China and East Asia



The Issue


The United States has major economic, strategic, and national security interests in Asia. In the 21st century, Asia’s importance to the U.S. will only continue to grow. Not only is it home to the second-largest and third-largest economies in the world, Asia is the only component of the global economy with significant prospects for growth. In a world of global value chains and markets, threats to these areas of the world also matter to the U.S.

A strong American economic, diplomatic, and military presence in the region is necessary because without it, Asia is geopolitically unstable. The U.S. is the hub of a “wagon wheel” of bilateral alliances that undergirds regional security. In fact, this regional balancing is of such importance that several countries there—such as Japan and South Korea—subsidize America’s military presence there. Local and American forces achieve far more together than either would alone in protecting their shared interests.

The U.S. has treaty commitments to five allies in the Western Pacific: Australia, Japan, the Philippines, South Korea, and Thailand. The alliances in East Asia and Australia, combined with forward-deployed forces of more than 80,000 troops and the Seventh Fleet throughout, serve as anchors of America’s resident power status to balance the rise of China and ensure regional peace and security.

U.S. military bases in Japan and South Korea, in particular, are indispensable to stability in the region. Prepared for war at a moment’s notice, U.S. and South Korean forces are highly integrated. U.S. and Japanese forces, meanwhile, are becoming even closer due to changes to alliance guidelines and to other restrictions on Japan’s defense policy over the past couple of years. U.S. forces in Japan are also being realigned and repositioned in order to make them sustainable in the long run. Additionally, the U.S. has made important new enhancements to its presence in Australia, the Philippines, and Singapore.

All is not a rosy picture, though. Allies’ overall confidence in U.S. leadership has been undermined in recent years by perceptions of American economic decline, uncertainty over U.S. commitment to the region, defense budget cuts and procurement decisions, the rapid rise of China, and deference to Chinese interests, particularly concerning Taiwan. The Administration has made important progress with individual allies, but strained to counter these doubts in the absence of solutions to underlying causes.

The United States faces two major threats in East Asia. One is long-term, involving both opportunities and risk. It revolves around the rise of China and the destabilizing effect this rise could have on the region. The second is more acute. It focuses on the ever-increasing threat of the North Korean nuclear program to both the region and the American homeland.

China

The relationship between the United States and the People’s Republic of China (PRC) is one of growing complexity, as American decision makers must balance necessary cooperation with increasingly intense competition. In so doing, the U.S. must maximize the benefits of its economic relationship with China even as it maintains the alliances, partnerships, and forward-deployed military to balance China’s increasingly strident bid to displace the U.S. as Asia’s pre-eminent power.

China and the U.S., as the rising power and currently dominant power, respectively, are constantly competing with each other throughout Asia. As China’s strategic center of gravity has shifted to the coast, Beijing’s views of its “core interests” and fundamental national concerns mandate dominance, if not outright control, of the region lying within the “first island chain” stretching from Japan through Taiwan and the Philippines to the Malacca Strait. That the various Asian states along that line are largely U.S. allies as well as major Chinese trading partners only highlights the complicated situation confronting U.S. decision makers in Asia.

Unlike with the Soviet Union’s during the Cold War, the U.S. and Chinese economies are highly interdependent. While China has consistently run a large current account surplus with the United States (largely as a result of China’s higher saving rates versus much higher domestic consumption in the U.S.), the U.S. currently enjoys a large capital account surplus with China. The importation of capital from China into the U.S. has provided enormous liquidity and a lower cost of capital for both consumers and businesses. This has resulted in a higher rate of gross domestic investment and economic growth.

China’s huge reserves leave many American leaders wary of China’s influence on the U.S. as a creditor, especially when the U.S.’s national debt poses an increasing threat to financial security and solvency. This insecurity is greatly overstated, as China would incur great capital losses if it rapidly sold U.S.-denominated assets. Moreover, other countries would quickly absorb the sell-off as bond prices fell and yields to maturity rose. China has business contracts and financial investments across the globe, but the bulk of its money is held in U.S. dollar assets because the American market is the only one large enough to absorb China’s enormous foreign currency reserves. The lack of investment choices and China’s overriding interest in financial security and stability severely limit any political influence China’s debt holdings have on the U.S.

China remains a growing economic powerhouse, but serious structural, economic, and even political issues hamper its further development and potential for economic leadership. These weaknesses have been exacerbated in important ways by renewed state intervention in the economy beginning around 2004. For example, reliance on state-directed investment has led to a profound economic imbalance and could threaten future growth. Frantic spending in response to the global recession has led to huge amounts of waste, corruption, debt, and distorted resource allocation. It remains to be seen whether the new Chinese leadership is prepared to revive economic reform to reignite real, long-term growth or whether it will continue to rely on economic stimulus packages.

Critics claim that the cost of increasingly close economic ties between the U.S. and China has been American jobs. China’s exchange rate policies—particularly, keeping the value of its currency low in order to encourage exports—are often said to be the heart of the problem. In recent years, however, China’s currency has been appreciating, and Chinese authorities have been intervening in order to maintain its value, not to devalue it. Chinese currency policy is not to blame for lost American jobs.

While China’s state-led economy presents unique challenges, the U.S. should not abandon its free-market approach to China and retreat into protectionism in its effort to resolve them. Government interference with purchases, sales, and other voluntary economic decisions made voluntarily by consumers and American companies can only hurt the U.S. economy. It would also be a clear abandonment of America’s global leadership.

There are also concerns that China aims to displace the American pre-eminence in the Western Pacific that has underwritten U.S. economic interests and the peace and security of the region for the past 70 years. China’s military has modernized steadily at a pace that often defies foreign expectations, aided by economic growth that has allowed the Chinese leadership to acquire both guns and butter. Official Chinese defense-spending figures indicate annual double-digit growth for most of the past two decades. The People’s Liberation Army (PLA) has introduced new fighters, anti-ship ballistic missiles, anti-satellite systems, and now an aircraft carrier faster than predicted. These efforts are supplemented by reforms in Chinese military doctrine and training to allow the PLA to make the most of its new acquisitions.

Meanwhile, China has assumed an increasingly hard-line stance in its territorial disputes with American friends and allies: in the East China Sea with Japan, in the South China Sea with the Philippines and Vietnam, and even on its southern border with India. The Taiwan issue also remains a potential flashpoint in Sino–U.S. relations, with over 1,200 Chinese ballistic missiles arrayed against the island nation.

Diplomatically, China has cultivated relationships with countries that openly oppose and threaten the United States, including North Korea and Iran. China has also become much more strident in opposing traditional freedom of navigation along its coast, directly challenging the long-standing American principle of freedom of the seas.

Only the United States has the ability to counterbalance China and keep its increasing assertiveness in check. No Asian state currently has the ability to match China’s nuclear arsenal, growing conventional military capability, and burgeoning defense budget.

There is a growing sense that, despite the economic relationship between the two countries, Beijing’s leaders are becoming more intent on challenging Washington’s presence in Asia, especially where China has disputes with American allies, friends, and partners. Confrontation could result in disaster for the regional—and even the global—economy. For example, if China were to inhibit U.S.-provided freedom of transit in the South China Sea, the potential trade disruption would be a disaster for U.S. allies and partners, such as Taiwan, which imports 98 percent of its oil via the South China Sea. Roughly half of global trade in goods transits those waters.

Finally, there are matters of U.S. liberty that are at stake in the relationship with China. Although China has permitted more individual economic freedom over the past three decades, it is still a one-party authoritarian regime governed by the Communist Party. The party continues its ruthless suppression of any group, even lone individuals, who might threaten its monopoly on power. The government is struggling to manage environmental degradation and demographic instability, including the world’s largest migration from rural to urban areas, all of which contribute to social unrest. The one-party bureaucratic system, which answers to no outside authority, breeds corruption and leads to much administrative waste within the political system. The U.S. cannot remain silent on these issues and maintain its leadership role in the region.

A robust U.S. commitment to Asia’s peace, security, prosperity, and freedom is more important than ever. It demonstrates this above all by maintaining its alliances and building partnerships in the region, and by keeping its military strong and forward deployed. But it must also manage its relationship with China carefully, pushing back on it when it threatens to undermine the regional order, and working with it when it serves U.S. interests, particularly on economic matters. China represents both threat and opportunity to the United States. The American goal is to minimize the former and maximize the latter.

North Korea

The rogue regime in North Korea poses one of the most dangerous threats to U.S. national security interests in the world. Pyongyang presents a multifaceted military threat to peace and stability in Asia, as well as a global proliferation risk. The hermit regime has developed enough fissile material for 16 to 20 nuclear weapons, and conducted five nuclear tests between 2006 and 2016. Pyongyang has doubled the size of its uranium-enrichment facility, increasing not only the potential threats from an expanded nuclear weapons arsenal, but also the risk of nuclear proliferation. Moreover, North Korea has contributed to nuclear proliferation by assisting programs in both Iran and Syria.

North Korea has declared that it already has a full nuclear-strike capability, even altering its constitution to enshrine itself as a nuclear-armed state. Twice in July 2017, Pyongyang test-launched long-range missiles that are assessed to be able reach major cities in the continental United States. Experts debate whether North Korea currently has the ability to attack the United States with nuclear weapons or still requires more development time.

Among North Korea’s many direct verbal threats to the U.S., in March 2016, Pyongyang declared it has “a military operation plan to liberate South Korea and strike the U.S. mainland.” Previously, Kim Jong-un was photographed in front of a map of the United States with four cities targeted for nuclear attack. In December 2014, the National Defense Commission warned that Pyongyang would “carry out an ultra-harsh war of reaction targeting the entire U.S. mainland, including the White House and the Pentagon.”

The U.S. and South Korea see a dire North Korean threat. In June 2017, Vice Admiral James Syring, head of the U.S. Missile Defense Agency, testified that “it is incumbent on us to assume that North Korea today can range the United States with an intercontinental ballistic missile (ICBM) carrying a nuclear warhead.” In April 2016, Admiral William Gortney, head of U.S. Northern Command, stated that it is “the prudent decision on my part to assume that North Korea has the capability to miniaturize a nuclear weapon and put it on an ICBM.”

Pyongyang has already deployed hundreds of missiles that can target U.S. forces and allies in South Korea, Japan, and U.S. bases on Okinawa and the U.S. territory of Guam. Pyongyang has test-launched the Musudan and Hwasong-12 intermediate-range ballistic missiles, demonstrating that both have the capability of threatening U.S. bases in Guam. North Korean officials privately commented that both missiles will soon be deployed to military units.

On the Korean Peninsula, where the U.S. has 28,500 military forces on the ground today, North Korea has approximately 1 million soldiers arrayed against it, with reserves numbering several million more. This presence makes an attack possible with little or no warning. Pyongyang’s unprovoked acts of war in 2010 against a South Korean naval ship and a civilian-inhabited island were chilling reminders that its conventional forces remain a direct military threat.

North Korea represents an immediate and growing threat to American territory—both in the Western Pacific (Guam, for instance) and stateside—U.S. armed forces, and U.S. allies. It can be expected to continue provocative acts, such as missile and nuclear tests, and even attacks on South Korea, for the foreseeable future. These must be dealt with firmly and with a commitment to defense, peace, and security in the region that is so strong that it leaves no doubt about that commitment.

Taiwan is a critical partner of the United States. Its security, freedom, and economic well-being—and its ability to make decisions about its relationship with Beijing free of coercion—have long been, and ought to remain, important objectives in American foreign policy. This is because Taiwan’s freedom has so long been in Beijing’s crosshairs. It is also because America’s commitment to Taiwan serves as a canary in the coal mine of the broader commitment to American interests in the region. The logic follows that if the U.S. could abandon Taiwan to China, no aspect of U.S. foreign policy can be taken for granted. That, given the role that its leadership plays, would be extraordinarily destabilizing and damaging to a broad range of American interests.

In 1979, when the Carter Administration broke relations with Taiwan in favor of opening them with China, Congress stepped in to provide the basis for continuing strong “unofficial” relations with Taiwan. This unique piece of legislation is the Taiwan Relations Act (TRA). The TRA has enjoyed broad, bipartisan support since. There are, however, several specific policy commitments that the TRA enshrines into U.S. law that need to be given vigilant attention so as to avoid slippage in U.S. policy.

The TRA makes it a matter of policy that the U.S. “will make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” The TRA further directs that the “President and the Congress shall determine the nature and quantity of such defense articles and services based solely upon their judgment of the needs of Taiwan.” This means that, as President Ronald Reagan pointed out in his assurances to the Taiwanese in 1982, that the U.S. may not consult with the government in Beijing on arms sales to Taiwan. Judging by Taiwan’s military deficiencies, the U.S. has fallen dangerously behind where it needs to be in order to help Taiwan defend its territory against the PRC. Despite a welcome warming in relations between the PRC and Taiwan in recent years—symbolized in 2015 by the first meeting between the heads of each government in Singapore in 70 years—the PRC’s military remains focused on the potential use of force to seize Taiwan. Indeed, as the U.S. Department of Defense’s annual report on the Chinese military states: “Preparing for potential conflict in the Taiwan Strait remains the focus and primary driver of China’s military investment.”

President Obama sold approximately $14 billion in arms to Taiwan. Half of that, however, was initiated by the previous Administration. Having fulfilled most of the Bush Administration pledges, and substituted upgrades of Taiwan’s current fleet of F-16 fighter jets for its requests to buy new ones, the Obama Administration waited more than four years to make a new sale—the longest such period of inactivity since 1979. The $1.8 billion sale in December 2015 consisted largely of second-hand equipment and munitions. In June 2017, the Trump Administration made a similarly small sale of $1.4 billion that was largely left over from a package that had stalled at the end of the Obama Administration.

The TRA prohibits the U.S. from “supporting the exclusion or expulsion of Taiwan from continued membership in any international financial institution or any other international organization.” Taiwan belongs to 35 international organizations or subsidiary agencies, including the World Trade Organization and the Asia–Pacific Economic Cooperation. It has been systematically excluded from many others, such as the U.N. Educational, Scientific, and Cultural Organization, the U.N.’s Food and Agriculture Organization (FAO), and the FAO’s Asia–Pacific Fisheries Commission. U.S. support for Taiwanese U.N. membership would directly contradict long-standing, bipartisan policy, but there is a great deal the U.S. can do short of that. Previous Administrations have supported Taiwan’s “meaningful participation” in more international organizations, including U.N. agencies. At Congress’s urging, they have achieved some limited success. Taiwan has received observer or guest status with both the International Civil Aviation Organization (ICAO) and the World Health Assembly (WHA). Most recent U.S. government efforts are focused on gaining Taiwanese participation in INTERPOL, and will likely return to the ICAO and WHA, as Taiwan has again been shut out of both.

The TRA contains assurances of U.S. concern for Taiwan’s security that are as strong as possible short of a treaty commitment. It declares “that peace and stability in the area are in the political, security, and economic interests of the United States, and are matters of international concern” (as opposed to internal PRC concern), and that use of anything “other than peaceful means” constitutes “a threat to the peace and security of the Western Pacific area and [is] of grave concern to the United States.” It also states that U.S. policy is to “maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan.” The U.S. can best meet this commitment by maintaining its own military capability and readiness vis-à-vis the standing threat to Taiwan from the PRC, maintaining the closest possible military relationship with Taiwan, providing Taiwan with the weapons it needs to contribute to its own defense, and making abundantly clear to Beijing the consequences that will ensue from the use of force.

Nothing in U.S.–China policy or the TRA prohibits the U.S. from concluding trade agreements with Taiwan, yet progress in trade talks, such as those under the U.S.–Taiwan Trade and Investment Framework Agreement (TIFA) has been very slow. In addition to the TIFA process, Taiwan has a standing interest in concluding a bilateral free trade agreement (FTA) with the United States. In a region deeply committed to regional economic integration, Taiwan has been prevented, due to sensitivities over PRC reaction, from joining regional trade agreements, including the 16-nation Regional Comprehensive Economic Partnership (RCEP), or making many bilateral arrangements. South Korea, its closest national competitor in the region, is part of the RCEP and has bilateral FTAs with the U.S., the EU, and China. The U.S. has pulled out of the Trans-Pacific Partnership (TPP). If the region moves forward with the TPP despite this, Taiwan will be further isolated, and economically dependent, on the PRC. Beyond FTAs with five of its small diplomatic allies (the nations with which it maintains official diplomatic relations), Taiwan has FTAs with only New Zealand and Singapore.

American interests in Asia are bound up in its continuing defense of freedom in Taiwan. Congress recognized this in 1979 and laid down a law on a reluctant President to make sure he and future governments enacted policy accordingly. The TRA may seem an obscure bit of legislation, but adherence to it is central to America’s role in Asia.

Democracy, Human Rights, and U.S. Leadership

There are serious human rights abuses in Asia. An estimated 80,000 to 120,000 individuals are held in political prison camps in North Korea today, China continues to violate the fundamental right to life through forced abortions stemming from the two-child policy, and many countries in Asia, including Pakistan, violate citizens’ freedom of religion through implementation of blasphemy laws and targeting members of minority faiths. Asia also faces a number of transnational threats, including human trafficking, drug trafficking, and refugee challenges, that present an opportunity for the U.S. to collaborate with Asian allies and friends.

Asia is home to a range of authoritarian regimes, but it is also a testament to the vitality of democracy in South Korea, Taiwan, and Japan. The U.S. should continue to encourage the advancement of freedom and respect for human rights in places where it has the capacity to do so. The U.S. has historically recognized that promoting freedom in Asia is in the interest of the United States. Congress has exerted leadership on human rights challenges in Asia and abroad, passing seminal pieces of legislation, including the Trafficking Victims Protection Act, the International Religious Freedom Act, the North Korea Human Rights Act, the Hong Kong Human Rights and Democracy Act, and the Tibetan Policy Act.

Congressional leadership should continue, but it operates most effectively when supported by executive action. The U.S. should continue to affirm the notion that promoting freedom in Asia is in the U.S. interest. With this in mind, the U.S. government should consider ways to integrate rights-respecting policies into pre-existing national security strategies.


Recommendations


China

Ensure that the Executive Branch’s Engagement with Beijing Does Not Compromise Enduring American Interests, like freedom of the seas, support for Taiwan and other allies, and political liberty. The executive branch has often sought to engage China on global priorities, such as global climate change, counterterrorism, and non-proliferation. In the process, the executive has sometimes traded off attention to other vital U.S. interests. Congress can keep focus on the full range of interests at stake in U.S. relations with China through hearings, direct interaction with the Administration, and legislation.

Support an Open Economic Relationship with China. China is always a tempting target for protectionism. But while China is engaged in unfair trade practices—such as intellectual property theft and support for state-owned enterprises—there are channels for dealing with these issues, both bilateral and through the World Trade Organization. There is also the power of the market itself, which ultimately punishes intervention in its operation. Congress should not be looking for legislative solutions to Chinese violations of their trade commitments. The Chinese must be pressed to comply with their commitments, but retaliating by blocking Chinese access to U.S. markets hurts American industry and consumers.

Help Improve the Military Capability of American Allies and Partners in the Region, provide for new U.S. military infrastructure, fund new exercises, and pre-position military equipment in the region. The annual appropriations process makes assistance to these ends available, as does the Senate Armed Services Committee’s proposed Asia Stability Initiative, which is contained in the 2018 National Defense Authorization bill.

Continue the Legal Prohibition on NASA-China Space Cooperation. Space is a strategic domain of growing importance, and cooperating with China erodes the U.S. lead. Congress enacted this ban in 2011, and has rightly renewed it each year since.

Support Free-Market-Oriented Efforts to Reform the Committee on Foreign Investment in the United States (CFIUS). CFIUS is the principle interagency mechanism through which the U.S. government evaluates the security threat posed by foreign investment in the United States. Even as the U.S. welcomes China’s increased stake in the American economy, its increased presence makes it ever more important to take a new look at the way this process works. Any reform to CFIUS should stay focused on mitigating direct threats to American security, not on restricting commercial competition.

Support the Hong Kong Human Rights and Democracy Act of 2017. China’s current relationship with Hong Kong threatens to undermine the commitments it made at the time of the 1997 turnover, in order to ensure a high degree of autonomy for Hong Kong under the principle of “one country, two systems.” The Hong Kong Human Rights and Democracy Act would reaffirm America’s interest in the principles of democracy, human rights, and Hong Kong’s autonomy. It renews a requirement for an annual report on conditions in Hong Kong, which, although authorized under a 1992 law, was allowed to lapse. It would require the Secretary of State to certify that Hong Kong is sufficiently separate from China to be treated separately, in areas like export controls, under future laws or agreements. It also imposes sanctions on individuals involved in the “surveillance, abduction, detention, abuse, or forced confession” of certain people in Hong Kong, and prohibits the U.S. government from denying visas to Hong Kong citizens on the basis of their participation in Hong Kong protests.

North Korea

Fully Implement Existing U.S. Laws Aimed at North Korea’s Illicit Activities. Congress has given the President authority to enact a wide range of sanctions against North Korea. It should exercise its oversight role to ensure that he does.

Fully Fund U.S. Homeland Ballistic Missile Defense. The U.S. should accelerate the deployment of additional ground-based midcourse defense interceptors in Alaska and California to counteract the emerging gap between North Korean ballistic missile capabilities and U.S. defenses.

Urge the President to Return North Korea to the List of Terror-Sponsoring States Subject to Sanctions. The Bush Administration removed North Korea from this list in 2008 in an effort to prod talks on its nuclear program. Adding it back would be justified by North Korea’s subsequent threatening behavior, and would enable stronger sanctions.

Keep the Pressure on North Korea to Abandon Its Nuclear Program by Employing the Following Financial Measures:

  • Ban North Korean financial institutions’ correspondent accounts in the United States. The U.N. Panel of Experts concluded that North Korean transactions continue to be mostly in “United States dollars from foreign-based banks and transferred through corresponding bank accounts in the United States.”
  • Publicly identify and sanction all foreign companies, financial institutions, and governments assisting North Korea’s nuclear and missile programs. Call on foreign banks, businesses, and governments to reciprocate U.S. actions.
  • Sanction third parties, including Chinese financial institutions and businesses that trade with sanctioned North Korean companies or deal in prohibited items.

Taiwan

Support Taiwan’s Acquisition of Diesel-Electric Submarines. Taiwan has expressed an interest in acquiring new submarines for more than 20 years, and in 2001, the U.S. offered to help—but has yet to do so. The U.S. could help by approving necessary transfers of technology. Taiwan is under a standing threat from China to unify it with the mainland, by force if necessary. It is in the U.S. interest that Taiwan make a minimum contribution to the effort to deter such an eventuality. Given the geography, submarines are an essential part of this deterrence.

Sell New Advanced Fighter Jets to Taiwan. Taiwan faces a yawning gap in airpower vis-à-vis China. The U.S. should make available for purchase sufficient numbers of fighter jets to address this gap.

Actively Support Taiwan’s Participation in International Organizations. Taiwan has critical experience and expertise to share with these organizations. More broadly, Taiwan’s meaningful participation in them will integrate its security policy in its broader relationship with global partners, and deter China from coercing it into unification. Taiwan is boxed out of most international organizations by China. In the case of the WHO and the International Civil Aviation Organization, it has already lost the access it only recently gained.


Facts and Figures


FACT: While the U.S. and China do have some common interests, especially on economic issues, the two countries’ geopolitical and security interests are often at odds.

  • China is America’s largest trading partner and its third-largest export market. Imports are also important to the American economy.
  • China has an interest in peace, but its interests, whether regarding Syria, outer space, or maritime legal regimes, do not mirror those of the United States.
  • China has not faithfully implemented its commitments to U.N. Security Council resolutions concerning North Korea’s nuclear and missile programs.
  • China reserves the right to intervene militarily in Taiwan, and continues to focus its military doctrine and weapons acquisition to prepare for this possibility.
  • According to the Department of Defense, over the past 10 years, China’s official defense budget has risen by an average of 9.8 percent per year. As of 2015, at $144 billion, it had the world’s second-largest defense budget.

FACT: The U.S. should be unequivocal in its support of treaty commitments in East Asia and the Pacific, and remain forward deployed.

  • The U.S. has five treaty allies in Asia (Australia, Japan, the Philippines, South Korea, and Thailand).
  • The U.S. has roughly 80,000 servicemen stationed in Guam, Japan, and South Korea. Its Seventh Fleet is homeported in Japan.
  • Japan contributes $2 billion per year to help defray the costs to the United States for deploying its military there. It is also paying $3.1 billion of the $8.7 billion required to relocate 4,000 Marines from Japan to Guam. South Korea is paying a similar share of the costs for base realignment in its country, as well as half of the overall non-personnel cost of American bases in its country.

FACT: America’s Asia policy cannot be entirely military—it also requires an active economic component.

  • As a general matter, Asia’s primary concern is economic development and opportunity, not rivalry and conflict.
  • Asia represents 40 percent of global gross domestic product, and the world’s fastest-growing economies are in Asia.
  • The U.S. trades more with Asia than with any other region of the world.
  • However, China is gaining in market share both as trader and an investor. In trade, in many cases, it has assumed a greater share of the market than the U.S.
  • To maintain its global leadership in the region, U.S. policy must contain an active economic component.

FACT: North Korea remains an active threat to the United States and the peace and security of the region.

  • North Korea has a 1.1-million-man army, 70 percent of which is deployed within 60 miles of the Demilitarized Zone (DMZ) that divides North and South Korea. These forces include mechanized infantry corps, artillery corps, an armored corps, and several infantry corps.
  • North Korea has 13,000 artillery pieces deployed along the DMZ. Many of these weapons, including chemical-weapons-capable systems, already threaten the 13 million inhabitants of Seoul, which is located just 30 miles from the DMZ.
  • North Korea has 800 Scud short-range tactical ballistic missiles, 300 No Dong medium-range missiles, and 100 to 200 Musudan intermediate-range ballistic missiles. The Scud missiles can reach anywhere in South Korea, the No Dong missiles can target all of Japan, and the Musudan missiles can hit U.S. bases on Okinawa and the U.S. territory of Guam.
  • North Korea spends an estimated 25 percent of its gross national product on its military, ensuring that the rogue regime maintains a credible and constant threat to U.S. military forces and U.S. allies in the region.

FACT: The United States has a stake in Taiwan’s freedom, prosperity, and security.

  • Taiwan has been a vibrant democracy since 1996, and has celebrated three peaceful transfers of power between opposing parties.
  • Taiwan has full diplomatic relations with 20 nations, and representative offices in 58 others, while foreign countries maintain 69 embassies or representative offices in Taiwan.
  • Taiwan is the fifth-largest economy in Asia.
  • Taiwan is the 10th-largest trading partner of the U.S. and its 14th-largest export market. According to The Heritage Foundation’s 2017 Index of Economic Freedom, Taiwan is the 11th-freest economy in the world.

Selected Additional Resources


Dean Cheng, “The Complicated History of U.S. Relations with China,” The Heritage Foundation, October 11, 2012.

Dean Cheng, “F-16C/D Fills Taiwan’s Fighter Need,” Heritage Foundation Issue Brief No. 3960, June 5, 2013.

Dean Cheng, “Why Taiwan Needs Submarines,” Heritage Foundation Issue Brief No. 4328, January 12, 2015.

Lisa Curtis and Olivia Enos, “Combating Human Trafficking in Asia Requires U.S. Leadership,” Heritage Foundation Backgrounder No. 2995, February 26, 2015.

Olivia Enos, “Improving Information Access in North Korea,” Heritage Foundation Backgrounder No. 3149, December 7, 2016.

Olivia Enos and Bruce Klingner, “Next Steps for Human Rights in North Korea,” Heritage Foundation Backgrounder No. 3071, January 12, 2016.

Olivia Enos, Sarah Torre, and William T. Wilson, “An Economic and Humanitarian Case for Pressing China to Rescind the Two-Child Policy,” Heritage Foundation Backgrounder No. 3146, November 18, 2016.

Bruce Klingner, “Chinese Foot-Dragging on North Korea Thwarts U.S. Security Interests,” Heritage Foundation Backgrounder No. 3138, August 11, 2016.

Bruce Klingner, “Creating a Comprehensive Policy Response to North Korean Threats and Provocations,” testimony before the Subcommittee on Asia and the Pacific, Foreign Affairs Committee, U.S. House of Representatives, September 19, 2016.

Bruce Klingner, “Moving Beyond Timid Incrementalism: Time to Fully Implement U.S. Laws on North Korea,” testimony before the Subcommittee on Asia and the Pacific, Foreign Affairs Committee, U.S. House of Representatives, January 16, 2016.

Bruce Klinger, “North Korea Should Be Put Back on the Terrorist List,” Heritage Foundation Issue Brief No. 4660, February 28, 2017.

Bruce Klingner, “Save Preemption for Imminent North Korean Attack,” Heritage Foundation Backgrounder No. 3195, March 1, 2017.

Bruce Klingner, “The Trump Administration Must Recognize the Dangers of Premature Negotiations with North Korea,” Heritage Foundation Backgrounder No. 3211, May 11, 2017.

Walter Lohman, “After the Rebalance to Asia,” testimony before the U.S.–China Economic and Security Review Commission, March 31, 2016.

Walter Lohman, “Southeast Asia: The Need for Economic Statecraft,” testimony before the Subcommittee on Asia and the Pacific, Committee on Foreign Affairs, U.S. House of Representatives, May 17, 2017.

Ambassador Terry Miller and Anthony B. Kim, eds., 2017 Index of Economic Freedom (Washington, DC: The Heritage Foundation, 2017).

Dakota L. Wood, ed., 2017 Index of U.S. Military Strength (Washington, DC: The Heritage Foundation, 2017).