration, was the principal author of the pivot to Asia, is now the Indo-Pacific Coordinator in the National Security Council under Biden. As far back as the Clinton administration, Campbell captained then Assistant Secretary of Defense Joseph Nye’s “Nye Initiative,” which strengthened US alliance relations in the region.

In a July 2018 speech at Harvard University, Ashton Carter, who was US Secretary of Defense during the Obama administration, said that the single most important factor in the 70-year history (of prosperity in Asia) has been the pivotal role of American military power in the region. The US aims to keep that going he said. But, he added, “I’m not one of those people who believes war, cold or otherwise, with China is likely. It’s certainly not desirable.”

From the point of view of the US, these moves are not nefarious and are not necessarily aimed to limit China’s growth. This US strategy is certainly not intended to lead to a shooting war with China—it can be argued that military strength and reduced ambiguity reduce the chance of war. A balance of power might stabilize the region. And, it is conceivable that it will not lead to anything that could be characterized as a cold war. But, it is not a big step from an informal military alliance to a cold war. History suggests that the US will not be willing to make the required expenditures unless we can designate an enemy.

The March 12, 2021 virtual meeting between the leaders of the Quad–President Biden and the leaders of Japan, Australia, and India–focused mostly on COVID-19 vaccines and made attempts not to antagonize China. But the White House said the leaders would work toward “a stronger regional architecture through the Quad.” Preventing China from becoming dominant in the region is a clear goal of that architecture.

The national security/intelligence state agencies are very influential and powerful in Washington. They win most interagency battles and even Presidents have failed to overcome their interests. Barack Obama came into office as a “peace” President who had opposed the war in Iraq. Donald Trump also opposed the Iraq War, sought to withdraw the US from wars in the Middle East, and, quoting President Eisenhower’s farewell address, railed against the national security establishment. But, both achieved little along the lines they promised. So, I fear that the default path will involve more buildup of American forces in East Asia and a new cold war.

If maintaining a liberal order in Asia were a relatively cheap and relatively easy strategy, there would be no reason to worry. But, as China’s economy rises to match or exceed that of the US, and as China invests in technology designed to match that of the US and builds more military forces capable of countering US naval and other power projection forces, the Quad-based pivot to Asia in which the US builds up its own forces and tries to maintain military hegemony in the region looks to be neither cheap nor easy.

Nothing in the history of military doctrine of the US suggests that it will recognize that it has few real direct interests in the region and thus adopt a policy of restraint. Instead, we are probably looking at a strategic plan designed to constrain China.

3. Managing the Dangerous Decade

Current US public opinion toward China is scary. According to a 2021 Gallup poll, favorable ratings of China among Americans have plummeted to a record low since 1979 of 20% and Pew, the leading US polling organisation, found that 89% of American adults now consider China to be a competitor or enemy rather than a partner.

This is not surprising since current US press reports and government discussions of China are unrelentingly negative. A cynic might fear that the US public is being prepped to see China as a cold war enemy.

Chinese views of the US are a lot less biased, but 2020 still showed a low point. Twenty-eight percent of respondents reported an unfavorable view of the United States, up from 17% a year earlier. The number of respondents reporting a favorable view also fell from 58 to 39%.

I’m often asked in China what I think the probability of war between the two countries is. My reluctant answer is “not zero.” But, war is not a random event that can be probabilistically predicted. War can be created only by short-term or long- term decisions of national leaders. How can both sides manage the coming dangerous decade in a way to minimize the chances that they or future leaders will feel obligated to go to war?

Graham Allison’s book, Destined for War: Can America and China Escape Thucydides’s Trap? did a great service to the world by warning us about the danger that a seemingly stable world order can fall apart, even though maintaining it is in everyone’s interest. Many have struggled to explain the decisions that led from the apparently globalized, prosperous world of the summer of 1914 to the incredible destruction of the first world war, even though Germany and Britain were culturally close and economically interdependent.

This essay is about strategic theories and doctrines, which certainly play a big role, but they are not everything, Thucydides certainly did warn about the dangers inherent in a changing balance of power. But, he also stressed that leaders could have made decisions that led to much better, or worse, outcomes.

One major factor leading to the Peloponnesian Wars was the idea of pride, which could be interpreted as credibility in modern times. The Athenians had many opportunities to make minor face-saving concessions to Sparta, which probably would have headed off the war. But they were afraid they would lose their own credibility with their own allies and subject states, some of whom wanted to break away if they thought Athens was weak. Such factors drive leaders in modern times. For example, it is hard to understand US involvement in the Vietnam War except as an attempt to maintain American credibility.

American and Chinese leaders need to understand that not just hard realist interests drive the decisions of the others. Credibility and pride may cause leaders to make decisions that are apparently not in their interests. One big danger that China may preemptively decide to assert its dominance and that could lead to some kind of conflict, maybe accidental conflict. On the other hand, the US may decide that it has to assert its hegemony to maintain its credibility in Asia. Either of these steps could lead to unthinkable disaster.

The American founding fathers were very familiar with Greek literature and Greek history. So, drawing on Thucydides, George Washington’s farewell address warned us against entangling alliances. The US needs allies, but it should be sure that the interests of allies don’t drag it into risky situations and a new cold war.

China could go a long way toward reducing the attractiveness of a Quad alliance simply by using kinder diplomacy and gentler rhetoric toward Japan, India, and Australia. The so-called “wolf warriors” have put regional countries on high alert. Strictly following the trading rules in the RCEP and, potentially, the TPP for a long period of time would reduce some of the fears of China’s economic domination.

For the foreseeable future, there are unlikely to be fundamental changes in US– China relations. On trade, the Biden administration will seek agreements to create jobs and raise wages in the US. Most of the damage to the US working class has been done by domestic financial reforms and the government’s failure to enforce antitrust laws, but it’s a lot easier just to blame China. So, it is unlikely that the US and China will be able to reach a wide-scale rules-based trade agreement, but even a continuation of the more transactional Phase One trade agreement would be economically beneficial. More importantly, it would help smooth relations between the two nations.

The US is unlikely to end its campaign to prevent the transfer of technology to China. But, that may not be a bad thing for China in the long term. After all, China is the only country in the world to develop its own software ecosystem because it banned the Silicon Valley oligopolists from its markets. China has a very strong interest in promoting its own indigenous tech capability. It would have that interest regardless of whether the US had put sanctions on it, but those sanctions make China’s interests more urgent. Withdrawal of the tech sanctions will not change Chinese behavior because China has now been warned that the US can try to destroy major parts of Chinese tech companies and it will not want to be put in that position again, regardless of the administration in power in Washington.

Domestic factors will be key in the long term. If the Chinese economy continues to grow so that it is able to escape the middle-income trap and become a country with indigenous innovation and a GDP 50–100% higher than the US, then it is hard to believe that the US will be able to maintain anything that looks vaguely like hegemony in Asia regardless of the strategic or military policies it implements now. If China fails at its economic transformation, then the long-term strategic balance won’t shift. And, if the US is not able to fix its own economic problems, its adventures and misadventures in Asia will make its domestic problems even worse. I hope that both countries just calm down for the next 10–20 years and see how it works out.

In addition to the liberal hegemony school of strategy, there is an alternative “real- ist” school of thinking about American strategy. For example, Harvey Sapolsky and his former students at MIT argue for a focus on America’s real interests, with a “strong military, just not a large or busy one.” And, in a 2014 Council of Foreign Relations- sponsored task force, General David Petraeus and Robert Zoellick argued for prioritizing North America. If China clearly becomes the leading world economy, US strategy will probably move in this more realist direction. Let’s hope it doesn’t take a war to move us there.

My view is that the best we can hope for is a continuation of the current unsettled status quo. Both sides should seek to muddle through until the long-term balance of power is clear. But just because nothing huge will change does not mean that small steps will not enhance safety. Discussions and seemingly unrelated agreements between the US and China can go a long way to salve the fears driven by the strategic situation. As George H.W. Bush stressed, “goodwill begets goodwill.” So any negotiations, confidence building measures, or joint actions could pay off by reassuring both sides.

David Blair is vice president of the Center for China and Globalization(CCG) and an economist specializing in macroeconomics, monetary policy and entrepreneur- ship. He has also held numerous positions related to foreign policy. He retired in 2016 as professor of economics and finance from the Eisenhower School of National Defense University in Wash- ington, where he also served as chairman of the economics department. Previously, he was a senior columnist at China Daily. He holds a Ph.D. in economics from UCLA and was a MacArthur Foun- dation Avoiding Nuclear War Fellow at Harvard University. He has led projects and consulted in Italy, Tajikistan, India, Bulgaria and Ethiopia.

// Editor’s note

This essay is selected from the book Consensus or Conflict? China and Globalization in the 21st Century, which is the first one of the “China and Globalization Series” books. This book series seek to create a balanced global perspective by gathering the views of highly influential policy scholars, practitioners, and opinion leaders from China and around the world. The open access book Consensus or Conflict? brings together leading international scholars and policy-makers to explore the challenges and dilemmas of globalization and governance in an era increasingly defined by economic crises, widespread populism, retreating internationalism, and a looming cold war between the United States and China. It provides the diversity of views on those widely concerned topics such as global governance, climate change, global health, migration, S&T revolution, financial market, and sustainable development.

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