November 4, 2010 / 7:52 AM / 9 years ago

Analysis: Strategic tensions threaten Asia as China rises

TOKYO (Reuters) - The Asia-Pacific region faces a period of strategic tensions that could damage economic ties as key national players adapt to an increasingly assertive China growing impatient with U.S. efforts to shore up its influence.

Paramilitary policemen hold red flags during a ceremony where flower baskets are laid at the Monument to the People's Heroes to mark the 61st anniversary of the founding of the People's Republic of China, in Beijing October 1, 2010. REUTERS/Jason Lee

The November 13-14 Asia-Pacific Economic Cooperation (APEC) summit in Japan, coming on the heels of a gathering of G20 leaders in Seoul, will test how much regional powers allow those strains to overshadow efforts to show collective goodwill.

Warning shots fired on Wednesday by South Korea’s navy to drive away a North Korean fishing boat at a maritime border were a reminder of tensions in a region where Pyongyang is a persistent threat to stability.

No one is predicting a shooting war in the world’s fastest growing economic region, but experts warn the danger of unintended military clashes has risen as Beijing tries to extend its naval reach and ties chill with rival Japan.

Security tensions could also spill over into trade and investment, while rivalry over resources from oil and gas to rare earth minerals risks fuelling strategic conflicts in turn.

“It could well turn out that after another 12 months of this, everyone pulls back and settles down and new lines are drawn ... But I don’t actually think that is going to happen,” said Alan Dupont, a professor at the University of Sydney’s Center for International Security Studies. “I see this as the beginning of a more volatile period strategically in East Asia.”

Sino-Japanese relations have taken a sharp dive due to a feud over claims to isles in the East China Sea near potentially huge maritime gas and oil reserves, just as a vibrant China grabs stagnant Japan’s No.2 world economic ranking.

U.S-China ties have been strained by currency and trade rows and Beijing’s push to expand its sphere of influence.

Aides to President Barack Obama, who heads to Asia on Friday after his party’s devastating defeat in U.S. elections, will raise the issue of what Washington says is China’s undervalued yuan currency when he meets Chinese counterparts.

Russia also leapt into the fray this week when President Dmitry Medvedev visited part of an island chain north of Japan claimed by both countries, sparking another row with Tokyo.

Until recently, China’s rapid economic growth was seen by many as a force for stability, but now its economic strength allied with big military spending is prompting second thoughts.

“The only thing we had before was the economic intertwining, and we know from experience prior to World War One that this does not guarantee stability,” said Andrew Horvat, director of the Stanford Japan Center in Kyoto, western Japan, although he played down any view of East Asia as a military powder keg.

ECONOMIC FALLOUT

Tokyo, Washington and Southeast Asian nations have grown increasingly wary of China’s intentions as it spends heavily to modernize its military, sends its navy further afield and asserts sovereignty over the contested South China Sea.

Push-back from the United States and China’s Asian neighbors seems only to have made Beijing feel more threatened, while Chinese nationalist sentiment, seen in a series of anti-Japanese street protests, makes it harder for China to compromise.

Fears China is using its monopoly over rare earth minerals needed for high-tech wares as a lever in diplomatic disputes have rattled Japan, despite Beijing’s denials and the certainty that China itself would suffer from reciprocal economic retaliation.

“In some sense, what is more worrisome is not volatility rising militarily over those islands, but that they are willing to use economic power to get what they want,” said Chikako Kawakatsu Ueki, a professor at Tokyo’s Waseda University.

Japan’s Democratic Party-led government, under fire for appearing to bow to Beijing’s demands to release a Chinese fishing boat skipper whose detention near the disputed island triggered the territorial row, now faces domestic pressure to take a tougher stance, especially after Russia’s diplomatic slap.

Tokyo’s ability to mount its own military buildup is limited by a public debt twice the size of its $5 trillion economy, but concern over a potential China threat will clearly play a part as Tokyo finalizes a defense policy review by the year-end.

“Certainly, the (military) focus more on the southwest that was already there would get more currency in the debate,” Ueki said.

Constrained by its pacifist constitution as well as its budget woes, Japan is moving to repair its security alliance with the United States after a year of rocky relations strained by a feud over a U.S. airbase on its southern Okinawa island.

“China is driving them into each others’ arms,” said Brad Glosserman, executive director at Pacific Forum CSIS in Hawaii.

Ironically, the strategic strains might give economic groupings such as APEC greater import. Obama, Chinese President Hu Jintao, and Russia’s Medvedev are all expected to attend the APEC summit hosted by Japanese Prime Minister Naoto Kan.

“APEC is often insufficient because it just a meeting, but it’s good in the sense that it is a forum where countries can meet and leaders do attend, so if they want to communicate something, or give a signal, the other side has to be there,” Ueki said.

Additional reporting by Paul Eckert in Washington and Chris Buckley in Beijing, editing by Miral Fahmy

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