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If the US and China go to the brink, can they figure out how to de-escalate?

“Volatile” but not “a powder keg”: An expert explains the state of play in a tense Asia-Pacific region.

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Russian nesting dolls of President Joe Biden and Chinese leader Xi Jinping are seen at a souvenir stand.
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The saga of the Chinese spy balloon floating over the United States dominated media attention last week, and its destruction by the US seemed a signal moment in the relationship between the two superpowers.

It had already been a tense few months. Just before the balloon standoff, Washington took a major step to expand its military presence around the Chinese mainland. The US and the Philippines announced a deal allowing the American military to use four more bases in the Philippines. It was the latest move by Washington to build up its defensive position in the Asia-Pacific, the likeliest site of any confrontation between the two.

The agreement with the Philippines followed last month’s announcement by the US and Japan that they were adjusting the American troop presence on Okinawa along with several other defense measures, as the countries’ top diplomats and military officials condemned Beijing’s aggressiveness in the South China Sea.

And in September 2021, Washington agreed to provide Australia with nuclear-powered submarines as part of a new AUKUS defense alliance that includes Australia, the UK, and the US. The security partnership also includes cooperation in cybersecurity, artificial intelligence, and quantum computing.

Meanwhile, Taiwan, which China claims as part of its historic territory, remains the biggest point of contention between the two countries. Then-House Speaker Nancy’s Pelosi’s visit there last summer caused weeks of hostile rhetoric and unprecedented defense maneuvers by Beijing near the island, and the People’s Republic has markedly increased its military flights around Taiwan in recent years.

So just how dangerous is the situation in the Asia-Pacific becoming? To find out, I spoke with Jeremy Mark, a senior fellow in the GeoEconomics Center of the Atlantic Council, a Washington-based think tank. Mark was previously a journalist for CNBC Asia and the Wall Street Journal, and he has lived in Singapore, Taiwan, and Japan. A transcript of our conversation follows, edited for length and clarity.

Michael Bluhm

How volatile is the situation in the Asia-Pacific?

Jeremy Mark

The situation is quite volatile, but I don’t think it’s a powder keg.

Over the last decade, in particular, China has taken actions that have created volatility unaccustomed in the region since the Vietnam War. China has bullied and intimidated Japan, South Korea, Taiwan, and the Philippines. At its land border with India, China’s provocations in the last two years have resulted in soldiers losing their lives. All this points to a significant escalation of tensions.

That said, I don’t think there is a looming regional or US-China conflict. Trade and business are proceeding. The integration of supply chains among China and its trade partners remains very deep.

China is profoundly preoccupied with its own economy at the moment because of the impact of Covid, a severe real-estate slump, high youth unemployment, and several other issues. This is not a country that’s about to endanger its future by launching a war.

Michael Bluhm

What are the possible consequences of the Philippine bases for regional security?

Jeremy Mark

The US sees the consequences positively. There has essentially been a hole in the US regional defense against China — one which is now being filled by this agreement.

It’s also a message to China that its provocative actions have resulted in the Philippines returning to the pro-American place that it once had in regional security arrangements.

But from China’s point of view, this increases volatility. The presence of US troops in the north of the Philippines’ Luzon island — the closest island to Taiwan — may introduce more tension into some situations.

Michael Bluhm

This agreement is only the latest in a series of new defense ties with countries in the region, such as the recent deal with Japan and the AUKUS submarine deal. How do you see Washington’s strategy here?

Jeremy Mark

I would add to that last week’s announcement of a technology exchange between the US and India and some other, smaller arrangements. They all underline the deep concern across much of Asia with China’s posture.

In the last 10 years, the Japanese have radically changed their approach to military policy. They’ve even revised their constitution to give greater power to their Self-Defense Forces, allowing for a higher level of defense vis-à-vis China. Australia has concerns about China’s actions regarding Australia’s exports and in the Solomon Islands, and Canberra’s decision to acquire nuclear submarines reflects that concern.

All these add up to a strong consensus among many Asian countries that they need greater cooperation with the US — and with each other — to address China.

Michael Bluhm

Let’s look at China’s perspective. How do you see China’s strategy in the Asia-Pacific?

Jeremy Mark

A lot of China’s strategy is oriented inward. The Chinese Communist Party, before and during the era of Xi Jinping, has had a crisis of legitimacy. Xi has addressed this in various ways, including a wide crackdown on corruption soon after he came to power. The Chinese government has used nationalism — and the threat from the US, in particular — to galvanize public opinion, and they’ve been very effective.

More broadly, China sees itself as a rising power. Its rhetoric portrays the US as a declining power, and it says that the time has come to redefine China’s place in the world order.

China clearly sees the importance of carving out a regional sphere of influence with China at the center — and using the development of its economic and military power to reduce the influence of the US in Asia. The Chinese military, which has gained a tremendous amount of power under Xi Jinping, is increasingly taking advantage of this to drive a much more confrontational defense policy.

Michael Bluhm

You’ve said that you don’t see an invasion of Taiwan or war in the region as imminent. The flight of the Chinese spy balloon over the US last week has sharply increased tensions between the countries. How might this incident affect the dynamic between the two powers?

Jeremy Mark

Xi and Biden met in Bali a few months ago and tried to establish ways in which they could put guardrails around the relationship. Secretary of State Blinken’s visit planned for this past weekend was going to be part of that process. The balloon incident clearly has derailed [that].

Ideally, the two governments can move beyond this and proceed with discussions to find ways to limit this type of incident. But there’s a tremendous amount of uncertainty, in large measure because of the political outcry in Washington and the increasing reaction in China to the US shooting down the balloon.

Michael Bluhm

How dangerous is the situation around Taiwan?

Jeremy Mark

It’s certainly dangerous, but I do not see an imminent invasion. I do not think that China has the military capability to mount that kind of invasion. China is acutely aware of the potential damage to its own economy and its place in the world from an invasion. Sanctions in the case of an invasion would certainly hurt China.

That said, China is able to take action against Taiwan, the most obvious example being a serious economic blockade. We saw gestures in that direction last summer. But overall, these are well short of actions that would disrupt the status quo in the Taiwan Strait.

You have to keep in mind that China very much depends on Taiwan for technology, such as semiconductors. Taiwanese investment is very important to China, particularly at this moment when the Chinese economy is struggling. That economic foundation is often overlooked in considerations of the Chinese threat to Taiwan.

Michael Bluhm

Let’s go back to the other regional powers and talk about their perspective. How are Japan, Australia, and India handling the situation?

Jeremy Mark

Japan, India, and — to a lesser extent — Australia are countries where China’s bullying tactics have been thoroughly self-defeating. Japan has completely shifted its core military policies because of China. Confrontations have taken place off the Senkaku Islands — uninhabited islands, which the Japanese administer but China claims — and there were joint Russia-China naval exercises last year in the waters around Japan, and these events leave little doubt in Tokyo that its interests lie with Washington.

India had not been interested in deepening the Quadrilateral Dialogue, a diplomatic and military arrangement including the US, Japan, Australia, and India. But because of the confrontations at the Chinese-Indian border in the Himalayas, India is now actively engaged in the Quad. Before the AUKUS submarine deal, Australia had previously been very cautious about alienating Beijing.

Countries such as Laos, Cambodia, and Myanmar lean toward Beijing, and other countries are trying to maintain good relations with both superpowers. Malaysia is a good example; Singapore allows the US Navy to use its port, but it also does not go out of its way to anger China.

But overall, the major countries around the Pacific have decided they have to strengthen their ties with the US.

Michael Bluhm

What is that shift doing to the balance of power between the US and China in the region?

Jeremy Mark

From a military point of view, China has become much stronger over the last 10 to 15 years. The US alone would be hard-pressed to confront China militarily, but if you add the military capacity of Japan, South Korea, India, and Australia, then China is confronting something much greater.

But the US and China are economically dependent on each other. The US relies on China’s manufacturing capabilities, and China needs the US market. China desperately needs US technology and finance because of the difficulties of its own economy and financial system.

These are closely intertwined countries that rely on each other — and China has a very significant dependence not just on the US, but on Japan, South Korea, Taiwan, and others.

Michael Bluhm

Some have compared the US-China dynamic to the Cold War, but during the Cold War, the US and USSR had decades of experience handling conflicts, and they had processes to defuse conflicts. Do the US and China have any such system?

Jeremy Mark

It’s a serious weakness in the relationship. If you go back to 2001, when a hot-dogging Chinese fighter pilot collided with a US spy plane over the waters off southern China, it was very, very difficult for the US to establish contact with the Chinese leadership at the highest levels. In subsequent years, efforts have been made to improve not just crisis interactions but working-level interactions across various parts of the relationship.

The overall sense is that there are still huge holes in the relationship, particularly in crisis management. Yes, diplomatic channels exist between the Chinese Foreign Ministry and the US State Department. At the highest levels, we see the US president, national security adviser, and secretary of state interacting with their Chinese counterparts. But the whole network of working relationships is very thin. Nothing I’ve seen suggests that there’s been any significant improvement in developing the processes to avoid a crisis.

If you don’t know how to talk to each other, how are you going to have a serious conversation when the chips are down?

Michael Bluhm is a senior editor at the Signal. He was previously the managing editor at the Open Markets Institute and a writer and editor for the Daily Star in Beirut.

Clarification, February 9, 3 pm: Updated to clarify that the Russia-China naval exercises off the Senkaku Islands were not a confrontation but a planned exercise.