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China’s role in the world continues to evolve strategically and economically. For those watching from a safe distance—such as the capitals of Europe—China’s strategic trajectory doesn’t even rate a mention ^[2] amid the scramble for profit. In contrast, for those of us in Asia, the warm glow of the Chinese economy is tinged by growing strategic uncertainty.

A good many commentators contend that China’s rise necessitates a regional ‘security architecture ^[3]’. To be honest, the notion escapes me; we already have an alphabet soup of largely ineffective regional summits, and it’s fanciful to think that countries will surrender a skerrick of their sovereignty to a new super-national entity. Asia isn’t Europe. Moreover, references to architecture implies design, yet, in the absence of a grand bargain—like Kissinger and Mao circa 1972—China’s role is more likely to evolve through piecemeal negotiation and, I fear, crises that progressively define the limits of its (and other’s) freedom of action.

While it’s fashionable to ignore the ideological differences between China and liberal democracies such as Australia, I think that the differences matter when it comes to China’s emerging role. I contend that the ideology of the CCP will, in and of itself, predispose it to pursue a particular sort of role for China in the international system.

In the aftermath of WWII, the US led the creation of an international system that broadly mirrored its own domestic constitution. At its heart was a rules based-system built upon the prohibition of economic and physical coercion. Of course, the US has often used its power to go outside of the system it created, though less frequently than it could have, and most usually out of folly rather than self-interest. Indeed, despite the vagaries of US exceptionalism, the US crafted an international system in its own image, one in which the nations of the world are effectively accorded the rights of citizens.

In a perverse way, China appears to have a similar vision of how the world should work; except that the Chinese leadership has a very different relationship with its citizens. While the US recognises clear limits on the power of government—including multiple checks and balances—no such constraint inhibits the absolute power that the CCP exerts over its people. It’s a case of Magna Carta verses Heavenly Mandate. Consistent with a domestic worldview of self-legitimised and unbridled central power, China’s vision for an Asian security architecture centres on its so-called ‘new model of great power relations’, which amounts to turning Asia into a Sino–US power-sharing condominium (and probably only so long as it takes to eject the US holus bolus out of the region).

The US is unlikely to accept a grand bargain based around a G2—such a move would run against its vision of the world and of itself. Instead, to use a hackneyed phrase, we will surely see a mixture of cooperation and competition. Where agreement can be found—such as trade—China will continue to integrate into the global community. Where agreement can’t be found—such as in the South China Sea—there will be competition. By negotiation and sharp-elbowed jostling, the freedom of action of nations large and small will be decided.

So far, in terms of both cooperation and competition, the US and its partners, Australia included, have played their cards poorly—and they were dealt a bad hand to begin with.

On the cooperation side, it’s a story of lost opportunities. In particular, the West has been far too slow ^[4] in according China a role in global economic governance ^[5] commensurate with the size of its economy. To make matters worse, the US chose to sell the Trans-Pacific Partnership as a zero-sum blocking of Chinese influence, rather than as a compliment to the other regional trade initiatives. Most visibly, the failed US attempt to block the Chinese-sponsored Asian Infrastructure Investment Bank resulted in an own-goal for the Americans.

As far as competition goes, it’s largely a one-sided affair. China has asserted itself in the South China Sea and the region has wrung its hands. The much vaulted freedom of navigation operations by the US were as tardy as they were ambiguous, and have made no difference to the facts on the (newly dredged) ground. Worse still, nobody else has had the guts to follow suit. In fairness, the limp response reflects the ambiguity of the situation. China has generated a low-level crisis below the threshold that would justify a robust response. Nonetheless, the US has been left looking impotent and the region un-united. Nobody said the game was going to be fair.

There’s no doubt that there’s more the West can and should do to engage China constructively on economic issues. With an emerging-market debt crisis on the horizon, we should be talking with China now about how to contain the damage. We have to do better than the botched Western response to the 1997 Asian Financial Crisis.

In terms of the emerging strategic competition, the game will be won or lost by the extent to which the US and its partners are willing to stand up to China. The critical question is how much risk we are willing to take to impose costs on China. The answer, to date, is very little.