The United States strives to promote a free and open Indo-Pacific strategy to contain China

UntitledIn November 2017, at the Asia-Pacific Economic Cooperation (APEC) CEO Summit held in Da Nang-Vietnam, US President Donald Trump introduced the concept of a "free and open Indo-Pacific,” and said it would support the World Bank (WB) and the Asian Development Bank (ADB) in investing in high quality infrastructure in the Indo-Pacific, and incentivize private sector investment, become an alternative to state-directed initiatives for countries in the region.

While the Trump administration's Indo-Pacific concept was not clear at the time, with the policy framework not yet in place, analysts say that the US’ free and open Indo-Pacific strategy was to counterbalance China's "Belt and Road Initiative”, preventing China from expanding its influence in the region and the world. This strategy was later adopted by three other countries in the region - Japan, Australia, and India, which later became known as the "Quad" (including the United States).

In the face of increasingly aggressive Chinese actions in the region, especially in the South China Sea, in order to fulfill China’s ambition of achieving their "Chinese Dream", making China a superpower on par with the United States, the Trump Administration has been actively coordinating with countries in the "Quad" to proactively promote the Indo-Pacific strategy to prevent such actions. The Trump administration has adopted strategic, economic and political measures such as building mechanisms, concluding partnership agreements, orientating finances, deploying construction cooperation projects, and strongly promoting early infrastructure investments in the Indo-Pacific to deal with the comprehensive impact of the "Belt and Road Initiative".

In order to effectively implement the US foreign aid mechanism to promote the Indo-Pacific strategy, the Trump Administration is reforming said aid mechanism. In 2018, the US Congress passed the Better Utilization of Investments Leading to Development (BUILD) Act into law, authorizing the United States Agency for International Development (USAID) to merge with the Overseas Private Investment Corporation (OPIC), to establish the United States International Development Finance Corporation (USDFC), thereby forming a two-trajectory mechanism with development assistance administered by USAID and the Millennium Challenge Corporation (MCC), and development assistance administered by the USDFC and the United States Trade and Development Agency (USTDA).

In addition to the traditional OPIC functions such as issuing capital, securing loans, insurance and reinsurance, technology support, etc., USDFC will also increase the right to invest shares in joint ventures and can use different currencies from other countries for investments and business guarantee.

Along with the establishment of the USDFC, the Trump administration has also constructed a network of bilateral and multilateral infrastructure investment partnerships. On a bilateral level, during President Trump's visit to Japan in 2017, OPIC signed a Memorandum of Understanding (MOU) with Japan Bank for International Cooperation (JBIC) and the Nippon Export and Investment Insurance. The MOU provides high-quality infrastructure investment for the Indo-Pacific Region, while USTDA and the Ministry of Economy, Trade and Industry of Japan (METI) also signed an MOU to power the Indo-Pacific region; meaning the two countries have joined together in a strategic energy partnership, investing in liquefied petroleum gas projects and related infrastructure in this area.

At the multilateral level, in July 2018, the US, Japan and Australia announced the establishment of an investment partnership in Indo-Pacific infrastructure. The three countries also signed an MOU to carry out cooperation on infrastructure investment partnerships, and encourage and support private enterprises to build important infrastructure projects in the Indo-Pacific region, strengthening the construction of digital and power connection infrastructure. The three countries are also promoting the initiative to build high-quality infrastructure at the G20 Summit in Osaka in 2019.

In addition, the United States, Japan and India have established a tripartite Working Group on infrastructure as part of a tripartite dialogue, in which the three countries have reached an agreement on infrastructure development in South Asian and Southeast Asian countries such as Nepal, Bangladesh, Myanmar,..., in which India is in charge of constructing seaports, Japan industrial zones, the United States electricity infrastructure.

At the 2018 Indo-Pacific Business Forum organized by the US Trade and Development Agency, US Secretary of State Mike Pompeo launched 3 infrastructure investment initiatives in the Indo-Pacific, including a partnership in cyber security connectivity, through energy exploitation that promotes economic growth and Asian development, business networks and infrastructure support, and vowed to provide $113 million USD for the partnership.

Based on the BUILD law, the US Congress provides a $60 billion USD financial development fund to the USDFC. In the framework of the Indo-Pacific infrastructure partnership, Japan pledged within five years to invest $200 billion USD to build global infrastructure in its infrastructure partnership plan, including building with India the Asia-Africa Growth Corridor. The Australian Government announced the establishment of an Australian Infrastructure Financing Facility for the Pacific worth $2 billion AUD and provided $1 billion AUD to Export Finance Australia (EFIC) for financial support for infrastructure construction in Pacific island nations.  

Analysts said that the US efforts to coordinate with the countries in the "Quad" to build a clear and transparent financial mechanism with the goal of making other countries in the region see the better effectiveness and superiority of the Indo-Pacific strategy as compared to China's "Belt and Road" Initiative.

"Belt and Road" is seen by the US as a geostrategic tool, which they even considers as a strategic threat to the US. Former US National Security Adviser John Bolton said the purpose of China’s "Belt and Road" cooperation initiative is to build multiple trade routes in China and abroad to achieve the ultimate goal of strengthening Beijing’s dominant position in the world.

From the US perspective, the geostrategic challenge caused by the "Belt and Road" to the US is manifested mainly in the following areas:

The first is the issue of militarization. Besides striving to promote the construction of the "Belt and Road", China has invested in military strength and increased its military presence in the region. China plans to promote a "string of pearls" project in the Indian Ocean, which will use the construction of a military and civilian dual-use seaport and pier along the Maritime Silk Road, to support China in dispatching military forces abroad. Recent actions by the Chinese Navy, such as conducting a series of patrols in the Indian Ocean and establishing a logistics base in Djibouti, reflect this trend.

The second is the issue of "sharp power". In recent years, China has increasingly been using economic "sticks" to achieve foreign policy goals, punishing nations which dare to go against Beijing's requirements. Japan, South Korea and the Philippines have all been subject to Chinese sanctions. At the same time, China also relies on its great influence to interfere in both political and societal issues of countries concerned.

The third is the future world order. China’s goal in launching the "Belt and Road" initiative is to establish a world order centered on China. From an economic perspective, this means that China will have the right to control the value chain and the production chain; from a political perspective, China will take advantage of its position to control its production chain, forcing its neighbors to serve Beijing's foreign policy goals.

When assessing China's global strategic intent through the "Belt and Road", US Secretary of State Mike Pompeo once said that China used the "buying an empire" method to use money to cause losses to any nation concerned, and at the same time it threatens US interests, "Washington is ready to do anything to deal with China," he said. Therefore, the US has always shown a willingness to compete fiercely to cause impacts and weaken the international influence of the "Belt and Road".

Regarding the South China Sea, the US has always considered it a focus of the Indo-Pacific strategy. The US’ strong opposition to China's excessive claims in the South China Sea in the "A Free and Open Indo-Pacific: Advancing a Shared Vision" Report by the US State Department on Tuesday November 4, 2019 makes this clear.

As part of advancing the Indo-Pacific strategy, in addition to increasing its presence in the South China Sea, the US has provided assistance to neighboring countries in the South China Sea to strengthen its maritime management capacity and develop marine patrol forces to cope with the challenges of Chinese aggression.

On the other hand, the US encourages US businesses to invest in coastal countries in the South China Sea, including seaports and cooperation in oil and gas exploration in the waters of coastal countries in the South China Sea, in accordance with regulations of China. This is considered a necessary measure to combat China's intimidation and coercion of oil and gas activities of the countries in the South China Sea, and also to prevent Chinese attempts to push the US and other countries out of the South China Sea.