Has China’s Power Peaked in Asia?

But by the end of the Hu Jintao era, Deng’s wisdom was either forgotten or ignored, perhaps because Beijing over-read the implications of the 2008 global financial crisis and, just as the United States had over-read the end of the Cold War, invested it with a universal significance as heralding Karl Marx’s long-predicted decline and eventual collapse of the West, specifically the United States.

In July 2010, at a meeting of the Association of Southeast Asian Nations (ASEAN) in Hanoi, then-Chinese Foreign Minister Yang Jiechi imperiously proclaimed: “China is a big country and other countries are small countries, and that’s just a fact.” Yang was reported to have been looking at the Singaporean foreign minister when he issued this warning because Singapore had been audacious enough to defy Chinese wishes by talking about the South China Sea.

In September 2005, Zheng Bijian, an influential intellectual and senior advisor to the Chinese government, published an article in Foreign Affairs titled “China’s ‘Peaceful Rise’ to Great-Power Status.” This became the dominant theme in Chinese foreign policy discourse, though “rise” was later deemed too provocative and replaced by “development.” China recognized that falling out with the United States and its allies could derail China’s growth.

But after Xi Jinping took power in 2012, “peaceful development” faded from the Chinese foreign policy lexicon. Instead, the dominant note was struck by the slogan “the East rising and the West declining.” China became more aggressive, not just in the South China Sea but against Hong Kong, in the East China Sea, around Taiwan and Australia, and in the Himalayas. This has raised anxiety levels across Asia.

It does not, however, follow that Asia will meekly submit to China’s wishes. ASEAN members have continued to discuss the South China Sea. The United States has continued to conduct regular freedom of navigation operations in the area. Japan, Australia, and India have conducted naval patrols. Britain, France, Germany, and other European countries have also occasionally sent their naval vessels to the South China Sea, investing the issue with an international dimension that Beijing had tried to avoid.

Singapore has never been shy about making known its view that the U.S. role in maintaining a regional balance was irreplaceable. But when Singapore offered the U.S. military the use of some of its facilities and signed a memorandum of understanding to that effect in 1990, all hell broke loose. Indonesia and Malaysia reacted hysterically, as if Singapore were conspiring with the devil to sell their children into slavery. Immense pressure was put on Singapore by its closest neighbors to rescind the memorandum. Of course, Singapore did no such thing. Fast forward to 2019 when the 1990 MOU was renewed with full publicity at a signing ceremony between Singapore’s Prime Minister Lee Hsien Loong and U.S. President Donald Trump, held at the United Nations in New York. What happened? Nothing, not even a whimper of protest.

The change in responses between 1990 and 2019 was not so much a brilliant success for Singaporean diplomacy; it was much more due to the failures of Chinese diplomacy. While attitudes towards China and the United States vary from country to country and are in any case complex, rising anxieties about China now make Singapore’s anchoring of a U.S. military presence in Southeast Asia something of a regional public good, even if some of the country’s neighbors will never acknowledge it as such.

Domestic politics sometimes places constraints on what ASEAN members can do with the United States or are willing to admit doing. Nevertheless, several ASEAN members have been quietly expanding defense ties through participation in military exercises with the United States and its allies, port calls by U.S. naval vessels, base-sharing agreements, and procurement of U.S. military equipment. Shifts by Vietnam, which fought a bitter war with the United States and still has more than 200,000 soldiers missing, and Indonesia, with its strong tradition of nonalignment, are particularly instructive.

Asia is one of the most diverse continents, consisting of 48 countries with a population of 4.6 billion speaking approximately 2,300 languages, including more than 1,000 in Southeast Asia alone. Reducing this complexity to a kind of geopolitical Rorschach test that betrays your deepest fears or hopes—or a blank sheet on which you project abstract universals or simplistic binaries—is analytically unsound. Unfortunately, it is all too common. One could call it the Binary Trap.

Singapore’s Yusof Ishak Institute of Southeast Asian Studies (ISEAS) has conducted surveys of the region’s experts and opinion leaders each year since 2019, and these paint a far more complex and accurate picture. The surveys have consistently shown that, while China is widely recognized as very influential, it is also widely and deeply mistrusted. U.S. intellectuals, who are sometimes overly self-critical, may be surprised to learn that the 2024 survey showed that 42.4 percent of respondents were confident or very confident that the United States would do the “right thing” to contribute to global peace, security, prosperity, and governance. The comparable number for China was only 24.8 percent. The United States’ principal regional ally, Japan, has consistently been the most trusted external power.

All opinion surveys must be used with caution. But what the ISEAS surveys show is that no power is entirely trusted, although some are more trusted than others. They are trusted or distrusted for different reasons in different domains. It is futile to try to force attitudes into any consistent pattern.

For instance, despite the official caution most ASEAN governments express towards the Quad, the 2023 ISEAS survey showed that 50.4 percent of policy elites agreed or strongly agreed that strengthening the Quad was positive and reassuring for Southeast Asia. In 2024, 40.9 percent believed cooperation with the Quad would benefit the region. Only minorities thought the Quad would provoke China (7.4 percent) or force ASEAN to choose sides (7.9 percent).

Yet this positive attitude towards the Quad does not equate to confidence in the United States. Only about 35 percent considered the United States a reliable security partner in 2024, compared to slightly more than 47 percent in 2023. But if you really think the United States is unreliable, why improve defense ties with it or think the Quad, which has the United States at its center, is not a bad thing?

To adapt a saying attributed to the great U.S. novelist F. Scott Fitzgerald, most of us Asians have absolutely no difficulty in holding two or more opposing ideas in our minds at the same time while still retaining the ability to function. That is how our diplomacy usually works. In this respect, Fitzgerald’s quip provides deeper insights into Asian statecraft than do many political scientists and experts on the region. Asia is a messy place, and a frame of mind that seeks to impose orderly answers on disorderly reality can lead to dubious conclusions. Better to embrace the contradictions.

This often baffles outsiders, particularly when Southeast Asians say “we do not want to choose” between the United States and China. When we say it, we do not mean we want to be “neutral,” because neutrality is a status that has to be accepted and respected by other parties, and we have no confidence they will do so. We do not mean that we want to be “equidistant” between the United States and China, because we are not sure what that means—and even if we were to find out, we are uncertain that it is even possible. And we certainly do not mean lying low, staying mum, and hoping to be left alone, because Southeast Asian history in the second half of the 20th century has provided tragic examples of countries that tried to do just that.

What we mean is that we intend to exercise our sovereignty to choose according to our own national interests as we determine them. How we define our interests will vary from domain to domain. We see no need to neatly line up all our interests across all domains in one direction or another.

In the defense and security domain, Singapore long ago clearly chose the United States and the West generally. But on some political matters—for example, the claim that the so-called universality of certain political ideas and rights gives countries a voice in how we in Singapore manage our internal affairs—our attitudes are closer to those of China or Russia, which sometimes disconcerts the United States and other Western partners. And in economic relations, we are positively promiscuous and will negotiate with whoever offers a deal that is in accordance with our interests, prudence, and law.

To most of Asia, dealing with great power competition is a normal state of affairs, and hedging, balancing, and bandwagoning are not alternative strategies, as they are usually presented in Western international relations theory. Most Asians see no contradiction in simultaneously hedging, balancing, and bandwagoning in different domains vis-à-vis different external powers.

I do not claim that Asian countries always play this game well, but in principle this is what they usually try to do. Southeast Asian diplomacy, in particular, has almost always been polygamous or omnidirectional. Even U.S. allies like Japan have not forgotten the shocks Washington administered to them, such as Nixon’s visit to China in 1972 that overturned a decades-old approach without informing any ally, or the 1985 Plaza Accord that precipitated a decade of slow growth. Their relationship with the United States, while close, has never been a starry-eyed love affair.

Mistakes occur, and examining the tragic mistakes made by Laos and Cambodia is instructive. Confronted with the spillover effects of the war in Vietnam, both countries first adopted an essentially passive form of neutrality—lying low and hoping for the best. When this did not work, they joined South Vietnam in placing their fate in the hands of an external patron, the United States. Both approaches surrendered agency to others, with the consequences we now know. Today, these two countries seem on the verge of repeating their mistake with China as their new patron. But I doubt any other Asian country will again so totally surrender agency to an external power. That is why talking of Washington or Beijing having “lost” or “won” a country or region is condescending nonsense; the countries that make up Asia were never anyone’s to “lose” or “win” in the first place.

A particularly egregious version of this attitude is the assumption that because China is often the biggest trading partner, Beijing will call the shots. This is an insulting and ethnocentric attitude, since it assumes that we “natives” are so venal as to sell our national interests for a mess of pottage or so stupid as not to know our own interests in the first place. It is also a gross simplification of how states make decisions and define their interests. Not every strategic calculation can be reduced to trade or economics.

In 2024, trade between the ASEAN states and China amounted to $982 billion; the figure for ASEAN and the United States was just under $477 billion. But if you factor in ASEAN’s trade with U.S. allies—the European Union ($279.9 billion), Japan ($239.5 billion), South Korea ($196.9 billion), Australia ($192.9 billion), and others—ASEAN’s trade with the West as a whole exceeded $1.4 trillion. Southeast Asia’s overall economic orientation is not unduly skewed towards China.

How patterns of trade will change during the second Trump administration is yet to be seen. What is already clear is that Beijing relies too much on its economic weight as a diplomatic tool, and Chinese diplomats and scholars sometimes appear somewhat puzzled and frustrated when trade, investment, and aid—not to mention what are euphemistically called “informal payments”—do not win trust for China. I have had occasion to remind some of my Chinese friends that even the most corrupt individual can be a nationalist. Beijing’s attempts at economic coercion have not changed basic strategic directions in Japan, South Korea, or Australia, and not even in a weak and corrupt country like the Philippines.

Which countries in the vast arc from Northeast Asia down through Southeast Asia and into South Asia trust China or would meekly acquiesce to China occupying the apex of a regional hierarchy? Despite having absorbed much of Chinese culture, the core identities of Japan, North and South Korea, and Vietnam have for centuries been defined in opposition to China and the Sinosphere. They cannot subordinate themselves to China without such a wrenching redefinition of identity as to make every other alternative less painful.

Under Prime Minister Shinzo Abe, Japan finally broke with the post-war Yoshida Doctrine that voluntarily subordinated Japan’s security role to the United States. Under his leadership, Japan passed legislation that circumvented constitutional restraints on defense and began to play a more proactive external role. Even if weak post-Abe leaders slow this process, the direction will not change because it is a response to permanent changes in Japan’s strategic environment.

In Southeast Asia, Indonesia is a strongly nationalist country that has followed its own path despite attempts by the Soviet Union, Maoist China, the Cold War-era United States, and Europe to capture it. Vietnam, too, is strongly nationalist. It is impossible for any external power to capture Southeast Asia without first bringing these two countries under its sway.

India is as ancient and populous a country as China and will never accept a subaltern status to it. Even in countries highly dependent on China, such as Pakistan, Laos, and Cambodia, ground-level attitudes towards Beijing are often at variance with those of their governments.

China’s reputation is better elsewhere in the global south. But that term invests the motley group of countries it refers to with undue coherence. The global south represents only a mood based on grievances about colonial history and its effects on development, as well as a desire for a stronger international voice, not any real convergence of interests. The institutions that profess to represent this mood—the Non-Aligned Movement, the G-77, and lately BRICS—are rent with internal conflicts that make their ability to act in unison largely performative. India, a founding BRICS member, clearly mistrusts China. Egypt, another key member, is dependent on Western aid. Of the BRICS group, only Russia and Iran share China’s anti-Western streak.

The harshest tones of “wolf warrior diplomacy” have since been moderated, but not its substance. There has been no change in Chinese behavior in the East and South China Seas, towards Taiwan, and in the Himalayas. Beijing seems to believe its own propaganda about the decline of the West, and it has prematurely abandoned Deng’s approach of hiding capabilities and biding time. Some brave Chinese intellectuals have warned about the dangers of underestimating the United States or thinking it is in absolute decline. There is no sign that Xi has taken any notice. If anything, China’s actions have become more aggressive on his watch.

Why is it so difficult for Beijing to stop or even substantively modify counterproductive behavior? First of all, it may regard the reputational damage as a sunk cost because it is convinced—not entirely without cause—that the West, and particularly the United States, is set on containing China and stymieing its growth no matter what it does. Moreover, once you have revealed your intentions by your actions, they are not going to be easily forgotten by others. I doubt Beijing really believes that piously claiming that its foreign policy is motivated by the desire for a “community of common destiny for mankind” is going to cut any ice except with the terminally gullible. Whatever you may think of them, China’s leaders cannot be accused of naivete.

But there is a more fundamental reason why Beijing cannot modify its behavior. In 2021, the Sixth Plenary Session of the 19th Central Committee of the Chinese Communist Party adopted a resolution on the “Major Achievements and Historical Experience of the Party over the Last Century.” The resolution melded China’s imperial tradition with Marxist dialectical materialism. In this retelling of Chinese history, the revolutions of 1911 and 1949 are only superficial ruptures with the past. More essentially, they are presented as stages in an unbroken historical process whose inevitable culmination will be the realization of the China Dream under CCP leadership. This conception of Chinese history is the foundation for the CCP’s ethno-nationalist legitimating narrative of China’s humiliation, rejuvenation, and eventual realization of the China Dream. The importance of this narrative to the CCP cannot be overstated.

A crucial aspect of the China Dream is the recovery of territory that China lost when it was weak, and the restoration of the real or imagined status China enjoyed before the West intruded into Asia. The inconvenient fact, however, is that China’s most extensive territorial losses were to Imperial Russia and its successor states, which Xi now claims as his partner without limits. Siberia and what is now the Russian Far East are beyond even the pretense of recovery ever since border disputes were conclusively settled in 2003. What is left to impress the Chinese people with the CCP’s resolve and success in defending China’s sovereignty and territorial integrity are its claims to tiny islands, atolls, reefs, and shoals in the East and South China Seas—and Taiwan. The connection with the CCP’s legitimacy gives its maritime claims far greater weight than the minuscule size of the land features or even the potential undersea resources around them may suggest. Taiwan is of even greater political importance, and Xi has said several times that the China Dream cannot be achieved until Taiwan is reunified with China.

The deep sense of victimhood that permeates the CCP’s legitimating narrative—and the presentation of the China Dream as the inevitable result of a historical process vouchsafed to the party—injects a strong element of entitlement into Chinese behavior on these issues. It makes diplomatic compromise difficult for Beijing, except as a purely tactical and therefore temporary expedient.

The CCP is caught in a trap of its own making. After all, if I have drummed into my people that I am only recovering what was stolen from me when I was weak, why should I compromise? And how can I defy what I see as the inevitable unfolding of history? What will my own people think about my mandate to rule if I bargain away what I claim was always mine?

The three interrelated economic challenges confronting China are familiar and much discussed: a precarious property sector that accounts for a quarter or more of GDP; burgeoning local government debt with consequent stresses on banking; and a lack of confidence that has limited the effectiveness of the measures Beijing has taken to boost domestic consumption. But what is perhaps insufficiently stressed is that these issues are symptoms of a much more fundamental political challenge.

In 2013, the CCP rolled out a plan that envisaged a restructuring to allow the market to play a “decisive role” in the allocation of recourses. Very little of this plan has been implemented. Why? China has been talking about raising domestic consumption for more than a decade, but the rate has stubbornly plateaued at under 40 percent of GDP. Again, one must ask: Why?

The answer to both questions is not economic (China has scores of brilliant economists who have not only identified the problem but proposed solutions); it is political. There are no economic solutions to political problems.

China’s political structure clearly remains that of a Leninist state led by the CCP. The primary value of a Leninist-style vanguard party is political control over all aspects of state, economy, and society. Xi is a true Leninist in that his almost Pavlovian response to any problem seems to be “more Party” and more control. (We saw this clearly in his stubborn insistence on continuing a zero-COVID policy long after it had become dysfunctional.) By definition, free markets mean less political control.

China may soon face a vicious circle if it is not already trapped in one. China must grow to acquire the resources to deal with the population’s rising expectations, but sustaining growth requires a new balance between political control and economic efficiency. Establishing that new balance requires the CCP to accept more political risk, mitigating those risks requires growth, and so on. Unless the party finds the political courage to break the circle, the Chinese economy is going to operate sub-optimally. China will be pulled in contrary directions.

Little wonder, then, that China is facing a domestic and foreign crisis of confidence. Xi himself is the basic cause. Chinese intellectual, party, and business elites are uncertain about the direction he is taking China, while rivalry with the United States adds geopolitical uncertainties into the equation for Chinese and foreign investors alike.

By mid-century, whether or not Xi is still in power, long-term demographic factors will also slow growth. The United Nations has projected that by the turn of the 22nd century, China’s population could be about half of what it is today. No major country in recorded history has ever experienced such a precipitous fall in population, and no country has been able to reverse population decline due to falling birthrates. Technology is, at best, only a partial solution to a declining population. The only true solutions are immigration and temporary foreign workers. Neither is available to China on the needed scale.

None of this means that we have reached “peak China,” whatever that phrase may mean. Even if China grows at around 5 percent annually, that is roughly equivalent to adding another Australia to the world economy every year. Not a bad “peak,” if indeed it is one. Whether that will be sufficient to satisfy China’s external ambitions and domestic expectations is an open question. And if the answer is no, only time will tell how a frustrated China will behave.

What is certain is that the dilemmas facing China are real and have no easy solutions. By emphasizing CCP control, Xi has sharpened the difficulty of finding a new balance for growth. The Chinese system could be reaching an inflection point where change cannot be delayed without risking severe black swan-style events.

No leader has found the political will or courage to take the risks needed to break out of China’s vicious circle like Deng did 40 years ago. Xi may be a genius at amassing power, but his record of governance can at best be described as mixed. He is unlikely to be such a leader.

China will have to grapple with its internal contradictions within the context of global geopolitics that have returned to the historical norm of rivalry between major powers. Throughout China’s history, the moments of maximum danger for dynasties were when periods of internal and external uncertainty coincided. Are we in such a moment? Nothing is clear, except perhaps that as formidable as China undoubtedly is, its future can no longer be regarded as an Asian version of the Whig interpretation of history: a story of continual progress.