Connect with us

East Asia

The two Koreas: Some considerations on the relationship between North and South Korea

Giancarlo Elia Valori

Published

on

[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] I [/yt_dropcap]f the two Koreas reunified, as planned in 2000 with the joint declaration of June 15, we would have an unreasonable merging of two radically different political principles. South Korea has chosen to be a periphery of the American empire, which uses the US economy on the basis of its internal cycles and mature technologies that it exports by taking advantage of the low cost of manpower and of some raw materials.

North Korea played the Cold War card, supported only partially by China and Russia, which used North Korea as a block for the West and paid for said North Korea’s commitment with political stability and some economic aid.

The Cold War, however, is really over and this holds true both for North and for South Korea.

We need to think of new worlds and new “super-concept rules”, just to quote Wittgenstein.

Traditionally, unification is conceived as a Confederation, as supported by South Korea, or as a Federation with wide autonomy for both areas, as always supported by North Korea.

The two inter-Korean meetings held in 2000 and in 2007 – with the first one that even made the South Korean President be awarded the Nobel Peace Prize for his Sunshine Policy – recorded excellent economic results (including the free trade area of Kaesong and the tourist area of Mount Gumgang), but no effective political results.

Indeed, in November 2010, the North Korean Minister for Reunification officially dismissed the Sunshine Policy as a failure.

This always happens when politicians are only interested in conveying a good “image”.

However, let us better analyzing the reunification policies which are currently being proposed, also by authoritative US think tanks.

The excessive psychologism – the flaw Husserl saw in the European philosophy of his time – still characterizes the North American analysis of strategic phenomena in Asia and the Middle East

Hence, both in North and in South Korea, the phenomenology of elites is often quite simplified and devoid of the necessary nuances.

The “states of mind” or the subjective tendencies of the real members of the two countries’ ruling classes are not so relevant as they may appear at first sight.

“Les faits ont la tête dure” (Common sense is not so common) – just to quote Voltaire – and elites do not live on psychology, but enjoy verifiable and significant privileges that someone has to pay anyway.

Meanwhile, the Constitution establishing the North Korean Workers’ Party repeats still today that conquering South Korea militarily is the primary strategic (and economic) goal of the North Korean regime – not to mention the fact that North Korea’s ruling class is selected with military and national criteria, while South Korea’s ruling class is more technocratic and less prone to accept the line of military confrontation.

The difference is not marginal. Pending an inter-Korean conflict, South Korea’s elites would escape to the United States – thinking of being at home – while the North Korean ones would fight their war until final victory.

Furthermore, in this Asian context, our American friends quote the example of “de-Baathification” in Iraq after Saddam Hussein’s fall.

Never was an example more dangerous for the theses it intends to uphold.

The abolition of Baath, namely the Party-State, and the selective and loyalist mechanism of the ruling class in Syria and Iraq was, on the contrary, a real strategic folly which voided Iraq and certainly made it viable – just to use the typical terminology of US strategic analysis – not to the bipartite “democracy” which is so fashionable in the Anglo-Saxon world, but rather to the Iranian regime and later to the Sunni sword jihad of Daesh.

This means also viable to the division of the areas of influence in a country like Iraq, having a Shiite majority and a Sunni area which, through the jihad, has now become mass of geopolitical manoeuvre for the Gulf powers.

Every manipulation of the historical heritage of peoples and Nations is bound to lead to their fragmentation into new areas of influence, which have often not even been foreseen by the crazy “social engineers” who believe – as happened to the first US Governor of Baghdad – they can use the same laws in force in Boston to regulate road traffic in the Iraqi capital city.

Turkey, too, has got its hands on Iraq – obviously with a view to settling the Kurdish issue.

Furthermore it seems to flout any “line” worked out within NATO, of which Turkey is a member.

From the Balkans’ wars – waged to avoid the globalization of Russian oil and gas towards Europe and the Mediterranean region – to the massive use of the Afghan jihad to destabilize and disrupt the post-Yugoslav political system, to the stable destabilization – if I may use this oxymoron – of the Maghreb region with the silly “Arab Springs” to be completed with the end of Syria and its ethnic and religious splitting up, it seems that the current US global strategy is designed to disrupting every geopolitical region.

Nevertheless if all countries become “liquid” and viable, every political contagion will tend to spread and worsen.

Just think of Macedonia’s current situation and the not-so-secret plan to achieve a Great Islamized Albania, capable of standing up to the Slavic and, hence, pro-Russian Serbia.

Reverting to the US line in this Korean region, the idea is that of a reunification creating a favourable interest for the North Korean ruling classes.

How? The North Korean system based on songbun, namely the traditional caste system, is further divided into 51 subgroups.

Obviously, as everywhere, the main criterion is loyalty to the regime – hence I do not see how the North Korean elite can accept a soft reunification, in which North Korea will inevitably lose a share of power to preserve hegemony – although with fewer elitist “privileges” – in a possible peaceful reunification with South Korea.

According to the most reliable calculations, approximately 4.4 million North Koreans can be part of the local “ruling class”, but – as those who are acquainted with Pareto’s and Veblen’s theories know all too well – all elite classes are intrinsically factionist and must have strong symbolic and material incentives to back the regime that supports them.

Psychology and the democratic myth are not enough.

Suffice to recall the phenomenon of Ostalgie, namely the nostalgia felt by many German citizens and voters for aspects of life in East Germany after reunification – Nost-Algie for permanent and regular jobs, for the lack of unemployment, for the authoritarian but effective Welfare of the old Sociality Unity Party of Germany (SED).

Money, however, never pays for the symbol – hence intangible incentives must always be greater than the tangible ones.

There is also talk about a selective amnesty for North Korea’s defectors.

Why?

How could South Korea support this new share of frustrated ruling classes coming from Pyongyang and finally what would be the strategic aim of this operation?

We may assume that the aim would be voiding the North Korean regime from inside – but are we really sure that the South Korean ruling class can safely double its size, possibly incorporating the North Korean songbun classes that are already accustomed to unlawful transactions?

Furthermore, reunification would bring no concrete benefit to South Koreans.

Quite the reverse. It would be necessary to support a population – about 50% of North Korean inhabitants – who is well below the typical economic standards of South Korea’s working class.

According to our estimates, for the five years following reunification, this would create a public debt at least 24% higher than expected – which is already approximately 40% – in a situation of weak growth, due to the crisis and saturation of the US market and the contraction of the domestic market.

Being a client State never pays.

In other words, this kind of reunification would certainly lead to the default of the South Korean government.

Furthermore, currently South Korea is bearing the brunt of political uncertainty, after the impeachment of President Park Geun Hye – not to mention the already described decrease of domestic consumption, resulting from an excessive cyclical link to the US economy and the decline of exports to China.

With a 2.6% planned growth throughout 2017, South Korea certainly has not the potential to absorb or make credible its debt generated by the costs of reunification, regardless of its being an elitist or mass reunification.

Even demography does not help, as the South Korean population is expected to start falling structurally next year.

Certainly we must consider the North Korean manpower, but the labour force has a cost of training, obviously adding to the cost of the means of production which should guarantee jobs precisely to the North Korean workers.

It is worth recalling that it took over twenty years to achieve homogeneous social and economic conditions between West Germany and the old German Democratic Republic (DDR) – a goal that has not been reached yet despite the Euro manipulation and the huge German investment.

Moreover, at the time of Vereinigung, Germany was the third world economy and certainly not the respectable, but much smaller South Korea’s economy.

And what about China? Obviously it is not interested in the Korean reunification.

In fact, if this were to happen, it would be the repetition – in the Third Millennium – of the unification of Northern and Southern Italy and, in this case, the economic and political “line” would be dictated by South Korean and not by North Korea.

As can be easily imagined, China does not like this.

China has every interest in freezing any geopolitical issue in Asia, by operating with peripheral States – as in the Roman legend of the Horatii and Curiatii – by dividing and later linking them with bilateral agreements.

In Asia, China wants to avoid everything may lead to the creation of a new strategic bloc capable of dictating certain conditions to its geoeconomic and military system.

Considering that South Korea is always a US client State, China would regard reunification as an undesirable increase of the North American potential in the safety buffer zone of its Eastern and Southern coasts.

In many ways, however, not even the United States would benefit from the Korean reunification.

While there is no longer such a reason to keep large troops in South Korea, the correlation of US interests is inevitably expected to change, thus leaving the Korean Peninsula uncovered while the United States is supposed to redeploy its Armed Forces in the Pacific, around the South China Sea and in the Japanese safety buffer zone.

Currently neither China nor Japan appreciate this new scenario of the American military power in Asia.

If the United States maintained a large amount of troops in the new reunified Korea, everybody would regard this as only having the aim of opposing China.

Not even Japan would benefit from a German-style reunification between the two Koreas.

Both South Korea and, potentially, even North Korea, are now global competitors of Japan – not to mention the strategic bloc represented for the country by an imperial “co-prosperity area” that a reunited Korea would undermine.

There is no Japanese geopolitics not targeted to the whole Southeast Asia – it is not possible otherwise.

And this holds true both for the Empire – the Dai Nihon about which Haushofer spoke in the 20th century – and for the Japan regionalized by the United States.

Unlike Italy, Japan was defeated in World War II, but it is still able to think big and really understand geopolitical issues without demonizing its past and worshiping its old enemy.

Hence, what can be done? It is simple.

Reopen the Six Party Talks circle, as well as fund specific projects in North Korea and help its people with humanitarian aid, but above all, with a peaceful reindustrialization policy going towards Russia, China, the EU and, possibly, also the United States.

The Asian Bank for European Infrastructure and the European financial institutions should take immediate action – and Italy is present in the Bank of Asia. In a new type of nuclear negotiations, we should also rethink the civilian potential of North Korea’s nuclear system for it to sell energy to its neighbours.

Obviously the resumption of the Six Party Talks should be based on a reconstruction of North Korean free trade areas and on an effective relationship with Russia and China, which should become the new guarantors of the Korean Peninsula’s nuclear and economic balance.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

Continue Reading
Comments

East Asia

Decoding Pentagon Report on China January 2019

Gen. Shashi Asthana

Published

on

Amidst sequential escalation of US- China ‘Heated cold war’, Pentagon has released a new report on 16 January 2019, airing US concerns about China’s growing military capability highlighting a contingency  about a possible attack against Taiwan. This is sequel to the coercive/threatening speech of Chinese President Xi Jinping in the beginning of 2019 and earlier in 19th CPC. This Pentagon report however needs to be read in context of US-China heated cold war, including information war. The interpretation of the report indicates expeditionary design of Chinese military strategy with global ambition, exploiting its increased ‘Comprehensive National Power’ (CNP) with improved technology, economics, military hardware and other elements of CNP. Chinese rapid advancement  in hypersonic weaponry, cyber warfare, sea and air power have allowed it to look beyond its “Active Defence Strategy” and slow moving “Incremental Encroachment Strategy” to expeditionary ambition beyond second island chain. It highlights its design of increasing number of bases, which can be turned into military bases at short notice. The Chinese interest of keeping a buffer zone in the form of North Korea to avoid having direct land border with US ally is also indicated in the report. The continuous increase in its defence budget has helped PLA to modernize and pose serious challenge to regional neighbours like India

The US Position

As per the information in open domain, the Report does not cover US position in response to Chinese growing military capability in context of Taiwan, apparently being classified, as Taiwan is strategically important to them. In a joint Communication with PRC in 1972, US had adopted the line of No declaration of independence by Taiwan, No UN seat and no representation in an international organisation, which requires only one membership for a country, in respect of Taiwan. US, however, remains opposed to any unilateral changes in status quo by either side. US will therefore like to have a democratic, independently governed Taiwan as an ally, where they have adequate strategic and economic leverage, instead of it forming part of Communist PRC. Neither Taiwan nor China, nor US have crossed redlines of each other so far. The US security assurance in terms of Taiwan Relations Act, indirectly promising to make available “such defense equipment and services, as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” has been one of the deterrence to PRC in acting against Taiwan.  Last year US Defence Budget was more than next seven countries put together including China; I do not see China posing a military challenge or competition to US in global arena, however in near vicinity of its eastern seaboard, it may pose some challenge in South China Sea and Taiwan Strait. The recently signed Taiwan Travel Act, sale of military hardware to Taiwan indicates that US is in no mood to give a walkover regarding Taiwan.

Chinese Position in context of Taiwan

PRC claims Taiwan as its integral part and is looking for its peaceful reunification continues to be a dream. PRC passed the Anti-Secession Law in 2005, authorising war if island formally declares statehood: hence any effort towards its independence/aiding its independence will invite Chinese action to protect its sovereign territory. The threatening speeches of Xi have brought US and Taiwan much closer and much sooner than what Xi Jinping would have expected. Taiwan seems to have got bolder today and is talking of self defence indicating that Chinese coercion has not worked so far. Will China Use Force Against Taiwan

President Xi Jinping has ordered the Southern Theatre Command responsible for monitoring the South China Sea and Taiwan to get ready for war, but in my opinion China will not use force against Taiwan due to many reasons. Firstly Adventurism by China in Taiwan at the time of Trade War with US does not make any economic sense as bulks of Taiwan’s investments are already in China with Taiwan having a trade surplus of approximately US $ 30 billion with China . China gains nothing, but has a lot to lose if it attacks Taiwan. Secondly, its adventurism will amount to crossing red line of US, which treats Taiwan no less than an ally. It had earlier indicated that any unilateral change of ‘status Quo’ in Taiwan as a red line and most desired option of common Taiwanese. China has enough missile arsenals to destroy Taiwan, but such destruction of Han Chinese, who have relations and investments in mainland will not go well with domestic population of mainland, besides destroying its own economic powerhouse .The threatening speech by China for Taiwan and countries helping them is to deter Taiwan getting stronger to pursue the path of independence.

What does this Report means for India

With construction of CPEC connectivity, and China’s need to increase domestic support by generating spirit of  nationalism amidst slowing down of economy, the urge to do something different cannot be ruled out. This could be an encroachment into un-demarcated borders. The clouds of ‘Two Front War’ continue to hang over India. To avoid a ‘Two Front War’ for India, the best way is to convince the potential adversaries that India is capable of fighting it. This convincing cannot be by announcements or statements by leaders, but by developing capability to do so. The defence capabilities take long time to build up, more-so if India does not have strong manufacturing base. ‘Make in India’ and self reliance is essential, but time consuming; hence must continue simultaneously with procurements. The defence budget allocation will have to substantially increase in 2019 and beyond to narrow down asymmetry in CNP with China, in the interest of national security.

Continue Reading

East Asia

China’s Soft Power Diplomacy on North Korean Nuclear Crisis

Published

on

For about the last two decades, North Korea’s nuclear weapon development program has become one of the major issues of concern to international community in general and Korean Peninsula in particular. Since the early 1980s, Pyongyang had begun undertaking its weapons of mass destruction (WMD) programs. North Korea also has conducted total five nuclear tests: October 9, 2006; May 25, 2009; February 12, 2013; January 6, 2016; and September 09, 2016. Following its historical progresses, North Korea apparently successfully tested its first intercontinental ballistic missiles (ICBMs) in July 2017.

As far as the global as well as regional security is concerned, the constant development process of North Korea’s nuclear weapons attaches immense attention with huge tensions to world’s global as well as regional powers, the United States, China, Russia, South Korea, and Japan. The involved actors especially the United States has urged for China’s support in dealing with North Korea’s nuclear crisis since the very beginning. Being a significant global as well as regional actor, China’s active role in resolving North Korea’s nuclear crisis through soft power diplomacy draws attention to the wider readers especially from the arena of international relations.

Given these developments, it is pertinent to examine China’s soft power diplomacy in dealing with North Korea’s nuclear crisis. China’s role in the Six-Party Talks on the North Korea nuclear crisis is one of the significant implications of China’s soft power diplomacy in Korean Peninsula. China has been playing a proactive role since 2003 in order to establish peace and stability in Korean Peninsula. The country has facilitated rounds of discussion among the members of the Six-Party Talks in order to dismantle North Korea’s nuclear program with the consent of involved actors, thereby, avoiding any kind of regional instability in Korean Peninsula.

The Shanghai Cooperation Organisation (CSO) is another multilateral forum where China has adopted its soft power diplomacy in resolving North Korean nuclear crisis. For instance, China asserted on dialogue and consultation for the peaceful resolution of North Korean nuclear crisis at the SCO annual summit held on June 11, 2018, in China’s coastal city of Qingdao, which is called Qingdao Declaration.

China’s diplomatic initiatives through its active mediation or mediation diplomacy, one of the significant aspects of China’s soft power diplomacy, in resolving the North Korean nuclear crisis is notable. The U.S.-North Korea talks in March 2003; trilateral dialogues consisting of the U.S. and the Democratic People’s Republic of Korea (DPRK) in April 2003; talks among Six Parties in February 2007; bilateral meeting between the then Chinese Premier Wen  Jiabao and North Korean Chairman of the Workers’ Party, Kim Jong Il in October 2009; and Beijing-Pyongyang dialogue in August 27, 2010 facilitated by China demonstrate China’s soft diplomatic initiatives to dismantle North Korea’s nuclear programs; peacefully resolve the nuclear crisis; and ease tensions in Korean peninsula. In addition, Chinese government officials paid several official visits in Pyongyang in order to make progress in denuclearization process in Korean Peninsula.

Dialogue and negotiation rather than confrontation is a significant strategy of China’s soft power diplomacy in resolving North Korean nuclear crisis. Chinese Foreign Minister, Wang Yi, in this regard, stressed on the peaceful solution of North Korean nuclear standoff through dialogue. Besides, reiterating on the necessity of nuclear-free Korean Peninsula, Wang Yi, also emphasized on the consideration of North Korea’s security concerns and other concerns related to its nuclear programs to avoid any military action or the escalation of tensions in the Korean Peninsula. As per its policy, China strongly opposed to the decision of deploying the Terminal High Altitude Area Defense (THAAD) anti- missile defense system by the U.S. and South Korea in August 2017 and reiterated on dialogue and consultation.

However, now it is important to examine the implications of China’s soft power diplomacy on North Korean nuclear crisis. China’s soft power diplomacy regarding North Korea’s nuclear crisis has significant ramifications on the process towards the peaceful resolution of the crisis. Most significantly, the most recent bilateral meetings between Xi Jinping and Kim Jong-un, Inter-Korean Dialogue, and the U.S.-North Korea Singapore Summit have attracted worldwide attention. For instance, during the historic Inter-Korean Summit on April 27, 2018 in South Korea, Kim Jong-un, Chairman of the Workers’ Party of Korea and the State Affairs Commission of the DPRK, declared to discontinue its nuclear tests. Therefore, the U.S-North Korea Summit, also referred to Singapore Summit, on June 12, 2018 is a noteworthy development towards the denuclearization process of Korean Peninsula. During that summit, Kim Jong-un reaffirmed his position and unwavering commitment to the denuclearization of the Korean Peninsula, while the U.S’ President Donald Trump reiterated on providing security guarantee to the DPRK in return.

Chinese President Xi Jinping’s invitation to Kim Jong-un on June 19, 2018 and talks on the denuclearization of the Korean Peninsula reiterates China’s sincere efforts to continue denuclearization in peninsula. As per the development of their bilateral talks, Xi Jinping met Ri Yong Ho, Foreign Minister of the DPRK on December 07, 2018 in Beijing calling for the development of their stable relations and political settlement on the Korean Peninsula through the progress of Pyongyang-Washington peace talks addressing each other’s legitimate concerns. Kim Jong-un has expressed willingness to continue fruitful discussions with the US President for “complete denuclearization” and “lasting peace” in the Korean Peninsula.

China’s positive role in denuclearizing the Korean Peninsula and improving inter-Korean relations has also been raised by the President of Republic of Korea, Moon Jae-in. He mentioned, “China has played a positive role in denuclearizing the Korean Peninsula and improving inter-Korean relations. Until now, China has played a positive role in helping very much the Korean Peninsula’s denuclearization and the improved inter-Korean relations.”

All these progresses particularly with the China have injected new impetus towards the peaceful resolution of North Korean nuclear crisis. China has been playing very crucial role in resolving the regional as well as global tensions related to North Korea’s nuclear development programs. China’s proactive mediation diplomacy, multilateral as well as bilateral engagements, facilitation to dialogues and meetings for all parties have played crucial role in dealing with the crisis through soft power diplomacy.

Continue Reading

East Asia

Diplomatic Maneuvers for China-US trade war: December 2018 agreement

Bassem Elmaghraby

Published

on

On the sidelines of the G20 summit in Buenos Aires, Argentina on December 1st 2018 the US President Donald Trump and the Chinese President Xi Jinping concluded a conditional trade agreement, according to which Beijing has to reduce its current trade surplus with the US by increasing Chinese purchases of soybeans, natural gas, commercial aircraft and some other US industrial goods. In contrast, Washington will maintain the tariff rate on Chinese exports to US of US$200 billion at 10 percent, instead of increasing it to 25 percent, which was due to come into force on Jan 1st 2019.

Although some commentators, politicians, or scholars over-optimistically described that deal as the end of the trade war, or at least a first step, between the two countries, including President Trump himself; but in fact by analyzing the reasons behind the two countries’ decision to conclude such agreement and whether this agreement paves the way for a final trade agreement or not, and what obstacles may stand in the way of reaching a final trade agreement between the two countries, it seems more likely to be a beneficial truce or a diplomatic solution to gain more time, calming the growing escalation of the trade war and to control its affiliated losses from both sides. Accordingly, the first question that may come in mind is how the future trade relations could be between the two countries?

The coming sections attempt to answer these questions by explaining the reasons behind conducting such agreement for the two sides, the main barriers or obstacles that may prevent reaching a commercial peace between the two countries, and the prospected future of US-China trade relations based on these factors as following:

Why to conclude such agreement?

Based on the rational choice approach, the simple answer of this question is that such agreement is beneficial for both of them; and in fact it is also beneficial for all the international economy, at least to stop the continued losses of both countries.

For the United States

In order to control the losses of the American economy since the beginning of the trade war, where the indicators of the American stock markets declined sharply during October and November 2018; large losses suffered by the American farmers because of China’s imports reduction of agricultural products and soybeans in particular, where 60 percent of its total US production were importing by Beijing; and the costs of the US Department of Agriculture increased for providing almostUS$12 billion as aid to farmers and breeders affected by the trade war.

Seek to improve the trade balance with China, where the Chinese trade surplus have been increased to $293.5 billion from January to November 2018, comparing with $251.3 billion in the same period previous year; combined with increase the Chinese exports to the US by 9.8% annually since November 2018, While imports fell by 25% during the same month.

In addition, to avoid any further economic damages or losses that may occur because of the continued escalation of the trade war between the two countries whether to the American or the international economy, Moreover, to face the internal pressure of his strong opposition, and for the re-election considerations.

The agreement came shortly after the G20 industrialized nations backed an overhaul of the World Trade Organization (WTO), which regulates international trade disputes, giving a symbolic victory for Trump administration, a sharp critic of the organization.

For China

To reduce the negative impact of the trade war, where the Chinese economy suffered from a decline in the economic growth rate during the third quarter of 2018,the defaults in the payment of corporate bond yields, and the decline in property prices; in addition to the devaluation of the Chinese currency since May 2018 by more than 8%, Which is warning to slow the economic growth to 6.3 percent next year compared to the current growth rate of 6.5 percent.

To avoid increasing US tariffs that would undermine China’s economic growth prospects, and increase pressure on its financial markets.

In addition to maintain the stability of the international economy, in order to avoid any negative effects on the Chinese economic ambitions such as the Belt and Road Initiative (BRI) whether directly or indirectly.

– Based on the abovementioned reasons it seems clear that such agreement is a beneficial for both sides to gain more time and prepare themselves for a second round of the trade war, or at least to stop the terrible consequences of the trade war escalation.

Obstacles of a commercial peace between the two countries

There are many obstacles or barriers that prevent a long-term commercial peace between China and the US such as:

The low level of trust between the two countries because of many of the thorny issues among them such as addressing Intellectual Property Rights (IPR) protection, the synthetic opioid fentanyl being sent from China to the United States, non-tariff barriers, cybercrimes, cyber-security, services and agriculture; and especially after the United States accuses Beijing of forcing American and foreign companies in general to disclose trade secrets versus access to the Chinese market.

The different understanding of the agreement by the two sides and the lack of clear future trade talks between them are also stumbling blocks in commercial peace way; while president Trump pledged to freeze tariffs in exchange for China’s commitment to reduce bilateral trade deficit with the US, but it is still unclear what exactly Beijing proposed; where the reports published by China’s state-owned media completely deny Beijing’s commitment to reduce the trade deficit with the US. In addition, whether China can reduce its tariffs on the American products, also the quantities and timing to resume its purchases of American goods are not clear. In addition to tariffs on Chinese goods, Trump has imposed tariffs on steel and aluminum imports into the United States this year. Numerous countries have filed litigation at the WTO to contest the levies.

Arresting the chief financial director of Huawei Communications Technology in Canada (the daughter of Huawei’s founder, the second largest smart phone company in the world)on December 1st 2018 (the same day as the agreement was concluded); and the American requests to extradition on charges of posing a threat to US national security arguing that the technology it uses can be used by the Chinese government for espionage. Additionally, the US companies were banned from exporting to the Chinese telecommunications company ZT earlier 2018 due to Iranian sanctions had been violated. Accordingly, the Chinese Vice Foreign Ministry has summoned the US Ambassador to China on Dec. 9 in a protest over the arrest. There is no doubt that this issue will affect the scheduled talks between the two countries; While the Trump administration insists that it will not affect the ongoing trade talks, Beijing believes that it is just an American attempt to contain China’s technological ambitions. In response, Beijing may have to take some measures to calm the mounting public anger, bearing in mind that a Chinese court decision to ban the sale and import of most iPhone models on Dec 10.

The fact that the competition between the two countries is much farther than the limits of the trade warand trade is one aspect of this competition, where from the Communist Party of China’s perspective the United States seeks to bring about comprehensive changes may reach the extent of changing the Chinese political system, and obstacle the Chinese economic and political aspirations.

Indeed there are many indications that the Trump administration consider the issue as much greater than a trade war by aiming to contain or undermine China’s rise in the world and maintain the American economic and political hegemony over the world for instance the US national security strategy and Trump hint to withdraw from the Nuclear Weapons Agreement, the declaration of the free and open Indo-Pacific economic zone, and the American opposition to BRI as well as the Made in China 2025’splan. In addition, the adoption of the America First policy gives the impression that the United States is seeking concessions, not to improve trade relations, but to maintain American hegemony. Furthermore, the historical experience proves that the American perspective in dealing with the international issues mostly characterized by realism features, where as soon as it considered any state as their rival the caution will prevail on their relations and keeps working and set strategies to win the zero-sum game with this state.

The narrow timeframe of the agreement, which lasts for no more than 90 days for further talks with the aim of structural changes on some thorny and complex issues, therefore, it is difficult to resolve this long list of issues in that short timeframe.

Furthermore, the two countries are also at odds over some other issues such as the China’s extensive claims in the South China Sea and U.S. warship movements through the highly sensitive Taiwan Strait.

Future of US-China Trade Relations

Whether the two countries could reach a commercial peace or not is depending heavily on their ability to overcome the above challenges and the real willingness of both sides to take concrete steps to end their trade war.

From one side, there are some steps or measures from the both sides to contain and avoid the escalation of trade war such as President Xi’s agree to designate fentanyl a controlled substance during the meeting, the Chinese announcement to slash on US-made autos from 40 percent to 15 percent in an attempt to show its willingness to calm the tension with Washington.

In the same context, whether the annual sessions of the National People’s Congress, the Chinese People’s Political Consultative Conference (CPPCC) scheduled for March 2019 may lead to substantial changes to China’s economic policy will be a decisive factor in determining the future of the US-China trade war. On the other hand, the announcement of President Trump on December 11 that he may intervene in the Justice Department’s case against the chief financial director of Huawei if it would be in the interest of U.S. national security and help forge a trade deal with China, gives an impression that both sides have a desire not to escalate the trade war or at least express their fearing about the consequences of this escalation.

From another perspective, it’s arguable that the US-China trade agreement is very similar to the agreement between Washington and the European Union in July 2018, which included strengthen the free trade measures and the announcement of more European purchases of the American agricultural products. But the agreement is in danger of collapse, with President Trump threatening once again to impose a 20 percent tariff on all cars and spare parts imported from the EU. The same scenario is possible with China as long as it serve the American interests, especially with the lack of a final agreement on what Washington considers as unfair trade practices by China in the areas of cyber espionage, piracy and intellectual property rights violations. With bearing in mind that the White House said talks would take place to resolve within the next 90 days specific US complaints such as forced technology transfer, or else existing 10 percent tariffs would go up to 25 per cent.

Continue Reading

Latest

Trending

Copyright © 2018 Modern Diplomacy