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No region will be more important to global peace and prosperity in the coming years than the Indo-Pacific, which has more geopolitical hotspots, emerging powers, overlapping political and economic partnerships, and risks of conflict than any other. Northeast Asia, especially North Korea and the East China Sea, continues to be the region’s epicenter of security risks. While Southeast Asia is an engine of regional and global economic growth, border disputes in the South China Sea likewise threaten regional stability. The expansion of China’s Belt and Road Initiative (BRI) also increases the geopolitical importance of the Indian Ocean and the Strait of Malacca as a sea lane for natural resources. From a security perspective, the deepening competition between the United States and China has further complicated these geopolitical and geo-economic tensions, a trend that has accelerated during the Covid-19 pandemic.
As the U.S.–China strategic rivalry intensifies, there is a growing expectation in the Indo-Pacific region that, in addition to these two major players, middle power countries such as Japan, India, Australia, and Indonesia should play more active roles to ensure stability. This reflects the reality that the Indo-Pacific region is geographically extensive and culturally and politically diverse—and therefore should not be subject to unipolar or a bipolar hegemony. Among the middle power countries, there are high expectations for Japan to assume a comprehensive leadership role in the region, especially as it has multilayered relationships—economic, security, and cultural—with the countries of Southeast Asia. Under the “Free and Open Indo-Pacific” vision introduced by former prime minister Shinzo Abe and embraced by the United States and other countries, Japan is well positioned to continue engaging with like-minded states on a range of issues in order to support regional stability and prosperity.
This paper first discusses the geopolitical dynamics and underlying U.S.–China competition in the Indo-Pacific region, with a focus on countries in the Association of Southeast Asian Nations (ASEAN). It then describes the U.S. “Free and Open Indo-Pacific” strategy, which was inspired by Japan. The following sections address the foreign policy initiatives of middle power countries such as Australia and analyze the geopolitical implications of Covid-19 and its potential to accelerate inward-looking trends in both the United States and China. Finally, it offers recommendations for how Japan can solidify a comprehensive leadership role in a multipolar Indo-Pacific, both in economic and security terms.
The term “Indo-Pacific” has recently been making the rounds in diplomatic and academic documents. While it could be considered a mere geographical reference to the connection between the Pacific and Indian Oceans, the term has also taken on strategic and geopolitical significance, as Rory Medcalf argues in his book Indo-Pacific Empire. In light of the rise of both China and India, the Indian Ocean and the Pacific Ocean are integral parts of the region from the perspective of improving military and economic connectivity, including securing large regional sea lanes. However, as China promotes the BRI, its global infrastructure development strategy for the entire Eurasian continent, and expands its military activities beyond the South China Sea to the Indian and Western Pacific Oceans, it is becoming increasingly important to construct a security strategy that encompasses not only the Pacific Ocean—focused on the Korean Peninsula, Taiwan, and the South China Sea—but also the Indian Ocean, to include the east coast of Africa. In this context, the “Indo-Pacific” has emerged as a counter-concept to China’s BRI and its increasing military footprint in the region. The transition from the twentieth century’s “Asia-Pacific” to the twenty-first century’s “Indo-Pacific” reflects evolving policy debates regarding how to address security concerns without jeopardizing economic ties in the region.
A common question among Indo-Pacific countries is how to formulate strategies in the face of U.S.–China competition, particularly because China is an important economic partner for them. According to research by the Japan External Trade Organization (JETRO), the volume of trade between China and ASEAN countries has continued to grow, reaching $577.4 billion in 2018, an increase of about 250 percent compared to 2008. Given that China’s overall trade volume grew only 180 percent over the same period, the close economic relationship between China and ASEAN is obvious. And in recent years, only ASEAN’s share of China’s total trade (12.6 percent in 2018) has increased steadily.
This trend even continues under the Covid-19 pandemic. The Chinese government is extremely concerned about the complexities and challenges of the global economy in 2020, citing the International Monetary Fund’s (IMF) and World Bank’s predictions of negative growth and the World Trade Organization’s (WTO) projection of double-digit negative growth in trade. However, even in 2020, ASEAN remained China’s largest trading partner in both the first and second quarters. According to JETRO, the Chinese government credits the following factors with driving this growth: (1) the ASEAN region’s success in preventing the spread of Covid-19, (2) deepening economic cooperation through an upgraded ASEAN–China Free Trade Agreement (ACFTA), and (3) closer industrial supply chains with Vietnam, Malaysia, and Singapore.
However, these countries do not necessarily trust China, and frustration and distrust have been mounting over China’s threats to hold their economies hostage. In particular, the maritime ASEAN states, such as the Philippines, Indonesia, and Vietnam, are increasingly vocal in their criticism of Beijing’s coercive moves to unilaterally change the status quo in the South China Sea. For example, Philippine president Rodrigo Duterte, in his state of the nation speech in July 2020, promoted equidistant diplomacy between the United States and China but also expressed reservations about abrogating the Visiting Forces Agreement (VFA) with the United States, as he had threatened to do in February. The Philippine government also issued a statement on July 12, 2020, celebrating the fourth anniversary of the Hague Court ruling in favor of the Philippines on maritime issues in the South China Sea. Indonesia sent a letter to the United Nations (UN) in May 2020 rejecting China’s “nine-dash line” that defines its maritime claims in the South China Sea and conducted military exercises in the Natuna Islands near that line in July 2020. Further indicating ASEAN’s concerns about the maritime borders, the Vietnamese chairman of ASEAN issued a statement in June 2020 in which the Vietnamese government expressed concern about Chinese coercion in the South China Sea and repeatedly referred to the importance of compliance with international law, especially the UN Convention on the Law of the Sea (UNCLOS).
Many ASEAN countries have not been able to push back against China even though they have silently resented its hegemonic and coercive behavior. This could stem in part from concerns about an inward-looking United States and a disengaged Europe, which has also generally prioritized economic ties with China—leaving ASEAN countries uncertain about the reliability of the United States and its allies even as China offers them tempting economic development initiatives under the BRI and the Asia Infrastructure Investment Bank (AIIB). However, U.S. Secretary of State Mike Pompeo’s July 2020 statement on the South China Sea issue has raised regional expectations for U.S. engagement and leadership, as have a series of other U.S. government initiatives. This is a good time for the United States to work with Japan and other like-minded countries to coordinate efforts at securing a “Free and Open Indo-Pacific.”
Japanese prime minister Shinzo Abe first mentioned the “Free and Open Indo-Pacific” (FOIP) strategy in August 2016 during a keynote address to the Tokyo International Conference on African Development (TICAD) in Nairobi, Kenya. FOIP is a diplomatic initiative that seeks to develop the region as an “international public good” in which a unified ASEAN is central to maintaining the rules-based international order in a comprehensive, inclusive, and transparent manner that ensures stability and prosperity for the region as a whole. The Japanese government has emphasized that FOIP is not a China-containment strategy, but rather a rules-based, inclusive framework for regional integration.
Inspired by Japan’s FOIP, the United States has developed its own “Free and Open Indo-Pacific” strategy. At the Asia-Pacific Economic Cooperation (APEC) summit in November 2017, U.S. president Donald Trump mentioned FOIP, the importance attached to which was further reflected in the U.S. National Security Strategy published at the end of that year. Since then, the National Security Council, the Department of State, and the Department of Defense have been developing the United States’ own FOIP as a comprehensive foreign policy strategy built around the three pillars of security, economy, and governance. The U.S. version of FOIP incorporates some elements of the Obama administration’s “rebalance to Asia” strategy but also reflects the Trump administration’s reconfiguration of U.S. trade policy—as represented by its withdrawal from the Trans-Pacific Partnership (TPP)—and its reaction to China’s growing influence not only in the South China Sea but also in the Indian and Pacific Oceans. Just as Japan inspired the United States to embrace FOIP, other regional players such as Australia, India, and ASEAN have also introduced their own Indo-Pacific strategies.
Based on the diversity and geographic scope of the countries in the Indo-Pacific region, the U.S. government is deepening its cooperation with Japan, Australia, and India, including holding joint military exercises and supporting infrastructure by financing development institutions. These activities by the United States are commendable, but how are they viewed in the Indo-Pacific region? Some argue that the U.S. FOIP is more of a rhetorical challenge to China’s BRI and that there is room for improvement in its implementation. In fact, the United States has not been successful in convincing Indo-Pacific countries that it is committed to following through on its planned initiatives. President Trump’s repeated absence from ASEAN summits and the administration’s withdrawal from the TPP could explain in part why these countries are skeptical. They do not want to be forced to choose between the United States and China and are looking for U.S. leadership to counterbalance Chinese influence.
As mentioned above, the United States has commendably stepped up in voicing concerns regarding the South China Sea issue. However, if it is to create a more inclusive region, the United States must engage not only on security issues but also on regional economic development. From this perspective, it is good news for the region that the U.S. government reorganized the Overseas Private Investment Corporation (OPIC) in December 2019, instead establishing the U.S. Development Finance Corporation (USDFC) within the framework of the Better Utilization of Investments Leading to Development Act (BUILD Act). USDFC CEO Adam Boehler promptly visited Indonesia in January 2020, where he discussed infrastructure development cooperation with President Joko Widodo and announced plans to open a USDFC office in Jakarta. The USDFC’s move to increase its presence in the Indo-Pacific region has raised expectations in the region that the United States will provide alternatives to Chinese development aid and mitigate the risks of relying solely on the BRI. That is why ASEAN used the term “Indo-Pacific” when it announced its own “ASEAN Outlook on the Indo-Pacific” (AOIP) in June 2019, hoping this “love call” to the United States would accelerate U.S. economic commitments under FOIP.
China is deeply embedded in the Indo-Pacific system, but a foundation of established rules and norms could reduce the potential for it to become a unilaterally dominant, hegemonic power. Some countries, such as Malaysia, have raised objections to China-led infrastructure development, which suggests that if Beijing adopts a forceful stance, targeted countries could resist and potentially cause a backlash against its regional initiatives. Therefore, it is important to engage China on rules and norms and encourage it to provide development support that contributes to regional stability. For the FOIP framework to be effective, it will be important to include ASEAN countries in formulating alternatives to China, as their multi-faceted perspectives will prove important in ensuring that the Indo-Pacific remains a multipolar region.
Middle power countries are making their own strategic moves as the United States and China compete for influence in the Indo-Pacific. Australia, which has generally emphasized economic cooperation with China, is doing its best not to bend to China’s economic coercion despite an economic deterioration caused by Covid-19—attracting a great deal of interest from ASEAN countries that have succumbed to intimidation in the past. Australia is dealing with the situation strategically, emphasizing its alliance with the United States, promoting information sharing with New Zealand, Canada, the United States, and the United Kingdom under the Five Eyes intelligence-sharing agreement, and coordinating with Japan, India, and the United States under the Quadrilateral Security Dialogue (“the Quad”). In July 2020, the Prime Ministers of Japan and Australia met virtually amid rising tensions over the South China Sea and Hong Kong, confirming and announcing the importance of the two countries’ cooperation under the FOIP vision. Australia’s decision to upgrade Australia–India relations to a comprehensive strategic partnership at the Australia–India Summit in June 2020 also was particularly noteworthy given that Australia’s ties with India were the weakest among the Quad countries. (The revitalization of the Quad fueled Chinese suspicions of an emerging Asian version of NATO, but the Quad has yet to institutionalize security cooperation.) Furthermore, Australia’s 2020 Defense Strategy Update, released on July 1, 2020, provides significant insight into Australia's security aspirations as a middle power. It emphasizes not only deterrence by denial but also deterrence by punishment, an approach that has important implications for other regional countries such as Japan, which has also strengthened strategic ties with Australia in recent years.
Australia also continues to prioritize its alliance with the United States. Australian Minister for Foreign Affairs Marise Paine and Minister for Defense Linda Reynolds visited Washington, D.C., in July 2020 for the annual Australia–United States Ministerial Consultations (AUSMIN), at which they publicly aligned themselves with the United States on the South China Sea issue and denied the legitimacy of China’s nine-dash line under international law. However, the ministers reportedly declined an invitation to participate in a freedom of navigation operation (FONOP) with the U.S. Navy in the South China Sea, citing Australia’s national interests. Australia recognizes the threat from China but also understands the need to avoid further escalation despite growing anti-China sentiment at home. This seemingly explains Australia’s strategy to address the China challenge by deepening its alliance with the United States and coordinating closely with other states in the region.
Australia also is working to strengthen its relationship with ASEAN. On June 30, 2020, it held a special ASEAN–Australia foreign ministers’ meeting to further diplomatic and economic ties. It also concluded a free trade agreement with Indonesia, a major power within ASEAN, which came into force on July 5, 2020. Australia’s increased engagement with ASEAN should serve as a good example for other middle power countries to promote the multipolarity of the Indo-Pacific region. However, although ASEAN can serve as a consensus-building forum, it is also unlikely to become a driver for change. Therefore, it must be supplemented by middle power diplomacy with individual states in the region.
As a result of the economic disruption caused by the Covid-19 pandemic, many countries are more attuned to the risks of over-relying on China in their supply chains, especially in the areas of 5G communications and medical care. In addition, debates about “decoupling”—stemming from U.S.–China friction and Chinese coercion in the region—are gaining momentum. But it is unclear whether perceived attempts at isolating or containing China can strengthen deterrence or reduce the potential for confrontation. Nor is there consensus on whether to cede regional hegemony to China. The Indo-Pacific countries feature different political systems, economies, and diplomatic agendas that speak to the region’s diversity. A multipolar Indo-Pacific region is desirable in which middle power countries—as well as major countries, China included—build a regional network in a rules-based and transparent manner. At this juncture, the Covid-19 pandemic has increased the U.S.–China divide and the need for international cooperation to maintain various aspects of the regional order beyond just the U.S.–China relationship. In this context, middle power countries must increase their presence in the region.
U.S.–China strategic competition has escalated toward confrontation during the Covid-19 pandemic. Tensions over the South China Sea, Hong Kong, and 5G communications issues are intertwined—anti-China sentiment is rising significantly not only in the United States but also globally, and China is waging a hardline “wolf warrior diplomacy” that has caused further backlash from the international community. Looking specifically at the situations within the United States and China, the Covid-19 pandemic has increased public dissatisfaction and frustration, and perceptions of each country toward the other have deteriorated significantly. For example, an April 2020 poll conducted by the Pew Research Center showed that two-thirds of the U.S. public has negative views of China, and this trend has increased further since then.
Some experts are pinning their hopes on an improved relationship after the U.S. presidential election. However, underlying trends in American public opinion could affect the foreign policy agenda and keep the United States looking inward. In 2015, before the previous presidential election, Ian Bremmer’s book Super Power: Three Choices for America’s Role in the World laid out the next president’s three options: focus U.S. resources on rebuilding the country (“independent America”), design foreign policy to increase American value and pursue the interests of the United States (“money ball America”), or expand the U.S. role as a superpower so it can spread its own values (“indispensable America”). Bremmer concluded that the first, an “independent America,” was the best option. He argued that it would be too difficult for the United States to expand its international role and that it was time for the American people to redefine their true value to the world by focusing on domestic issues. In fact, polls in the United States show that the public prioritizes domestic issues over foreign policy ones.
Now, five years after Bremmer’s book was published, Trump is about to complete his first term. To what extent have the Trump administration’s moves been consistent with Bremmer’s ideas? U.S.–China strategic competition and the Covid-19 pandemic have reinforced the stagnation of globalization, and “decoupling” has become a global buzzword. Covid-19 has not only heightened the need for medical and other commodities, but also for communications, electricity, and other social infrastructure; and the term “buy American” has become a rallying cry for both Republicans and Democrats. More exposure has also been given to social issues such as inequality, exemplified by the Black Lives Matter movement. Regardless of the outcome of the presidential election, the United States can be expected to focus more on domestic challenges. Its inclination to step away from its past role as the world’s “policeman” could persist, placing a premium on cooperation with allies and partners.
How about China? In February 2020, President Xi Jinping issued an edict, framed around “bottom-line thinking,” calling on Chinese citizens to prepare for the worst as the country battled Covid-19. In his report on government activities at the National People’s Congress in May 2020, when the Hong Kong national security law came under heavy scrutiny, Premier Li Keqiang emphasized China’s basic policy of “six fronts” focused on security—job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments—and “six areas” focused on domestic stability—employment, the financial sector, foreign trade, foreign investment, domestic investment, and expectations. Both “sixes” are meant to mitigate the economic and social impact of Covid-19, which should be the basis for the Chinese Communist Party’s new economic strategy of “dual circulation.” The policies pursued by the United States and China to protect the livelihoods of their citizens and their domestic economy during the pandemic are now clashing head-on. Tensions between the United States and China are likely to remain high until the social unrest and economic fallout caused by the Covid-19 pandemic are alleviated.
Amid the tense competition between the United States and China, countries such as Japan must make difficult decisions on how best to steer the course politically and economically. President Xi Jinping’s proposed visit to Japan, which was postponed from spring 2020 due to Covid-19, caused a heated debate within the ruling Liberal Democratic Party, with some members calling for the permanent cancellation of the visit given public backlash against China’s recent enactment of the Hong Kong national security law and the continued intrusion of Chinese vessels into the waters around the Senkaku Islands in the East China Sea. But like other countries in the region, Japan has deep economic ties with China in terms of investment and regional supply chains—illustrating the challenges of managing a relationship characterized by both security concerns and a degree of economic interdependence.
U.S. President Donald Trump takes part in a welcoming ceremony with China’s President Xi Jinping on November 9, 2017 in Beijing, China.
Photo by: Thomas Peter – Pool/Getty Images
Will Japan vacillate between the United States and China, or will it exert its presence in the Indo-Pacific? The FOIP framework requires Japan to take a comprehensive view of security and the economy: strengthening defense capabilities and the U.S.–Japan alliance to counter Chinese coercion, managing diplomacy with China to stabilize bilateral ties and maintain economic relations, and assuming a leadership role in Southeast Asia. All of these aims further require coordination with like-minded partners to support multipolarity amid U.S.–China strategic competition.
Prime Minister Shinzo Abe speaks during a press conference at the prime minister official residence on August 28, 2020 in Tokyo, Japan.
Photo by: Franck Robichon – Pool/Getty Images
Japan should take on a more active leadership role in the Indo-Pacific region, especially in Southeast Asia, a strategically important corridor between the Pacific and Indian Oceans. Even after the sudden resignation of Prime Minister Abe in August 2020, it is expected that Japan will remain connected with Asia in terms of security, economics, and institutions, and Japan might be the only country that can be an effective, active coordinator. Of course, Japan is burdened with its dark past in World War II, which led to massive demonstrations during then prime minister Kakuei Tanaka’s 1974 visit to Southeast Asia. But former prime minister Takeo Fukuda and subsequent prime ministers have since provided economic assistance to the region under the “Fukuda Doctrine,” and in the 1980s and 1990s Japan utilized its economic growth to benefit ASEAN countries by deepening investment and supply chain ties and providing prompt economic support during the Asian financial crisis of 1997. These efforts over a half century have helped maintain a high level of confidence in Japan among Southeast Asian countries. In fact, a study published by the Institute of Southeast Asian Studies (ISEAS) in January 2020 shows these countries’ preference for expanding strategic partnerships with Japan as a hedge against U.S.–China competition. Another survey by CSIS in late 2019 also shows that ASEAN’s expectations of Japan, especially in economic terms, are nearly as high as their expectations of the United States and China.
Japan’s prompt efforts to coordinate responses to Covid-19—as reflected in the ASEAN–Japan Economic Ministers’ “Joint Statement on Initiatives on Economic Resilience in Response to the COVID-19 Outbreak” issued in April 2020—are especially illustrative in this regard. This declaration sets three goals: (1) sustaining the close economic ties developed by ASEAN and Japan, (2) mitigating the adverse impact of Covid-19 on the economy, and (3) strengthening economic resilience. A concrete action plan to achieve them was announced in July 2020. This is precisely the type of leadership role Japan can be expected to assume under FOIP in the future, though its approach should be multifaceted to reflect the various policy challenges that will likely shape regional dynamics.
Amid growing competition between the United States and China, middle power countries, especially Japan, should play important roles in shaping the foundation for stability and prosperity in the Indo-Pacific region. The leadership role of the United States remains critically important, but it is necessary to build a network of middle powers, including Japan, Australia, India, and Indonesia, rather than a bipolar or unipolar Indo-Pacific subject to Chinese coercion. Japan should take on a coordinating role by listening to the voices of Indo-Pacific countries and utilizing multilateral institutions such as ASEAN while strengthening its alliance with the United States and networking with like-minded partners such as Australia and India. Japan is expected to take the lead in building a strategy that is flexible and tailored to the needs of the region through a series of multilateral and bilateral dialogues. While it would be a challenge for Japan to fully align its FOIP vision with that of the United States and other countries, it can and should improve its coordination capabilities and carefully engage China with an eye toward shaping the rules and norms for a free, open, and multipolar Indo-Pacific.
Hiroyuki Suzuki is a visiting fellow with the Japan Chair at the Center for Strategic and International Studies. He comes from the Japan Bank for International Cooperation (JBIC). He is a globally prominent expert on energy and infrastructure project finance.
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