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It’s too early to say that President Obama’s decision to use the U.S. Navy to challenge China’s expansionism in the South China Sea shows he’s grown a backbone. But maybe a vertebra or two? At the same time, it’s clear that this story is far from ended, that there may be less than meets the eye to Beijing’s apparent acquiescence in the administration’s clear dissing of Chinese unilateral claims to East Asian waters, and that the United States needs to explore new types of responses if it wants to maintain its leading position in the Asia Pacific region.

To recap, in recent years, China has put muscle behind its long-stated insistence that many of the seas to its east and south, along with various tiny islands and island chains, are Chinese territory. As with similar longstanding claims made by other Asian countries ranging from Japan and South Korea to the Philippines and Vietnam, these positions aren’t recognized by international law.

For literally decades, all of these countries generally agreed to disagree (despite testing each others’ resolve from time to time).  Yet nearly two years ago, China began upping the ante by creating large physical presences on some of the (mainly uninhabited) islands in the South China Sea, and then by literally enlarging some of the smallest ones (which are so tiny that they literally sink below the waves on a regular basis), and creating new ones through various land reclamation techniques. (Other countries have made similar efforts, but they’ve been much smaller and far more sporadic.) China has also claimed exclusive air rights over many of the disputed regions.

In addition, China has unilaterally declared sovereignty over the waters surrounding all these locations out to 12 miles – the normal allowed by international law, but a standard that doesn’t always apply to the kinds of artificial creations produced by China. Moreover, Beijing went even further, stating that foreign naval vessels needed to notify Chinese authorities whenever they wanted to enter such waters.

This decision apparently convinced Washington that China’s actions unacceptably threatened freedom of navigation in the South China Sea. That’s a huge deal, since trillions of dollars worth of U.S. and other international commerce sail through these waters annually, and since they’re rich in natural resources as well. And incidentally, all other regional powers seem to agree.

So the president finally authorized an American guided missile destroyer to sail close enough to one of the disputed islets to violate Chinese claims – and without asking permission. The administration has also made clear that the kind of mission carried out by the U.S.S. Lassen would be repeated frequently. Even better would be participation by regional allies, whose historic specialty so far has been free-riding on American defense guarantees.  But except for Japan, they don’t seem to be even actively considering such assistance, and the United States bizarrely hasn’t even officially sought it.

China has protested strongly, but don’t dismiss it as a paper tiger just yet. Despite America’s continuing military edge in East Asia, Beijing is hardly devoid of options. For instance, China could create significant military presences on some of the islands. In addition, and more worrisome, according to a tweet from China-watcher Patrick Chovanec, Beijing could escalate its cyber-attacks on American businesses and government agencies.

The United States would be hard-pressed to respond in kind, as I’ve noted, because it lacks clear-cut (and perhaps any) cyber-war superiority, and because such hacking could be much more damaging to America’s more advanced economy and society than to China’s.  And in fact, capitalizing on such disparities would be fully consistent with the notion of waging “asymmetric war” developed by Chinese strategists. 

A much better means of retaliation would be economic. China’s economy, which depends heavily on exporting, and especially to the United States, is slowing. And that growth threatens Communist Party rule because it’s hold on power has for decades depended heavily on its success in boosting living standards throughout Chinese society.

Of course, erecting major barriers to Chinese imports would be condemned, especially by offshoring interests, as shortsighted and even dangerous protectionism that could plunge the two countries, and the larger world, into a “trade war.” But as always, such warnings ignore the long-term net damage inflicted on the U.S. economy – and especially its invaluable productive sectors – by the huge expansion of bilateral commerce since the early 1990s.

They also ignore the clear message being sent by the persistence of the American recovery (however inadequate) in the face of a weakening global economy, and by the reemergence once that recovery began of overall U.S. trade deficits (including of course with China) as major drags on American growth: The United States needs the rest of the world economy even less than ever, and certainly much less than trade-dependent countries like China need the United States.

Would wielding this kind of economic stick against China be cost-free for Americans? Of course not, especially in the short- and even medium-term, before supply chains got restructured. Yet tariffs and other curbs could always be phased in. Nor need they cover all Chinese products (although the more, the merrier). And other means of economic retaliation could be employed as well. How about cutting off all or at least some of the defense-related technology and capital that U.S. multinational companies are still recklessly transferring to China, either voluntarily or under threat of being shut out of the Chinese market?

More important, whatever the resulting costs, they look a lot less intimidating than those that could result from even a brief military conflict (which logically would trigger even greater and costlier economic adjustments), or from massive Chinese cyber-attacks. And don’t forget the flip side of passivity: An America that failed to use its biggest advantage over China for fear of experiencing any pain at all inevitably would be an America that flashed a big, fat green light to Beijing’s expansionists.