By Ernest Z. Bower

U.S. vessel moored in Sasebo, Japan. Source: Jeff Laitila’s flickr photostream, used under a creative commons license.

Yesterday in Arizona, the new U.S. defense secretary Ashton Carter delivered an important speech. He talked about trade and the urgent need for the United States and its partners to seize the initiative to conclude the Trans-Pacific Partnership (TPP) trade negotiations and then spend political capital to pass the agreement.

Carter understands that economics is the necessary foundation for long-term security in Asia, saying, “TPP is as important to me as another aircraft carrier.” The man with the world’s most powerful military at his fingertips has an intuitive feel for its most dynamic region: the fast growing and complex countries stretching from India through Southeast and Northeast Asia and across the Pacific. This comprehensive perspective will make Carter the strategic leader on Asia for President Barack Obama’s national security team. He is stepping onto the stage with not a moment to spare.

A window of opportunity in Asia remains wide open, but it will close eventually, maybe very soon. What does this mean? The greatest opportunity to propel world growth comes from the same country that may challenge the security balance that has given the Indo-Pacific region over half a century of peace to build economies, create a booming middle class, and strengthen connections to the global markets: China.

Its neighbors, including the United States, need China to prosper and feel secure. If China is not secure, Asia will be unstable. Countries around China understand this truth instinctively. That is why they are seeking ways to convince China to join regional efforts to develop and then abide by rules and laws that don’t impinge on the sovereignty of other nations.

While China’s economic growth has been one of the most important contributors to regional growth and security over the last 20 years, it has also demonstrated an interest in using its new economic and military power to redefine its role in Asia. Specifically, China continues to challenge its near neighbors in the East and South China Seas, and test India along their shared land border. Asians want the United States and other large countries involved in regional bodies to bring global standards and geopolitical ballast to the bargaining table to convince China that its road to power and prosperity will be paved by rule of law.

Xi Jinping’s perspective is that China should be at the center of how Asia organizes its economies and security in the twenty-first century. His Sinocentric economic diplomacy has the United States mesmerized. Initiatives such as the Asian Infrastructure Investment Bank and One Belt-One Road projects seem to have caught Washington flat footed.

The United States need not panic. But it must do much more than “pivot” to Asia. It must do the geopolitical calculus and understand the fact that Asia is where the future prosperity and security of the United States will be decided. Having accepted the facts, Americans must find leaders like Secretary Carter who will work to change the way the United States engages Asia with a renewed confidence and approach. Washington must modernize its Cold War bureaucracy and political mindset, recognize that for all China’s seeming recent economic agility the most powerful and stable economic force in the world is the private sector, and embrace Asia as the opportunity that it is.

To accomplish these objectives, the U.S. government will need to work with like-minded countries. Priority should be given to creating a new economic strategy for Asia and encouraging partners to do the same.

In the United States, this effort should be led by the president and driven by a national economic adviser in the White House – a new and powerful member of the national security team. And the White House and Congress should redefine their working relationship with the U.S. private sector. Companies hold the majority of the world’s capital and technology. Private sector entities, including companies and non-profit organizations, are by far the largest financial contributors to development, health, and disaster relief. This trend has become pronounced in the last 20 years. Additionally, innovation is driven by companies.

Washington feels handcuffed by China’s fast moving economic diplomacy. China’s neighbors need the finance and credit Beijing is offering as well as the dynamism of China’s large market. But if the United States embraced private sector ingenuity, funds, and innovation, the impact on Asia would be transformative, including for China.

Asia will drive global trends in a dominant manner by the end of the twenty-first century. By developing an economic strategy fully integrating the power of the private sector, the United States can lead a paradigm shift that will promote another half century of peace and prosperity in Asia. This requires broadly defining economic strategy to include not only trade, but also finance and development. Trade agreements are important as a tactic within a broader strategy. In that context, the TPP an important step, but it is not sufficient nor does it qualify as a U.S. economic strategy for Asia. A broader and more comprehensive vision is needed: one that has domestic political support from citizens who understand their future depends on getting Asia right.

This Friday, April 10, CSIS will organize a full day conference sponsored by Standard Chartered Bank called “Financing Growth in the Asia Pacific.” Speakers will explore these issues in detail and drive toward recommendations for a more complete understanding of how economics underpins security in Asia and therefore the world.

Mr. Ernest Z. Bower is Senior Adviser and holds the Sumitro Chair for Southeast Asia Studies at CSIS. Follow him on twitter @BowerCSIS.

Ernest Z. Bower

Ernest Bower is Chair of the Southeast Asia Advisory Board at CSIS.

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