China's power play in Asia may be emboldened by US politics

[HONG KONG] US Defense Secretary Ash Carter warned a few months back that China risked a "great wall of self-isolation" for its actions in the disputed South China Sea. That hasn't deterred Xi Jinping.

Beijing is boosting its military presence in the area unabated, in the face of stepped-up US patrols and a recent arbitration court ruling that invalidated its claims to most of the waterway. After decades of US dominance in the western Pacific, Mr Xi's behaviour throws up an increasingly urgent dilemma for America in how to slow China's military and economic expansionism.

The risk now is that troubles afflicting a signature Obama-backed trade deal embolden China to see how much further it can push the world's biggest economy.

Regardless of who wins the US presidential election in November, the mood among a vocal number of American voters is one of isolationism after more than a decade fighting wars thousands of miles away and amid concern about preserving US jobs.

That domestic climate is threatening the US ratification process for the Trans-Pacific Partnership, a pact that would cover 40 per cent of world commerce and does not include China. Republican Party nominee Donald Trump says the TPP will cost US jobs and Democrat Hillary Clinton has reversed her earlier support for it.

"Right at the heart of China's conduct in the East China Sea and the South China Sea over the last few years has been a conviction that the US doesn't have the resolve to push back hard against China's prodding," said Hugh White, a professor of strategic studies at the Australian National University in Canberra and author of The China Choice.

If TPP fails, "it will encourage them to think that America is not willing to pay the costs and risks required to push back against it and that will encourage China to test it."

Mr Trump has raised the prospect of cutting military assistance to allies like Japan and South Korea and starting a trade war with China. Whether he would or could make good on that is unclear - the checks and balances of Congress might reign him in. But he has found a strong populist rump in the electorate for his views. While Mrs Clinton would probably seek to preserve ties with the region, she would need to manage the political noise at home.

Under President Barack Obama, the US embarked on a military and economic rebalance to Asia, with the policy articulated by then-Secretary of State Clinton in 2011. Aimed at assuring Asia of America's commitment to the region, China has painted it as a bid to contain it. The policy has had two main pillars - a military buildup in the western Pacific, and US advocacy for the TPP.

While the arbitration court's July ruling in favour of the Philippines' challenge to China's South China Sea claims was a diplomatic setback for Mr Xi, it hasn't stopped China from militarising reclaimed reefs, according to Asia Maritime Transparency Initiative photographs that show reinforced hangers that seem designed to house jet fighters.

It has also flown bombers over the disputed waters, announced joint naval exercises with Russia and Defense Minister Chang Wanquan has called for preparation for a "people's war at sea".

"China's expansionist claims in the South China Sea, reiterated in its angry rebuff of the recent arbitral decision, make it clear that the US faces a crucial test of its reliability in South-east Asia," according to a recent article co-authored by Patrick Cronin, director of the Asia-Pacific Security Program at the Center for a New American Security.

"The president should offer assurances to allies and partners that coercive moves that undermine the historic legal ruling risk a confrontation with the US".

China is also seeking to displace US economic influence amid questions over whether the second plank of the rebalance, the TPP, will get through the US Congress. Singapore's Prime Minister Lee Hsien Loong spoke on his recent visit to Washington of the need for TPP to be ratified: "For America's friends and partners, ratifying the TPP is a litmus test of your credibility and seriousness of purpose."

"Failure to pass TPP will have an impact," said Catherine A Novelli, Under Secretary of State for Economic Growth, Energy, and the Environment. "China is actively working in Asia and has strong relationships with its neighbours and we expect this will continue. TPP provides balance in the region and sets a very high bar for transparent rules and open and fair trade."

China isn't a member of the TPP, which is being sold as a kind of super trade deal that would not only slash tariffs on goods and services among its 12 members, but would establish shared standards in areas like labour and the environment. Participants include the US, Japan, Australia, Malaysia, Singapore and Vietnam.

Mr Obama has vowed to keep pushing the TPP during the lame-duck session of Congress that follows the election. His efforts to get the deal ratified received recent support from a group of senior former Republican officials who, exasperated by Mr Trump, said they'd back Clinton's presidential bid and that they hoped she'd reconsider her TPP position.

"Failure to approve it would cede to China the role of defining regional trade rules," they wrote in an open letter.

Beijing has established the US$100 billion Asia Infrastructure Investment Bankto complement its "One Belt One Road" initiative of building ports and transport links across Asia to Europe.

Mr Xi has touted investment and trade in the region to offset concerns about China's military ambitions, and pushed an alternate Asia trade pact to the TPP.

Still, while China may be able to make short-term capital of any TPP collapse, strategists in Beijing fret any advantage may be frittered away.

"It might make China more complacent," said Shi Yinhong, director of the Center on American Studies at Renmin University in Beijing and a foreign policy adviser to the State Council.

"China would be under less external pressure to push through economic structural reform and the motivation to improve the relations with its neighbors would be somehow diminished."

On the US side, foreign policy experts argue a TPP failure won't entirely undo the work of the Obama administration, citing a new defense pact with the Philippines, a reinvigorated alliance with Japan and greater participation in groupings like the East Asia Summit, which Mr Obama will attend in Laos next month. China's long-reach naval capacity is still dwarfed by the US, with a single aircraft carrier to its name.

"There is a broad consensus that the United States needs to invest more in Asia and that's both because of the economic realities as well as concerns about China's rise and what it means for the region," said Michael Fuchs, deputy assistant secretary of state for East Asian and Pacific Affairs from 2013 to 2016 and now a senior fellow at the Center for American Progress.

BLOOMBERG