identity and a permanent adjudicative body, resulting in interstate bargaining being the primary means of dispute resolution. In turn, a country's bargaining power depended on its relative economic and political clout in the international community, rather than the relative merits of its claim. As a result, more powerful Western countries often triumphed regardless of the merits of their claims. [FN31]

Additionally, Asian leaders have been inspired by the creation and development of other regional trading blocs, while recognizing the economic and socio-political benefits to regional trade generally. The apparent success of the EU and NAFTA did not go unnoticed by Asian leaders. [FN32] Moreover, a regional economic grouping would generate positive trade effects. It could, for example, expand trade within the regional economic grouping and shift trade from outside the grouping to within the grouping. [FN33] Asian economic regionalism would also strengthen Asian countries' positions in intergovernmental organizations as well. [FN34]

China's leadership aspirations in the arena of Asian economic regionalism are based on its desire to capture the economic and political benefits of regional trade. More specifically, leading Asian economic integration would boost China's domestic economy. Chinese leaders increasingly recognize that a primary benefit of participating in trade liberalization initiatives is increased competition in China's domestic market, which would spur badly needed structural reform of state-owned enterprises. [FN35] An alliance with ASEAN in particular would have a strong positive effect on the Chinese economy. Indeed, ASEAN is China's fifth largest trade partner, and China's trade alliance with ASEAN is projected to increase Chinese and ASEAN exports by 50 percent and China's domestic economy by 0.3 percent. [FN36]

Along with economic benefits, leadership in Asian economic regionalism also has political ramifications for China. Some Chinese authors have noted that a desire to counteract US influence is one reason why China is seeking alliances in Asia. [FN37] The enhancement of China's position in negotiations with the West is therefore a tangible side effect to China's economic alliances in Asia.

Furthermore, an Asian economic grouping dependent on Chinese leadership could fulfill China's other objectives involving security and the resolution of disputes with its neighbors in the region. Indeed, China has already forged non-economic agreements with ASEAN. For example, in 2002, China and ASEAN issued the Joint Declaration of ASEAN and China on Cooperation in the Field of Non-Traditional Security Issues as well as the Declaration on the Conduct of Parties in the South China Sea. With the non-traditional security agreement, China sought to address issues such as drug trafficking, human trafficking, piracy, and arms smuggling, while also strengthening personnel exchange, training, and joint research on non-traditional security matters. [FN38] Meanwhile, with the latter agreement, China sought to resolve territorial concerns over islands in the South China Sea. In the South China Sea Declaration, China and ASEAN member countries agreed, among other things, "to resolve their territorial and jurisdictional disputes by peaceful means," "reaffirm their respect for and commitment to the freedom of navigation in and overflight above the South China Sea," and to refrain "from action of inhabiting on the presently uninhabited islands." [FN39] Therefore, economic cooperation could lead, and has led, to beneficial cooperation on other non-economic issues that are important to China.

More significantly, taking a leadership role in Asian economic integration would allow China to craft the economic rules of the region, rather than merely follow them. Given that international economic rules establish the system of relations between regional neighbors, such rules and the ability to make them are crucial to China's national interests. If China does not assume a position of leadership in Asian regionalism, it may be forced to follow economic rules promulgated by other, possibly rival countries. As one Chinese law professor summarized:

Indeed, China is fully aware of its limited national strength vis-a-vis Japan in the region. But it is also aware that if it refrains from playing a leading role in rule-making for the region until its economy becomes developed, then China will possibly have to follow the rules decided by other countries.

In other words, should China not initiate formation of a regional arrangement, it would have no other alternative but to accept the existing rules in the future. From the perspective of Realpolitik, it is understandable that China tries to preempt the right to participate in rule-making by taking the initiative. [FN40] China and its competitors' vision of Realpolitik then is not based on blood and iron but on strategic diplomacy.

IV. Breaking the Enemy's Resistance Without Fighting: Obstacles to Chinese Leadership and Agreements with ASEAN

Although China has demonstrated that it has both an impetus and the resolve to lead the Asian regionalism movement, its ascension to the position of sole leader in this regard is far from guaranteed because it faces several obstacles to its leadership aspirations. In particular, Japan has desires for primacy in Asian economic policy (if only to frustrate China's plans), Taiwan has shown that it is a necessary but unwilling partner, and South Korea has the potential to be the dark horse in this race to lead the Asian-Pacific region to an economic community akin to the EU and NAFTA. However, China has been the first among the Plus Three countries to forge a host of comprehensive agreements with ASEAN, a vital component of Asian economic integration, which may help China overcome these barriers.

A. Japan