Chinese President Hu Jintao’s more conciliatory behavior at the recent nuclear summit is not likely to signal a change in Beijing’s increasing assertiveness in world affairs. Whether China’s reemergence as one of the world’s great powers proves to be advantageous or an impediment to international cooperation, however, remains an open question. How China relates to its Asian neighbors, especially the states on its southern periphery, will help to determine just how “harmonious” its rise to global power is likely to be. But even if it turns out to be a benign force, its ascendancy is bound to alter the leading role the U.S. has played in Asia since the end of World War II.

News that China will acquiesce, if not participate, in UN sanctions on Iran and indications that it will permit the renminbi to appreciate have at least temporarily reset relations with the U.S. Clearly, China has chosen to damp down recent moves that had challenged the international order, including blocking efforts to establish binding regulations at the Copenhagen climate summit. But its rhetoric aside, it is unclear what its acceptance of Iran sanctions constitutes.

China remains Iran’s biggest customer, and it is not likely to sacrifice its trade and access to oil on the altar of international comity. Its apparent willingness to tolerate a stronger currency rise has more to do with managing domestic inflation and maintaining social order than placating the U.S.. According to Beijing’s calculus, if inflation soars, the profits of Chinese businesses will decline, factory layoffs will increase, and mass protests will multiply, potentially threatening, depending on their severity, the primacy of the Communist Party.

Thus far, China has managed to enjoy the best of both worlds. It has experienced unabated economic growth – an annualized 12 percent in the first quarter of 2010 – yet has managed to keep inflation in check through higher bank reserve requirements and periodic currency increases. Furthermore, China’s economic leverage in Southeast Asia is growing. It is now the largest exporter to the region and its third-largest trading partner. It has exercised particular influence in mainland as opposed to maritime Southeast Asia, notably in poor states such as Laos, Cambodia, and Burma, which are being drawn into its gravitational force.

Although China’s neighbors have prospered from its economic rise, they are having second thoughts about its intentions. As Asian production networks become more integrated, members of ASEAN (the Association of Southeast Asian Nations) that warmed to the idea of the China-ASEAN Free Trade Agreement when it was proposed in 2001 are beginning to worry that they will be reduced to economic appendages of Beijing.

This is especially true of Thailand and Malaysia, whose exports must compete with similar and often cheaper goods from China. But even countries rich in commodities that China covets are voicing concerns, including those in mainland Southeast Asia. Chinese plans to mine bauxite in Vietnam have provoked considerable domestic criticism. Cambodia too is wary that Beijing will eventually acquire their land and water rights. Though it relies on China for money and arms, the military junta in Burma is also hedging its bets by increasing contacts with India and the United States. And Indonesia, a major beneficiary of Beijing’s ravenous demand for raw materials, has gone so far as to delay implementation of the FTA because it fears that it may put pay to its steel and textile industries.

More than its economic penetration of the region, it is China’s growing self-confidence and muscle-flexing that has aroused fears in its neighbors that its ultimate objective may be hegemony rather than harmony. Last year it dispatched troops to the Indian border to reinforce its claims to the state of Arunachal Pradesh, and it recently sent a flotilla of vessels en route to the Pacific for naval exercises between two Japanese islands without notifying Tokyo.

China’s projection of naval power has also increased tensions over territorial claims in the Parcel and Spratly Islands, whose surrounding waters could contain large oil and gas deposits. China signed a Declaration on the Conduct of Parties in the South China in 2002 in the spirit of “good neighborliness, pledging it and the other signatory nations – Malaysia, the Philippines, Vietnam, Brunei, and Taiwan – to resolve sovereignty issues in a peaceful manner. Although the agreement was not legally binding, it fostered the hope that Chinese leadership would in due course seek a negotiated resolution of the contested territory. Having long viewed the South China Sea as an integral part of China, however, Beijing has treated its ownership of the islands as a fait accompli. Last New Year’s Eve, it brazenly announced plans to transform the Parcels into a tourist site.

Some Southeast Asians believe that such behavior reflects Beijing’s wish to revive its imperial past, if not the tributary system that began during the Ming Dynasty. Thitinan Pongsudhirak, director of the Institute of International and Security Studies in Bangkok, said that “they see a pattern of the past coming true again,” when China saw Southeast Asia as “its backyard.” For this reason, ASEAN has encouraged the United States to become more actively engaged in the region in order to balance China’s growing power. Still, ASEAN members are keeping the U.S. at arms length. This is partly because they fear that greater American involvement could weaken ASEAN, which they consider essential for advocating their interests, and because they oppose policies that would dilute the Asia-centered character of regional integration.

Besides, no one in Asia wants to alienate China, which remains, in spite of its truculent behavior, the engine of economic growth and the catalyst of the process of asianization. Ideally, all Asian states would like a relationship with the U.S. similar to the one Europe enjoys, one in which the U.S. continues to underwrite their security without interfering in the development of regional economic policies and architectures.

Whether they can have their cake and eat it too remains to be seen. Notwithstanding its recent muscle-flexing, China could revert to the agile diplomacy that enabled it to ingratiate itself with the Asia-Pacific community and with the U.S. Resolving the competing sovereignty issues in the South China Sea would give credence to China’s “peaceful rise” rhetoric and thus increase the prospect of multilateral cooperation. As China becomes more powerful and more confident, however, the odds are that it will increasingly assert its perceived prerogatives in Asia, much as the U.S. has historically done in the Western Hemisphere. In this eventuality, the ASEAN community, if not the region’s larger states, influenced by a shared history and cultural attachments, will probably seek some modus vivendi with China, perhaps one that sacrifices their foreign-policy independence for trade and security. Either way, the U.S. will no longer be primus inter pares in Asia, much less the dominant actor.

Hugh De Santis is analytic director at Centra Technology. He is a former career officer in the Department of State and chair of the department of national security strategy at the National War College. His comments do not necessarily express the views of Centra Technology or the U.S. Government. Photo credit: Reuters Pictures.

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