America’s Asia strategy has reached a dead end

In December 2021, the Biden administration's Indo-Pacific coordinator, Kurt Campbell, detailed the shape of US thinking about China and Asia during a conference on Indo-Pacific security. He hit all the familiar notes: the importance of alliances, weapons sales to counter China, the centrality of the Association of Southeast Asian Nations (ASEAN), and the optimistic view that Sino-US relations could be at once competitive and stable.

In any other era, such talk might have been comfort food for regional experts and policymakers. But absent from Campbell's remarks at the conference, which was organised by Australia's Lowy Institute, was any meaningful statement about political economy—the single aspect of statecraft most crucial to the Indo-Pacific region's stability. 

It is in this arena of policy that China has done more to displace the United States than in any other, and it remains the glaring hole in Washington's attempts to craft an Indo-Pacific policy. When pressed on this by his host, Campbell acknowledged that defence initiatives were not enough.

But he could mention no concept, policy, or action to suggest economics was anything more than a throwaway gesture in a speech. Grand references to a forthcoming "economic framework" that would be "cutting-edge" lacked all specifics and stated no purpose other than wanting the United States to "design" the region's standards.

To the extent Campbell's remarks reflect Washington's view of Asia, they are at once modestly reassuring and highly troubling. Reassuring because Campbell's bland rhetorical restraint is a refreshing departure from the volatility and pugnaciousness of the Trump administration. 

Troubling, however, because the ideas powering US President Joe Biden's Asia policy are as bland as the rhetoric itself. US policy toward the world's most important region is no more than a mashup of the residual inertia from Trump's military-first Asia policy with a revival of then-US President Barack Obama's well-intentioned but ill-fated "pivot to Asia," which also had a heavily militarised agenda.

Consequently, the United States is misallocating its attention and influence relative to what would actually benefit the region most. Economic policy, not defence policy, is the only way to address the interrelated problems of development, pandemic recovery, and adaptation to climate change—issues that plague policymakers throughout Asia and threaten to derail the region's peace and prosperity.

This is precisely the trouble with US engagement in Asia to date: The United States has no economic strategy for the region—at least not since Obama's ill-fated attempt to negotiate a new US-Asia trade agreement, the Trans-Pacific Partnership. And it is unrealistic to expect any economic strategy beyond the free-trade pabulum so sharply at odds with US domestic political constraints.

So what is the United States to do?

First, Washington must obviously prioritise economic statecraft and stop thinking with its missiles. It is clear from the way US leaders talk about their country's role in Asia that trade, aid, finance, and development are not as privileged in their minds as the Pentagon; economic equality outside US borders does not even appear to register as a problem needing attention. 

If that does not change, the United States will continue to place itself on the wrong side of trends—including defence spending, naval expansion, nuclear modernisation, and missile proliferation—that are turning the region into a powder keg, which serves no one except the defence industry.

Second, Washington needs an economic policy for Asia—one that tries to do actual good for the region instead of furthering only abstract US interests. And there is much the United States can do to do right by Asia.

For instance, US officials could use the United States' privileged position in the global economy to negotiate various forms of debt relief on behalf of low- and middle-income countries in the region that have been hit particularly hard by the pandemic, such as the Philippines and Malaysia. (The United States did this for Iraq after the 2003 US invasion.) Washington could also grant these countries preferential trade access, which would be a boon to Asia's export-dependent economies.

The right kind of economic engagement would also focus on incentivising the region's US partners to make progress on labour rights, fair treatment of workers, floor wages for companies that export to the United States, and anti-kleptocracy initiatives. Washington could also offer massive aid for the transition to green energy in developing Asian nations.

All this and more are in the realm of the possible and good. But accomplishing them requires recognising that economic statecraft is the foundation for regional stability, durable peace, and more equitable development in low-income countries. Above all, Washington must stop conflating economic strategy with stale tropes on free trade and coercive sanctions.

The third thing the United States should do is recognise its own limits. The United States is not Asia's economic hegemon, even though recently declassified documents suggest that US officials still think it is. 

Since the 1997-98 Asian financial crisis, the region's dense financial and trade architecture has largely moved on without the United States. And that is okay. 

There is nothing threatening about regional institutions that are exclusively Asian, especially if they help the region manage balance-of-payments issues and encourage capital controls to avoid future fiscal crises. Not every problem can be solved by US power—especially when the United States no longer enjoys the position of primacy it did at the end of the Cold War. Insisting otherwise is a path to ruin.

If the United States can prioritise economic statecraft oriented toward stability and peace, help Asian economies reduce inequality and adapt to climate change, and give up its effort to sustain a hegemony it no longer has, it will help Asia create stability that is not only greater but better and more just. 

It might even offset the loss of Washington's once cooperative relationship with Beijing, which did more to keep Asia peaceful than many US officials appreciate. In a world coloured by Sino-US rivalry, Asia needs a new source of stability. Fresh thinking about the political economy may be just that.

Van Jackson. Illustration: TBS

Van Jackson is a senior lecturer in international relations at Victoria University of Wellington, a distinguished fellow at the Asia-Pacific Foundation of Canada, and a defence and strategy fellow at Victoria University of Wellington's Centre for Strategic Studies.

Disclaimer: This article first appeared on Foreign Policy, and is published by special syndication arrangement.