American credibility. A tougher line may in fact produce more constructive Chinese behavior if it convinces Beijing that America retains the capacity to lead in Asia over the long run and is willing to encourage China's ongoing development so long as that does not produce behavior that challenges America's overall position or vital interests in the region. China's leaders are, after all, very pragmatic. They are unlikely to "take on" the United States if America has adopted a strategically coherent Asia strategy that is widely respected and viewed as credible in the region.
Rhetoric and diplomacy, after all, can shape perceptions and expectations and thus are important determinants of foreign-policy outcomes. But over time credibility is crucial, and credibility requires demonstrably having the resources and capabilities to implement the overall strategy over the long run.
In this context, it is striking that Obama and Clinton talked in Asia as if Asians did not view the global financial crisis as "made in America," as if the American system of democracy has recently been performing splendidly, and as if the American military had all the resources necessary to sustain any type of deployment Washington wishes across the vast Pacific region. But none of these is true.
The biggest question in Asia is whether America will bounce back from its current fiscal crisis and soon get onto a path to fiscal health and future strength. The political meltdown over raising the debt ceiling in August 2011 did enormous damage to America's standing in Asia because it generated such a strong negative signal on exactly this issue. As the president was laying out his strategy toward Asia in November, the congressional "supercommittee" was failing to reach even a minimal agreement to present to the Congress as a whole -- a failure that was announced within days of the president's return to Washington.
There thus may have been more than a little wishful thinking in the president's rhetoric during his November trip. While the president indicated that all countries would be welcome to join in Asian prosperity if they accepted the high standards being developed for the TPP, the reality is that at present it is China and not the United States that is the largest trade partner for every major economy in the region, and China does not operate according to these standards. No Asian country appears willing to do anything to jeopardize its economic ties with the rapidly growing Chinese economy, especially at a time of weak American growth and a very uncertain economic prognosis for Europe.
The U.S. military, moreover, is facing potential total budget reductions of over $1 trillion over the coming 10 years. Most Asian governments wonder whether this will, despite current protestations, adversely affect American military capabilities -- and the United States' willingness to use them -- in Asia. China's military, far weaker than that of the United States, appears set to enjoy double-digit annual budget increases for years to come.
In short, a tremendously important factor shaping the future American role in Asia will be how well the United States does in repairing its domestic economy and in demonstrating that, as has happened so often in U.S. history, the American system can bounce back from severe domestic problems stronger than ever before due to the changes the crisis has forced America to adopt.
China's trajectory. There is also the matter of China's own prospects. There is an impression when discussing Beijing's international role that China's growth momentum is unstoppable and that its system is on very firm ground domestically. But both of these are in fact in question. Beijing has already made clear that it must change its development model, as the model that has proved so successful in the past few decades has run its course and is now increasingly generating outcomes -- extreme disparities in wealth, pervasive problems in product and food safety, increasing corruption, catastrophic environmental degradation, decreasing returns to investment, widespread feeling that the system itself has become unfair, and so forth -- that are economically unsustainable and socially destabilizing. But there is sparse evidence to give confidence that the very tough political decisions required to effect this change -- decisions that will challenge vested interests in the corporate world and among some powerful local leaders -- will in fact be made during this time of succession politics in Beijing.
Indeed, the protracted nature of the succession warrants pessimism about substantial domestic reforms before about 2014, if then. Yet, China's political stability cannot be assured without the types of changes in the political system that have become very difficult -- perhaps too difficult -- to make. Should China experience major political unrest or a sharp disruption in its growth momentum, perceptions throughout the Asia-Pacific will shift in ways that can easily affect attitudes toward China's role and the U.S.-China balance in the region.
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