1.0 General Introduction

            The economic development that continues to be witnessed in East Asia has managed to attract the attention of developed countries such as the United States and the European nations.  China is one of the nations in East Asia that has contributed to the rapid development in the region and has become a challenge to the hegemony of European nations and the United States in East Asia.  This has made China to greatly influence the security and East Asian political economy.  The Western nations which are interested in shaping the security and enjoying the benefits emanating from economic development in East Asia have realized that China is vital in relation to the security and political-economy structure of the region (Alon and John, 2008).

China’s economic development has promoted the employment of diplomatic strategies with other nations. The Western nations that aim at cooperating with China have tried to secure diplomatic ties with China since the rapid economic growth in China has secured it a bargaining power in international cooperation.  One factor that has made China influential at international level is its bilateral agreements and state-owned energy corporations.  As a result of China’s rapid economic growth, the rate of fossil fuel consumption has risen, making China to experience an increase in its dependence on gas and oil imports.  This has affected other oil importing nation’s trade relations due to a growing demand for oil and oil-related products.  China’s economic bargaining power has increased its influence on political economy of East Asia.

            Being one of the emerging powers in East Asia, rising of China has some consequences on security and economy of the East Asian region.  The deepening and further expansion of economic globalization has made China to emerge as a powerful political and economic actor in East Asia. Based on the three pillars that are expected to sustain the ASEAN community establishment, China has aimed at promoting politics and security, economic integration and social and cultural integration.  The European Union (EU) has realized the importance of China in East Asia, and this has made the European Union to consider China as a strategic trade partner.  The commitment by both sides to expand and deepen their relationship is a clear indication that China plays an important role in the East Asian political economy outcome.  Although between 2002 and 2004 the relationship failed to deepen, negotiations on how China and the European Union can develop comprehensive strategic partnerships have been going on. China’s economy has been estimated to be one of the world’s fastest growing economy.  It’s fast growing military budget has continued to influence security in East Asia. With its nuclear weapons and strong military force, China is considered to have great ability to resolve border disputes and old quarrels in its favor and the  serious attention that China is currently enjoying from the international business community indicate that when looking at the East Asian political economy structure, China cannot be ignored (Thomas,2003).

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2.0 Detailed description of the topic

            In the late twentieth and early 21st century, the rise of China became a very critical factor in the security and political economy structure in East Asia.  The opening up of China’s economy and the Chinese leader’s conviction that economic growth was mandatory to avoid the communist rule collapse were important factors in economic development.  After determining economic development as a prime goal, China adopted opening policies and reforms in order to achieve the prime goal. In addition, since the late 1970s, the Chinese leaders considered it very vital to maintain a very peaceful international environment to ensure there was steady economic development.  Due to China’s struggle to attain economic prosperity and a peaceful international environment, its economic and political interests influenced the security and political economy structure of East Asia (Chambers, 2006).  One of the most well known Chinese leaders Deng Xiaoping put great emphasis on the economic development of China as a primary goal of the Chinese government. The building up of defense came second to economic prosperity.  After China achieved economic development, its neighbors perceived China to be a threat to their development and peace.  China’s change in its foreign and security policies has seen it adopt a new policy of establishing good relations with its neighbors and considering them to be partners.  This has no doubt changed the security situation in East Asia as China tries to switch from the traditional strategy of only befriending distant states.  The Chinese new concept of security has promoted mutual benefit, mutual trust, cooperation between nations, and use of dialogue in solving conflicts peacefully.  China’s membership in the Shanghai Cooperation Organization (SCO) enables China and other powerful nation in Asia such as Russia to make great impact on security in the region.  Due to its great influence on the political economy of the region, evaluating how China affects the regions’ political economy will shed more light on the topic of discussion.

            To understand the East Asia political economy, it is important to acknowledge the role of China in the economy.  The structure of East Asian political economy has become very significant in international economic relations.  The attractiveness of the East Asian region to investors and the economic success of nations such as China have been attributed to the economic status of East Asia in the contemporary world.  The international relations of East Asia in future will be shaped by the political economy of the region, and this makes it important for Western nations to give their attention to what is happening in China and neighboring nations.  Examples of two most important developments of the East Asian political economy are the relationship between Japan and China and the development of China.  The United States changing role in East Asia influences the regions’ development and the fact that Chinas’ failure or success affects the whole East Asian region means that China is very important in the politics, economy and security of the region (Shambaugh, 2006).  Just like the 1990 collapse of Japanese bubble, Chinas’ instability can have adverse effects on the economy of other East Asian nations.  With its efforts to revitalize the Association of South East Asian Nations (ASEAN), China offers its neighbors economic opportunities that they exploit for economic benefits as they try to balance. This also promotes peace and security in the region.

            China’s indication that it would like to engage its neighbors in matters relating to the development of the region and its efforts to eliminate the perception that it is a threat to its neighbors has shaped the political economy structure in East Asia.  The success or failure of China can have profound influence on the political decisions, economy and security in the region.  Therefore, evaluating the effects of China on the East Asian political economy structure and regional security is significant in understanding the regions’ political economy and security. Some of the questions that may be relevant in discussing China’s influence on East Asia political economy and security include;

 Which factors have led to China’s rapid economic growth?

How does China’s economic development promote security or conflict in the region?

What role does China play in promoting both economic prosperity and peace in the East Asian region?

How does Chinas’ economic growth affect its interest in attaining power politics and economic prosperity in the region?

What does China’s economic revolution mean for other developed nations in East Asia?

 How does China’s ability to develop nuclear weapons and strong military force affect security in East Asia?

What factors have contributed to the economic interconnection between China and its neighbors?

3.0 Review of Literature Review

     3.1 Effect of a Rising China on security in East Asia

              It is anticipated that Chinas’ effort to maximize its political power influence the economy of the East Asian nations and the regional security.  China’s neighbors such as Japan and Russia are also competing with China for economic and military power in the region.  As China seeks ways through which it can maximize its power at regional and international level, events that unfold will have an impact on the political economy and security in East Asia (Kang, 2007).  To protect its economic prosperity and peace, China is expected to embark on strategies that will ensure it secures more economic and military power than other Asian nations.  In the past, the economic relations that China has had with other countries reflect the existing political relations in the region. China’s rapid economic development has attracted investors and has provided people with business opportunities that generate great financial returns (Klare, 2006).  During the late 1990s, the change in China’s foreign and security policies was considered to be an important factor in shaping the security situation in East Asia.  For instance, China’s traditional strategy of befriending the distant nations has been replaced by a policy that encourages having the neighboring nations as trade partners and maintaining good relations with them .Through such policies, China has promoted peace and security in Asia. For example, China has played a very critical role in promoting security through the regional cooperation in East Asia by being a member and supporter of the ASEAN+3 frameworks.

            China’s development in its military can change the status quo in East Asia.  East Asia lacks a multilateral security organization that can address the regions’ security issues and the rise of China makes the regions’ security relevant globally.Furthermore, China influences the bilateral and security relations between nations in East Asia through its efforts to eliminate the neighboring nations fear that it is a threat to them. China aims at ensuring that external stability in the region by promoting continuous economic growth and by minimizing the US influence in the regions’ international relations without engaging in a conflict. This has affected the decisions that are made by the East Asian nations economically and politically (Ikenberry and Michael, 2003). The China’s growing security role in East Asia has been acknowledged by other developed nations such as the United States.  For instance, in relation to the US-North Korea nuclear tensions and the South China sea Islands, China has been promoting a multilateral approach over the disputes.However, China’s support for a comprehensive multilateral security organization in East Asia is complicated by its insistence that its dispute with Taiwan should not be interfered with at a multilateral level since it is a domestic issue. This has made it impossible for one of the most direct threat to security and peace in East Asia to be solved at a multilateral level.  The military alliance between by China’s neighbors and other foreign nations is not taken well by China.  For example, China does not support the military alliance between the United States and Japan. To China, this is an effort by the two nations through the alliance to dominate the East Asian security organization .Chinas’ neighbors such as South Korea, Japan, and Taiwan considers China’s investment flows, trade, travel and communication to influence security within their borders. For instance, Taiwan and Japan consider China’s economic development and military build up as factors that are likely to affect the region’s security in future.  The East Asian nations that neighbor China are working hard to adjust their military capability to a level that can cope with the Chinese threat that keeps on increasing.

     3.2 Effect of rising of China on the structure of political economy

            The Chinese economy has provided the South Korean, Japanese, and Taiwanese exporters with a market for their commodities.  This has shaped the East Asian political economy structure by providing a stabilizing force (Rex, 2008).  Without this force, the East Asian economy would be affected by a disruption in trade flows.  The major changes in the political, human, military, and economic interactions between nations in East Asia define the structure of the regions’ political economy.  The economic development of China together with the growth in trade and investment relations network has been attributed to the changes (Kenneth and Mikkal, 2006).  Through trade and investment, China has been trying to co-opt the interests of the neighboring nations such as Japan and South Korea, a move that has created a political economy structure that encourages partnerships between the countries and growth in both trade and investments.  For example, the Smile strategy has enabled China to maintain good economic relations with its neighbors and to show its less threatening military side to its neighbors.

            Because China depends on foreign invested enterprises for an estimated half of its exports and imports, its economic development affect the political interests of the East Asian nations.  China’s great role in the region’s political economy is proved by its ability to displace nations such as the United States to become a major trading partner for Japan, Taiwan, and South Korea. In addition, the four levels of interaction that China has with its neighbors affect the political economy structure.  These levels of interaction include the financial interaction, military relations, human relations, and the political and diplomatic relations.  These relations influence the political and economic ties between China and its neighbors hence the rising of China as an economic power and its globalization affects policy making at Tokyo, Seoul, and Taipei (Mearsheimer, 2001).

4.0 Discussion; An analysis of effect of rising China on the structure of political Economy       in East Asia

    4.1 Effect on the Political Economy Structure

            China’s rapid economic growth can be attributed to the reforms, development of domestic policies and stability that have been witnessed in the region.  China’s economy is very important for the East Asian political economy. The economic development and high Chinese population provide market for commodities produced in its neighboring nations.  China’s economic interconnection with its neighbors such as Japan, South Korea and Taiwan has aimed at revitalizing its relations with its neighbors (Kang, 2007).  The establishment of the Association of Southeast Asian Nations (ASEAN) has played an important role in shaping the political economy of the region.  This is because, through the association, China’s neighbors who have become trade partners have taken advantage of business opportunities offered by China to encourage economic development.  In the past, China has been perceived as an economic threat to other nations in East Asia. However, the change in China’s foreign policy to start considering its neighbors as trade partners has promoted diplomatic relations in the region and trade agreements between the East Asian nations. The positive attitude of East Asian nations towards each other and the China’s policy of engagement success have encouraged the creation of free trade agreements in the region.  For example, China has managed to influence the structure of East Asian political economy through trade-in services agreement with other countries in Asia. The signing of a trade-in services agreement with Philippines is a good example. After signing the agreement, the Philippines President Arroyo appreciated China’s initiative to establish trade relations with Philippines.

            The relationship between China and Japan which is another economic power in East Asia is very critical for the political economy situation in East Asia.  The bilateral relations between China and Japan which have been fragile in the recent past have led to “hot economics, and cold politics” between the nations. In the past, due to the deterioration in relations between Japan and China, the economic relations in East Asia were highly politicized (Gowa, 1994).  This had some Japanese lobby groups come out to urge the Japanese government to improve its relations with South Korea and China in order to promote good economic and political relations.  A good example of a sudden decision that indicated the relation between China and Japan was deteriorating was the Japanese government initiative to stop giving ODA aid to China. Despite this, the rise of China has boosted its economic and political influence in East Asia which has in turn affected its political relations with countries such as Japan.

            The rising of China was earlier considered to disrupt East Asian economic growth.  This changed when China took the initiative to arrange a Free Trade Agreement with ASEAN with the aim of increasing investment and mutual trade that would benefit the East Asian region.  The economic rise of China has changed the international trade patterns in Asia.  By becoming a major trade partner of its neighbors, China is replacing the economic influence of other superpowers such as the United States in Taiwan, Japan, and South .For example, by 2004, South Korea was estimated to export about $46 billion to the United States and $50billion to China.  Although Japan exports less to China as compared to the US, Japan is expected to export more to China in future.  The fact that China is a major exporter in East Asia makes it very influential both economically and politically in the region.  Because China’s neighbors depend highly on China in relation to trade, China is also becoming dependent on its neighbors for both exports and imports.  It’s economic growth and industrial sector now demands for intermediate products and goods from other nations in the region such as Japan, Taiwan, and Korea.  For nations such as Japan, China has become an important market for its commodities and services. China’s effort to create a regional economic sphere in East Asia influences the political economy structure.  Through the ASEAN, China negotiated an ASEAN – China free trade agreement (Yoshimatsu, 2008).The agreement which has continued to promote trade between China and other ASEAN countries that are undergoing industrialization.  China’s initiative has made nations such as South Korea and Japan to begin discussing about negotiating free trade agreements between them.  Taiwan has also sought to establish economic ties with South Korea and Japan.  This has been referred to as the “bandwagon effect”. In this case, nations in East Asia in efforts to cement their trade ties with China are coming together through closer ties and trade agreements.

            China has encouraged the coming together of East Asian countries in order to develop strategies that will protect the region from plunging into financial crisis such as the one experienced between 1997 and 1999.  For example, the Chiang Mai Initiative which comprised of bilateral currency swap arrangements involved South Korea, Japan, and China.  The Asia Bond Fund which accepted financial contribution from China, South Korea, Australia and Japan.  Aims at enabling the Asian governments to invest in the international market through Quasi-Sovereign and Sovereign bonds.  This initiative is expected to promote the Asian Financial markets stability, reduce reliance of Asian nations on dollar denominate assets, create greater liquidity, and have the capital markets deepened.  Such financial arrangements form an important part of the East Asian political economy organization and are an indication of the institution building and cooperation among the East Asian countries.  China plays a major role in the financial arrangements.

            China’s economic development has a great impact on the political decisions and policy making in China and surrounding nations (Rex, 2008).  For example, Chinese entrepreneurs have become members of the Chinese Communist Party (CCP).  Some party members have developed strong business interests as the economic development in China continues to be witnessed.  This has made politics to become a critical factor when decisions relating to the economy are made.  China’s rapid economic development has increased its demand for energy and raw materials.  It is estimated that by 2020, China’s demand for oil will require 12 million barrels of oil per day.  Other commodities whose demand continues increasing in China include natural gas, steel, and gold. The demand for these commodities makes it necessary for the East Asian countries to develop good political relations and trade agreements and deals with China.  This is a prove that rise of China is expected to continue shaping the East Asian political economy structure in future.

            China is using its economic power to achieve its political agenda in relation to Taiwan.  Taiwan has for a long time tried to attain its independence from China.  To ameliorate Taiwan’s demand for independence, China has encouraged Taiwan to invest in China. China hopes that this will increase Taiwan’s financial and economic independence so that it suppresses its efforts in search of political independence.  China has welcomed Taiwanese businessmen and investors in China.  The political economy structure is expected to be affected when China manages to woo Taiwanese people by providing them with financial benefits to stop them from demanding for independence. This move has succeeded because many Taiwanese investors, businessman and their families reside in China.  Taiwan is also opening up to investment by China in the country. The Taiwanese expertise provides China with high technology to use in its industries.

            China’s trade investment and trade with Japan has promoted Japan’s economic recovery due to the Japanese exports to China.  Japan’s business enterprises have even considered China to be important in the manufacturing of their products.  The desire by China and Japan to develop a mutually beneficial trade has changed the economic relations between the two countries. However, the historical and sovereignty issues between the two keep on bringing tension between them (Haggard, 2000).  These factors are viewed as those that can easily lead to political instability in the region.  The bilateral relationship between China and Japan is characterized by diplomatic and political relations that focus on historical grievances. In Japan’s an occurrence that symbolized the two nations’ political differences was the 2005 anti-Japanese demonstration in China which had Japanese shops and consulate damaged.  Despite the tension between political leadership in Japan and China, the two nations are making efforts to address the discord and conflict experienced in the past.  The economic competition between China and its developing neighbors such as Japan plays a vital role in shaping the political economy structure in East Asia.

4.2 Security

            China has become a regional hegemony in East Asia and in order to ensure its economic development gets peace and stability to continue, China has shown great commitment and dedication in promoting peace and security in East Asia (John, 2003).  Through its foreign policies, China strives to achieve as well as maintain security and a peaceful environment in the East Asian region.  Protecting economic development from effects of insecurity in the region has become a primary goal for China and its citizens. As China continues to seek for more economic development, maintaining peace within and around its borders has been very important.  However, the rapid economic development is perceived by its neighbors as a threat to the security, peace, and economic development of the region For instance, Taiwan recognizes China’s military ability that can easily threaten security in the region (Kastner, 2006).  Taiwan’s effort to attain complete independence has had it conflict with China over the issue.  Through its economic power, China has the ability to interfere with the security issues in the region if its political agenda is compromised.

            China’s foreign and security policies have been trying to encourage good relations with its neighbors who it has had conflicts with in the past.  For example, Japan has in the past experienced sovereignty and political differences with China.  To solve the conflicts it has had with its neighbors, China is pursuing ways through which it can befriend its neighbors.  Therefore, in efforts to promote friendly relations with the neighbors it has not related with well in the past, China’s new policy promotes the acceptance of other nations in East Asia as business partners.  The ASEAN Regional Forum (ARF) together with the Shanghai Cooperation Organization (SCO) has enabled China to promote security in East Asia by combating terrorism and religious extremism. Because China acknowledges the need to maintain security in the age of globalization, China emphasizes on the need for regional cooperation through the ASEAN+3 frameworks.  This promotes security in the region as nation’s hostility towards each other is reduced. China which is one of the of SCO members has a role to play in ensuring there is security in Central Asia.  By fighting separation, terrorism and religious extremism, China has participated in promoting security in the East Asian region.  By signing the Collective Security Treaty Organization (CSTO, China has a commitment to promote security in the region ensuring the region is protected from terrorism.

            China has embarked on efforts to enhance security and regional cooperation due to the unstable relationship it has with the United States.  The United States is a superpower which has become hegemony in East Asia (Garrett, 2006).  Good relations between the United States and Japan is a threat to China’s domination in the region and as China tries to increase its power in the region, economic development and security for China crucial.  Competition for power in the region with the United States and other superpowers in Asia such as Russia motivates China to develop good relations with its neighbors.  Furthermore, economic development in China has enabled China to develop military might that can easily challenge East Asia’s security status quo (Lampton, 2007).  For example, China’s ability to develop nuclear weapons is a threat to a country that may interfere with its interest in the region.  This has made Japan and the United States to be interested in strengthening the diplomatic and economic ties with China.  The move is also expected to boost China’s economy in future, a situation that is likely to enable China to expand and modernize its military.  This puts a lot of pressure on Japan which tries to cope with this possibility by maintaining good relations with China.  This no doubts plays a significant role in the region where people are concerned and worried about a strong China both military and economically.  In response to the concerns and fears, countries in East Asia reinforce good relations with the United States as a measure of promoting power balance in East Asia.

            The Chinese elites influence security in East Asia and because the elites perceive China to be a rising power, they always consider the implications that other East Asian countries aspirations, security, and power strategies have on China’s pursuit for more power. China has won itself great power in global politics by proving that it can achieve economic power over a short period of time(Rex L.2008) and while some consider it to be one of the largest economy in the world, its adoption of a more diplomatic positive and military modernization is viewed as  positive in the region.  China’s rise is seen by some political analysts to be a threat to security and peace in China.  Emphasis has focused on instilling the belief that China can no longer be ignored in issues that concern security in East Asia. China’s intentions and capabilities in future are expected to continue influencing security in the region. China supplies food to North Korea, and therefore it has offered its support to North Korea.  China has been accused of supporting North Korea’s authoritarian regime.  However, China’s relations with North Korea have been threatened by North Korea’s testing of nuclear weapons.  By being a major source of fuel, food and arms for North Korea, China has a lot to loose if it halted its support for North Korea.  China’s top priority to avoid war and maintain stability makes its relation with North Korea very sensitive.  The need to ensure North Korea remains stable makes China to promote security in the region to ensure that North Korea refugees do not move to China incase there is a conflict. For example, in case the United States is triggered by North Korea into war, China realizes that it is likely to face adverse effects as a result of military confrontation in the region. To address this, China has even tried to encourage North Korea to promote peace in the region.

5.0 Conclusion

            The political economy and security of East Asia have become very significant in international relations and economic prosperity of other nations.  The region has experienced great economic development, which has been referred to as the “Asian miracle”.  Being one of the fastest growing economies in the world, China’s economy can be attributed to the economic development in East Asia.  Due to China’s economic growth, it is expected that it would be reasonable to engage in power politics.  This means that the political economy and security of the regions are vital for winning political power by China.  For every great power, maximizing its power the world becomes its ultimate goal.


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