The best weapon against Chinese expansionism is not a weapon

A missile is launched during a live-ammunition drill in the East China Sea. (Wu Dengfeng/Xinhua News Agency via Associated Press)

+ The Question: How can the next president prevent China’s encroachment in the South China Sea?

In the weeks leading up to the election, In Theory will be asking policy experts to weigh in on the critical questions our presidential candidates should be addressing — but often aren’t. This week we’re discussing the South China Sea.

Over the past decade, China has aggressively expanded its sphere of influence into the South and East China seas, going so far as to build islands on reefs and anchor rigs in economic exclusion zones claimed by its neighbors. An arbitration panel at the United Nations recently rejected China’s assertions of ownership, but China denounced the decision as “null and void,” pressing on with its expansionism.

In response, the Obama administration has continued to toe a delicate line. To demonstrate its support for regional allies such as the Philippines, the United States has been flexing its military muscles, sailing vessels and conducting drills in the disputed seas. And as part of his “pivot to East Asia,” President Obama has been attempting to form a trade deal with other countries in the area — the Trans-Pacific Partnership — which is often described as a check against China’s power in the region. But the Obama administration has been careful not to escalate the situation too much, as China remains our third-largest trading partner. Angering Beijing too much could devastate the economy.

The next president will doubtlessly inherent a tense relationship with China, and it’s unclear whether a new administration could serve as a diplomatic refresh. Chinese officials have long seen Obama’s “pivot to East Asia” as a containment policy, so Hillary Clinton’s tough stance against China as secretary of state has made her unpopular in Beijing. Meanwhile, Donald Trump has angered the Chinese by comparing our trade deficit to “rape,” although officials generally don’t necessarily view a potential Trump administration as negative — only unclear.

Too often, public discourse about China is vaguely simplified to a message about projecting strength. But what would that look like? What foreign policy strategy should be put in place to address an increasingly aggressive China?

Jennifer M. Harris is a senior fellow at the Council on Foreign Relations and co-author of “War by Other Means: Geoeconomics and Statecraft.” She previously served on the policy planning staff at the State Department under Secretary of State Hillary Clinton.

Despite all the military bluster regarding China’s encroachment in the South and East China seas, this is an economic contest, not a military one.

China’s entire strategy for asserting its maritime claims is guided by a belief that exercising a military option in the next decade would prove too costly for America and its allies — and indeed for China itself. Instead, it has resorted to using economic influence to bully and coerce its neighbors. Until Washington recognizes this and develops a mercantile strategy to match, China is likely to continue changing facts on the water — unfazed by recent U.N. arbitration panels or U.S. naval exercises.

China has been forced to accept U.S. military dominance in the Pacific, but it is still able to flex its economic muscle to work its will in the region. When the Philippines sought to defend its claims in the Scarborough Shoal, Beijing showed its displeasure by leaving Filipino agricultural exports to rot on Chinese docks. China also initiated a fishing ban around waters claimed by the Philippines and depressed Chinese tourism to the Philippines. Tokyo received similar treatment in 2010 when China embargoed exports of rare earth minerals to Japan amid disputes over competing claims in the East China Sea, producing outages that rippled across Japanese industry.

Understanding the adage that possession is nine-tenths of the law, Beijing regularly uses elements of Chinese economic power, especially Chinese state-owned enterprises, to enforce claims and colonize disputed areas. China has prevailed upon Chinese companies to build or expand seven artificial islands in the South China Sea in recent years. CNOOC, China’s largest state-owned oil firm, repeatedly anchors one of its deep-water rigs within Vietnam’s exclusive economic zone in what’s been called “one of the most sensitive spots possible,” even as the company’s chairman praises the rigs as “mobile national territory and a strategic weapon.”

But it’s not all sticks and no carrots. China has also developed a regional investment campaign and uses the Chinese-led Asian Infrastructure Investment Bank to further draw neighbors into Beijing’s economic orbit, sharpening its diplomatic leverage and creating commercial opportunities for Chinese firms in the process. The China Development Bank — a primary lending source for China’s investment campaign — holds more than $1 trillion in assets, far surpassing the World Bank’s lending capacity.

These economic overtures seems to be working. Take, for instance, the recent victory by the Philippines, which won its three-year U.N. arbitration case against China earlier this summer. Though the panel’s ruling was favorable to the Philippines, Manila’s willingness to stand up to Beijing was fleeting. By the time the ruling was issued in July, Philippine President Rodrigo Duterte had already hinted repeatedly at possible concessions in exchange for economic cooperation with Beijing — even going so far as promising to “shut up” about the dispute in return for investment.

Thus far, there is little evidence that Washington understands the need to reach for something other than military might. The emerging military competition in Asia is real, but focusing on it risks muffling the larger struggle for leadership in the region, which is chiefly economic. If the United States is to check Beijing’s expansionism, it will need to make China bear the economic costs of its growing bellicosity. It will also need to help its Asian allies, countries such as Japan and the Philippines, steel themselves against Chinese economic bullying.

To date, the White House’s primary answer has been the Trans-Pacific Partnership, the 12-country trade agreement President Obama often frames as a referendum on U.S. leadership in Asia. The TPP would also establish new norms against China’s bullying behavior and new defenses to better insulate member countries from retaliation — everything from closer sanctions cooperation to collective responses and insurance mechanisms that could dull China’s tactics. For example, the next time China embargoes Filipino bananas, allies could help the Philippines find new buyers, while insurance products could cushion the fallout.

Yet, if the TPP were genuinely built to answer China’s pressure tactics, it would include stronger injunctions against China’s state-owned companies and protections against currency manipulation. After all, China routinely deploys its companies and foreign-exchange reserves to win allies, punish adversaries and coerce those in between. Even if the TPP fails, these policies should be pursued on their own terms.

Since World War II, the United States has honed an alliance system in Asia that enjoys the most sophisticated war-fighting capability in modern history. The question now is whether the next president can teach this alliance new skills — ones suited to the kind of economic war China is waging.