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CHAPTER TWO


Defining Trends


The Strategic Importance of the Region Will Continue to Increase in Line with the Increase in its Economic Importance
Regional Powers Will Continue to Focus on Domestic Agendas
Regional Leades Will Intensify Efforts to Develop a More Permanent Structure of Security Relations
Regional Powers Will Try to Sidestep Confrontational Issues
Regional Powers Will Continue to Adjust Their Military Strategies and Improve Their Military Capabilities
The national security policies of the major regional powers increasingly reflect efforts to come to terms with these and other uncertainties. During the next few years, as these policies continue to evolve in response to regional and global developments, a new regional security order will emerge. The new system will be shaped by five major trends that define the Asia Pacific region today.

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The Strategic Importance of the Region Will Continue to Increase in Line with the Increase in its Economic Importance

Since the mid-1970s, many Asian nations have taken advantage of a stable regional political order to implement market- and trade-oriented economic policies that have produced the most rapid rates of economic growth in history. A number are now poised to join the community of prosperous market democracies.

By the next century, the global center of economic gravity may well have shifted to this region. In 1992, regional GNP accounted for 25 percent of the Gross World Product (calculated on a purchasing power parity basis or at official exchange rates). Japan and China represented the world's second- and third-largest economies, respectively. Barring some political calamity, the region will produce approximately one third of the Gross World Product in 2001 (on a purchasing power parity basis). The region is also a major source of the investment capital required to spark and sustain the global economy. Current official reserves in the region now exceed $250 billion, equal to those in all of Europe; more than three quarters of those reserves are held by China, Hong Kong, and Taiwan.

The ultimate effect of the Asian economic miracle on intra-regional relations is not clear. On the one hand, economic success creates forces for divisiveness. The need for raw materials and access to markets breeds competition, which is intensifying as the interests of individual nations expand. Often, as in the case of China and Japan, competition is complicated by historical animosities and conflicting territorial claims. Also, such powers as North Korea, Burma, Laos, Vietnam, and Cambodia, which do not yet share in the general prosperity, remain sources of tension.

On the other hand, the positive response of Japan, South Korea, and the ASEAN nations to Beijing's efforts to reconstruct and expand relations illustrates that Asia's economic coming of age is also producing an impulse toward stability and integration. This principle is increasingly evident in efforts to develop regional frameworks for economic and security cooperation, ranging from the Asia Pacific Economic Cooperation (APEC) accord to the ASEAN Regional Forum (ARF), to South Korean proposals for a conference on security and cooperation in Northeast Asia.

Gross World Product by Region, 1992 Top of Section

Regional Powers Will Continue to Focus on Domestic Agendas

Domestic economic, political, and social problems have become the primary concerns of regional leaders. In Japan, a succession of weak governments has had little success in developing policies to deal effectively with a stubborn recession, while in China the leadership continues to grapple with the political consequences of market economics. Beijing is also concerned about growing disparities in income levels among the nation's different regions, which may eventually threaten the unity of the People's Republic. Both China and Japan are experiencing a slow transition to a new, younger generation of political leaders. China already faces significant social unrest, which may well increase as the succession unfolds. In both cases, completing the transition will require a number of years.

On the Korean Peninsula, the real test of Seoul's still-new democratic political institutions will not be passed until the succession to Kim Young Sam is completed by constitutional means. In the North, a new leadership is emerging. The outcome is uncertain, and much depends upon the final issue. Political implosion in the North would be destabilizing at the very least, and could result in a conflict that would destroy many of the recent political and economic achievements of the region.

This concern with domestic matters means that, for the next few years at least, Asian political leaders will, more than ever, tend to view foreign and national security policy needs through the prism of pressing domestic political requirements. Domestic political preoccupations and internal political weakness have been known to result in destabilizing behavior in other times and places. Considering the stakes, however, it is more likely that the regional leaders most affected by these conditions will seek to avoid potentially destabilizing confrontations.

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Regional Leaders Will Intensify Efforts to Develop a More Permanent Structure of Security Relations

Doubts about the future U.S. role and presence, the absence of any external military threat to replace the former Soviet Union, and the persistence of potential flashpoints all contribute to a desire to achieve a new structure of regional security relations. At present, however, the characteristics of the evolving regional order are unclear. Whether there will be one system, or one for Northeast Asia and one for Southeast Asia (and, if the latter, the nature of the relationship between the two) is a major uncertainty.

The end of Chinese stonewalling on regional security dialogue, the Clinton administration's call for a New Pacific Community, and the achievements of APEC and ARF all suggest that, in principle, multilateralism is a preferred approach to dealing with regional security problems. This, in turn, raises questions about the future of the present approach, which relies upon a network of bilateral security ties between the United States and Japan, South Korea, Australia, the Philippines, and Thailand, as well as agreements providing the U.S. with access to support facilities in Malaysia and Singapore.

Annual Real GDP Growth Rates, 1986-94 Top of Section

Regional Powers Will
Try to Sidestep Confrontational Issues

Because of domestic economic and political priorities, no nation--with the possible exception of North Korea--has an interest in disrupting the overall stability that prevails in the region. For example, despite strains in U.S. relations with China (over human rights and trade issues) and Japan (over market access), all three countries continue to cooperate in order to avoid any serious disruption of their bilateral ties.

The possibility of conflict in Taiwan, the South China Sea, and especially the Korean Peninsula will, of course, continue to affect the security planning of every regional power. Given China's strong interest in maintaining stability, however, Beijing is likely to remain conciliatory. Conflict would be likely to occur only if Taiwan were to declare its independence, or if one or more parties to the territorial dispute in the South China Sea were to directly challenge China's sovereignty claim.

Nor is a conventional conflict between India and Pakistan likely to create instability beyond South Asia. Even though China would face pressure to assist Pakistan in such a conflict, Beijing would almost certainly prefer to avoid direct involvement and work with other major external powers to promote a diplomatic settlement. If, however, such a conflict were to escalate to the nuclear level, the impact on the region would be much more difficult to manage.

The Korean Peninsula will be the major source of concern, particularly if the isolation and inaccessibility of the North Korean regime persists. The major priority of all of the regional powers will be to avoid the outbreak of conflict, and the powers most directly concerned will wish to avoid taking any actions that might provoke the North Korean leadership. At the same time, secondary attention will be directed toward achieving a smooth and gradual process of reunification, even if this means tolerating some ambiguity about North Korean nuclear capabilities and intentions.

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Regional Powers Will Continue to Adjust Their Military Strategies and Improve Their Military Capabilities

The emphasis on domestic priorities and a region-wide desire to maintain stability will not prevent regional security planners from re-examining and redefining their military strategies and improving their force structures. This is illustrated by China's relatively new focus on limited regional conflict and its ongoing program of military modernization, Japan's recently completed re-evaluation of its National Defense Program Outline, South Korea's defense modernization plan, and the continuing efforts of the ASEAN nations to modernize their military equipment and capabilities.

Between 1985 and 1992, increasing prosperity made it possible for regional powers to increase their spending on defense. Nations with the highest rates of economic growth also showed the largest increases in spending for defense. Overall, Asian defense spending grew at about 22 percent. This exceeds the rates for the Middle East and the rest of the less developed world, and almost matches European levels for the same period--although since 1992, European defense spending has declined, while Asia's has not. As might be expected, Northeast Asian defense spending is the highest, owing to the size of the economies of China, Japan, and South Korea, and to the scale of the strategic challenges they face. During the next few years, Chinese and South Korean expenditures will probably continue to show the largest increases, while the rates of increase for Japan and North Korea can be expected to hold steady or decline slightly. Expenditures by Southeast Asian nations also may be beginning to level off.

Acquisition patterns reflect a desire to modernize forces in order to deter or prosecute any limited regional conflicts that might arise. Regional powers are seeking the kinds of high technology systems and capabilities that proved effective during the Gulf War. Areas for improvement include air and naval capabilities; command, control, and communications systems; tactical intelligence systems; electronic warfare capabilities; and rapid deployment forces.

China is actively engaged in improving the quality of its nuclear forces. Evidence available at this time suggests that Beijing is committed to modernizing its small strategic force, rather than mounting an effort to substantially increase the size of that force. Because Beijing still has some distance to travel on this path, it is likely that China's testing program will continue. North Korea's nuclear intentions continue to be a subject of serious regional and global concern.

There is much discussion about whether these developments constitute an arms race or not. Citing the generally good political relations among Asian nations, most observers believe that regional security planners are not basing their force structure improvements on the need to deal with a particular "threat," and there is no indication of an action-reaction dynamic at work. Excepting the Korean Peninsula, it is therefore probably misleading to think in terms of a regional arms race.

In virtually every case, doubts about the future U.S. role and military presence in the region are a major factor stimulating change. With the obvious exception of North Korea, most nations view the prospect of a diminishing U.S. military presence with varying degrees of dismay. Considering Beijing's worries about future relations with its historic competitor Japan, even China probably would prefer that such a decline occur only after the Chinese have achieved considerable improvement in their own military capabilities. Regional powers that have hitherto relied to some extent upon U.S. security guarantees are beginning to develop "hedging strategies" to prepare for possible future contingencies, designing and deploying more self-sufficient forces capable of operating with less direct U.S. support.

Military Expenditures, 1985 and 1993 Chart


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