I also pointed out that the current American approach to China can best be summarized as a strategy that seeks to simultaneously engage and contain. The logic of engagement is dictated by economic realities and the mutual dependence between the US and China. Simply put, neither China nor the United States can afford economic warfare. Chinese economic growth and Chinese savings (particularly the purchase of American treasury bills and other financial assets) keep American interest rates low. This is a crucial luxury for the American economy because it creates liquidity, cheap credit and consumption -- without which there would be no recovery. China needs the American economy to grow to keep selling its products to the largest market in the world. In the absence of these dynamics, there is a risk of mutually assured destruction.
But I concluded by saying that while all these factors explain the American logic for economic engagement with China, there is also a geostrategic competition dimension to Sino-American relations. China has regional ambitions and it is investing an important part of its trade surplus to create a stronger navy and air force. Although it remains true that Beijing still prefers a so-called “peaceful rise” principle that limits its geopolitical intentions to occasional strategic posturing, there are also signs that the new leadership of the country will be less reluctant to flex its muscles in regions like the South China Sea. As a result, the United States is becoming increasingly concerned about China's quest for hegemony and such concerns fuel the logic of containment. In fact, one can clearly argue that the Barack Obama administration's concept of a “pivot” and “rebalancing” towards Asia is partly based on the need to contain China.
One major factor that helps Washington in its efforts to contain China is the regional willingness to embrace America as a counter-balance to Chinese geopolitical ambitions. There is indeed a growing sense of alarm among the elites and general populations in the South China Sea, particularly in Vietnam, the Philippines, Korea and Japan about the rise of China as a hegemonic power that wants to change the balance of power in the region. This provides a strategic opportunity for Washington because there is regional support for its containment strategy. In the military sphere, the US already has long-standing alliances with Japan and South Korea. Washington has also been strengthening its defense and military cooperation with Australia, Singapore, Taiwan and Vietnam since 2010.
In the larger geostrategic framework, the centerpiece of America's containment strategy is based on balancing the rise of China by partnering up with India. In other words, America's India strategy is absolutely critical in terms of creating an Asian balance of power that will favor Washington. America's willingness to increase its military, economic and diplomatic engagement with India has reached unprecedented levels in the last 10 years. Both the George W. Bush and Obama administrations have been very cautious in terms of accommodating India's sensibilities in two critical areas: India's nuclear power and the Kashmir dispute with Pakistan. Although Pakistan is an urgent challenge for Washington because of problems related to Afghanistan, it is very telling that neither President Bush nor President Obama have been able to deal with the real issue that could change Pakistani behavior in Afghanistan. This issue is of course Pakistan's willingness to have American involvement in solving the Kashmir dispute. For India, American involvement in the Kashmir dispute remains a red line. The fact that Washington is reluctant to upset India, despite the urgency of the crisis with Pakistan, proves that India is crucial for Washington in ways that Pakistan will never be. In other words, without India, America's containment of China will simply not work.
Only time will tell whether America's China strategy based on simultaneous economic engagement and military containment will work. For now, it looks like there is no better alternative.