Strategic Hedging and the Future of Asia-Pacific Stability

The United States and China are shadowboxing each other for influence and status in the Asia Pacific. Rhetorically pulling punches but operationally throwing jabs, both are using diplomacy and military cooperation to jockey for position as the regional security order evolves. Driven by China's ascending role in Asian security and economic affairs and the U.S. desire to maintain its position of regional preponderance, policymakers in each nation are hedging¹ their security bets about the uncertain intentions, implicitly competitive strategies, and potentially coercive policies of the other. To hedge, the United States and China are pursuing policies that, on one hand, stress engagement and integration mechanisms and, on the other, emphasize realist-style balancing in the form of external security cooperation with Asian states and national military modernization programs. Neither country is openly talking about such hedging strategies per se,especially the security balancing, but both are pursuing them with mission and dedication. U.S. and Chinese leaders regularly recite the bilateral mantra about possessing a "cooperative, constructive, and candid" relationship, even as policymakers and analysts in each nation remain deeply concerned about the other's real strategic intentions. Such balance-of-power dynamics certainly do not drive each and every U.S. or Chinese policy action in Asia, but mutual hedging is fast becoming a core and perhaps even defining dynamic between the United States and China in the Asia-Pacific region.

The logic of this mutual hedging is understandable, as it allows Washington and Beijing each to maintain its extensive and mutually beneficial economic ties with each other and with the rest of Asia while addressing uncertainty and growing security concerns about the other. Hedging also helps prevent a geopolitical rivalry from becoming a self-fulfilling prophecy, another mutual core interest. In this sense, the U.S. and Chinese choice of hedging strategies could arguably be a manifestation of security dilemma dynamics at work in a globalized world characterized by deep economic interdependence and the need for multilateral security cooperation. Yet, such hedging is fraught with complications and dangers that could precipitate a shift toward rivalry and regional instability. It is a delicate balancing act that, to be effective and sustainable, requires careful management of accumulating stresses in U.S.-China relations, of regional reactions to U.S. and Chinese hedging policies, and of the domestic politics in each country. The prospect of armed conflict over Taiwan's status exacerbates these challenges.

This pattern of U.S. and Chinese reciprocal hedging is taking form and becoming more explicit at the very time that the security architecture in Asia is profoundly evolving. Since the Cold War, a U.S.-centric system of bilateral alliances and partnerships, more commonly known as the hub-and-spokes system, has delivered stability and security to the region and facilitated Asia's impressive economic development. The traditional role of this edifice is now being called into question. China and Japan are simultaneously reemerging, India is ascending in the Asian order, most Southeast Asian nations are themselves hedging by pursuing positive relations both with China and the United States, economic and technological interdependence is accelerating, and the region is calling for greater economic integration and multilateral cooperation. In the context of these complex dynamics, this reciprocal hedging is an especially precarious pattern of interaction. If not carefully managed, it could undermine the historical U.S. centrality to the region, alienate U.S. allies and security partners, and precipitate adversarial competition between the United States and China. How are the United States and China hedging? What is driving this hedging behavior? What risks and complications may arise for both countries, and how can they avoid those risks as they collectively seek to shape the evolving security architecture in Asia?

Why the United States Hedges

Washington faces the classic challenge in international relations of responding to a rising power in a region where the United States has long been predominant, possessing substantial economic interests and security commitments (five of the seven U.S. mutual defense alliances are in Asia). Policymakers have grown increasingly concerned about the...