China’s rise inspires awe, a combination of fear and admiration. The fear is much more pronounced among some of its neighbours, involving claims and counterclaims of sovereignty over a clutch of islands in the South China Sea and East China Sea. In the South China Sea, the Philippines and Vietnam are particularly at odds with China as it has sought to physically occupy/encircle the disputed islands/islets. In some cases, China is also said to be creating new islands out of submerged coral reefs, turning them into military facilities/bases to project power and threaten its neighbours. Admiral Harry Harris, the new chief of the US Pacific command, sounded the alarm in Australia recently about a string of islands China has dug out and levelled, posing a threat to stability in the South China Sea, which has some of the busiest sea-lanes carrying global trade.This is what Admiral Harris reportedly told an audience at a dinner at the Australian War Memorial: “China is creating a great wall of sand with dredgers and bulldozers over the course of months.” He added, “When one looks at China’s pattern of provocative actions towards smaller claimant states, the lack of clarity on its sweeping nine-dash line claim is inconsistent with international law and the deep asymmetry between China’s capabilities and those of its smaller neighbours. It is no surprise that the scope and pace of building man-made islands [by China] raises serious questions about China’s intentions.” In other words, China is posing a threat to regional stability. According to Professor Michael Wesley, director of the Asia Pacific School at the Australian National University, “This marks a real ramping up of US determination and resolve in the region, reflecting a realisation that China is determined to play hard ball in the South China Sea.” In other words, the US is unlikely to let China get away with it. Indeed, this looks like a delayed follow up to President Obama’s declaration of the US “pivot” to Asia announced in the Australian parliament in 2011 during an earlier visit. How will the US go about dealing with the China threat? One way is to forge a common strategy with member states of the Association of South East Asian Nations (ASEAN), as a number of them are contesting China’s sovereignty claims in the South China Sea. For instance, ASEAN member states might be encouraged to form joint maritime patrols. As commander of the US seventh fleet of the Pacific fleet, Vice Admiral Robert Thomas reportedly said, “If ASEAN members were to take the lead in organising something along those lines, trust me, the US seventh fleet would be ready to support.” Rebutting the idea that a Chinese threat might not eventuate, Admiral Harris reportedly told the dinner gathering in Canberra: “As we like to say in navy circles, hope is not a strategy.” The US already has security alliances with some regional countries though they are not specifically directed against China. It periodically holds military exercises with its regional alliance partners. Australia, for instance, is a strong regional ally and has not made any secret of its concern about China’s regional claims, at least the way it is pursuing them. Similarly, Japan is a US ally and Tokyo is involved in, what looks like, a tit for tat situation with China over a clutch of islands in the East China Sea, with a potential for military clash. Japan is also helping Vietnam and the Philippines by supplying naval patrol boats and the like to help them face the Chinese threat. By virtue of its security linkages, the US is already bound up with regional defence. As Professor Alan Dupont of the University of New South Wales (NSW) in Sydney said, “We need to work with our nearest neighbours to persuade China that it is not in their best interest to militarise the South China Sea and there will be consequences in doing so.” But Beijing does not seem terribly perturbed, being quietly confident that the countries in the region will have no choice but to accept the new realities of power. This was reflected in a strong rebuke from China to Australian Foreign Minister Julie Bishop’s criticism of China’s air identification zone over disputed (with Japan) islands in the East China Sea. The newspaper of the Communist Party of China, The Global Times, said at the time that Australia (and other countries, for that matter) would be forced to adjust its rhetoric to the realities of international bargaining power. It added, “Bishop calls for standing up to China but what resources does she have to do so with?” In economic terms, Australia’s future seems tied up with China as its biggest trading partner. Other regional countries might not be as heavily dependent on trade with China but it is emerging as the economic powerhouse for the region and, indeed, for the world. The China-floated Asian Infrastructure Investment Bank (AIIB) is an example of its economic clout, which will supplement its growing military power. Starting by the end of this year with an initial Chinese capitalisation of $ 50 billion, AIIB seems to be making a healthy beginning with many countries already signing up as its foundation members. Despite US pressure, some of its closest European allies like the UK, Germany and France are keen to be part of it. Japan, which has a prominent role in the Asia Development Bank, does not appear to have been invited. India, Asia’s second largest country, is in it. The US’s major Asia-Pacific ally, Australia, has also made a decision to be part of it as soon as some matters about its functioning are resolved. The US, on the other hand, is opposed to it because it will weaken the post-World War II global financial architecture by creating a parallel structure dominated by China. The decision by some of its closest allies to join the AIIB is dictated by the prospect of economic opportunities from investment in the vast infrastructure needs of the Asian region. With initial capitalisation of $ 100 billion for AIIB – $ 50 billion from China — its financial role will expand over the years with China’s four trillion dollars in foreign reserves. The economic potential of the AIIB is one major reason behind why the US’s closest allies are prepared to go against its advice. Another reason is that they would like to shape the governing structure of the AIIB so that it does not simply end up being China’s strategic tool to supplement its political influence. Australia’s thinking in this respect gives some insight into it. Announcing his country’s decision to consider joining the AIIB, Prime Minister Tony Abbot said, “Key matters to be resolved before Australia considers joining the Asian Infrastructure Investment Bank include the bank’s board of directors having authority over key investment decisions and that no one country control the bank” among other things. But China might not be too keen on replicating the governing structure and practices of the World Bank and International Monetary Fund. As Li Ruogu, a former chairman of China’s Export-Import Bank, reportedly said, “This newly established institution cannot be a clone of the old ones [where the US and its European allies have preeminent roles]; we are working in a very different environment.” Indeed. China would want its own way and pursue its own national interests, and might not be averse to using its economic, political and military assets to that end. The writer is a senior journalist and academic based in Sydney, Australia. He can be reached at sushilpseth@yahoo.co.au