(ASIA PIVOT) Dynamics of Power Shift from U.S. to China–Asia-Pacific Security and Japan’s Foreign Policy - Discuss Japan
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Diplomacy, Nos.13-15  Mar. 3, 2013

(ASIA PIVOT) Dynamics of Power Shift from U.S. to China–Asia-Pacific Security and Japan’s Foreign Policy

Photo : Jimbo Ken

Jimbo Ken

The security situation in the Asia-Pacific region is changing dramatically. If a power transition stemming from the rise of emerging countries led by China proves inevitable, the international situation surrounding Japan will become unprecedentedly tough. Accordingly, the security strategy and foreign policy of Japan in an “era of transition” are coming under the spotlight.

“20-Year Crisis” and Asia-Pacific Region

A key point in devising a mid-term and long-term foreign policy for Japan will be an awareness and ability to envision the next 20 years, a period that is becoming extremely important in the timeframe of international relations.

The 20-year period between the two world wars (1919-1939) is deeply ingrained in international political history, as representatively illustrated by E.H. Carr in his book “The Twenty Years’ Crisis.” It involved the overturning of what Carr called the “foundations of belief” in the international order as the principle of international cooperation (internationalism) under the Versailles Treaty, and Germany, which was defeated in the World War I, re-emerged as an immense military power. This two-decade period of relations in Europe has long been remembered as a time when the formation and destruction of the world order, as well as cooperation and confrontation between the major actors in international politics, took on a completely different pattern from anything previously experienced.

Over the coming 20 years, the security situation in the Asia-Pacific region is also on the verge of entering a turning point from the current age. The implications of this likely transition — whether it will lead to regional cooperation or create further and persistent tensions and tragedy — are yet to be known.

But what we can say with quite a high degree of probability is that a “power shift” or “power transition” in U.S.-China relations (or U.S. relations with Asian emerging countries led by China) is likely to lead the dynamics of change in regional security order.

The United States has been a predominant power in the Asia-Pacific region with its outstanding economic, and military and diplomatic influence. But with the rise of emerging countries in Asia, its position in these areas will become more relative, leading to new patterns and preferences of regional transactions. This is probably what we must focus on over the next 20 years in the Asia-Pacific region.

“Power Transition” Seen in Economic Index

In “Global Trends 2030: Alternative World” published by the U.S. National Intelligence Council (NIC) in December 2012, “diffusion of power” is listed as one of the megatrends of the next 15-20 years. The council believes that China will probably be the largest economy, surpassing that of the United States by 2030, and that Asia will have surpassed North America and Europe combined in terms of global power, based on gross domestic product (GDP), population, military spending, and technological investment. According to the contemporary power index, the aggregated power of the developed countries of the Organization for Economic Cooperation and Development (OECD) will be overtaken by that of non-OECD nations in 2015. The NIC also says that the gap thereafter will widen quickly.

The implication of this report is a dynamic shift of power in 2030 from the United States and Europe to Asia, or in terms of current country classification from developed nations (OECD members) to developing and emerging economies (non-OECD members). From a macroscopic overview, this phenomenon would be a reversal of the West’s rise in the 18th century and a transition of the distribution of wealth and power to Asia.

NIC points to this megatrend of diffusion by using not only current indices but also a new index incorporating a broader array of factors such as public health, education and governance. With the new index, however, the share of global power of emerging countries increases but at a slower pace for many of them than for developed countries. But even with the new index, non-OECD countries will surpass OECD members by 2030. “Power transition” entails “power diffusion” and is progressing steadily.

In addition to this analysis, a Tokyo Foundation project led by the author provides an almost identical outlook in its report (2011) (See the report…). Based on a calculation of nominal GDP estimates (revised based on 2012 figures), the 2020 figure for the United States is 22,518.5 billion dollars, for China 16,779.4 billion dollars and for Japan 7,151.6 billion dollars. In 2030, the figure for the United States is 28,740.9 billion dollars, for China 36,322.9 billion dollars and for Japan 8,149.2 billion dollars. The ratio against 1 for Japan is as follows: 3.1 for the United States and 2.3 for China in 2020, and 3.5 for the United States and 4.5 for China in 2030. The figures show that in 2030 China will pass the United States in nominal GDP as the largest economic power.

Noteworthy is the economic trend of emerging countries in the 10-member Association of Southeast Asian Nations (ASEAN). Based on the country classification of the International Monetary Fund (IMF), the combined nominal GDP of six ASEAN countries (Singapore, Indonesia, Malaysia, Thailand, the Philippines and Vietnam) will surpass that of Japan by 2024. The power transition evidenced in the GDP index applies not only to the relationship between the major powers — China > Japan (2010) and the United States < China (2025) — but also to the relationship between Asian emerging countries and Japan — Japan < ASEAN 6 (2024). The implication is that not only China but also emerging Asian countries together are increasing their weight in international society.

“Power Transition” Seen in Military Index

If a “power transition” as seen in the economic index actually occurs in the Asia-Pacific region, what will be the impact on the region’s security? Many scholars who believe a shift in economic power will occur assert that even if China’s GDP surpasses that of the United States, its drawing level with the United States in terms of military power will not happen in the near future.

It is true that U.S. military power is globally predominant and its defense budget is equivalent to that of all other countries. The U.S. defense budget in 2011 was 689.5 billion dollars (about 60 trillion yen). Taking into account such factors as military technology, power projection, logistics, research and development spending, application of advanced technology, overseas warfare experience and integrated command communications systems, the majority view is that U.S. military superiority will remain unshakable for the next few decades despite economic swings.

On the other hand, the Tokyo Foundation report suggests the possibility of the gap between U.S. military power and other nations being rapidly reduced when looking at the mid-term and long-term trends in military spending. The estimation of military spending was computed by applying the ratio of spending to GDP based on nominal GDP projections (2010-2030) for the United States, Japan, China and the six ASEAN nations mentioned. The estimated figures were based on annual data for each nation’s defense spending published by the Stockholm International Peace Research Institute (SIPRI) as well as 2011 defense budget rates against GDP on the assumption that these will remain intact until 2030 (2011 U.S. dollar average annual exchange rate). Since the ratio of each nation’s defense budget to GDP fluctuates as a matter of course, the calculations are obviously provisional.

Nonetheless, the report takes into account the current situation and adopts the following provisional indices. For the United States, it forecasts two cases — a “high path” on the assumption that the 2011 ratio of defense spending to GDP (4.8 percent) will continue, and a “reduction path” with the ratio falling to 3.0 percent due to a cut in defense spending in line with a large reduction in federal budget expenditures. Two cases were also used for China — a “SIPRI benchmark” which sets the rate at 2.1 percent based on estimates of defense spending, and “high path” estimates included in the U.S. Defense Department’s “Annual Report to Congress: Military Power of the People’s Republic of China.” The Pentagon report projects the rate at 1.4 times that of SIPRI’s, and that this will remain so until 2030.

With calculations based on these provisions, the U.S. defense budget in 2030 is estimated to be 1,379.6 billion dollars (high path) and 862.2 billion dollars (reduction path), whereas China’s military expenditure in 2030 will be 1,067.8 billion dollars (high path) and 762.7 billion dollars (SIPRI benchmark). If U.S. military spending follows the “high path,” the United States will retain its overwhelming superiority in 2030 even if China’s spending increases under a “high path.” But if the United States moves along the “reduction path” and China along the “high path,” the two nations’ defense expenditures may reverse in 2030.

This phenomenon appears in a more startling form between Japan and China. With China’s defense spending rapidly outgrowing that of Japan, the bilateral military balance is projected to result in massive Chinese superiority.

In 2010, China’s defense budget (121 billion dollars) was twice that of Japan (54.6 billion dollars). By 2020, the gap increases to 4.8 times (6.7 times if China takes the “high path”) and in 2030 China is forecast to be spending 9.3 times (13.1 times) more than Japan.

If these figures apply, a power transition is a reality that must be squarely faced. They make it predictable that sooner or later a time will come when dealing with China’s military rise will become increasingly difficult for Japan.

As with the bilateral economic relationship, Japan must draw up a strategy to cope with the shift in military relations with China from Japanese predominance to overwhelming Chinese superiority, after a brief period of equilibrium between the two nations.

Foreign Policy, Security Strategy to Support Declining National Power

This analysis is merely a rough sketch based on estimations of nominal GDP and projected defense budgets for the countries. These figures could actually fluctuate sharply depending on the real growth rate, commodity prices and exchange rates. Therefore, these assumptions should not be used to determine the world picture in 2030, and it is better to see them only as a reference point. But it can be pointed out at least that the world in 2030 will be one that sees a power transition between the United States and China (and emerging countries), and there is a high possibility that it will encompass not only the economy but also in the domains of defense and security. The international environment surrounding Japan will become unprecedentedly tough, and it will be expected to conduct foreign policy strategies effectively to wield its relatively reduced national power and limited resources.

Going back to the NIC’s “Global Trends 2030”, the report says that with respect to the regional order East Asian countries will strengthen their economic ties with China but be drawn to the U.S. side in terms of security. China’s rise and the deepening of interdependent economic relations are expected to develop into a more liberal regional order. On the other hand, however, they may induce moves to hedge against an emerging country and push existing conflicts onto a much more serious level. This can already be seen, as various contentious issues between Japan and China, Japan and South Korea, India and China, Vietnam and China, and the Philippines and China are becoming even more difficult to control.

The NIC report presents four scenarios — (1) continuation of the present order structured by existing alignments sustained by U.S. leadership, (2) a balance-of-power order with unconstrained power competition and a reduced U.S. role, (3) a consolidated regional order in which an East Asian community develops in a pluralistic way along the lines of European democracy, with China’s political liberalization as a precondition, and (4) a Sino-centric order in which a closed East Asian community develops with China at the summit of a hierarchical order.

The Tokyo Foundation report also envisions four patterns based on the presumption that the U.S.-China relationship is the key variable in Asian regional order. They are (1) a hierarchical liberal order in which cooperation between the United States and China is sustained under U.S.-superior power diffusion, (2) an asymmetric balance-of-power order of sustained U.S.-superior power diffusion but deeper conflicts between the United States and China, (3) a great-power order in which cooperation between the United States and China is sustained with the power diffusion of the two nations heading toward an equilibrium, and (4) a Cold War-type bipolar order of deeper conflicts between the United States and China as the power diffusion of the two nations reaches an equilibrium.

The key element in analyzing these multiple scenarios is that a stable transition to a security order leading up to an equal U.S.-China position must be worked out, as the power transition process will go through a phase of “contested supremacy” by the United States and costs for maintaining an order supported by U.S. predominance will gradually increase.

Using these orders suggested by the NIC and Tokyo Foundation, Japanese foreign policy strategy must be established to prepare for (2) to (4), while trying to maintain order (1) as long as possible.

The direction of Japan’s foreign policy and security strategies will become clear through this kind of macro-compass. The first point must be to re-emphasize the U.S. role in the Asian security order and use it as a balancing mechanism in the transition stage. Therefore, a solid U.S. -Japan alliance is especially vital to create a stable transition process. The second point is to focus more on the formation of a security network with the emerging Asian countries. By deepening security cooperation with markedly emerging players (Australia, India, South Korea and ASEAN members) in Asia, it is important to use the network to develop regional conflict deterrence and confidence-building into an effective mechanism, and at the same time to have the network function as a collective counterweight against China in times of change in the strategic environment. The third point is to strengthen the strategic relationship with China to control escalation of bilateral disputes, support China’s efforts to form a liberal order and make the interdependent economic relationship into a mutually beneficial one.

Japan’s foreign policy and security strategies in the power transition stage must aim at creating a desirable international order by building up Japan’s own power through cooperation with emerging countries, which will make up for its relative decline in national strength.

The biggest challenge here is strategic relations with China. Japan needs to confront the paradox of forming a regional security network as a hedge against China while deepening a mutually beneficial strategic relationship with the country. A hedging strategy alone may evoke similar action by China and result in a security dilemma by causing much more serious tension. On the other hand, relying only on making an interdependent relationship more mutually beneficial would be naive.

Bold usage of diplomacy and security policies to overcome this dilemma is what is necessary to create a stable order in the Asia-Pacific region where a power transition is underway.


Translation of an article (pages 34-41) from Diplomacy Vol. 17 (published by the Ministry of Foreign Affairs, planning and production by JIJI Press Publication Service Inc.).

Ken Jimbo earned his doctorate from the Graduate School of Media and Governance at Keio University. He is concurrently senior research fellow at the Canon Institute for Global Studies and visiting research fellow at the S. Rajaratnam School of International Studies, Nanyang Technological University. His major fields are international security, regional security in the Asia-Pacific region, and Japanese foreign and security policy.