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China condemns G7 interference in South China Sea

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After a prolonged conflict between Russia-G7 (the Group of Seven advanced economies) remaining without any solution so far, now China and G7 are gearing up for a serious conflict which, if not controlled by the big powers, could escalate into a another cold war situation. America’s Asia pivot targeting China (and Russia) and China’s recent military action on South China Sea (SCS) have now placed G7 and China in a conflictual situation. The G-7 grouping comprises Britain, Canada, France, Germany, Italy, Japan and the United States. The EU is also represented in the club.

The 42nd G7 advanced economies’ summit, held on May 26–27, 2016 at the Shima Kanko Hotel in Kashiko Island, Shima, Mie Prefecture in central Japan, criticized and even warned against military operations on SCS. Russia is not a part of G7 as USA abandoned the G8 in March 2014 that included Russia and reverted back to G7. The G7 had then declared that a meaningful discussion was not possible with Russia in the context of the G8. Since then, meetings have continued within the G7 process, denying Russia a place on this important international forum of advanced economies.

Leaders of the G7 said they were concerned by the situation in the East China and South China Sea. They reiterated their commitment to maintaining a rules-based maritime order, according to international law, and urged the settlement of disputes by peaceful means, including judicial procedures such as arbitration. At the close of their formal session in Ise-Shima, G7 leaders fired a broadside across China’s bows over its behavior in the region, without mentioning Beijing by name. The foreign ministers had urged all states to refrain from such actions as land reclamations and “building of outposts on South China Sea for military purposes”. The G-7 leaders had stressed the importance of peaceful management and settlement of disputes through peaceful means.

Though the communiqué, issued at the end of the two-day summit on May 27, the G-7 did not mention China by name, but it is apparent the G7 is targeting only China. The G-7 leaders also condemned “in the strongest terms” North Korea’s fourth nuclear test in January and its subsequent launches using ballistic missile technology. These acts pose a grave threat to regional and international peace and security, they said, adding that they also deplored human rights violations in North Korea. On terrorism, the G-7 leaders said they will continue to work together to prevent the flow of foreign terrorist fighters and terrorism-related materials and equipment, as well as to counter terrorism financing. And, on the migrant crisis gripping Europe, the G-7 “encourages the temporary admission of refugees and establishment of resettlement schemes, to alleviate pressure on countries hosting the largest numbers of refugees”.

The G7 demanded that North Korea fully comply with UN Security Council resolutions and halt nuclear tests, missile launches and other provocative actions. The group condemned Russia’s “illegal annexation” of the Crimean peninsula from Ukraine. The declaration threatened further restrictive measures to raise the costs on Moscow but said sanctions could be rolled back if Russia implemented previous agreements and respected Ukraine’s sovereignty.

The G7 expressed concern over the East and South China Seas, where China has been taking more assertive action amid territorial disputes with Japan and several Southeast Asian nations. The G7 reiterated its commitment to the peaceful settlement of maritime disputes and to respecting the freedom of navigation and overflight. The group called for countries to refrain from “unilateral actions which could increase tensions” and “to settle disputes by peaceful means”.

Meanwhile, the refugee crisis gripping Europe is a problem that the whole world must deal with, G7 leaders said, as it called for beefed-up efforts to tackle the root causes of mass migration. The G7 also called large-scale immigration and migration a major challenge and vowed to increase global aid for the immediate and long-term needs of refugees and displaced people.

UN Secretary General Ban Ki-moon, International Monetary Fund chief Christine Lagarde and World Bank head Jim Yong Kim, the heads of the Organisation for Economic Co-operation and Development and the Asian Development Bank also attended the summit.

G7 summit focus on global growth

The Group of 7 industrial powers pledged on May 27 to seek strong global growth, while papering over differences on currencies and stimulus policies and expressing concern over North Korea, Russia and maritime disputes involving China. G7 leaders wrapped up a summit in central Japan vowing to use “all policy tools” to boost demand and ease supply constraints. G7 said, in a 32-page declaration, global growth remains moderate and below potential, while risks of weak growth persists.

Japanese Prime Minister Shinzo Abe said that global growth is their urgent priority, talking up what he calls parallels to the global financial crisis that followed the 2008 Lehman Brothers bankruptcy, said the G7 shares a strong sense of crisis about the global outlook. The most worrisome risk is a contraction of the global economy, led by a slowdown in emerging economies. Abe has stressed the need for flexible fiscal policy to sustain economic recovery, while German Chancellor Angela Merkel has been sceptical about public spending to boost growth. The G7 called global industrial overcapacity, especially in steel, a pressing structural challenge with global implications.

Abe told a news conference after chairing the two-day summit that there is a risk of the global economy falling into crisis if appropriate policy responses are not made. In the broad-ranging, the G7 committed to market-based exchange rates and to avoiding competitive devaluation of their currencies, while warning against wild exchange-rate moves. This represents a compromise between the positions of Japan, which has threatened to intervene to block sharp yen rises, and the United States, which generally opposes market intervention.

The G7 encourages international financial institutions and bilateral donors to bolster their financial and technical assistance. It said that a resolution to Syria’s civil war was crucial to plugging the flow of desperate people fleeing across borders. “The G7 recalls that only sustainable political settlements within countries of origin, including Syria, will bring lasting solutions to the problem of forced displacement, including refugees,” the communiqué said.

Large movements of people are a multi-faceted phenomenon, which requires addressing its root causes resulting from conflicts, state fragility and insecurity, demographic, economic and environmental trends as well as natural disasters. The statement came a day after European Council President Donald Tusk warned that the crisis was not just Europe’s problem.

Later, leaders from ‘advanced democracies’ met on Friday with representatives of emerging and developing countries in Asia and Africa. The so-called outreach program involves Chad, Indonesia, Sri Lanka, Bangladesh, Papua New Guinea, Vietnam and Laos. G7 host Japan said ahead of the meeting that it would zero in on Asia’s stability and prosperity including “open and stable seas” as well as United Nations sustainable development goals, with a focus on Africa.

The leaders pledged to tackle a global glut in steel, though their statement did not single out China, which produces half of the world’s steel and is blamed by many countries for flooding markets with cheap steel.

The G7 vowed a more forceful and balanced policy mix to achieve a strong, sustainable and balanced growth pattern, taking each country’s circumstances into account, while continuing efforts to put public debt on a sustainable path.

South China Sea

From economic issues, the G7 turned to a topically favourite theme of Chinese ‘interference’ in South China Sea and it appeared the issue got prominence in discussions than expected. Beijing has reiterated that it wants to protect itself from any possible US menace to protect its navigational rights on South China Sea.   China is extremely dissatisfied with what Japan and the G7 have done.

The G7 statement angered China and led to Beijing summoning top envoys from the G-7 nations. Beijing lays claim to almost all of the South China Sea, and is now embroiled in a territorial dispute with Brunei, Malaysia, Vietnam, Taiwan and the Philippines over conflicting claims to territory in the waterway. Japan and China are involved in a separate dispute in the East China Sea. Chinese Foreign Ministry spokesman Hua Chunying said this G-7 summit organised by Japan’s hyping up of the South China Sea issue and exaggeration of tensions is not beneficial to stability in the South China Sea.

China was not pleased with the G7 stance. “This G7 summit organised by Japan’s hyping up of the South China Sea issue and exaggeration of tensions is not beneficial to stability in the South China Sea and does accord with the G7’s position as a platform for managing the economies of developed nations,” Foreign Ministry spokeswoman Hua Chunying said in Beijing. A ruling is expected soon on China’s claims to the South China Sea in a case that the Philippines had brought to the Permanent Court of Arbitration in The Hague. Beijing has lashed out at the tribunal for “abuse of power”, and said it will ignore its decision.

China’s foreign minister fired a pre-emptive shot at G7 leaders gathering in Japan, warning them not to “escalate tensions” over territorial disputes in the South and East China Seas. Last month, foreign ministers from the G7 angered Beijing by issuing a thinly veiled statement critical of its “island building” activities in the South China Sea over recent years. The issue is expected to be raised again as G7 heads of state and prime ministers begin two days of discussions in Ise-Shima. “We hope the G7 will focus on urgent economic and financial matters,” Wang Yi said at a briefing in Beijing. “We do not want to see actions that escalate tensions in the region.”

Beijing is locked in a dispute with G7 host Japan over rocky outcroppings in the East China Sea, stoking broader concerns about Beijing’s growing regional might and threats to back up its claims with force, if necessary. China, for its part is engaged in a furious diplomatic charm offensive among developing countries, offering aid and trade in what critics see as a naked bid to rally international support to its cause. The roster of countries Beijing claims back its position on the South China Sea includes Mauritania, Togo and land-locked Niger.

Washington is not a claimant in any of the disputes but has accused Beijing of militarizing the contested waters of the South China Sea. Vietnam and the Philippines are engaged in a number of territorial disputes with Beijing in the South China Sea, where the Chinese military has recently completed airstrips and other infrastructure on contested reefs and islets. Manila has successfully rallied international support through its decision to challenge China’s actions in a tribunal at The Hague — an international legal challenge that Beijing has refused to recognize.

John Kerry, US secretary of state, said the lifting of the Vietnam arms embargo was not aimed at China, despite an increasing number of close encounters between the two countries’ militaries. Even UK PM David Cameron, wants to be now China’s “best friend” in the west, urged Beijing to be part of a “rules-based world” and “abide by these adjudications”. The Pentagon recently complained that People’s Liberation Army jet fighters conducted a dangerously close intercept of a US spy aircraft. Chinese state media reported that USA and Japanese naval vessels had kept a close eye on PLA Navy exercises in the western Pacific.

Meanwhile, reports say in September Beijing will host Obama, Cameron and Japanese Prime Minister Shinzo Abe at a G20 meeting of developed and developing economies in Hangzhou, where Wan will make clear that his government would not tolerate a debate over regional territorial disputes. China say the G20’s central task is to promote growth and not dispute resolutions.

China fears that Japan and the US will use the G7 meeting to further isolate Beijing over its increasingly assertive posture in the region. The two countries are also leading members of the Trans-Pacific Partnership, a potential trading bloc that has pointedly excluded China from joining as an inaugural member. The reference to maritime issues comes as tensions build over Beijing’s claims to almost the entire South China Sea, a strategic body of water that encompasses key global shipping lanes. China’s maritime claims and ongoing militarization of islets and outcrops have angered some of its Southeast Asian neighbours, including the Philippines and Vietnam.

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East Asia

How China is helping Iran skirt US sanctions

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Shortly after the Trump administration reimposed sweeping sanctions on Iran, Secretary of State Mike Pompeo said eight countries, most notable China, would be exempted from the draconian sanctions on buying Iranian crude oil.

Shortly after the Trump administration reimposed sweeping sanctions on the Islamic Republic of Iran, Secretary of State Mike Pompeo made an important announcement. It was a calculated move to avoid a major embarrassment. The hawks in the power corridors of Washington had anticipated the backlash of sanctions on US foreign policy with many global powers rebuffing Trump’s foolhardy move.

Pompeo said eight countries would be exempted from the draconian sanctions on buying Iranian crude oil due to special circumstances. The countries included China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey.

Many of these countries had quite clearly indicated that they would not be cutting oil imports from Iran under the US pressure, most importantly China, Turkey, and India – three of Iran’s largest oil customers.

While India has its own strategic interests in maintaining good relations with Tehran, for instance, the Chabahar port project in Sistan-Baluchistan, Turkey’s relations with Washington have hit a new low following sanctions and trade tariffs imposed by the US.

China, which has emerged as a viable counterweight to US hegemony in the world and a protagonist of new international economic policy, has unambiguously reaffirmed its commitment to keep alive the Iran nuclear deal and stand by the Islamic Republic of Iran.

On November 5, when the petroleum-related sanctions came into effect, Chinese foreign ministry said it will continue to “hold a fair, objective and responsible attitude” and “resolutely safeguard its legitimate rights”, while reiterating its opposition to the unilateral US sanctions.

“China feels sorry for the US’ decision and we noticed that the international world as a whole opposes the practice of such unilateral sanctions,” foreign ministry spokesperson Hua Chunying said at a press briefing.

She said Iran has been seriously fulfilling its obligations under the JCPOA and its efforts have been recognized by the International Atomic Energy Agency dozen times. She also affirmed that China will firmly safeguard its lawful rights while continuing to adhere to JCPOA and urged relevant parties to stand on the “right side of history”.

China has maintained that implementing the Iranian nuclear deal is akin to safeguarding the authority of UN Security Council, basic norms of international law, international non-proliferation treaty and peace and stability in the Middle East.

As one of the remaining signatories of the JCPOA, along with European Union countries who are exploring options to circumvent the US sanctions, Beijing wants to keep the deal alive. China, believe experts, is in a better position compared to other Asian countries as it is not subservient to US interests and is already embroiled in a bitter trade war with Washington.

For all parties of the JCPOA, Iranian crude oil is the main commodity of interest, particularly for Beijing. In 2017, one-third of Iran’s oil was supplied to China, which underlines the significance of oil trade between the two countries. China’s commitment to continue importing oil from Iran is very likely to deal a body blow to US ploy of reducing Iranian oil imports to zero and ‘starving’ the Iranian nation.

Hu Xijin, chief editor of the influential Chinese daily Global Times, told Tehran Times that there was no possibility of Washington reducing the Iranian oil exports to zero, “because Washington lacks righteousness to do so, therefore it can’t have the full support of the international community”.

To continue oil trade in different currencies other than dollar, Iran has been in talks with key allies, including China. On September 29, Foreign Minister Javad Zarif said Tehran would circumvent sanctions by conducting trade in all currencies to avoid using the US dollar. “You can use your own currency. Sell stuff in your own currency, buy stuff in the other country’s currency, and at the end of a specific period, balance it out in a non-dollar currency. It’s quite possible and may even be profitable,”

China, which is the largest oil importer in the world with around nine million barrels imports every day, has been making concerted efforts to reshape the global oil market with increased usage of its currency in oil trading. If Chinese currency manages to replace the US dollar, it will be a masterstroke.

US has been rendered friendless and isolated in its quest to tear up the Iran deal and force countries to cut oil imports from Iran. European Union has already refused to back down on the Iran deal, exploring ways to develop payment channels to facilitate payments related to Iran’s exports. The goal, according to a statement issued by EU, “is to protect the freedom of other economic operators to pursue legitimate business with Iran”.

Beijing has expressed its full support to the EU’s proposal to set up a “special payments system” to facilitate trade with Iran and safeguard the Iranian nuclear deal, which experts believe will significantly reduce reliance on the US dollar in the global oil trade. That will be a game-changer.

First published in our partner MNA

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The Implication of China’s Diplomacy in APEC and ASEAN

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It is truly unusual that the Chinese President Xi Jinping and its Premier Li Keqiang are visiting the same area during nearly the same time: Xi’s visit to APEC from15th to 21st November and Li’s visit to ASEAN on 15th November. Yet, if we look into China’s foreign policy towards this area over the past years since President Xi took power, it is not difficult to understand both Xi’s and Li’s official visits to the “larger Pacific” and the meaning beyond.

As we know, President Xi has reiterated that the Pacific is large enough for the countries involved to share the prosperity with each other. In order to achieve the inclusive rather than exclusive benefits for all, China’s diplomacy aims to reject any kind of unilateralism, trade protectionism and anti-globalization. Given this, Xi’s at APEC and Li’s at AEASN is defined as a signal of China’s diplomacy to further reform and bold openness.

As a rising great country, China is surely eager to expand its investment and trade with the south Pacific area, and Papua New Guinea (PNG) is the first country visited by Chinese president. What is more, PNG joined the Asian Infrastructure Investment Bank (AIIB) early 2018 and then became the first state of Pacific islands to sign the MoU on “The Belt and Road Initiative” construction. As the theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” the APEC summit will focus on Regional economic integration, digital economy, connectivity, sustainable and inclusive growth and so forth.

Also during Premier Li’s visit to the ASEAN, he highlighted the necessity of the collaboration and mutual benefit among the countries involved on the 21st China-ASEAN leaders meeting. This is also the 21st ASEAN Plus Three Summit (10+3) and the 13th East Asia Summit (EAS).

Quite understandable, since the 1960s, the center of world economy has shifted from North Atlantic to Asia-Pacific, its dynamic growth in the region create countless jobs and push the development of world economy. This is the reason that Asia-Pacific region has the most trade agreements and the most complicated economic architecture around world. APEC and ASEAN, as two institutions that possess most member states, are the very pillars of the tumbledown regional economic architecture. APEC was launched by Australia and later included 21 member states in the region, amongst are United States, China, Japan, the economic giant three of the world economy. ASEAN is an institution that consist of ten small and middle states. Though they are not strong enough to meet the challenges from the power politics alone, ASEAN is a core force that firmly facilitate the economic integration of the whole region of East Asia and the Pacific. No matter what the way they embrace, they are the de facto basic regionalism of Asia-Pacific. The withdrawing of United States from Trans-Pacific Partnership (TPP) and hard-achieved Regional Comprehensive Economic Partnership (RCEP) once brought the regional economic architecture a fig leave and strengthened the impact of APEC and ASEAN.

As a result, the two visits of Chinese top leaders to the same region at the same time definitely attract worldwide attention, because they not only represent China’s recent diplomatic focus but also mark the fact that Asia-Pacific region has become one of the vital fields where China’s diplomacy will be actively conducting in terms of the Belt and Road Initiative, and carry on the good-neighbor policy. Since China has argued for creating a peaceful development milieu, to enhance economic transformation and upgrading oversea markets and partners in Asia-Pacific region.

Consider these facets, China, as the second largest economy, aims to promote its well-articulated stance on multilateralism and inclusiveness and globalization. As both President Xi and Premier Li have strongly said that China is ready to work with Pacific island countries to endeavor together and sail for a better future for bilateral relations. For the sake of that goal, China always believes that as long as all the countries involved have firm confidence in each other’s development, cooperation and the future of East Asia, and work closely together and forge ahead, all sides would achieve more and reach a higher level in the next 15 years.

For sure, China belongs to the part of a larger Asia-Pacific family, and the Chinese government defines its goal as the shared prosperity of this region. Therefore, China will continue to work hard and constructively to promote the overall development of impoverished but promising Pacific island countries under the Belt and Road Initiative.

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An uncertain step in moving China-Japan relations

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Authors: Meshach Ampwera  & Luo Xinghuan

On October 26, Chinese President Xi Jinping met Japanese PM Shinzo Abe and praised that both China and Japan have pledged to strengthen bilateral ties amid continuous efforts made by the two nations. Xi said, “Bilateral relations have returned to the right track and gained positive momentum, which is something the two sides should cherish.” As the two largest economies in Asia, China and Japan are also the vital players in Asian security and the global development.

In addition, since this is the first official visit to China by a Japanese PM in a seven-year “Cold Peace” period, it is widely assumed that Abe’s visit symbolizes the resumption of high-level visits and will be followed by an increasing rapprochement between China and Japan. True, the leaders of the two economic giants witnessed a wide range of agreements, including a 30 billion US dollar worth of currency swap pact, the establishment of a maritime and air liaison mechanism, and enhancing people-to-people exchanges.

Yet, three factors have to be considered seriously in looking into Japanese foreign policy given the current changing geopolitical landscape regionally and globally. First, Japan has still regarded itself as a “defeated” state during the WWII. Since then, Japan’s postwar posture has frequently described as a new pacifism; yet in fact it is considerably more complex. As Henry Kissinger put it: “Japan had acquiesced in the U.S. predominance and followed the strategic landscape and the imperatives of Japan’s survival and long-term success.” This means that the governing elites in Tokyo used to hold the constitution drafted by U.S. occupying authorities with its stringent prohibition on military action, and adapted to their long-term strategic purposes. As a result, Japan was transformed from the pacific aspects of the postwar order (that prohibited military action) into a nation that has focused on other key elements of national strategy, particularly using economic leverage regionally and globally, though not uncontroversial.

Second, in a recently-released paper written by the former US Secretary of Defense Ash Carter, he maintained that “Japan is a close ally of the U.S. and a rising military power, too, because of legal and constitutional changes of great significance championed by Prime Minister Abe.” In practice, the Japanese administration has engineered an expansion to enable its military to operate regionally and even globally in response to the rise of China, violent extremist activity in Asia, and the alleged North Korean belligerence.

Actually in 2013, Japanese Government White Paper revealed a desire to become a “normal country” with an active alliance policy. In a searching for a new role in the Asia-pacific region, Japan aims to act as an “anchor” of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) concluded in 2018 after the withdrawal of the United States. Now it involves 11 countries and representing 13.4% of global GDP ($ 13.5tri.). As the largest economy of the CPTPP, Japan has been active in moving it forward. Early this year when the British government stated it is exploring becoming a member of the CPTPP to stimulate exports after Brexit in 2019, Abe stated that the United Kingdom would be welcomed to join the partnership. It is said that even the U.S. reconsiders possibly rejoining the CPTPP if it were a “substantially new deal” for the United States.

Japan’s ardent involvement into the US-led strategy in Asia has also been endorsed to expand steadily as a normal power regionally and globally. For example, the Asia-Africa Growth Corridor (AAGC) is the result of the joint declaration issued by the India and Japan in 2016. Although it is premised on four pillars of development and cooperation, it is self-evident that the AAGC reflects a growing special “strategic and global partnership between India and Japan” in which both sides have viewed China’s growing, pragmatic and successful presence in Africa as a menace. There is no question that AAGC is a well-crafted vision and agenda of both India and Japan, linking with their own development priorities. But with increasing pressure from Washington and Brussels, Japan and India are in effect driven by the option for the AAGC to rebalance China’s Belt and Road Initiative (BRI).

From the inception of the BRI, they have more than ever before been concerned with being isolated in Africa by Beijing’s initiative. But, as Ampwera Meshach, a researcher at Jilin University put it, “Africa is on the growth trend and offers potential markets and raw materials. For this reason, Africa largely needs pragmatic and scientific, technological and development- oriented initiatives and these are clearly reflected in China’s BRI.” In light of this, the AAGC does neither reflect a novel nor pragmatic approach on how it fits within the African agenda. Instead, AAGC’s foundational pillars seem more inclined to the Western cooperation approaches that have for decades not been translated into development.

Controversially, two days before Abe’s visit to Beijing, Japan had decided to scrap official development assistance (ODA) to China, which is a program where Japan provides aids to developing countries starting back in 1954. Even though some people argue that Japan’s ODA is reasonably cancelled because China’s GDP is even 2.5 times larger than that of Japan, yet, it is necessary for Chinese to be aware of the reality that Japan is a longstanding ally of the United States. As Japan has long been an economic power, its impressive military capabilities would not be confined to a strict policy of territorial defense—no projection of Japanese power or the U.S.-Japan alliance to the region as a whole.

It is during the Abe’s administration which has recognized an environment of growing Chinese assertiveness, violent extremist activity in Asia, and North Korean hostility, and therefore, Japan has eagerly participated in Asian security, including training and exercising with other nations, beyond a purely passive, home-island defense role. This makes it an increasingly important player serving the US strategy in Asia but challenging the rise of China globally.

It is true that Abe tweeted about the trip — while recognizing the challenges in moving bilateral relations forward, he said that he would still work to “push Sino-Japan relations to the next level”. Given the two countries’ economic links, it is only understandable that there is a need for the two sides to come closer. Moreover, Japanese businesses has been an extremely active force behind the government’s shift of attitude on the Belt and Road Initiative (BRI).

Yet, all in all, we should never ignore that Japan’s ambitious foreign policy has gone beyond the economic goal.

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