For more than two centuries, the United States was a Europe-first power. In 2011, however, the Obama administration announced a change to America’s strategic orientation. Asia would henceforth serve as its priority region, and the United States would refocus its military, diplomatic, and economic emphasis on the Indo-Pacific. This move—the pivot to Asia—would tap into Asia’s dynamism, respond to China’s astonishing rise, end Middle East wars, and limit security expenditures in Europe. The notion quickly won support among policymakers in both parties and across subsequent administrations. It coupled sound strategic logic with a keen appreciation of the ways in which the world was changing.
Our new book, Lost Decade: The U.S. Pivot to Asia and the Rise of Chinese Power, tells this story, including its economic dimension. Capitalizing on Asia’s economic promise was key to the approach from the outset. By 2008 the unique economic potential in the Asia-Pacific, which accounted for 40 percent of global growth, was undeniable. By the early 2010s the notion of an “Asian century” had become commonplace, referring mostly to the eastward shift of global economic gravity. The pivot’s architects naturally wished to harness this dynamism for American benefit.
Most U.S. policymakers also subscribed to the notion of a causal link between economic growth and liberal governance, especially in China. “As we grow our economies,” President Barack Obama said, “we’ll also remember the link between growth and good governance—the rule of law, transparent institutions, the equal administration of justice. Because history shows that, over the long run, democracy and economic growth go hand in hand.” Successfully engaging in commerce, it was thought, required the kinds of institutions and practices characteristic of democratic government, and a rising middle class would eventually demand basic rights and liberties.
Asia’s own trade liberalization also drove American economic interest. By the early 2010s, with global trade talks (via the World Trade Organization’s Doha Round) going nowhere, countries in the region increasingly pursued their own deals. In 2000, for example, Asia had just three free trade agreements in effect. By 2011 the number had exploded to around 50, with another 80 in progress. In November 2011, the year the U.S. pivot was announced, the idea of the Regional Comprehensive Economic Partnership (RCEP) first appeared at the ASEAN Leaders Summit in Bali. Amid this flurry of activity, however, America was on the outs: With the exception of the Korea Free Trade Agreement, the United States was party to none of these deals. It was time to get in the game, many policymakers thought, or be left behind in a region on the move.
The final driver of the economic pivot revolved around China’s increasing economic gravity. In 2001, more than 80 percent of countries had a larger trade volume with the United States than China. By 2018, that figure had fallen to barely 30 percent. In 2023, China stood as the top trade partner of some 120 countries around the world. The shift was especially pronounced in Asia.
Over more than a decade since the pivot’s announcement, however, the strategy’s economic component changed radically. At the beginning, U.S. policy sought to harness opportunity via a raft of economic agreements with multiple countries, crowned by the pan-regional Trans-Pacific Partnership (TPP) trade pact. Doing so would provide greater access to Asian markets, signal enduring U.S. leadership in the region, and create alternatives to China’s ever-increasing economic weight.
Yet virtually all of those efforts failed over time, and Washington’s offensive agenda—one that aimed to open markets, facilitate trade and investment, and lower barriers to commerce in the Pacific—increasingly yielded to a defensive effort, focused instead on blunting the national security risk that attended China’s economic activities. Instead of trade agreements and investment frameworks, the focus of U.S. policy turned to export controls, investment screening, tariffs, domestic industrial policy, and sanctions. This shift to a defensive effort, aimed at reducing risk from China rather than seizing opportunity in the Indo-Pacific, produced an economic approach to Asia utterly different from the pivot’s original conception.
The TPP began in 2005 as a modest trade agreement among Brunei, Chile, New Zealand, and Singapore. By 2011, the membership was broad enough for the secretary of state to envision an expansive accord. “Our hope,” Secretary of State Hillary Clinton wrote, “is that a TPP agreement with high standards can serve as a benchmark for future agreements—and grow to serve as a platform for broader regional interaction and eventually a free trade area of the Asia-Pacific.” In time, the TPP would become the very core of America’s pivot to Asia.
It was easy to see why. The TPP promised simultaneously to serve multiple U.S. objectives. It would boost economic growth and create jobs at home when the administration sought both. The deal would enshrine U.S.-authored and supported rules, including in new economic areas like digital trade and intellectual property, rather than leaving such rulemaking to others. The TPP promised to strengthen key American allies and partners, increasing their economic performance and tying them more closely to the United States and one another. Above all, it would send a broad signal of sustained American leadership and presence in Asia. Economic policy in the Pacific is foreign policy, and U.S. regional leadership was unthinkable absent a dominant role in trade and investment. The TPP would provide pathways for it.
Over time, the strategic argument for the TPP overtook its economic rationale, and the deal became more focused on China as administration officials moved from the negotiation stage to the domestic outreach phase. The pact “strengthens our strategic relationships with our partners and allies,” Obama argued, “in a region that will be vital to the 21st century. Secretary of Defense Ash Carter said that passing the TPP was as important to him as another aircraft carrier. The TPP became, by the end of the Obama administration, not only Washington’s highest-profile economic initiative but the linchpin of the pivot to Asia.
Yet the domestic politics of trade were difficult. TPP initially attracted the support of political leaders in both parties. As 2016 wore on, however, opposition grew. Pew Research Center opinion surveys showed that the percentage of Americans who had positive views of trade agreements fell from 58 percent in May 2015 to 45 percent in October 2016. Even Clinton, who as secretary of state had championed the TPP as vital to the pivot to Asia, announced her opposition. On his first day in office, President Donald Trump signed an executive order pulling the United States out of the TPP, which he described as “a rape of our country.” The Trans-Pacific Partnership was, for the United States, dead. It would not be revived.
In the decade-plus following the pivot’s announcement, America’s positive economic agenda in Asia—opening markets, lowering barriers to trade, sealing agreements—bore virtually no fruit. Its negative, or defensive, agenda, however, gathered ever-greater support and became the focus of U.S. economic policy in the region. Instead of lowering tariffs, the United States raised them. Rather than increasing market access, Washington imposed sanctions. In place of facilitating globalized supply chains, it moved to de-risk and “friendshore” them. Instead of creating new arrangements abroad, the United States established new institutions at home. The driver of nearly all this activity was China.
The Belt and Road Initiative launched in 2013, the Asian Infrastructure Investment Bank established in 2016, and other Chinese infrastructure efforts galvanized a set of American responses. These included the Blue Dot Network, a joint initiative with Japan and Australia to certify infrastructure projects meeting governance and transparency standards, and the Build Back Better World (B3W) Initiative, which the Biden administration launched to “meet the enormous infrastructure needs of low- and middle-income countries.”
For a number of these initiatives, aspirations outran results. A 2022 report on the Blue Dot Network, for instance, found that the program “lacks dedicated staff to vet projects, and provides nowhere for an applicant to submit a project for review.” The White House pledged that B3W would “collectively catalyze hundreds of billions of dollars of infrastructure investment” but, a year after its announcement, its commitments totaled only $6 million.
The U.S.-China infrastructure competition turned not only on which country would spend how much and where, but also on companies and services. Huawei, the Chinese telecommunications company that provides 5G infrastructure, emerged as a central flashpoint. Washington charged Huawei with violating sanctions on Iran and North Korea and claimed that, under Chinese law, any data passing over Huawei-built or operated systems would be subject to seizure by the government. The Trump administration discerned a national security threat not only in the possible provision of Huawei 5G infrastructure in the United States but also in other countries’ use of it. Washington’s response exemplified its turn toward a defensive economic policy when it came to China.
That agenda was hardly limited to infrastructure. Trump entered office blaming China for persistent U.S. trade deficits and for stealing American jobs—“the greatest theft in the history of the world,” he called it. In response, Trump imposed multiple rounds of tariffs on the import of Chinese goods. In four separate actions, the administration imposed tariffs on a total of $370 billion in Chinese imports.
Between 2018 and 2020, the average U.S. duty on Chinese products rose from 3.1 percent to 21 percent. This period also saw other defensive and coercive economic moves. Trump in 2018 signed the Foreign Investment Risk Review Modernization Act, expanding the reach of investigations conducted by the Committee on Foreign Investment in the United States. In 2020, after Beijing moved to extinguish democracy in Hong Kong by rescinding its autonomous political system, the administration revoked the territory’s special economic status. And in 2021, Congress passed a law barring imports from Xinjiang unless businesses could prove that they were made without forced labor.
In October 2022, the Biden administration went a step further by imposing export controls on advanced semiconductors used for supercomputing. The controls aim to keep China as far behind as possible in its development of key technologies. By issuing this arcane rule in a technical area of U.S.-China economic relations, the administration took a last step in inverting the economic pivot’s original logic. In her article on the pivot, Clinton wrote, “Some in China worry that America seeks to constrain China’s growth. We reject both those views. The fact is that a thriving America is good for China and a thriving China is good for America.” This was hardly an isolated view, and the Trump and Biden administrations affirmed it.
Yet it appeared those days were gone. Given the importance of advanced semiconductors to a modern economy, the policy’s effect—if not its intent—would be to constrain Chinese growth. At the same time, efforts like the CHIPS and Science Act began funneling tens of billions of dollars toward reshoring semiconductor manufacturing and funding homegrown technology development. Industrial policy, now seen as vital to competing effectively with China, became popular among Democrats and Republicans alike. Administration officials insisted that the new policies focused only on national security risks and potential human rights violations, and that they would not color the entirety of U.S.-China economic relations.
More than a decade after the pivot’s announcement, its original economic goals today seem almost quaint. The notion of Chinese political liberalization through trade and globalization was abandoned years ago. The hopes of a U.S.-led, Pacific-wide free-trade agreement came to naught. Most of the way through the Biden administration’s first term, the shift from a positive, offensive economic agenda in Asia to negative, defensive policies on China was nearly complete. Whether the United States could muster the political will necessary to combine the two remained to be seen.
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