For all its slick modernity, there are plenty of 19th-century echoes about contemporary China with the new railroads that are opening up the hinterland and all those Dickensian factories. Amid the mountainous production of steel, a confident new national identity is being forged in a country that wants to stake its claim in the world.

The same echoes can be felt across other parts of Asia where not just China, but India, South Korea and Australia are all investing heavily in their navies, building new blue-water fleets to take to the oceans. And so it is with the region’s diplomacy, where the postwar era of US dominance is being replaced with a more uneasy balance of power.

This emerging geopolitical drama was underlined by a fascinating statement in Hanoi at the end of last month by Hillary Clinton. En route to her daughter’s wedding, the US secretary of state told a regional meeting that the US was willing to act as a mediator in talks over the islands in the South China Sea disputed by, among others, China.

Many of the islands in question might be little more than rocks, but given that they are close to the sea lanes for a significant chunk of world trade, they have huge strategic importance. As such, Mrs Clinton’s speech is one of the most striking symbols of the diplomatic battle that will define Asia for the next few decades – a tussle between the US and China to be the dominant voice.

The Clinton statement had two goals. One was to emphasise that in Asian diplomacy, the US is back. During the presidency of George W. Bush, some Asian governments felt that the US had lost interest in the region. Whether this impression was justified or not, she was telling Asia’s leaders that the US is not packing its bags any time soon.

Most of all, the speech was a message to the region about China and its seemingly inevitable rise. Since the sinking of South Korea’s Cheonan warship in March, Washington has taken advantage of Beijing’s reluctance to criticise North Korea to boost its ties with Seoul and drive a wedge between China and South Korea. As suspicions grow in south-east Asia about China’s intentions in the South China Sea, the US is presenting itself as the natural honest broker.

The broad outlines of this strategy are not new – since the end of the cold war, Washington has approached China through a mixture of engagement on economic issues and diplomatic containment. The nuclear deal with India was partly motivated by such considerations.

But the Obama administration also has to make up for lost time. Over the last decade or so, China has stolen a march on the US in Asia. The wars in Afghanistan and Iraq proved to be a strategic gift for Beijing. While the US was chasing al-Qaeda and hunting for WMD, China settled border disputes with a string of once suspicious neighbours – from Russia in the north to Vietnam in the south (although not India). As a decade of double-digit growth in China helped shift the axis of the Asian economy, Beijing drove pipelines into central Asia, invested in natural resources projects in Burma, Indonesia and the Philippines, and financed new ports in the Indian Ocean.

China has been happy to engage with the US on economic issues, joining the World Trade Organisation and stockpiling Treasury bonds, but Beijing has also accelerated a military build-up that has the US in its sights. Rather than preparing for a fight with the US, Chinese planners want gradually to squeeze the US out of its dominant position in Asian waters by developing a series of missile systems they describe as “anti-access” weapons.

Yet in the last year or so, China’s charm offensive in Asia has run into trouble – not least in the South China Sea, which for many Asian countries is a barometer of how a powerful China might treat them. The Paracel and Spratly islands are claimed in full or in part by Vietnam, Malaysia, the Philippines, Taiwan and Brunei. On China’s maps, however, the islands are inside a U-shaped line of its territorial waters, which stretches down to cover most of the South China Sea.

Amid rising tensions, China has reportedly told other Asian countries not to discuss the issue among themselves. According to US officials, Beijing also now says it considers the area a “core interest”, alongside Taiwan and Tibet. Some push-back was inevitable. Sure enough, Vietnam – the one country in the region with a Leninist political system comparable to China’s – lobbied its old nemesis in Washington to get involved. (The USS George Washington aircraft carrier visited Vietnam at the weekend.) Even Singapore’s Lee Kuan Yew, who has spent much of the past decade praising Beijing, called last year on the US to remain the Pacific’s “superior power”.

In Asia’s new diplomatic contest, the momentum is still very much with Beijing. While the US faces debts and deficits, China could easily grow by 8 per cent a year for one if not two more decades and its naval power will also inexorably expand.

Yet Mrs Clinton has laid a trap for Beijing in the South China Sea. If China stands up to US interference in its backyard and presents itself as the regional power, it risks pushing wary neighbours into the US camp. Indeed, this is the broader diplomatic test that China faces in Asia over the coming decades. The more dependent Asian countries become on China’s economy, the more uneasy they will be about its power. The ball is very much now in Beijing’s court.

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