FOREWORD

 

The international financial crisis of 2008 shook the foundations of the global economy to their very core. It originated in New York but some of the strongest tremors were felt in Asia where trade plummeted and economic growth ground to a halt, or reversed, in many countries. This was no ordinary crisis. The fallout has the potential to shift the tectonic plates of international politics in one of the most strategically important regions of the world.

 

In early 2008, before the crisis hit full force, The Chicago Council on Global Affairs and the East Asia Institute conducted an unprecedented multi‐national survey of soft power in Asia that was generously supported by the Korea Foundation. By soft power, we mean the ability of a state to achieve its goals through attraction rather than coercion. The project’s findings showed that the United States enjoyed greater levels of soft power than China in the eyes of several Asian publics. Now, twenty months after that survey was put in the field, the foundations of the regional order in East Asia have been shaken. A key question is thus how the international financial crisis has affected American, Chinese, South Korean, and Japanese soft power and influence in Asia.

 

These recent developments inspired a workshop in Chicago co‐hosted by The Chicago Council on Global Affairs and the East Asia Institute, Seoul, and generously sponsored by the Korea Foundation and the Korean Consulate, Chicago. The workshop brought together thirty experts drawn from current and former foreign policy and national security officials, academics, and policy experts to discuss the implications of the current crisis for the soft power of these four countries. Over a day and a half, participants engaged in discussion on what the financial crisis will mean for the future of each country.

 

The discussions motivated this summary report authored by Dr. Thomas J. Wright, Executive Director for Studies at The Chicago Council. The findings presented in the report emerged from the discussion, but do not necessarily reflect a consensus opinion amongst the workshop participants or the views of any single participant.

 

EXECUTIVE SUMMARY

 

Dennis Blair, the Director of National Intelligence, told the U.S. Senate in February 2009 that the “primary near term security concern of the United States is the global economic crisis and its geopolitical implications.” The crisis, he said, “has increased criticism about free market policies, which may make it difficult to achieve long‐time U.S. objectives…It already has increased questioning of U.S. stewardship of the global economy and the international financial structure…China has an opportunity to increase its prestige.” Admiral Blair’s concerns include America’s soft power, i.e. the attractiveness of U.S. policies so that other countries want what the United States wants.

 

The Chicago Council on Global Affairs and the East Asia Institute of Seoul, South Korea organized a two day workshop to study the broader implications of the financial crisis for the soft power and influence of the United States, China, South Korea, and Japan in East Asia. The overarching questions addressed in the workshop included:

 

1. Has the crisis put at risk the postwar security regime in the Asia‐Pacific?

 

2. Has the “American model” been irreparably damaged and has the financial crisis provided a boost to philosophies that challenge Western orthodoxies of governance and international order?

 

3. How has the crisis affected the relative influence of the United States, China, Japan, and South Korea?

 

This report, inspired by the workshop discussions, offers eleven analytical points:

 

• In terms of regional order, the 2008 crisis is seen through the prism of the 1997 Asian Financial Crisis;

 

• Economically, China has emerged stronger from the crisis while Japan is weaker;

 

• The soft power, or attractiveness, of multilateralism has increased although if the G‐20 or regional initiatives cannot deliver, it could be fleeting;

 

• The crisis places pressure on China to play a more active part regionally;

 

• But Japan and Korea will also continue to be key players because they are indispensable for pan‐Asian multilateral initiatives;

 

• The dichotomous distinction between the U.S. and Chinese economic models is a false one so it is inaccurate to say that the U.S. model is weaker relative to a Chinese alternative;

 

• The Chinese government is not taking advantage of the financial crisis to criticize the U.S. model domestically;

 

• The hit to U.S. soft power is in competence—militarily bogged down and economically inept—not a desertion of the U.S. worldview;

 

• There is an increasing interest internationally in wanting to understand China but this is not the same thing as wanting what China wants. Countries also make a distinction between wanting what China wants economically and wanting what China wants politically and diplomatically;

 

• China is often clumsy in its use of soft power because it lacks a thick skin to accept international criticism as a normal part of the political discourse;

 

• America’s allies continue to want what the United States wants but they worry about U.S. capabilities to realize its goals.

 

INTRODUCTION

 

The international financial crisis, triggered in September 2008, may be a transitional moment in the history of postwar order in East Asia with significant implications for great power influence in the region. It is at least as significant as the 1997 crisis and probably more so. In late 2008 regional trade collapsed while growth rates plummeted. American capitalism and globalization now stand coaccused. While there are some signs of a gradual recovery, the political establishment is under pressure within states while the shifting distribution of power, although still unclear, may alter the balance between them.

 

The last major world economic crisis— the Great Depression—led to an upsurge in protectionism, the rise of communism and fascism as leading political philosophies, and the strengthening of authoritarianism. While such a calamity appears remote at this stage, it is no surprise that the crisis has raised questions as to whether U.S. influence and prestige in East Asia have been severely damaged. Dennis Blair, Director of National Intelligence, told the U.S. Senate in February 2009 that “the primary near term security concern of the United States is the global economic crisis and its geopolitical implications.” The crisis, he said, “has increased criticism about free market policies, which may make it difficult to achieve long‐time U.S. objectives . . . It already has increased questioning of U.S. stewardship of the global economy and the international financial structure. . . China has an opportunity to increase its prestige.”

 

Admiral Blair’s concerns include America’s soft power, which refers to the ability of a state to achieve its goals through attraction rather than coercion. Historically, soft power has played an important role, alongside U.S. military power, in maintaining America’s strategic role in East Asia. The United States is in East Asia by the invitation of its allies, with whom it shares liberal and democratic values.

 

Moreover, the U.S. economic model has been adopted by choice by all major powers in the region. In Asia, as in the rest of the world, America’s philosophy of international order is without a competitor of the sort provided by communism during the cold war. While the United States suffered a global loss in standing in the seven years after the terrorist attacks of 9/11, a 2008 survey by The Chicago Council on Global Affairs and the East Asia Institute found that the United States is the undisputed soft power leader in East Asia.

 

However, over the past decade, China’s leaders have sought ways to increase China’s soft power by sponsoring Confucius Institutes around the world, hosting study missions of foreign journalists and opinion leaders, improving China’s media outlets, participating in cultural exchanges, engaging with the Chinese diaspora, and reassuring its neighbors that its rise will be peaceful by playing an active part in regional multilateral institutions.6 Yet China’s use of soft power has differed from that of the United States. Chinese leaders view soft power primarily as a defensive tool—a means of correcting misperceptions of China overseas, and occasionally at home. To date, China has not sought to develop a philosophy or set of values that compete with dominant Western orthodoxies although some countries seek to emulate its mix of free markets with authoritarian control.

 

The Chicago Council and the East Asia Institute organized this workshop, which brought together thirty experts from the United States, South Korea, China, Japan, India, and Australia to discuss the implications of the crisis for soft power and international relations in East Asia. The topic was chosen to provide an analytical tool for understanding the deeper roots of great power influence in East Asia and how they may be affected by the changing economic climate. The overarching questions addressed in the workshop included:

 

1. Has the crisis put at risk the postwar security regime in the Asia‐Pacific?

 

2. Has the “American model” been irreparably damaged and has the financial crisis provided a boost to philosophies that challenge Western orthodoxies of governance and international order?

 

3. How has the crisis affected the relative influence of the United States, China, Japan, and South Korea?

 

The workshop consisted of four sessions—one each on the United States, China, South Korea, and Japan. This report offers eleven themes or insights arising out of the workshop’s proceedings. They do not necessarily reflect the views of all participants and are the responsibility of the report’s author...(Continued)