The Regional Comprehensive Economic Partnership (RCEP) signed by China and 14 other countries from across the Indo- Pacific region including 10 Asean members, Japan, Australia, New Zealand and South Korea on 15 November 2020 at the Asean Summit in Vietnam was viewed by several analysts as heralding the rise of world’s largest trading bloc representing 30 per cent of the global economy as well as world population. But the recent chain of events that began with the diplomatic row between China and Japan triggered by the visiting Chinese Foreign Minister’s remarks in Tokyo related to the Japanese-administered Senkaku islands followed by an escalation in the ongoing trade war between China and Australia has raised doubts over sustainability of this multilateral experiment amidst mutual distrust, asymmetric interdependence and strategic uncertainty.
Multilateralism, whether in the sphere of security or international trade, is not so much about the number of parties or size of population and economy they represent as the kind of relations instituted among them. In other words, RCEP as a regional trading arrangement with its modest goal of multilateralising the existing bilateral Free Trade Agreements into a single agreement needs to be assessed in terms of appropriate conduct of memberstates disregarding their particular interests and the nature of relations shared among them rather than its size or geographic scope.
Even though RCEP in its Joint Declaration reaffirms Asean centrality in the economic integration process, China as a key player in the intra-regional trade landscape accounting for over 47 per cent of its combined GDP is certain to prevail over other members. With China in the lead role, one wonders whether the RCEP would survive the geopolitical jerks and jolts, the roots of which lie in the manner China uses its strategic leverage as the dominant trade and investment partner to push its own regional agenda.
For Beijing, trade agreements are an integral part of its ‘wedging strategy’ designed to prevent or weaken any threatening alliance. Reflective of this, China has used trade as a political weapon to reward its security partners and punish those resisting its attempts to create a modern tribute system in the region.
Australia has, for instance, faced China’s wrath ever since Prime Minister Scott Morrison called for an independent inquiry into the origins of the Covid-19 pandemic, which was first detected in the Chinese city of Wuhan. In utter disregard to their bilateral free trade agreement, Beijing has imposed a slew of measures subjecting billions of dollars of Australian exports to punitive restrictions and tariffs over the past several months. While Morrison has called for ‘happy co-existence’ following a diplomatic war of words between the two countries over a ‘deeply offensive’ tweet posted by a Chinese official, Beijing continues to insist on political compliance not just from the Australian government but the country’s free press and academia as well.
At any rate, wielding economic coercion is not new to China, nor has Australia alone suffered because of its economic dependence on trade with China. Back in 2016, South Korea went through a similar experience in the wake of Seoul’s decision to deploy the US anti-missile THAAD system to strengthen the country’s defense against North Korean missiles. So did the Philippines in 2012 when the ban on Filipino bananas hit its core agricultural sector amid the escalation of bilateral tensions triggered by Beijing’s claims to the Scarborough Shoal, a coral reef located within the exclusive economic zone of the Philippines in South China Sea.
Of all the RECP member states, it is Japan that has faced China’s coercive economic treatment repeatedly since 2001 over a host of bilateral issues including the dispute over Japanesecontrolled Senkaku Islands in the East China Sea.
In all, China’s economic offensive against its regional trading partners reveals how interdependence is often asymmetric, which provides sources of influence to a less dependent actor in its dealings with others. As explained by leading liberal institutionalists, Robert Keohane and Joseph Nye, asymmetrical interdependence as a source of power entails not only the risks of disruption in supply chains and trade flows but also possibility of the dominant partner using asymmetric vulnerabilities as strategic leverage. Highlighting how inter-state trade relations were used by Germany as an instrument of strengthening its national power, Albert Hirschman, an American economist in his classical study, National Power and the Structure of Foreign Trade observed, ‘power elements and disequilibria are potentially inherent in such harmless trade relations.’
Unable or unwilling to recognize the correlation between economic interdependence and power politics, many analysts and decision-makers fell prey to China’s charm offensive, its grand strategy of reassurance centered on the ‘peaceful rise of China’ thesis. Consequently, what dominated the policy circles and strategic community in many countries including India was the hackneyed neo-functionalist argument that economic interdependence would constrain ascendant China’s behavior since it has much to gain from stable relations and more to lose from conflicts.
For several years, especially during the UPA rule we were, in fact, encouraged to believe the China-India narrative so credulously that we did precious little to counter Beijing’s policy of maritime encirclement of India through its ‘string of pearls’ strategy. Drawn on a similar assumption, the decade-old Western policy of integrating China into the international economic system has also failed to yield the desired results.Far from transforming its external behaviour, integration into the global economy has hugely benefited China, registering extraordinary rates of growth for over three decades. With its sustained economic success and increasing levels of military spending in absolute terms, Beijing grew aggressive in its territorial claims in the Indo-Pacific region, especially in the years following the fiscal crisis of 2008.
As Paul Kennedy, author of The Rise and Fall of Great the Powers has aptly put it, ‘wealth is usually needed to underpin military power, and military power is usually needed to acquire and protect wealth.’ Relying on both military and economic dimensions of statecraft, China has been successful in building up its own sphere of influence around the 1.3 million square mile South China Sea, which it claims as its sovereign territory and part of its core national interest.
If the latest flare ups over the contentious territorial issues and popular anti-China sentiments in the region are anything to go by, it seems likely that uncertainty over domestic ratification of the RCEP agreement by the signatory states would persist in the days ahead.
Meanwhile, the fiercely nationalist Modi government by staying out of the trade bloc despite pressure from sections of media and think-tanks has, arguably, chosen to avoid the moral culpability for facilitating the rise of a regional bully with 18th century expansionist mindset as a preponderant Asian power, nay a rogue hegemon in Asia.