Neither US-China rivalry nor unbridled Chinese hegemony is suited to a region made for multipolarity and middle players; neither is it what regional nations want. However, the dominant trends across the region do not suggest the arrival of a happy equilibrium any time soon.

Trend – Infrastructure

The New World Again: the centrality of sea power

The Indo-Pacific landscape is vast. Straddling the Indian and Pacific Oceans, this region contains 36 countries, 16 time zones, more than half of the world’s megacities, seven of the eight fastest-growing markets, seven of the 10 largest armies, 25,000 islands, and 60% of the world’s population and it is still growing. The concept of the Indo-Pacific is concentrated on the centrality of sea power, that the strategic advantage of maritime reach overshadows continental power. The Indian Ocean is today the busiest trade channel in the world, with the security of this maritime domain from the Red Sea, to the Strait of Hormuz and thence to the Strait of Malacca only set to grow in strategic importance.

The Infrastructure Question

Connectivity is a shared problem requiring collaborative solutions in order to secure the economic dynamism and integration of the Indo-Pacific. Infrastructure, particularly China’s Belt and Road Initiative (BRI), is today a source of geostrategic tension. There is now a competitive marketplace for infrastructure in the Indo-Pacific since apart from China, Japan and the United States are also involved albeit on a smaller scale through the Partnership for Quality Infrastructure (Japan) and the International Development Finance Corporation (the United States). “The infrastructure choice in this scenario is one of efficient resource allocation, not picking winners”, to ensure transparency, mutually agreed standards for a rules-based approach to infrastructure development, and to manage geostrategic concerns in a positive-sum way.

The BRI: Indo-Pacific with Chinese characteristics

Officially, the Chinese do not use the term ‘Indo-Pacific’. Their India experts were the first to notice the usage of the new nomenclature replacing references to the Asia-Pacific by the United States. Chinese analysts see the BRI — China’s Indo-Pacific with Chinese characteristics — as a foil to the Indo-Pacific strategy of countries in the Quad. Further, they see the Quad as a quasi-military alliance of strategic points that connect Japan in the East, Australia in the South and India in the West, forming a pattern that strategically encircles China in a coalition of the willing.

Strategic thinkers in China are also inclined to see the United States as lacking a coherent or a consistent grand strategy since the end of the Cold War. China’s view is that American presidents come and go, and “their momentary periods of power make it difficult to implement a consistent grand strategy.” Consequently, Chinese officials see today as a period of “great opportunity.”

The ‘secondary strategic direction’ and the BRI

The region of South Asia, particularly the land border with India, is regarded by China as a secondary strategic direction — the first strategic direction being East Asia and the Pacific. This region is a transverse section for both the maritime road and the land belt of the BRI, with the flagship project of the China Pakistan Economic Corridor (CPEC), which looks to open a route between inland China to the Indian Ocean. This element of BRI is, in particular a trigger for Indian concern as it runs through Pakistan-occupied territory in Indian-claimed Ladakh and Kashmir.

In the words of the Chinese India specialist, Hu Shisheng, “The strategic importance of South Asia and the northern Indian Ocean to China is no less than it is for India.” China is developing Hambantota port in Sri Lanka and Gwadar port in Pakistan which overlook key sea lanes  – 80% of global seaborne trade and 40% of oil shipments travel through the Indian Ocean. In the last five years, China has also established a key military logistics facility in Djibouti, which is a military base by any other name, and the Chinese Navy operates regularly in the Indian Ocean.

Another area of concern is, as stated in the words of a recent study, “the fact that (some) South Asia states are largely weak or unconsolidated democracies leaves ample room for China’s political influence and potential for democratic backsliding.” As relations with the United States have deteriorated, China has tended to put pressure on countries like Pakistan in order to restrain improvements in relations with the United States. Even modest Pakistani attempts to restore what is a deeply troubled relationship with the United States in recent years has been viewed by Beijing with “a jaundiced eye.”

Even modest Pakistani attempts to restore what is a deeply troubled relationship with the United States in recent years has been viewed by Beijing with “a jaundiced eye.”

Bases, not mere places

There is a military geography to the BRI, which buttresses its geostrategic reach. The People’s Liberation Army (PLA)’s concerns about vulnerabilities on China’s eastern flank in the 1990s spurred the idea of westward expansion, which forms the foundational precept of the BRI. Military bases that China is very likely to establish along the BRI, including within in the Indian Ocean Region become strategic buffers that safeguard the geo-economic value of the BRI. As one analyst puts it, “In Mahan‘s time, gun boats paved the way for commercial ships – in China’s case, the BRI calls for a naval presence to safeguard regions of importance for the maritime silk road.”

BRI redefines itself

The BRI was described recently as a “shambolic initiative, more Maoist than Marshall Plan”, but one that is “strategically central to Xi Jinping’s personal brand”, a project of “national rejuvenation and imperial resurrection, building a semi-imagined imperial tributary system” with Xi Jinping at its core. While this may have been the case, in the last few years, activity has become more organised, especially as the Chinese government views digital technology as increasingly strategically important. This is especially true given the COVID pandemic; there is an increasing emphasis on digital infrastructure, and the ‘digital’ and ‘health’ silk roads.    

Chinese industrial and foreign policy priorities are tightly interwoven within many BRI projects, such as China’s 5G technology, data centres, submarine cables and satellite tracking. China is also exporting smart city infrastructure, including surveillance systems, public security-related cloud-based architecture and over-the-top (OTT) media platforms, e-commerce and financial technology. Along with Chinese investment in the IoT, in AI, big data and e-health projects, these efforts are set to create China’s New Information Order.

Trend – Critical Technology

Technology; “One World, Two Systems”

The Indo-Pacific is in need of digital transformation; digital inclusion and connectivity will be central to development efforts in the post-pandemic era. High-speed internet is expected to be the “new electricity” for many parts of the region, and China is well-poised to enter this space. It has been observed that unless there are effective alternatives provided, the COVID-19 pandemic may intensify the reliance smaller Indo-Pacific countries have on China for infrastructure financing . The cyber domain is likely to be as central to the theatre of contest in the Indo-Pacific as the maritime domain.

Today, the international order confronts a “one world, two systems” configuration with two spheres; one led by the United States and the other by China. The internet is being transformed into a ‘splinter net’ or a “bifurcation into a Chinese-led internet and a non-Chinese internet led by the United States”, in the words of Eric Schmidt.

In this period of the Fourth Industrial Revolution, information is “the most valuable, strategic and contested resource in the world”, which has transformational implications for nations in states of conflict. The digitisation of war not only “extends war fighting into the virtual, it also involves the blurring of boundaries between peace and war, the military and civilian.” Advanced digital technologies facilitate the use of greyzone tactics where actions are deliberately kept below the threshold of a major war, thus providing an advantage to nations that are able to develop and deploy new and regionally networked technology faster than any adversary.

India Rising, the Changing Nature of Work

India’s talent pool in technology is unique. There are close to 4.5 million IT professionals in India and its IT industry now has the same switching costs as China has in manufacturing. For instance, it is the only place where 1,000 Hadoop software programmers can be hired in a week. The biggest development in the last five years has been the setting up of captive software development centres by western technology giants.  The largest employee base outside the United States for many of these countries is in India. This trend recalls a period in the 1990-2000s, when major western companies were setting up manufacturing in China to take advantage of a large, medium skilled and cheap labour force. India is now becoming similarly attractive to major international investors for two reasons — firstly, the human capital perspective, and secondly, the intensifying negative reactions internationally to China’s assertiveness.

With a large amount of IT hardware being manufactured in China, embedded software is also being developed there and exported throughout the world. Should the global market decide to diversify away from Chinese hardware, processes relating to embedded software development will follow.  This task can be done in India, with its huge inventory and capacity of digital talent. Cities like Bangalore, Chennai, Hyderabad and Pune can be leads for the Indo-Pacific region. Likewise, India’s IT capabilities, its inventory of engineers, and ability to scale provide great advantages in technology-driven competition and warfare.

As one of the areas identified for cooperation within the Quad is critical technologies, there may be scope for an IT agreement — a grand coalescence — between the four member countries that would benefit other sectors like defence, aerospace, infrastructure, cyber security and science and technology.

Trend – Minilaterals

India in the Indo-Pacific

In 2018, when Indian Prime Minister Narendra Modi addressed the Shangri-La Dialogue in Singapore, he stressed that India stood for a free, open, inclusive Indo-Pacific region, including “all nations in this geography and also others beyond who have a stake in it”. Multilateralism and regionalism, he said, were mutually reinforcing concepts in this Indian worldview of the Indo-Pacific, based on a principled commitment to the rule of international law. Connectivity is vital to unite the region, not only physical connectivity, but also the connectivity of mutual trust. Such initiatives should be based on respect for sovereignty and territorial integrity, consultation, good governance, transparency, viability and sustainability. Contests should not become conflicts, differences should not become disputes, and it was the responsibility of both existing and rising powers to ensure that their choices built a united world, not force new divisions. The embedded message in the speech was for China’s benefit as India looks to shape the region to best suit its interest.

As India’s Indo-Pacific vision acquires granularity, an emerging trend is a convergence of interest between India and Japan.

As India’s Indo-Pacific vision acquires granularity, an emerging trend is a convergence of interest between India and Japan. The two countries share a “Special Strategic and Global Partnership”. Japan is the sole foreign partner whose projects of development support are located in India’s periphery, both in the Northeastern states and also in the Andaman Islands.

The projects in India’s northeast highlight the strategically important position of this region for a free and open Indo-Pacific, especially as the land bridge between South and Southeast Asia. The Andaman and Nicobar island chain in the Bay of Bengal abuts Southeast Asia, the southernmost point being just ninety miles from Indonesia’s Aceh province and three hundred miles from the coast of Thailand. These islands are a natural springboard for any military action that is launched eastward and for surveillance in the Indian Ocean. In the event of a conflict with China in the maritime domain, these islands are a launching pad for joint operations with the United States and partners like Japan — countries that already have access to logistical services like aircraft refuelling in the Andamans.

In September 2020, India and Japan concluded their Acquisition and Cross-Servicing Agreement (ACSA), similar to the Logistics Exchange Memorandum of Agreement (LEMOA) that India and the United States have concluded, as an expression of the proactive strategic convergence between the two countries. In yet another manifestation of such convergence, the United States, India and Japan were joined for the first time by fellow-Quad member Australia for the 24th edition of the Malabar maritime exercise both in the Bay of Bengal and the Arabian Sea in November 2020.

Oceanic South Asia

The convergence of interest between India and Japan is also expressed in Sri Lanka where an interesting dynamic of competition exists between China on the one hand, and India and Japan on the other. This competition is apparent in the development of the container terminals at the Colombo Port, where a joint India-Japan project was recently cancelled. The Rajapaksa-led government in Sri Lanka has strong relations with China, providing Beijing opportunities to advance its strategic and military interests on the island whilst excluding strategic competitors.

But Japan has tended to tread cautiously in order to deflect any sense of overt competition with China. For instance, the Abe government shifted the nomenclature of a “Free and Open Indo-Pacific Strategy” to “Free and Open Indo-Pacific Vision” precisely in order to avoid such an impression.

Sri Lanka today is focusing much more on reclaiming its maritime identity as an Indian Ocean state. It aims to strengthen its trans-shipment capabilities and seeks to become a financial centre that trades on an “exceptional openness”, leveraging its favourable geostrategic location. Sri Lanka will likely aim to strengthen partnerships with the other Indian Ocean island states, like the Maldives, Mauritius and the Seychelles to push the concept of ocean economy and to deflect from South Asia’s traditional focus on continental, land-based power, and India’s looming peninsular presence.

Future Scenarios

US-China

Ideology: it’s about power, winning, and survival

The clash of ideologies — between free and repressive visions of the region— intensifies strategic rivalry and competition in the region and shows no sign of abating in coming decades. But ideology is not likely to be the central driver of competition between the United States and China. The rise of China is a clear geopolitical challenge to the United States, in that China may eclipse US military power in the Western Pacific, making US commitments to its regional allies difficult. Secondly, economic power may also provide China with increased leverage with key states, which can be transformed into voting blocs in multilateral organisations.

“competitive when it should be, collaborative when it can be, and adversarial when it must.”

For its part, China sees the United States as seeking regime change in China, often citing the Colour Revolutions as an example meant for the People’s Republic. Beijing also sees US support for Taiwan — a core concern for China — and the rebirth of the Quadrilateral Security Dialogue (The Quad) as a manifestation of American containment. Knowing that its current military strength does not match that of the United States, China is careful to play the smart game, “holding the bottom line” in order not to trigger open conflict with the United States. Any shift from this strategy is unlikely until China can boast serious military dominance from within the second island chain, at the very least. Until then, China is most likely to continue using salami slicing tactics – where incremental change is achieved without any single change being great enough to justify armed confrontation – to achieve its goals in national defence.

The new Biden administration’s China strategy was expressed by Secretary of State Antony Blinken as “competitive when it should be, collaborative when it can be, and adversarial when it must.” It is quite plausible that the adversarial element of the US strategy will eventually influence the entirety of America’s engagement with China.

The Chinese Communist Party has never been as powerful as it is today. Xi Jinping amplifies the party’s belief that the United States is bent on transforming China and undoing Communist Party power through a policy of engagement. If Xi Jinping dies in office, it is very unlikely that the next great reformer will come, or that the party system will become more liberal and less controlling. China’s anxiety to ensure its global status will not fade and in that sense, it will continue to be a deeply conflicted power, a combination of hubris and insecurity – a fragile superpower, as Susan Shirk terms it. Even if China overtakes the United States in GDP numbers, it will still have many limitations — low per capita income when compared to the developed economies and inequality between regions of the country, to name two. China’s “sharp power” will require constructive vigilance, but overall, managed competition will be the best strategy for China and the United States to avoid armed conflict.

Regional Shifts

The “one world, two systems” that may be upon us will likely result in a lot of fence-sitting, with opportunistic behaviour by many nations. As Yuan Peng of the China Institutes of Contemporary International Relations (CICIR) notes,  the near and mid-term, will likely be a “jumble of non-polarity, warring states and transitions” with the prospects for cooperation between China and the United States waning.

Promiscuous Diplomacy

The ASEAN nations belong to a region where the interests of great powers have long collided, and therefore, as a coping strategy, there is “the instinct to simultaneously hedge, balance, and bandwagon in the region’s political DNA”. There is also a complexity of attitudes toward China – ASEAN countries do not share one monolithic view. The Singaporean Prime Minister illustrated this point when he said, “if you are a landlocked state on China’s borders, you see the world differently from an archipelagic state which is further away and which does business not only with one major partner, but with many different partners.” Exclusive relationships with either China or the United States will continue to be avoided, with some states leaning more in one direction than another with ASEAN unity being tested by Chinese claims over disputed territories. Without picking sides, the diplomacy of ASEAN and its member states will likely remain “naturally promiscuous, not monogamous” for the foreseeable future. 

The India-China Conundrum

The question can be asked, is India’s strategic convergence with the United States pre-ordained? The trends indicate this, as a factor of India’s troubled relationship with China. The violent confrontation between Indian and Chinese forces in the Galwan Valley in June 2020 has further cemented these trends. But antagonistic Indian decoupling from China may not be fully achievable given the extent of India’s trade linkages with China. Even as India negotiates with China for a return to the status quo along the Line of Actual Control, and attempts to dilute economic ties, the threat of military confrontation between the two countries has not receded.

Between the two countries, China is the revisionist power, while India stresses the preservation of the status quo, pending a negotiated boundary settlement. Intensified development of infrastructure, and a military build-up in areas of disputed territory, points to a further intensification of strategic competition and raises the risk of confrontation for the foreseeable future.

In the disputed territories, three possible future scenarios can be sketched: Firstly,  the status quo will persist but in a highly unstable manner; secondly, an end to the conflict cycle through a grand territorial bargain and peaceful settlement of the dispute; and thirdly, a small border conflagration triggering escalation into a wider military conflict between India and China. It is difficult to foresee any peace between China and India until the fundamental basis for conflict is settled – the sovereignty of disputed territories. Until then, confrontation will be a defining element of relations between the two powers.

Hot War: of Rogues and Peers

The outbreak of a hot war between China and the United States over a confrontation in the South China Sea, or over Taiwan, that escalates with disastrous consequences for both countries remains an unfortunate possibility. In a future scenario of war between China and the US, Russia has wide scope to play ‘rogue’ by, cutting internet cables, hacking into public utility systems, launching cyber-attacks, for example, to ensure that maximum damage is inflicted on the US at a time when it would be unlikely to have capacity to open a second front with another nuclear-armed adversary.  

In Central Asia, and beyond, the two have bolstered authoritarian, repressive regimes in an attempt to define a new normative landscape that prioritises dealing with threats to their own internal stability. Given the absence of trends indicating the liberalisation of China or Russia, it is likely that Beijing and Moscow will continue and even intensify their efforts to make the world safer for states of their ilk.

Technology is already a key battlespace for global influence and its importance is only set to grow given the increasingly networked and digitised nature of modern life and warfare. Russia has had to turn to China for access to technology to circumvent US sanctions over its invasion of Ukraine and Crimea. Until those sanctions and similar drivers disappear, Russo-Sino cooperation in this space will create risk for America’s tech-advantage with Russia’s strength in the sciences being paired with China’s own growing capabilities and resource commitment to research and development.

A Pivotal Moment

The strategic competition in the Indo-Pacific between the United States and China suggests that there are difficult days ahead. The worst is yet to come if these great power relations fracture further. Will the smaller countries just huddle together for warmth in such a doomsday scenario? The coronavirus pandemic has been as world-changing as a major war. America’s dysfunctionalities were exposed by the virus and the case for national revival is a genuine one.

It is not implausible that the United States continues to be the world’s leading military power with even more advanced weapons systems and technological platforms, but regresses in the quality of life of its citizens, state of public infrastructure, the provision of livelihoods and economic opportunities and ensuring social stability. American exceptionalism will, if this happens, be sharply eclipsed in the eyes of the rest of the world. The United States must remain alert to such a possibility which calls for setting its own house in order.

This paper forms part of the ANU National Security College Future Insights Series, designed to help policymakers develop and test futures scenarios, conduct horizon scanning, and integrate futures analysis into their work. The papers are designed to present provocative conversation-starters and arguable propositions, not definitive trend lists, or predictions about future circumstances. Every paper in the series is informed by consultation, and reviewed by experts.

It is published with support from the Japanese Embassy in Australia. The ANU National Security College is independent in its activities, research and editorial judgment and does not take institutional positions on policy issues. Accordingly, the author is solely responsible for the views expressed in this publication, which should not be taken as reflecting the views of any government or organisation.

Share

Nirupama Rao

Former Indian Foreign Secretary; Former Indian Ambassador to Washington and Beijing