The powerful combination that gives US the edge over China

When speaking of the future power balance in the Indo-Pacific, Hugh White likes to reduce all the complexities and debates to a single, simple chart. White, a prominent ANU professor of strategic studies, directs you to page 26 of the federal government's white paper on foreign policy. There you'll find the Australian Treasury's projection of the size of the region's economies a dozen years from now. Seven purple blobs represent the expected scale of seven regional economies. The chart foresees that America's economy will have annual output of $US24 trillion ($32 trillion). Enormous, right?

Yes, but on the chart it's overshadowed by a much bigger one. China's economic output is projected to be $US42 trillion at the same time. Once he's given you a moment to absorb the scale of China's expected economic preeminence in 2030, White tells you: "Everything else is detail."
A nation's economy is the fundamental generator of the resources a country can marshall, he reasons. China will be able to mobilise much more money, investment, weaponry, technology and aid than the region's next biggest power.  China, therefore, will win the 21st century, says White.
But not necessarily, even if you assume that the forecast comes true. Because the equation changes when you include alliance systems, or groupings of countries.

Just now it's hard to see that the US puts much value on its allies. Donald Trump is putting some of America's closest alliances under a lot of stress. He's applying punitive tariffs to the exports of rivals like China.  But, using the pretext of national security, he's also put 25 per cent tariffs on US imports of steel from Japan and Canada. And then there are the insults.

Ugly though all this is, there's also something deeper going on. Trump says he doesn't want to break the NATO alliance but strengthen it by demanding bigger defence efforts by the other members.
And, according to the NATO secretary-general, Jens Stoltenberg, it's working: "The good news is that allies have started to invest more in defence," Stoltenberg said at a press conference with Trump last week. Under the pressure of Trump's bluster and threats, the NATO allies have been stung into action. "After years of cutting defence budgets, they have started to add billions to their defence budgets," said Stoltenberg. "And last year was the biggest increase in defense spending across Europe and Canada in that generation. And your message is having an impact."

The US is at the centre of an alliance system embracing some 40 countries, the sum of which is greater than the individual parts. China has nothing like it, able to count only North Korea and Pakistan as allies.

And, contrary to appearances, the Trump administration's national defence strategy published by the Pentagon this year affirms the importance of the alliance structure on page 2: "Our network of alliances and partnerships remain the backbone of global security."
It's entirely possible that Trump's tactics could seriously hurt some American alliances, but the institution that operates the security relationships – the Department of Defence – is doing its best to preserve and strengthen them where it can.

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