One would think it unnecessary to point up the potential for disruption of a functioning international order now before us in the stand off of an American Administration headed by a President widely perceived to be inexperienced and impulsive, and a perennially, aggressively oppositional North Korean dictatorship.
Threats of annihilation of much of the population and productive capacity of a nation — actually, in consequence, the two nations on the Korean peninsula — and total disruption of largest trade relationship in the Pacific Rim — — now a cornerstone of a robust, healthy global trade system — hold the potential for rapid loss of tens of millions of lives, and disruption of supply chains and other exchanges deeply embedded in the United States, China, Korea and other nations. Standards of living would decrease in at least three major economies, and other economic systems around the world could face major uncertainties. The damage to the international fabric would be extensive and last for decades. So clearly it is necessary to understand and take account of what looms before us.
This moment has been long coming, It embodies conflicts which were only held in abeyance by the truce which divided the Korean peninsula over six decades ago. And even the work-around here proposed would only reduce the tensions involved in Korea to currently manageable levels.
One might argue, as, in effect, has Russia’s Putin, that the potential danger to the United States and its allies of a Korean nuclear capacity is not likely to destabilize the world, and the United States is overwrought. But the forces in play and in this corner of the world are substantial and persistent, and if World War I taught us anything, it is that a destabilization event can spread far, and catastrophically, beyond its initial impulse.
At this point, it appears that many see Chinese action directed toward North Korea as the most effective and feasible action available. From the viewpoint of the United States, the venue of this writer, one can make the case that there is an asymmetry which China should recognize and respond to. Though nations economically aligned with the United State ring China in the Pacific Ocean area, none of them hosts missile capacities targeting or otherwise threatening China. But North Korea, whose economy is closely linked with China’s, aggressively seeks to create a nuclear threat to the United States.
And while the leader of North Korea may not be incapable of connected thought, or intentionally suicidal, he has a very narrow and coddled range of experience. The conduct of his regime suggests that he has little more regard for the millions of lives he might sacrifice in South Korea, or elsewhere, than he would for the ants in an anthill in his path, and he would care little or nothing for any disruption his conduct might lead to in the interdependent web of nations in the Pacific and around the globe.
China’s capacity to restrain North Korea may be conditional, and its use in some respects awkward for it. Various writers have pointed out such considerations. But the economic and political stakes for China are massive. Korea is not economically essential to China. But even were it to be considered so, China need not fear that an eventually unified Korea (which the United States does not need, and has not for decades been a core objective of the United States) would decisively tilt the Korean peninsula against China. China has propinquity, a long history, and major market opportunities for any unified Korea, should that, far from certainly, eventuate. In an open international trading regime, such advantages can be legitimately be employed without justifying massive economic or political response from the United States
Even though these are considerations which the representatives of the United States can press, one can consider including in the multilateral response to North Korea’s provocative adventure an arrangement which demands less from China than a complete abandonment of North Korea, and which could be more effective as to all concerned.
Let us consider this framework. From the viewpoint of the United States, the critical issue is not so much whether North Korea has an ‘atomic bomb’ as whether it can deliver such a weapon to our homeland, or the homelands of our economic and political partners, If North Korea’s ability to launch offensive long range missiles could be removed, then the threat which has so aroused the United States, and others in the International community, would be eliminated or reduced to far more manageable dimensions.
At present, notwithstanding extensive sanctions, the world external to North Korea has not been able to stop the Kim regime’s pursuit of long distance missile capacity. Let us suppose that this continues to be the case, short of sanctions so severe as to induce enormous suffering upon the North Korean people and/or a reformulation of the uses of the United Nations apparatus?
Let us suppose that the United Nations apparatus were to be used to certify and if necessary prevent any ICBM launches, as a part of a program to convert the current truce in the Korean peninsula into a workable treaty. Such a program to in effect disarm North Korea, as to nuclear tipped missiles, would also necessarily involve stepping back sanctions, on proof of performance, and treaty obligations not to invade or use first strike force against North Korea if it were to abide by the treaty.
To give such an arrangement multilateral teeth, let us then suppose that nations with the intelligence and technical capacities to detect the creation and exercise of long distance missile capabilities were to unite to earmark for United Nations ‘trigger finger’ authorization the use of means to destroy, or otherwise make inoperative, the missile facilities used to launch any ICBM from North Korea. In such an arrangement, no need of demonstrating any harm to any nation would be required, Nor would any single nation, including but not limited to South Korea, be identified as ‘the opponent’ justifying armed invasion or other forms of retaliation. The issue would become very simple. If North Korea undertakes action which is aimed at delivering destruction to any other nation, by ICBM means, and evidences that aim by ICBM deployment, it would immediately and effectively sacrifice such means, by concerted action of the entire international community. (Even if, in frustrated rage, it were then to lash out on South Korea, it would have doubly earned the concerted opposition of a formidable group of nations.)
Even though this approach could be argued to be elegant and incisive, in concept, it would present substantial practical and political issues. The capabilities to counter ICBM use would have to be identified, and their availability and usage controls continually monitored. This is sensitive territory for any nation having such capabilities. A great deal of very sensitive demarcation and coordination among nations would have to be agreed upon and continually maintained. The mechanism entails such destruction potentials as to demand the most stringent oversight and maintenance, while maintaining lethal effectiveness. Clearly, any such program would have to be explored carefully, by a sufficiently diverse body, before presented for United Nations acceptance in some fashion.
There would also be costs of maintaining this control apparatus. (Those might be covered by levy on North Korean exports and imports. This approach would make international threatening costly to North Korea, while allowing peaceful commerce to proceed without embargoes and other stringent impediments.)
Also, granting this much latitude for lethal effect to a body of global scope would be troubling to many in the international community. If this were done, might it become a template for other cessions of lethal authority, reducing the scope of national sovereignty, and eventually resulting in a group of Overlords remote from the global citizenry, subject to corrupt and brutal use of vast delegated powers? Bit by bit, ‘emergency’ by emergency’, by incremental steps, would international citizenry become international serfdom?
In the legal discipline, there is a saying to the effect that hard cases sometimes make bad law. North Korea is a a hard case. We do not want to let it lead to a repressive international regime.
But ‘hard cases’ do arise, and require practical solutions. This hard case has a potential for vast global damage, here and now. Let us consider looking down this path.
Getting concert among the most interested national entities, in a formalized framework of this sort, would reduce the possibilities of oppositional interactions among them, involving trade, or military, activity, getting out of hand, and destroying economic commerce important to all nations. North Korea would in effect face an effective blockade of nuclear force, and concerted resistance to any attempt to hold hostage millions of Koreans in aid of its long run effort to gain the capacity to use such force. In exchange, North Korea would gain formal international recognition, would gain assurance that force would not be used against it, and would gain much improved possibilities for peaceful and productive commerce.
The complex puzzle of Canberra-Beijing ties, as diplomacy takes a back seat
Australia and China seems to be engaged in a repulsive tariff war targeting each other’s goods. Canberra is struggling to manage its complex economic relationship with Beijing even as it finds itself in the strategically opposite camp. How did things turn out this way? Here, I analyse.
There was a time when Australia under the Mandarin-speaking Prime Minister Kevin Rudd, who was in office from 2007 to 2013, had the highest level of warmth in relations with China.
The Labour premier saw a promising prospect of economic partnership with a rising China at that point of time, but gravely under-estimated the geopolitical threat that would be soon posed by Beijing, a mistake later governments would realise and is still striving to rectify.
Quad pullout and comeback
Rudd even pulled Australia out of the four-nation Quad grouping in 2008, a year after it was conceived by former Japanese PM Shinzo Abe, in a move to appease Beijing with which Canberra’s economic partnership was progressively moving upwards. But, nine years later, Malcolm Turnbull’s premiership brought Canberra back to the Quad as regional and global security dynamics witnessed a paradigm shift.
A decade later since Rudd took office, despite closer economic ties with Beijing, Canberra pushed for a closer alliance with the United States since 2017, the year Quad Security Dialogue was revived during the ASEAN and Related Summits in Manila.
It was a result of changes in security assessments by Canberra with regard to new threats and challenges from an increasingly assertive Beijing in the Indo-Pacific and beyond.
The rift between Australia and China further widened, earlier this year, when the Australian government supported an inquiry into the origins of the novel coronavirus, annoying China where it originated. Australian politicians also became increasingly divided on hawkish and dovish lines.
Huawei and ZTE ban
Tides were turned in 2018 when Australia became the first country in the world to ban Chinese telecom giants Huawei and ZTE from 5G trials and rollout, citing security concerns, as these companies ‘allegedly’ had links to the Chinese ruling establishment which they deny.
Beijing also reciprocated with tit-for-tat measures from time to time. The latest in line of such measures was the imposition of temporary anti-dumping tariffs up to 212.1 per cent on Australian wine imports with effect from November 28, this year.
Ongoing tariff tensions
2020 saw a foray of imposition of tariffs and reciprocal duties from both sides right from the beginning of the pandemic. Attempted mergers and acquisitions by Chinese companies involving companies in Australia were also blocked by Canberra citing security reasons.
Adding oil to the fire, anti-dumping investigations were initiated by both sides against each other, for using its findings as rationale for imposing more tariffs on different sets of goods such as aluminum, steel, paper, coal, copper, sugar, log timber, and barley.
What will be the fate of the 2015-signed China-Australia Free Trade Agreement (ChAFTA)?
The worsening ties might take a toll on ChAFTA as it readies for a five-year review next month, notwithstanding the other broad-based trade pacts in which both countries are participants such as the recently-signed, 15-nation Regional Comprehensive Economic Partnership (RCEP).
ChAFTA took about a decade to complete and led to zero tariffs on many goods, but RCEP is still in its infancy.The main issue is not whether a review of ChAFTA is possible, but how to prevent the looming prospect of Canberra and Beijing retreating from the current commitments directly or indirectly that would effectively reduce the pact into a state of coma.
As ChAFTA goes for review in December, the most likely outcome could be both countries agreeing to maintain the deal’s status quo. If any of the parties wishes to terminate the pact, there is a six-month notice period after which they can leave, with or without a review.
Still economic partners, but political rivals
Today, China has positioned itself as Australia’s largest trading partner. Moreover, Australia strongly benefits from its close proximity to the vast markets of China and Japan which together represent over 40% of all Australian exports, in which a little over 32% amounting to $89.2 billion, are exclusively to China, as data from 2019 show. Despite this, Canberra and Beijing remain at odds politically.
Exercise Malabar 2020 and beyond
One of the striking questions in the strategic circles of all Quad partner countries is, will Australia continue to take part in the annual Exercise Malabar in the coming years, annoying Beijing further?
While Japan is a strategic partner in the Quad, ties with China are moving on an adversarial path, particularly worsening since Canberra took part in the annual Exercise Malabar in the Indian Ocean this month, after a gap of 13 years since it left the mega naval war games.
The exercise by the four Quad partners of India, United States, Japan, and Australia is apparently a warning to Beijing’s naval ambitions in the waters of the Indo-Pacific.
Supply Chain Resilience Initiative
In fact, all the Quad partners and other democracies in the Indo-Pacific wish to decouple itself from over trade dependency on China. But, domestic economic realities prove otherwise. With a raging pandemic and the unravelling US-China cold war threatening supply chains, Japan has recently put forward an idea – the Supply Chain Resilience Initiative or SCRI.
It is a trilateral approach to trade, with India, Australia, and Japan as the key-partners aimed at diversifying its supply risk across a group of supplying nations instead of being disproportionately dependent on just one, apparently keeping China in mind.
Despite all these measures, the prospect of closing of huge Chinese markets for Australian exports, owing to a disproportionately high level of tariffs is haunting domestic producers in Australia that could potentially make Australian wine largely unmarketable and non-feasible in Chinese markets.
Ineffective diplomatic efforts
Current Australian PM Scott Morrison has been trying to bridge gaps in a reconciliatory tone by stating that his government’s actions are wrongly seen and interpreted by some only through the lens of the strategic competition between China and the US. But, Beijing doesn’t seem satisfied, as evident in the decision to impose the recent set of disproportionate tariffs on wine.
Loss of businesses for Australian domestic producers is already hurting the Australian economy badly as goods remain stalled at ports. But, the behemoth of Chinese economy appears to be largely resilient to adverse impacts, compared to the Australian economy.
Australia’s producers and farmers are largely unhappy and unsatisfied with the way Canberra is dealing with Beijing as it directly threatens their livelihoods.
As things turn out worse, Canberra will have to strategise newer options to effectively balance geostrategic and economic considerations with regard to Beijing, possibly through the diplomatic route, in a way to immediately diffuse the prevalent confrontational approach to come out of this diplomatic impasse.
Is China on the brink of a food crisis?
It is not a secret that the current COVID-19 pandemic has been affecting people all around the globe. The virus touched almost all spheres of regular life – i.e. it resulted in temporary or permanent closure of businesses, a rise in the unemployment rate, inability to physically spend time with family and friends. Such drastic changes in times of uncertainty significantly impacted the well-being of the world population. Moreover, Food and Agriculture Organization of the United Nations (FAO) warned about the emerging food shortages worldwide. According to FAO statistics, global food prices have been on the rise for four consequent months, hitting their maximum in September 2020. China – the place where the virus originated – is one of the states that have been seriously affected by the disruptions, including production and distribution of food.
In his speech on August, 11 Chinese leader Xi Jinping did not admit any food shortages. However, he promoted food security through the campaign “operation empty plate,” thereby encouraging people to stop wasting food. It is interesting to note that Mao Zedong introduced a similar food campaign before the 1959 Great Chinese Famine. Meanwhile, there has undoubtedly been a significant increase in food prices in China. Many experts claim that China is on the brink of a food crisis that has been manifested as a result of lockdowns, infected livestock, and poor weather conditions. It is difficult to give any predictions or estimations about the future food situation in China because the country does not share enough of its data with the rest of the world, yet it is possible to answer the question why the state faces food difficulties.
Average food prices increase
The National Bureau of Statistics of China reported that, on average, food prices have increased by 11.2% compared to 2019. The price level of vegetables increased by 6.4% in one month; egg prices soared by 11.3% within the same period. Pork prices grew the most, by 52.6% compared to the last year’s statistics. Why is it important?
Firstly, many workers and their families who faced loss or decrease of income or remittances became food insecure. That, in turn, has had social repercussions for the overall level of crime, health concerns among adults and infants, high death rate, different demographic and economic challenges. Furthermore, international trade will also suffer: due to the lack of labor force Chinese imports in foreign countries will seemingly increase in price.
Secondly, China, along with other countries, was in a period of recession earlier this year. Food insecurity will cause difficulties in coming out of this financial downturn.
The impact of lockdowns on food supply chains
One of the main factors contributing to the declining agricultural productivity and spiking food prices in China is the restrictions on personal mobility and transportation of goods. In January Chinese authorities adopted measures to limit mobility within the country; they imposed “city lockdowns, traffic control, and closed management of villages and communities.” Such restrictions impacted food supply chains. For the production part many workers experienced difficulties getting to work that created a shortage of physical labor. That is why some crops were not picked, others were not even planted. As a result, the supply of agricultural goods decreased. On the other hand, at the beginning of the year, the demand for them also fell as restaurants and bars were closed. Thereby, many crops went to waste, while farmers did not make enough profit to purchase the seeds and fertilizers for the next season. It is a problem because businesses continue to open up, raising the demand and prices on crops. Immobility also impacted the distribution of seeds and fertilizers to the farms that disrupted the plantation season. Furthermore, the distribution of agricultural goods to grocery stores became difficult. Particular inconveniences associated with the restrictions on mobility all added up to the spike of prices on crops.
African Swine fever outbreak
Another factor impacting the emerging food crisis in China is the failure to rebuild last year’s loss of pigs due to the infection. Chinese porcine farms were hit by the African swine fever outbreak that infected and killed a large number of pigs (40% of total Chinese pigs’ population), decreasing the supply but increasing the prices on pork in 2019. According to China’s National Bureau of Statistics, pork prices were 52.6% higher in August this year than the year before, while corn prices – the main porcine fodder – increased by 20% compared to last year. Chinese farmers failed to improve the situation in 2020 due to severe flooding. The increased amount of precipitation caused considerable losses of corn and thus the inability to feed pigs. China began to import crops from abroad – particularly, corn from the US. As the United States Department of Agriculture (USDA) stated, China had been importing 195,000 more tonnes of American corn than the year before.
Shuttered diplomatic relations between China and Western states
Some experts claim that Chinese diplomatic relations with such Western countries as Australia, the US and Canada shattered due to the fire of four ballistic missiles on the Indian border on August, 26. These states are China’s major food exporters. If their diplomatic relations with Beijing worsen, then the trade has a high chance of being negatively affected as well. In other words, Chinese imports of crops have the risk of becoming more expensive, meaning that the prices of pork and other goods might rise even more.
Severe flooding and drought
Finally, worsened weather conditions – some parts of China experienced drought, others were hit by flooding – led to a decrease in crops and a significant increase in food prices. Southern, Central and Eastern China underwent a period of heavy rain and the worst flooding in the last hundred years. Excessively high water levels in major Chinese rivers, including the Yangtze River, resulted in the evacuation of 15 million people in July 2020. Moreover, the flooding destroyed 13 million acres of agricultural land, which is estimated to cost at least $29 billion of economic damage. In the meantime Northern (Xinjiang province) and Southwest (Yunnan province) China have gone through a period of severe drought. In April 2020 nearly 1.5 million people in Yunnan province were caught in an emergency situation: shortages of drinking water, damage of hundreds of hectares of crops and livestock. Consequently, the supply of many agricultural goods and pork decreased, which spiked the prices on these goods.
Chinese long-term prospects toward food security
To conclude, immobility, African swine flu, worsened weather and security conditions led to the growing food shortages and increasing food prices in China. This being said, the Chinese government has been working on that problem. It has taken special measures to ensure sufficience of agricultural goods by investing in various disaster relief funds for different crops, particularly rice and wheat. For example, Chinese authorities allocated 1.4 billion yuan to save the agricultural harvest in Hubei province. Due to the substantial loss of agricultural products, China has also increased its imports. General Administration of Customs reported that China’s grain imports rose by 22.7% in July 2020 compared to the previous year. Meanwhile, the Chinese leader took a gentle approach to solve this problem. He did not announce the issues related to the insufficient number of crops; instead, he adopted a program for encouraging people to be more frugal with their eating habits. The Chinese Academy of Social Sciences followed the same path as it denied anticipation of a food crisis in the short-term perspective, yet warned about possible food shortfalls by 2025 if no agricultural reforms take place. As of now, China is not on the break of a food crisis; however, its shuttered prospects for long-term food sustainability are subject to dangerous repercussions.
From our partner RIAC
China and Mongolia: A Comprehensive and Never-Ending Strategic Partnership
Mongolia is an exceptional country when it comes to Eurasian geopolitics, linking China with Russia, two great countries in terms of military and economic capabilities, geographical area and population. In June 2016, the China-Mongolia-Russia Economic Corridor (CMREC) was announced in order to consolidate friendly relations and promote economic exchanges for the success of the Belt and Road Initiative. Many reports indicate the great position of Mongolia on the Chinese economic map as a pillar of the modern Chinese initiative. Mongolia is a major economic partner of China, and the Chinese administration aspires to forge permanent relations of cooperation and coordination with Mongolia by virtue of its common geography and strategic location, in order to open up through it to Russia and other Mongolia is a key economic partner of China, and the Chinese administration aspires to forge permanent relations of cooperation and coordination with Mongolia by virtue of its common geography and strategic location, in order to open up through it to Russia and other international partners.
Mongolia is rich in natural resources, for example the mining industry provided up to 30% of GDP and almost 90% of exports, but its economy is not as developed compared to China. Some economic reports indicate the great economic benefit to Mongolia from the China-Mongolia-Russia Economic Corridor. Mongolia is expected to witness unparalleled economic growth in terms of international economic cooperation, which will positively affect the national economy. The Mongolian economy depends heavily on China’s investment; data of the two largest ports in Inner Mongolia Autonomous Region in northern China indicates enormous economic benefits. In the chart below, the continued economic progress achieved in Inner Mongolia is shown. In addition, rail trade increased by 16 percent year-on-year to 11.2 million tons in 2017. In the same year, 570 trips were made on the China-Europe railways passing through Ernhot (a county-level city of the XilinGol League, in Inner Mongolia Autonomous Region, located in the Gobi Desert along the Sino-Mongolian border, across from the Mongolian town of Zamyn-Üüd).
The Belt and Road Initiative aims for mutual profit, cooperation and peaceful communication. China shares an ancient cultural history with Mongolia, long common borders, and economic cooperation that has never stopped. The strategic geographic location of Mongolia makes it a priority for China on the new Silk Road, in addition to the richness of natural resources and livestock that China needs.
The Mongolians are a horse-loving people, a country known for its large number of horses. Mongols without horses are like birds without wings. Despite globalization and the great economic progress in the neighbor (China), as well as the cold weather and difficult geography, the Mongolians did not abandon their traditions and the Mongolian way of life still exists today. In Mongolia there are herders of horses, camels and cattle to benefit from milk, meat, wool, etc. During the pandemic in China, for example, President Battulga set up what is known as “Sheep Diplomacy” where Mongolian President donated 30,000 sheep to China. This initiative indicates the Mongolians’ positive intentions towards the Chinese and the desire to open up more. In this context, I would like to point out that China is a big importer of meat and the Chinese demand for meat is constantly increasing, as shown in the chart below. Here is a great opportunity for Mongolia to increase its exports of meat to the Chinese market.
The reading of Mongolian history indicates that this country has passed through periods of prosperity. Mongolia may be a good example of power and rule, as its borders extended to many countries during the rule of Genghis Khan (1162-1227), the man whom the Mongolians consider their historical leader and has turned into a hero and a national symbol. The Mongolians did not abandon their land despite the cold weather and difficult geography, indicating that they are a deeply rooted people with land. Mongolia, with its vast territories and few people, has turned into a meeting place for Russia and China, and a strategic center for Chinese economic expansion. Therefore, it is impossible for the Chinese administration to abandon the partnership with Mongolia.
The Mongolian economy is heavily dependent on livestock, and the number of pastures has increased significantly since the Soviet era because of the transfer of ownership to the people. However, the government is still not able to provide all services to citizens “the government has failed to promote education and health care and veterinary care in pastoral communities, so there is no longer any incentive to stay in rural areas” said Sarol Khuadu, an official at the Institute for Environmental Research in the Mongolian capital. The policy, which no longer places much emphasis on the countryside, has led to the transfer of large numbers of citizens to the capital and to engage in the world of money and business.
Unfortunately, the Mongolian government is not working seriously to support citizens in remote areas. The conditions of life are not good and the loans granted are high interest, in addition to the weather that adversely affects their businesses. In order to help the poor and rural people, in cooperation with national governments, humanitarian, development and scientific partners, FAO has developed an early warning approach by monitoring risk information systems and turning warnings into proactive actions. International organizations contribute to permanent humanitarian and social assistance in Mongolia.
Mongolia’s strategic policy through the “Mongolia Steppe Road Program 蒙古国“草原之路” is largely in line with the belt and road initiative, which is a road connecting Mongolia, China and Russia. Consequently, Mongolia, a country that mainly depends on the agricultural sector, will be a center for economic communication between China and Russia, and thus will witness a great economic development. The Steppe Road Program aims to boost Mongolia’s economic standing and create an advanced network of infrastructure for communication with China and Russia and build an oil and gas pipeline. In 2014, during his historic visit, Chinese President Xi Jinping raised the level of relations between the two countries to “Comprehensive Strategic Partnership Relations”. Since then, bilateral cooperation has begun to move faster.
China has never abandoned Mongolia; it is a country of advanced strategic location as a bridge between Asia and Europe, in addition to the important agricultural sector in Mongolia which benefits China greatly, not to forget to mention the China-Mongolia-Russia Economic Corridor which has become an important part of the belt and road initiative and a key component of Sino-Russian cooperation.
The relationship between China and Mongolia today is an ideal example of the bilateral relationship between two neighboring countries. Cultural, economic, political and tourism communication is in continuous progress between the Chinese and Mongolians, and the Belt and Road Initiative will push this communication forward. The Chinese aspire to increase free trade areas and economic connectivity through a developed infrastructure network.
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