When President Obama left on his ongoing trip to the Asia Pacific countries, opponents grumbled that he should have stayed at home. He needed to keep a laser-sharp focus on urgent domestic issues like the flagging economy and the budget deficit, they complained. To counter such criticism, Obama has laced almost every public statement he has made on this trip with references to bettering economic ties with Asian partners, which he argues will create more jobs here in America.
Jobs are undeniably important. But the Obama administration’s desire to engage actively with the Asia Pacific is driven by even more profound imperatives. We lose sight of these at American’s long-term peril. There are at least two compelling motivations — and they impact our future as the world’s economic and strategic superpower.
The first is the need to maintain the strength of the U.S. economy as the global leader. Job creation, crucial though it is for the well being of Americans, ultimately serves a more essential goal. The president’s trip is more fundamentally about reaching out to partners who can help the U.S. stay ahead economically. To meet the challenge from China, we have to be aggressive in forging closer economic relations with those countries whose potential we can use to benefit us.
As Europe struggles through its debt crisis, it is booming Asia that represents the strongest engine of growth. Figures from the U.S. Department of Commerce show American exports to the Asia Pacific have risen about 80 percent in the last decade. That is twice the rate of export growth to the European Union. In absolute terms, Asia is already a bigger market than the E.U.
Our trade deficit has generated some backlash. It is however important to remember that China with its undervalued currency accounts for much of that deficit. Our trade gaps with key trading partners like Japan, Korea and Taiwan have narrowed in recent years, and we even have trade surpluses with other Asia Pacific countries. The U.S. stands to gain much more by encouraging greater trade openness with those partners.
Besides trade, it is often overlooked that businesses from the Asia Pacific constitute a fast-growing source of direct investment (FDI) in the U.S. These businesses — whose stock in this country amounted to $362 billion in 2010 — create millions of American jobs. They have rebounded faster than Europe since the 2008 global financial crisis and make up an expanding share of foreign investment in the U.S. FDI from Japan, Australia, and Southeast Asia — not China — are the major sources from Asia. They fortify American growth and mitigate China’s reach into the U.S. economy. At the same time, the Asia Pacific has seen phenomenal growth for American investments abroad. American-owned companies worth $611 billion operated in the Asia Pacific last year. These firms take advantage of business-friendly environments to produce wealth that eventually find their way back to our shores.
By bolstering economic interdependence, the U.S. will also be significantly contributing towards reinvigorating its strategic alliances in the Asia Pacific. This is the second compelling reason for the U.S. to put sustained effort into engaging closely with the region. As Secretary of State Hillary Clinton noted in an article in the latest issue of Foreign Policy, the future of global politics will be decided in Asia. China and India are poised to play starring roles. Since it began transforming itself economically two decades ago, China has incrementally taken on a more activist approach in the Asia Pacific. China recognizes that the rich resources and dynamism of its neighbors can be harnessed for its own aspiration to become a global power. It is proving effective at integrating the interests of Asian countries with its own. Benign neglect on the part of the U.S. has aided China’s rising influence.
Asia Pacific countries are not sanguine about China’s expanding sphere of influence. China has sometimes flexed its muscles, for example, in its handling of territorial disputes in the South China Sea, and that raises concern in the region about Chinese hegemony. An overwhelmingly powerful China in Asia is bad for the U.S.: it means ceding eminence in a vibrant part of the world and will inevitably diminish America as a global leader. President Obama’s trip — his third to the Asia Pacific — represents the continuing aim of re-positioning the U.S. as an involved, dominant actor. By preserving its presence in the region and strengthening alliances with the likes of Japan, Australia and Indonesia, America protects its long-term strategic supremacy.
LaiYee Leong is a research fellow at the John G. Tower Center for Political Studies at Southern Methodist University. She can be reached for comment at l[email protected]
