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Beyond who leads America, what direction will it take?

What America does still matters more to the world than the actions of any other country. Now that we know who will lead the world's greatest power and largest economy for the next four years, perhaps it is time to consider what directions are likely to be set.



While some continuity should be expected from a second Obama administration, there are underlying and quite fundamental factors that might well change the American engagement with Asia.

The first factor is the widespread anxiety about the continuing softness of the American economy. Despite Barack Obama's victory, considerable divisions remain about what is to be done. These differences are coming to a head with the "fiscal cliff" that will kick in by January, if the president and Congress are unable to find a compromise on the budget.

The sound and fury of the campaign largely drowned out any alarm over the situation. But post-election attention will turn to the prospect of a gridlocked America.

Even if immediate crisis is averted, the underlying debt will cast a shadow over hopes for a stronger, sustained recovery. Moreover, American efforts to re-energise its fortunes could have negative effects on others.

President Obama will likely see a third round of quantitative easing (QE3), and continue with a loose monetary policy and low interest rates. The resulting effect - a softer US dollar - will ripple through the emerging markets to affect asset prices and also those countries' underlying competitiveness.

Conversely, what used to be a matter of foreign policy - relations with China - has now become an American domestic issue. Electioneering showed it was not security or human rights that commanded attention. China was a punching bag for the issue of jobs, with much angst and many allegations that China's currency and trade practices have unfairly hurt America.

Candidate Mitt Romney pledged to take action against Beijing from Day One, and many in the region will be relieved not to have had to see if this was more than a campaign-trail promise. But Obama, too, did little to deny such sentiments, and instead retorted that he had already taken China to task in the World Trade Organisation.

Will he now set such rhetoric aside? Odds are that he will. But the pressures are increasing to get tougher on China. This will worsen if America drifts while China's growth continues.

After all, there is a real prospect that - within President Obama's second term - the Chinese economy will become the largest in the world.

It is not clear, moreover, if the incoming Chinese leadership will do much to placate American accusations. Just as the new American leadership faces domestic pressures, so too have attitudes in China shifted to show more confidence and assertiveness.

The average Chinese citizen is now less compliant and often loudly nationalistic, using the Internet and protests to make views known. Beijing shows less will to stem and control such sentiments, and incoming leaders feel the need to respond to such citizen complaints about America.

The Obama administration's "pivot" to Asia shows this. Even as the US asserted its presence and interests in the region, many in Beijing have perceived this as a step to contain China. The Obama administration is likely to continue to deepen its engagement with Asia and, while this is welcome by most, US-China competition seems likely to escalate.

This is especially true as the personalities who initiated that pivot - Secretary of State Hillary Clinton and Assistant Secretary Kurt Campbell - will not continue in the second Obama administration. New officials must seek to find balance and nuance in American engagement, and not stoke militaristic, anti-Chinese sentiments.

The great hope is that both the US and China will understand their deep interdependence in a globalised world, and that others in Asia that want to deal with them both will not be forced into an "either/or" choice. A new, more multilateral Asia could then emerge in which there would be room to accommodate both the US and China.

If President Obama can foster this and find a way to work with the incoming leaders in Beijing towards a shared future, this will leave a legacy not only for America and China but for Asia and indeed the world.

Simon Tay is chairman of the Singapore Institute of International Affairs and teaches international law at the National University of Singapore. He is the author of Asia Alone: The Dangerous Post Crisis Divide from America.


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