The positive externalities of US–China institutional balancing in the Indo-Pacific.

Challenging the pessimistic and alarmist view of competition between the United States and China, we propose a soft balancing argument—institutional balancing for peace (shortened to 'institutional peace')—to highlight the positive outcomes of their strategic rivalry. We argue that globalization, economic interdependence and nuclear deterrence have motivated the US and China to engage in institutional balancing to vie for security, power and influence in the international system. We examine how the US and China have used multilateral and minilateral security institutions, such as various trilateral dialogue mechanisms, the Quad, the Shangri-La Dialogue, the Conference on Interaction and Confidence-building Measures in Asia and the Shanghai Cooperation Organisation, to compete in the Indo-Pacific region in the period since the 2008 global financial crisis. We suggest that institutional balancing between the US and China has led to three positive externalities for the region: sustained institutional dynamism, new incentives for regional cooperation and the provision of public goods, unintentionally fostering regional peace and prosperity in the long run. If the United States and China can manage their strategic competition through international institutions, the emerging transition of the international order may be more peaceful than historical transitions, even amid potential regional military crises. [ABSTRACT FROM AUTHOR]