Will U.S.-Asia Tensions Increase In '08?

Oxford Analytica
12.07.07, 6:00 AM ET

The deteriorating U.S. economy, presidential election season and tensions with Iran will influence U.S. Asia policy. However, beyond these important peripherals, Washington will confront increasing dissonance in Chinese foreign policy, new versions of old tensions over Taiwan and obstacles in the six-party talks on North Korea.

While the "opportunity costs" of the U.S. misadventure in Iraq have had a global impact, the most severe consequences of Washington's preoccupation with the Middle East may become evident next year in Asia. China made significant diplomatic and economic inroads in the region in 2007--particularly in southeast Asia. As the United States addresses its key strategic and trade priorities in Asia next year, it may find that it has less support than expected.

In 2008, Washington will maintain pressure on Beijing to play a constructive role in stemming nuclear proliferation in North Korea and Iran. However, new concerns over the stability of the "strategic partnership" and a growing malaise in public ties will make management of the bilateral relationship more difficult:

Military flaps. The dissonance over China's refusal to let the U.S.S. Kitty Hawk aircraft-carrier group make a port call in Hong Kong for Thanksgiving, and more seriously, China's prior decision to ignore a distress call from two U.S. minesweepers, were symptomatic of recent tensions in the military-to-military relationship:

--U.S. policymakers are concerned that they may have overestimated the strength of the U.S.-Chinese relationship on security issues.

--The disconnects over foreign and security policy within the Chinese government that these incidents may have uncovered have renewed concerns in Washington that the Chinese civilian leadership may not be able to control the People's Liberation Army (PLA) if a crisis erupts in the Taiwan Straits.

In 2008, both countries will continue to test one another on military and security issues, with symbolic gestures acquiring unusual significance. However, the Olympic year should prevent such disputes from getting out of hand.

Taiwan tensions. The possibility of a crisis in the Taiwan Straits may be greater than usual next year. Disconcerted by Washington's announcement of the sale of Patriot 2 anti-missile system upgrades to Taiwan, Beijing fears that F-16 warplanes may be next on Taipei's shopping list. Although no concrete steps have been taken in that direction, there is some basis for China's concerns, since the political significance of Taiwan will rise in a U.S. election year. Taiwan's own presidential election in March 2008 could exacerbate the situation. If Beijing tries to influence the outcome, as it did in 1996, Washington will be forced publicly to take Taiwan's side--however reluctantly and temporarily.

Economic competition. The bilateral economic agenda has expanded in recent years, with energy competition taking on a more urgent role, but in 2008 the most important issue will be China's management of its foreign reserves, which now exceed $1 trillion. In political terms, U.S. voters are ambivalent about Chinese investment:

--They want the U.S. trade deficit to be reduced through greater Chinese investment in the United States, as Japan did in the 1980s.

--However, greater Chinese involvement in the U.S. economy raises concerns about national security, complicated by U.S. public anger over defective Chinese consumer goods and perceived cavalier comments from Chinese officials about "dumping" the dollar.

This dynamic is likely to increase hostile rhetoric toward Beijing by U.S. political candidates in 2008.

North Korean frustration? In his second term, President George Bush has centered his Asia policy largely on North Korea and the revived six-party talks on nuclear disarmament:

--Claiming success. For the administration to claim success in the six-party process, North Korea must make a credible declaration of its nuclear weapons, as agreed in March. Although this is scheduled before the close of 2007, Washington expects it to be overdue and incomplete.

--International stakes. The disclosures required in Pyongyang's declaration may indicate whether North Korean leader Kim Jong-Il is genuinely prepared to disarm. At stake is not only the success of the six-party process but also the applicability of the model to other international crises. Some within the Bush administration are considering the possibility of a similar international process for Iran.

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