^[1]This week ASPI held its inaugural Northeast Asia Defence and Security Forum in Sydney, bringing together a range of distinguished experts from the region and Australia. My task was to discuss some of the key strategic trends affecting the region. My baseline is that the region is subject to a volatile mix of cooperation and competition—but that there’s a risk of an evolution towards greater imbalance.

It’s difficult to understate the importance of stability in Northeast Asia for Australia and the rest of the region (and indeed the world). If something goes wrong there the consequences would be disastrous. The northern Pacific is home to the top three world economies (the US, China and Japan); three established nuclear powers (China, the US, Russia) and one emerging (DPRK); two of the three major Asian flashpoints (Korean Peninsula and Taiwan); as well as a range of unresolved territorial disputes ^[2].

Consequently, the potential for inter-state conflict in Northeast Asia is high. It’s hard to see a winner in a major conflict. But there’s an upside to that, as it creates incentives for cooperation among the major players, not least of which, the growing economic interdependence between all the major economies in Northeast Asia. They share common security needs, such as secure maritime supply lines to meet growing energy needs and promote economic prosperity. For example, 99% of South Korea’s international trade depends on access to the Pacific ^[3] and secure sea lines of communication. Finally, apart from North Korea, all major powers, including Russia and China, share a strategic interest in preventing nuclear proliferation on the Peninsula.

Thus, even in times of tensions, elements of political, economic and strategic cooperation persists between the major Northeast Asian powers. But economic interdependence doesn’t necessarily reduce the likelihood of war, ^[4] and two emerging trends could tip the precarious balance in Northeast Asia towards greater competition.

Firstly, there’s growing uncertainty about the future balance of power in the region. China no longer passively accepts a strategic order based around America’s bilateral alliances with Japan and South Korea, or Washington’s strategic ambiguity over Taiwan. The PLA’s growing ability to project military power ^[5] into the first and second island chains undermines the credibility of America’s security commitments to its allies.

The US ‘rebalance’ towards Asia is intended to reassure allies and partners; Japan and South Korea wonder ^[6]about the possibility of a strategic order in which their US ally might be less willing to support them against Chinese assertiveness. As a result, they’re taking incremental steps towards developing more independent defence capabilities. Meanwhile, North Korea has apparently taken steps to restart its nuclear reactor at Yongbyong ^[7], raising the possibility that it could further improve its nascent nuclear weapons capability. This has potentially major repercussions for Asia-Pacific security and the strategic balance in Northeast Asia—a nuclear DPRK will only increase the pressure on Japan and South Korea to invest in offensive and defensive military capabilities.

This leads to the second key strategic trend: a shift in the regional defence build-up from mere military modernisation towards more serious arms races. As Des Ball has long argued ^[8], the changing balance of power in Northeast Asia leads to changing arms acquisition dynamics. While acquisitions during the 1990s largely reflected force modernisation, a much greater ‘action-reaction’ dynamic can be observed since the 2000s. For example, South Korea and Japan have responded to the development of ballistic and cruise missiles by China and North Korea by enhancing their land- and sea-based missile defence capabilities. South Korea has strengthened its offensive cruise-missile strike capabilities against North Korea, while Japan increasingly wonders how to address its lack of strike capabilities.

Japan is also investing more in amphibious and anti-submarine warfare capabilities as a direct response to China’s air and naval activities ^[9] around its southwestern islands. Indeed, its latest Defence White Paper ^[10] makes clear that China has become the major concern for defence planning.

As I’ve argued elsewhere ^[11], South Korea’s investment in more capable submarines, anti-ship cruise missiles, naval bases and modern frigates are also driven by considerations about Chinese and Japanese capability development, and by lingering territorial disputes; ROK investments in air-to-air refuelling tanker aircraft increases the loitering time for aircraft over Takeshima/Dokdo.

Even Taiwan is more seriously investing in asymmetric ‘anti-access/ area-denial’ capabilities ^[12] to offset China’s ongoing build-up of ballistic and cruise missiles across the straits. Just last week, Taiwan announced that it would equip its fighter aircraft with indigenously produced precision-guided munitions to increase its strike capability vis-à-vis China ^[13].

All this isn’t to argue that we’re already in the midst of a full blown arms race in Northeast Asia. But uncertainty is growing and the current strategic trajectory points to the potential for much greater competition among various pairs of regional players—including the potential for complex arms racing dynamics. Those would be very hard to manage given the almost complete absence of adequate institutional and procedural mechanisms such as arms control arrangements, and the lack of strategic trust and transparency about defence acquisitions.

It’s high time to start addressing these issues, otherwise the delicate balance between cooperation and competition in Northeast Asia might start tilting towards the latter.

Benjamin Schreer is a senior analyst at ASPI. Image courtesy of US Navy ^[14].