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A Big Power Agenda for East Asia: America, China, and Japan

David M. Lampton and Gregory C. May

Foreword By James Schlesinger

The Nixon Center, Washington, DC  2000

Table of Contents

Foreword

Executive Summary

Part I.  The Current Situation

China's Military Modernization
Taiwan's Response to a Stronger PLA
South Korea: More at Ease With China
Japan: In Search of "Normality"
Russia: On the Down Escalator
South Asia

Part II. The Three Key Drivers

     Driver No. 1: Taiwan
     Driver No. 2: Missiles and Missile Defenses
     Driver No. 3: Lack of Sino-Japanese Reconciliation

Part III. Recommendations

Notes

EXECUTIVE SUMMARY

For more than a decade since the June 1989 violence in Beijing, the focal point of debate between the Executive and Legislative branches was over granting Normal Trade Relations to China. With the late 2000 passage of Permanent Normal Trade Relations (PNTR) by comfortable, bipartisan margins in both houses of the United States Congress, that particular debate has concluded. With that preoccupation gone, the focus for policy makers in the new administration should shift to two sets of issues.

The first set of issues concerns China’s integration into the World Trade Organization (WTO). The process of making the People’s Republic of China (PRC) a fully compliant member of the rules-based trading regime will profoundly (and positively) affect China. However, integration will not be easy for either China or its trading partners. Achieving compliance in the vast Chinese bureaucracy that stretches from the pinnacle of Beijing through multiple layers into over one million villages will require one to two decades and will test the patience, perseverance, and skill of the United States and China’s other Western trade partners.

The second set of issues, and the concern of this study, is strategic in character--the implications of China’s increasing power for America and the rest of East Asia. We believe that big power relations between the United States, China, and Japan should be at the very heart of American policy in East and Northeast Asia.

The U.S.-China relationship is a broad, protracted, and therefore fundamental foreign policy issue facing the new U.S. administration in 2001 and beyond. The character of U.S.-China relations will affect all of the principal big power relationships in East Asia, particularly U.S.-Japan and Japan-China ties. The character of these bilateral relationships, as well as the three-way relationship as a whole, will, in turn, affect how productively every other challenge in the region can be addressed, whether it is proliferation, peace on the Korean Peninsula, sustained economic growth in the region, Taiwan, or "softer" transnational issues.

Internal developments in the PRC, cross-Strait relations, and the character of the Sino-American and Sino-Japanese relationships in the decade ahead will determine whether or not East Asia is fundamentally stable. This report describes the current security environment in the region, identifies the principal trends and developments, and proposes recommendations for the new U.S. administration.

In terms of personnel, the PRC maintains the largest standing army in the world with an estimated 2.48 million men and women in uniform, though in qualitative terms, the People’s Liberation Army (PLA) takes a distant back seat to the Japanese Self Defense Force, not to mention the U.S. military. More broadly, eight of the world’s 11 largest military forces (in terms of manpower and/or expenditure) are located in the region. Proficiency in missile-related technology is spreading beyond the PRC and Russia. Japan has an advanced civilian space-launch program that has raised eyebrows in the region (though there is no evidence Japan intends to use its launch vehicles for military purposes). North Korea is developing a missile of intercontinental range and engaged in a provocative test of its Taepo Dong missile in August 1998, though as this study went to press Pyongyang and Washington were negotiating terms of a possible halt to this effort. South Korea, meanwhile, recently tested a new short-range missile and Taiwan’s leaders are debating a revival of their surface-to-surface ballistic missile program abandoned in the 1990s.

In terms of societies that could "go nuclear," the neighborhood also is tough—North Korea, Japan, and Taiwan could probably acquire such weapons in a short period of time, were there a decision to do so. (Indeed, Seoul believes North Korea already has the ability to assemble one or two crude nuclear weapons.) In addition, around China’s periphery there are three declared nuclear states—Russia, India, and Pakistan, not to mention the United States at greater distance. In short, there is lots a dry tinder lying around the region.

The first section of this report examines the current military situation in Northeast Asia. While several disturbing developments are noted, particularly China’s increasing reliance on theater missiles to compensate for its overall military weakness, it is not correct to say that the region is experiencing a feverish arms race that is inevitably headed toward conflict. Reasons for cautious optimism include:

• China’s military modernization, though indisputable, is occurring at a gradual pace. Beijing’s emphasis on the idea of "comprehensive national power," in which economic might is just as important as military power, means that the PRC, unlike pre-war Japan, is not necessarily destined to become a military hegemon as more alarmist observers sometimes argue. Others in the region, including the United States, will have time to respond to the People’s Liberation Army’s growing capabilities.

• Most militaries in the region, including the PLA, are actually becoming smaller. Indeed, a "modernization race" is perhaps a more accurate description of what is occurring in Northeast Asia rather than an "arms race." With the seeming exception of North Korea, the Northeast Asian countries are trimming aggregate force levels and investing in high-tech equipment designed to fight localized wars on the sea and in the air. Although military budgets have expanded in absolute terms over the course of the 1990s, they have generally declined as a percentage of GDP (though China’s still inadequate transparency on military spending means this trend may not be as dramatic in the PRC as official figures suggest).

• The Korean Peninsula, though still dangerous, may be becoming less so. While a healthy suspicion of Pyongyang is warranted, the historic Kim-Kim summit of June 2000 offers hope for a peaceful and gradual evolution of political relations between North and South Korea, as do the direct Washington-Pyongyang discussions that occurred during the waning days of the Clinton Administration.

• Nuclear and missile proliferation risks are largely contained in Northeast Asia. Worrisome technology appears to be flowing primarily south and west from China into the Subcontinent and the Middle East. The Agreed Framework of 1994 appears to be holding and Pyongyang has not engaged in further missile tests. Though there are murmurs on Taiwan about developing a ballistic missile and perhaps nuclear capability, there is no evidence that Taipei has restarted its nuclear program. Finally, despite the musings of some right-wing politicians, Japan’s commitment to forgo nuclear weapons and stay under the American strategic umbrella is unchanged.

The Three Drivers of the Military "Modernization Race"

However, while the present situation is still manageable, the region could quickly become less so. The second section of this report identifies three key "drivers" of instability in the region: increasingly tense cross-Strait relations; China’s missile buildup and U.S. missile defense plans; and deep and lingering Sino-Japanese animosity. In late-2000, U.S.-China relations appear to be making modest, tenuous progress (when assessed from the lows reached in the second half of 1999). Looking more deeply, however, some trends are not reassuring, though growing Sino-American economic interdependence is perhaps the most significant stabilizing element in the relationship. Three broad trends need to be the focus of attention by the next administration, beyond issues of WTO compliance mentioned at the outset of this Summary.

Trend No. 1: Stalemate in the Taiwan Strait

• The greatest risk to U.S. and allied interests is isolated conflicts escalating into major-power clashes. Conflict in the Taiwan Strait, for example, could erupt if either Taiwan or mainland China misjudges the other or miscalculates Washington’s intentions. Taipei could push the independence envelope too far if its leaders believed Washington had given it a carte-blanche security guarantee. Beijing might be tempted to employ military muscle if it believed Washington was irresolute about its requirement that there be a "peaceful resolution" to cross-Strait issues. The gradual buildup of PRC short-range missiles in the area of the Taiwan Strait is fueling calls on Taiwan for an offensive-strike capability. If this action-reaction dynamic proceeds very far, there will be progressively less stability in the Taiwan Strait and the risks of American involvement will rise accordingly.

• Faced with a modernizing PLA and a tense cross-Strait political relationship, Taiwan is improving its forces, albeit with difficulty. The Chen Shui-bian Administration emphasizes the need to defeat the PLA off Taiwan’s shores rather than repel an attack once it has reached Taiwan’s soil. For its part, PLA doctrine also has emphasized offshore force projection, although current capabilities are quite limited. Each side’s move toward offshore-strike capability adds to instability, it puts forces on a hair trigger, and Taiwan’s acquisition of offensive weapons raises difficult choices about future U.S. weapons sales to the island, given the Taiwan Relations Act’s requirement that America provide Taipei only weapons of a defensive character.

• For Taipei, strengthening security ties to the United States and Japan is taking on increased urgency with Taiwan’s military advantages expected to diminish in the latter half of the decade as the economic size and technological prowess of the PRC gradually increase.

Trend No. 2: PRC Missiles and American Missile Defense

• Missiles (short-, intermediate-, and long-range) are the one area where the PRC’s military capabilities are comparatively robust. China is relying on this force to compensate for its lack of conventional military force projection capacity, hoping to raise the potential costs of American intervention to "unacceptable" levels in what Beijing views as a risk averse Washington.

• Even a limited U.S. national missile defense (NMD) system could cause China, currently with only about two dozen ICBMs, to lose what may be left of its minimum deterrent vis-a-vis America. Although the NMD system currently under development is designed primarily to stop a small attack from "states of concern" such as Iran, Iraq, or North Korea, China’s ICBM force also is vulnerable. If Washington moves toward NMD (in the absence of some understanding with Beijing), the PRC can be expected to substantially increase the size and quality of its strategic forces beyond the target levels of its current modest modernization effort. This should not come as a surprise to Washington nor should it elicit a U.S. overreaction that further feeds an escalatory cycle.

• China is modernizing its missiles, but there is no evidence of a change in its basic nuclear doctrine of minimum deterrence and no first use. Some American analysts, however, perceive a move toward a limited deterrence concept that includes acquiring the capacity to flexibly respond to an attack, rather than relying simply on indiscriminate retaliation against a few major urban areas. Implementing a limited deterrence strategy would require China to have a better early warning capability and a more survivable missile force with more, and more accurate, warheads. To the degree that these improvements enhance China’s sense of security and contribute to stability in crisis, they are not completely unwelcome.

• Theater missile defense (TMD) is principally a political/sovereignty issue for the PRC because of Taiwan’s possible inclusion. China possesses a relatively large array of intermediate and short-range missiles that could overwhelm any probable TMD system on Taiwan. The PRC’s principal political concern is the increased military cooperation between Washington and Taipei that upper-tier TMD would require. If the United States moved in this direction, in Beijing’s eyes it would undermine one of the three bases on which "normalization" occurred in 1979—termination of the U.S.-Taiwan security alliance.

• Further, if Taiwan was in the process of acquiring an upper-tier TMD capability from the United States, the dangers of PRC preemption against that imminent capability would increase considerably. Finally, China cannot continue to build up its missile forces indefinitely without eliciting reactions from the United States, Japan, India, Taiwan, and perhaps others.

• China’s reactions to TMD and NMD will vary according to the choices the United States might make in basing modes, scale, system recipients, and whether America’s offensive nuclear weapon stockpiles decline as defensive systems come on line. However, Beijing has not indicated that it would show restraint on offensive capability if Washington demonstrated restraint on missile defense.

Trend No. 3: The "Normalization" of Japan

• Sino-Japanese relations are not stable over the long term. Japan understandably wishes to become a "normal" country in security and diplomatic terms and Beijing finds this contrary to its interests, in part because genuine post-World War II reconciliation between the two has yet to occur. This underlying distrust finds expression in issues surrounding the U.S.-Japan security alliance, Taiwan, and theater missile defense.

• Japan no longer feels a strong obligation to help China catch up with the rest of the region economically or technologically. Japan is becoming increasingly concerned about indirectly assisting in the PRC’s military buildup. Public opinion data in Japan show growing skepticism about China. Friction-laden China-Japan relations are counter to U.S. interests and, indeed, contrary to the long-term interest of Tokyo and Beijing.

RECOMMENDATIONS

Overall, the situation in East Asia is still favorable to America. The objective of U.S. policy should be to strengthen the current relatively stable circumstance and to discourage adverse developments. The United States, by maintaining a modest contingent of around 100,000 forward deployed troops has managed to contribute to a stable balance of power and peace in the region’s powder kegs, namely the Taiwan Strait and the Korean Peninsula. This should continue to be the focus of U.S. government policy attention, though, as explained below, Washington needs to think creatively about how to best maintain a stable balance in the years ahead.

Currently, cross-Strait tensions present an unacceptably high risk of spiraling out of control; policy assessment is needed in Washington, and this should be among the new administration’s highest foreign policy priorities. The United States now is viewed by the predominant coalition of forces in Beijing as presenting the greatest challenge to its national interests, particularly regarding reunification with Taiwan. At the same time, Beijing also considers productive relations with the United States to be essential to achieving its overriding development objectives. In short, just as Washington is ambivalent about a rising China, Beijing is ambivalent about an ascendant America.

The PRC’s preoccupation with, and "deterrence" posture toward, Taiwan is hampering its ability to reassure neighbors in the Asia-Pacific of China’s peaceful intent. China’s military buildup will undoubtedly shape the policies of other Asia-Pacific actors, including the United States, a fact Beijing does not acknowledge. Beijing generally sees itself as reacting to the initiatives of others, rather than others reacting to its moves. The PRC’s gradual build-up of short-range missiles to "deter" secessionist tendencies on Taiwan is a classic example of how Beijing’s self-conception of reacting is feeding responses on Taiwan, in the United States, and more broadly in East Asia.

Others in the region worry that China, as its overall economic and military strength continues to grow, will become less respectful of the interests of others. For its part, China is worried about what it views as the "hegemony" of the United States which, at the start of the twenty-first century, enjoys the widest disparity in national power (defined economically, militarily, and culturally) the world system has ever witnessed.

With the above in mind, the authors offer the following recommendations both to the new U.S. administration and to leaders in the region:

• The new administration should do its best to involve China in bilateral and multilateral arms control efforts. Global nuclear issues need to be addressed in a U.S.-China-Russia framework, rather than along the Cold War Moscow-Washington axis. Regional issues (e.g. TMD and North Korea), meanwhile, should be handled in a forum that includes (but is not necessarily limited to) the United States, China, and Japan.

• China’s reactions must be given important weight in the U.S. debate about missile defense. A missile defense deal with Russia that excludes China (without even having tried to win Beijing’s cooperation) would be damaging to stability.

• Beijing will have a qualitatively improved and quantitatively larger nuclear force in the future, no matter how benign American decisions may be. Nonetheless, this basic trend will be exacerbated considerably if the United States deploys NMD and/or high-altitude TMD in the region, particularly to Taiwan. This is not to say the United States should terminate missile defense programs, only that Washington should not overreact when Beijing takes the logical step of improving and expanding its own nuclear forces to insure minimum deterrence in the face of TMD and NMD.

• The United States should make it clear to Beijing that continued deployment of increasing numbers of short- and medium-range missiles across from Taiwan make an American TMD response in the area of the Strait almost inevitable. The new administration should seriously explore with Beijing negotiating restraint in China’s behavior in exchange for restraint in American and Taiwanese behavior. Taipei would likely welcome initiatives aimed at demilitarizing the Strait so long as it does not perceive the U.S. to be jettisoning its historic security role.

• Washington should press ahead with Moscow on Strategic Arms Reduction Talks (START). To move ahead with missile defense while dragging heels on nuclear force draw downs would be the most unsettling combination of policies and would ensure the most negative response from Beijing (and probably Moscow as well).

• Out of consideration for their own interests, Beijing and Tokyo should move toward genuine reconciliation. Japan needs to credibly reassure China and the rest of Asia that it has come to terms with its imperial past. And, China must credibly assure Japan that it will not perpetually seek to use World War II-era guilt to exert leverage in negotiations. Until there is such durable reconciliation, Sino-Japanese cooperation will be tenuous at best; a high degree of Sino-Japanese friction is not in U.S. interests under current circumstances. Over the long run, Chinese opposition to Japan’s resumption of a "normal" diplomatic and non-nuclear security posture is untenable. For its part, Tokyo must do more to prepare the region for changes to the peace constitution that are likely to come.

• China’s concerns about the U.S.-Japan alliance must be addressed if Beijing is to accept a "normal" Japan. The United States and Japan should state unequivocally that the independence of Taiwan is not a goal of their alliance. For its part, Beijing should stop rhetorical and diplomatic efforts to undermine the alliance and acknowledge that it can play a stabilizing role in the region.

• American presidents in the future should not permit Chinese entreaties to determine their travel schedule as was the case when President Clinton overflew Japan on his way to the 1998 summit in China.

• As part of a process of building confidence among the three major powers, annual trilateral meetings of the Japanese, Chinese, and American defense and foreign ministers should be institutionalized. Further, a Northeast Asian Regional Forum similar to ARF (with initially modest expectations), should be established, or adapted from existent "track two" dialogue mechanisms.

• There is a need for Washington to place less emphasis on the 100,000 troop benchmark and rather focus on American capabilities to project power in the region quickly. This might allow a gradual evolution of the U.S. forward presence as the situation evolves on the Korean Peninsula, across the Taiwan Strait, and as multilateral forums take root. If developments move in a positive direction, one possible scenario is that U.S. security links with its allies remain (as in NATO), but progressively fewer troops are forward-based.

• Finally, to conduct such a policy in Asia, the new administration will need congressional cooperation. Such cooperation can only occur if the new president and his administration works early and hard to nurture a congressional leadership that is on the same approximate foreign policy wave length. This will not be easy in an era when domestic politics is trump and an unusually contentious body politic has been created by the 2000 general election. But the president should frequently invite key congressional foreign policy leaders to the White House, exchange views often, and do so before crisis requires cooperation for which no foundation has been established.

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