GMF - The German Marshall Fund of the United States - Strengthening Transatlantic Cooperation

At last weekend’s Shangri-La Dialogue, China did much to bear out James Joyce’s maxim that absence is the highest form of presence. In deciding not to send their defense minister and offering only an elliptical justification, China made itself the subject of even greater speculation and theorizing than usual. But by leaving only a few embattled academics to defend its amorphous and indeterminate claims in the South China Sea, Beijing also ensured that much of the focus was placed on Washington’s own conundrums in dealing with friends and allies in the region. The central one for the United States at the moment: how does it provide effective reassurance and deterrence over territorial disputes without also engendering recklessness?

In theory, it is China that is in a difficult spot. Its assertive maritime behavior, especially in the last couple of years, has been the principal reason that its neighbors have stepped up their security ties with the United States. Beijing has virtually guaranteed that the U.S. military’s rebalancing towards Asia, laid out in some detail by U.S. Secretary of Defense Leon Panetta during his speech on Saturday, would be welcomed with open arms. But some countries have been a little too enthusiastic for comfort. The spotlight on this front has moved from Vietnam to the Philippines, whose dispute with China over Scarborough Shoal has threatened to spill over in recent months. Manila received only lukewarm support from within ASEAN, and the United States has been left with the tricky task of calibrating how much to support and how much to restrain its treaty ally while hawks in China occasionally growl about launching a “limited war.”

This would be difficult enough as a purely military issue, where there has been a careful attempt to ensure that the Philippines does not overreach itself. Panetta was left continuously stressing that the United States “isn’t taking sides,” could not be expected to keep “charging in,” and that a regional dispute settlement mechanism was essential to prevent this story repeating itself. But it is a game that is playing out in the economic realm too. As it did with Japan before, China has decided to use its trade relations with the Philippines as a point of leverage, temporarily halting imports of bananas and placing a block on the visits of Chinese tourists.

Beijing’s approach — saber-rattling and economic coercion — certainly does not come without costs. Every new demonstration that China is a reliable economic partner only to the compliant will further heighten the desire of states in the region and elsewhere to ensure that their economies are not overly dependent on Chinese goodwill. But there is only so much that countries can do to limit their exposure to the world’s second-largest economy, and however routinely officials may dismiss this dimension of China’s trade policy as crude, capricious, and self-defeating, the nervousness that it elicits is still tangible.

The Scarborough Shoal dispute itself shows signs of de-escalation. The moderating of rhetoric from both sides was again in evidence from the Philippine defense minister over the weekend, and a mutually imposed fishing ban reduces the risk of incidents. No-one is expecting fireworks when the Philippines’ President Benigno Aquino III visits Washington next week. But the broader pattern is set. China keeps pushing and probing, repeatedly testing the limits of U.S. commitment and the willingness of states in the region to defend territorial claims in the face of an economic and political squeeze. So far, the United States had played its hand well and with restraint. But Beijing only needs to “win” once to start sowing seeds of doubt about how the next phase of the game will play out.

Andrew Small is a Transatlantic Fellow with the German Marshall Fund of the United States.