The Quad at the crossroads

When the Quadrilateral Security Dialogue was first conceived as a strategic coalition of the four major Indo-Pacific democracies, many doubted it would amount to much. Chinese Foreign Minister Wang Yi derided it as a “headline idea” that would dissipate “like sea foam in the Pacific or Indian Ocean”. But continued Chinese expansionism, combined with former Japanese Prime Minister Shinzo Abe’s determination to put up broad resistance, has produced an increasingly consolidated group with real potential to bolster regional security. The question is whether he will deliver.

One thing is certain: the four members of the Quad – Australia, India, Japan and the United States – are essential to realizing the vision of a “free and open Indo-Pacific” introduced by Japan in 2016. and affirmed by the United States in 2017. While the Quad took a while to take off – it was resurrected by the United States under the administration of Donald Trump, but leaders’ summits only began after Joe Biden took office – he gained tremendous momentum. Its members have held three summits since last year (including two virtual ones) and are due to meet in person in Tokyo on May 24.

But the Quad still has a long way to go, not least because its members’ own actions undermine its strategic logic – the need to prevent China from upending security in the Indo-Pacific. A key issue is that the four countries have been seduced by the Chinese narrative that economic relations can be separated from geopolitics.

China’s trade surplus, which hit a record $676.4 billion last year, is now the main driver of its economy. Without it, Chinese growth would likely stagnate, especially as President Xi Jinping tightens state control over private businesses. It would also hamper China’s ability to invest in its military and fund its aggressive maneuvers in the Indo-Pacific and beyond.

And yet, the United States and India are the main contributors to China’s trade surplus. The United States leads the way: its trade deficit with China has increased by more than 25% in 2021, to $396.6 billion, and now accounts for more than 58% of China’s total surplus. India’s trade deficit with China, which reached $77 billion in the 12 months of March, exceeds its defense budget, even as the two countries are locked in a dangerous military confrontation on their long border Himalayan.

China’s stealthy encroachments on some Indian border areas in 2020 sparked deadly clashes, triggering a buildup of border forces and infrastructure that continues to this day. This should have been a wake-up call for Indian Prime Minister Narendra Modi, who was so committed to appease China that he was blindsided by its aggression. But India’s large and growing trade deficit with China suggests it is still sleeping.

Australia and Japan have also developed significant dependencies on Chinese trade. China accounts for almost a third of Australia’s international trade and is Japan’s largest export market. Additionally, the two countries are members of the China-led Regional Comprehensive Economic Partnership. For them, allowing China to shape trade rules in the Indo-Pacific is seemingly a small price to pay for the economic benefits of increased regional trade.

Rather than continuing to guarantee China’s economic and geopolitical might, the Quad should make economic cooperation, including increasing trade among its members, a core part of its agenda. Unfortunately, although Biden has pledged to unveil an Indo-Pacific economic framework covering everything from infrastructure to the digital economy, his administration’s reluctance to commit more resources to the region or provide regional partners with greater access to US markets significantly limits the initiative’s potential. Additionally, Biden has pushed a broad Quad agenda covering topics that have nothing to do with the group’s core goals, ranging from climate change to Covid-19 vaccine delivery and supply chain resilience.

The deepening proxy conflict between America and Russia further blurs the strategic picture. Biden is the third successive U.S. president to pledge to shift America’s primary strategic focus to Asia and the broader Indo-Pacific. But the war in Ukraine – which, according to him, “could last a long time” – could well lead him, like his predecessors, not to complete this pivot.

The war could also prompt Biden to take a more conciliatory approach to China. Even before Russia invaded Ukraine, Biden had begun to ease the pressure on China. It effectively let Beijing off the hook both for obscuring the origins of Covid-19 and for failing to meet its commitments under the 2020 “phase one” trade deal with the United States. He also dropped fraud charges against the daughter of the founder of military-linked Chinese tech giant Huawei. US sanctions against the Chinese Muslim gulag remain largely symbolic.

Now, as Biden tries to ensure Xi doesn’t offer Russian President Vladimir Putin an economic lifeline, neutralizing the impact of Western sanctions, he’s likely to take an even more dovish approach. Already, the U.S. Trade Representative‘s office has reinstated Trump-era tariff exemptions on 352 products imported from China. And now the White House is considering a broader reduction in tariffs on non-strategic goods from China.

The Quad can hold as many leadership summits as it wants, but without a clear strategic vision and corresponding agenda, it will have little impact. The group’s objective is to act as a bulwark against Chinese expansionism and to ensure a stable balance of power in the Indo-Pacific. At next month’s summit, all other issues should take a back seat to that goal.