SPECIAL REPORT 37

"Trialogue": U.S.-Japan-China Relations and Asian-Pacific Stability

Challenges of Post-Cold War Leadership

The state is facing unprecedented challenges to its ability to provide leadership in the modern era. A widening array of non-state actors have gained influence that can be used either to support or to challenge the central government's leadership. The understanding and careful cultivation of these new constituencies has become a prerequisite for successful leadership, even in countries with relatively controlled political environments. As coercion is neither a viable nor desirable option, state leaders must master the art of persuasion in both domestic and international affairs, wooing "coalitions of the willing" both to gain domestic support and to broaden support at the international level.

The exponential increase in the global flow of information and capital has given increased prominence to new international constituencies -- the market and the media -- as groups that must be cultivated to sustain political power. And the influence of perceptions may overwhelm substance as pressure increases to make significant policy decisions in shorter periods of time and usually without all of the facts. Ironically, these newly emerging constituencies must be both courted and resisted as part of a strategy for effective leadership, yet short-term judgments and the conventional wisdom of today may prove to be illusory. Consistency and vision may be particularly prized because it appears to be in such short supply. Interestingly, newly emerging shared challenges to political leadership may provide a pretext for enhanced policy coordination among state leaders in Japan, the PRC, and the United States.

The remarkable reversal of capital flows that has occurred in conjunction with the Asian financial crisis constitutes a major shock to the system in Asia, unveiling secretive backroom business deals and putting a premium on transparency and the timely provision of accurate information as the new currency necessary to build and maintain the confidence of global financial markets. To the extent that policymakers in Tokyo or elsewhere have been unwilling to come clean regarding the extent of the crisis, prospects for recovery have only been delayed.

Likewise, policymakers in Beijing must recognize that opening markets and eliminating corruption are necessary and inevitable; the issue is how to manage such a process in the most orderly and efficient manner. And despite some conspiracy theories targeting the U.S. Treasury as the evil manipulator of the global economic order, U.S. policymakers find themselves captive to market forces and well aware of the dangers of recklessly exposing the limitations of their own leadership in cases where the market may be unwilling to follow.

Non-state actors and nongovernmental organizations have reached across international borders to press their concerns more effectively both from below and from above. While the international effort to ban land mines may be the most effective international example, the campaign for recognition and compensation from the Japanese government led by comfort women in Korea, China, and Southeast Asia has also influenced government policy formation in Asia. At the same time, the institutionalization of the World Trade Organization (WTO), even as China continues to negotiate the terms of its own membership, has limited the freedom of unilateral policy action by governments, including the United States, replacing bilateralism with an international court for equitable settlement of trade disputes. Although governments may attempt to limit citizen contacts across borders by regulating information flows through the Internet, globalization is "the wave of the future," and no country can resist it without paying the usually inordinate costs of isolation.

Likewise, domestic political constraints have limited the possibility of effective cooperation on the international level. Political leaders in the United States, Japan, and China have found their freedom of international action limited by domestic politics, whether by political scandals in Washington, the perplexities of perpetuating local political pork projects contrary to necessary financial reforms in Japan, or popular Chinese resentment toward Japanese aggression during World War II.

Ironically, the common challenges to governance may push national leaders into each other's arms as they consider how to broaden the foundations of leadership. Joint intervention by the Federal Reserve Bank and Japan's Ministry of Finance in June of 1998 was stimulated partly by concerns that further devaluation of the yen might cause China to also devalue its currency, unleashing a new round of "beggar thy neighbor" currency devaluations that in turn might trigger global deflation. Although China's decision not to devalue the renminbi may be in its own economic interests, the Chinese leadership has also gained significant political benefits from stepped-up political consultations with its neighbors as well as continued reassurances that China would stand firm despite reduced foreign investment flows to the Chinese mainland. The United States has led a new round of financial consultations among the G-22 in Asia, consulting on pressing issues resulting from the crisis as well as discussing adjustments in the global financial architecture that may be necessary to stem the recurrence of such a crisis.

See the complete list of Institute reports. The views expressed in this report do not necessarily reflect those of the United States Institute of Peace, which does not advocate specific policies.