As the longest tour of Asia by a US president in 25 years, US President Donald Trump has embarked on a 12-day trip to Asia starting on Friday the 3rd November during which he would five countries: Japan, South Korea, China, Vietnam and the Philippines. In his shuttle diplomatic voyage, President Trump is expected to show a united front with South Korea and Japan while pressing China to take a stronger line with Pyongyang.
Donald Trump has kicked off his 12-day tour of the Asia-Pacific region in Japan. Trump will then visit South Korea and China before traveling south to Vietnam and the Philippines.
Ahead of a trip to Asia starting from Japan, Trump urged Saudi Arabia to choose Wall Street as a venue for the initial public offerings (IPO) of shares of oil giant Aramco in 2018. He tweeted from Hawaii, “Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!” The Aramco IPO is expected to be the largest in history, raising around $100 billion in much-needed revenue for the Saudi kingdom. Saudi Arabia has posted $200 billion in deficits in the past three fiscal years due to the slump in global oil prices. Aramco, which controls Saudi Arabia’s massive energy assets, plans to list nearly 5 per cent of its shares in the stock market. Plans are to list the offering in the second half of 2018 on the Saudi stock market as well as an international exchange, with markets in New York and London vying for the offering.
The trip comes at a time of heightened tensions with North Korea over its nuclear program and missile tests. Trump flew first to the US state of Hawaii where he visited the USS Arizona Memorial at Pearl Harbor – the scene of the 1941 Japanese attack that drew the USA into World War Two. He also took part in a briefing at the US Pacific Command.
On 5 November: Arrives in Japan. Plays Golf with Prime Minister Shinzo Abe and professional player Hideki Matsuyama at Kasumigaseki Country Club; Bilateral meetings with Abe; 7 November: In South Korea for talks with President Moon Jae-in. Trump will also address the National Assembly; 8 November: Arrives in China for a series of events including meetings with President Xi Jinping; 10 November: Travels to Da Nang, Vietnam, and will participate in the Asia-Pacific Economic Co-operation (APEC) summit; 11 November: Travels to Hanoi, Vietnam, for talks with President Tran Dai Quang and other Vietnamese leaders; 12 November: Arrives in Manila, Philippines, to take part in a gala dinner for the 50th anniversary of the Association of Southeast Asian Nations (Asean); 13 November: Will attend the Asean summit in Manila and hold talks with President Rodrigo Duterte; 14 November: Trump will stay for the East Asia Summit, a wider regional gathering that includes the US, India and Russia.
Japan – first stop for Trump’s Asia-Pacific tour. The first two stopovers are Washington’s key allies in Northeast Asia: Japan and South Korea. They have both been rattled by a wildcard president who threatened to upend a global order the US had underpinned for decades. In Vietnam, Trump will attend the Asia-Pacific Economic Co-operation summit in Da Nang, apparently the key item of his tour, and make a state visit to Hanoi. His final engagement was scheduled to be a summit of South East Asian nations in the Philippine capital, Manila, on 13 November but the trip has now been extended by an extra day so he can attend the East Asia Summit. The last time a US president made such a marathon trip to Asia was when George HW Bush visited the region in late 1991 and early 1992.
Before Air Force One takes off for a Hawaii visit on Friday, the key challenges facing Trump on an odyssey that started in Japan on Sunday before stops in South Korea, China, Vietnam and the Philippines. From Hawaii, he and First Lady Melania Trump headed to Japan and then on move to South Korea.
Donald Trump’s tour of Asia offers plenty to keep the US president cheerful, from lavish state banquets to honour-guard pomp and even a chummy round of golf with Japanese Prime Minister Shinzo Abe. Upon arrival in Japan, Trump resumed his characteristic aggressive rhetoric targeting his “foes” like North Korea, Iran and Pakistan warning them of destruction saying that they are on a suicide mission.
Target North Korea
Trump has previously exchanged some fiery rhetoric with North Korea over its ballistic missile tests but aides said earlier last week that he would not go to the heavily fortified demilitarized zone (DMZ) on the border between the South and North. He is, however, to visit Camp Humphreys, a US military complex south of the capital, Seoul. Trump’s visit to China was incorporated into his itinerary to make Beijing get North Korea on board.
The way the Trump government tells it, the totalitarian regime in Pyongyang is rapidly developing nuclear warheads and the intercontinental ballistic missiles to carry them to a US West Coast city such as Seattle or Los Angeles.
The White House counter-strategy seems to be assuring allies such as South Korea and Japan that the USA still has their back, while getting North Korea’s main ally, China, to economically pressure Pyongyang back to the bargaining table.
That’s a recipe for trouble at Trump-Xi talks from November 8 onwards. Many Trump’s officials believe that Beijing has to help solve the North Korea problem. Not be helpful, but solve the problem. And there’s no easy solution to this, certainly not one that China will find acceptable and low cost.
Chinese President Xi Jinping’s calculus is different. Beijing-Pyongyang relations have troughed, but a collapse of the hermit nation could send refugees spilling northwards and land American troops on China’s doorstep.
That’s where the fun stops. These are big tests for a commander-in-chief who does, on occasion, follow the teleprompter and stay “on message”, but at other times becomes frustrated and fires off salvos of brusque, early morning Twitter missives. It also represents a grueling 12-day slog of speech-making, summits, and tricky sit-downs on a range of trade disputes – and the intractable policy headache of North Korea’s nuclear arms program.
While Trump has skimped North Korea in his maiden trip to the region of Asia Pacific, the trip is indeed focused on that country as he wants to deny nuclearization of that nation. He wants to make a united front among the regional powers including China against North Korea.
Trump has spoken of raining “fire and fury” on North Korea – rhetoric that nudges the region towards a potentially calamitous conflict. He may well tone that down a notch when addressing the National Assembly in Seoul on November 8. He may also be wise to offer some goodies. The US pull-out from TPP came as China was rolling out its multibillion-dollar “Belt and Road” infrastructure development plan across Asia and beyond. According to Ford, the expected Asia policy must provide a new “economic vision, post-TPP”. Simply renegotiating a bilateral trade with South Korea, and vaunting new ones with Japan and Vietnam, is not enough.
Challenge of Asia-Pacific policy: Asia last?
Fake news, fictitious threat perception concerning their security by the government makes both USA and Israel strong militarily. USA and Israel always fix their imagined foes trying to target and destroy them, though it remains a fact both cannot be destroyed because of their anti-missile shield and WMD.
Thus any country seeking nuclear energy and WMD to defend their nations and populations from possible enemy attacks is viewed as being the cause of destructive trouble for the super power of USA and Israel. Of course that is only a known gimmick to threaten and bully the weak nations seeking WMD.
Thus Iran and North Korea are seen as their enemies because USA says they are developing nukes to destroy only USA and Israel.
Former US President Barack Obama tried to “rebalance” the US’ defence and economic policy to counter China’s rise, including with a 12-nation Trans-Pacific Partnership (TPP) trade deal that excluded Beijing.
Trump scrapped TTP almost as soon as he entered the White House in January. Amy Searight, a former Pentagon official, told Al Jazeera the “lack of any replacement with a proactive trade policy or economic agenda” has left Washington’s Asian partners feeling anxious.
Trump the property magnate is expected to unveil a new framework at the Asia Pacific Economic Cooperation (APEC) summit in Da Nang, Vietnam, on November 10. White House officials talk up plans for a “free and open Indo-Pacific region.
Although big questions about the policy remain, a recommitment to rules-based economic fairness may be a solid message, Lindsey Ford, a former Department of Defense official, told Al Jazeera. “It’s important for people to hear that America First does not mean Asia last; that American prosperity can go hand in hand with Asian prosperity,” said Ford, an analyst at the Asia Society Policy Institute, a think-tank.
Trump’s biggest challenge could be the one thing he cannot seem to change: himself. He is prone to undiplomatic language that plays badly with buttoned-down Asian officials. Previously on Twitter, he accused South Korea of trying to “appease” its northern neighbour, and criticised Xi for not doing enough to rein in Pyongyang.
The trip is longer and tougher than his first foreign venture to the Middle East in May. He may get irked by Japanese resentment over a US military base in Okinawa, or rallies against the “war maniac” US president on the streets of South Korea. “Among government officials, there are going to be a lot of white-knuckles and held breath throughout the two days of his time in South Korea,” Scott Snyder, a scholar at the Council on Foreign Relations, a think-tank, told Al Jazeera.
There is a risk of clashing egos when Trump meets Rodrigo Duterte, the hard-boiled president of the Philippines, on November 13. Meanwhile, Russian President Vladimir Putin will attend APEC, shifting the spotlight back on to the troublesome probe of election collusion. China is a safer bet.
Officially a communist nation pursuing Socialist policies indoors and a mixed agenda abroad, China has developed trade relations with US superpower along with it also shares the veto power on UNSC. USA has been employing many countries in Asia including those he is visiting now and India to contain the Chinese influence on the continent and beyond.
Neocons believes only economic ties could USA closer to Beijing. Trump’s stop in Beijing is being billed as a “state visit plus” to mark the importance of the dynamic between himself and President Xi, as well as relations between the US superpower and China’s fast-growing economy and armed forces.
In Beijing, the two leaders representing West and East respectively may be able to paper over the cracks by unveiling a few energy deals this month, but that would only be a “calm before the storm” and the “escalation of tensions” next year. The Trump government has high expectations from China, a fundamental reordering of the trade relationship, while China expects a relatively painless negotiation process.
Meanwhile, the two leaders are in different positions. Xi has just emerged from a glowing five-yearly Communist Party congress; Trump has low approval ratings of 34 percent and is battling a probe about election collusion with Russia. He faces condemnations form both Democratic and Republican pastries. Former CIA analyst Christopher Johnson compared Xi’s “strong position with no visible domestic opposition” to Trump’s routinely questioned style and legislative record. “This gives Xi a bit of a leg up” when bartering.
North Korea is not the only glitch. Trump rails against the United States’ “embarrassing” $347bn trade deficit with China, and has accused Beijing of manipulating its currency, rigging markets, and pilfering ideas from US firms.
WMD as deterrent
The US President Donald Trump’s two-week visit to the Asia-Pacific region as the threat of a military confrontation with North Korea will be high on the agenda in Japan, South Korea, and China.
North Korea is developing its nuclear weapons to defend itself against any future US aggression so it doesn’t endure “the tragic situation of the war-torn non-nuclear countries which became the targets of invasion and plunder by the USA.
North Korea needs nuclear weapons as a deterrent to prevent “invasion and plunder” by the unilateral USA. It is indeed scared of US militarism and condemned the USA and its allies’ “crazy escalation of sanctions, pressure, and military threats” against the communist country that “will get them nowhere”.
The nuclear force of the DPRK has become a strong deterrent for firmly protecting peace and security of the Korean Peninsula and the rest of Northeast Asia and creditably guaranteeing the sovereignty and the rights to existence and development of the Korean nation, using the acronym for the country’s official name, Democratic People’s Republic of Korea.
The Uriminzokkiri commentary denounced the military build-up near North Korea. “It is ridiculous for the US to try to browbeat the DPRK through such muscle-flexing as deploying nuclear aircraft carriers and submarines near the Korean Peninsula and its vicinity and flying nuclear-capable strategic bombers on it,” it said.
The USA has said it will never accept a nuclear-armed North Korea and Trump has threatened to “totally destroy” the country. In response, Kim Jong-un’s leadership said it may conduct an atmospheric nuclear weapons test. North Korea dared USA to make the first military move.
In advance of Trump’s visit, three American aircraft carrier strike groups have been deployed to the region, a move military analysts have described as unusual. Stratfor, a US-based intelligence analysis company, noted in a report that the US Air Force also will send a dozen F-35A stealth fighter jets to a base in Japan in early November.
The gathering is a rare occurrence – the last time three US aircraft carrier strike groups convened for a combined exercise was in 2007 – and will give the United States a powerful force within striking distance of North Korea,” Stratfor said.”Taken together, these developments suggest that the United States is preparing for a confrontation. But that doesn’t necessarily mean that Washington is gearing up to start a war with Pyongyang,” a report concluded.
Michael T Clare, a professor of peace and world-security studies at Hampshire College in the US, wrote: “There can be only two plausible explanations for this extraordinary naval buildup: to provide Trump with the sort of military extravaganza he seems to enjoy; and/or to prepare for a pre-emptive military strike on North Korea.”
Tensions remain sky high after North Korea’s sixth and most powerful underground nuclear test in September, and a flurry of ballistic missile tests in recent months.
Will there be a war on the Korean Peninsula?
Absolutely there is no chance for a direct US war with North Korea, a close ally of China and Russia – another veto member. Russia and China would reject any US proposal in UN for a war with NK. USA would not dare attack North Korea on its own or under the NATO banner since Russia and China might as well enter the war, making it a beginning of an official WW-III.
There could be possible triggers for war with North Korea that need to be carefully watched. The first possible trigger is a declaration of war by North Korea, especially since the USA has made clear it has not declared war. This won’t happen because Russia and China would not support it. The idea that countries would formally declare war against each other, before commencing hostilities, is a relic of the early 20th century. Although remnants of the practice remain, it was largely outdated by the Second World War as the military advantages of surprise as the Japanese attack on Pearl Harbour and the Nazi attack on Soviet Russia, made clear.
The second possible trigger is the North Korea threat of a possible detonation of a nuclear device in the atmosphere over the Pacific. Although the aesthetics of such an act would shock the world as humanity has not seen a nuclear airburst since that done by China in 1980, this would not be the beginning of hostilities. However, if Kim explodes it in international territory, such as the high seas, he faces different rules, such as when Australia and New Zealand took France to the International Court of Justice after French atmospheric testing caused radiation pollution to fall on them, downwind. It was for this reason of pollution that most of the global community concluded an international agreement prohibiting such atmospheric nuclear testing. The third possible trigger is the North Korea threat to shoot down aircraft in international airspace as in, mirroring the territorial sea, 12 nautical miles/22.2km out from the land. Previously in 1969, North Korea did shoot down an American spy plane, killing all 31 members aboard when it was operating in international airspace. At that point, President Nixon did not respond with violence due to a fear of how the Soviet Union and China would react.
Interestingly, upon arriving Tokyo, Trump has asked Japan to attack North Korea by firing missiles to that nation. Japan is yet to respond to US demand. .
After the Second World War, the UN seeking global peace hoped that all members would refrain from the threat or use of force against the territorial integrity or political independence of any state, to which Declarations of War by individual states would become redundant. However, when the North Korean armed forces advanced over the 38th parallel on June 25, 1950, without a declaration of war, it was shown how in vain this hope was. The response to this act of aggression by North Korea was the 84th resolution of the Security Council (when the Soviet Union was absent from the vote) to defend South Korea under the UN flag but with the leadership of the US.
Today, the situation is even more complicated as the North Korean rhetoric of declaring war is not uncommon. Following the 2013 sanctions approved by the Security Council against North Korea for their nuclear test, Kim Jong-un promised a pre-emptive strike against the USA with its nuclear weapons. This was followed by a “Full War Declaration Statement”. This was all part of their assertions that North Korea had scrapped the armistice that ended the first Korean War in 1953.
To show their determination in 2013, North Korea also cut the hotline that enabled direct communication between North and South Korea. Although the hotline was reconnected a few months later, when South Korea closed down the joint Kaesong industrial complex following Kim Jung-un’s fourth nuclear test in early 2016, North Korea condemned the act as a Declaration of War, and then cut the hotline again.
Cutting the hotline is more dangerous than the rhetoric. Hotlines prevent accidental war. South Korea, which has a hotline to China, has been trying to have its hotline to North Korea reconnected. However, the line that is really needed is one between North Korea and Washington. Such best practice has been evident since 1963, following the Cuban Missile Crisis, when the two superpowers recognised the necessity to be able to talk directly, at short notice, whenever required so as not to stumble into nuclear war.
Today, war planes of both USA and Russia keep flying over very close to each other’s space. Russian military aircraft have flown over 60 times close to Alaska or down past the edge of Western Europe in the past 10 years have shown, no matter how unpleasant such acts may be, such planes may be intercepted and followed, but they may not be shot down if they do not cross into territorial airspace. To ensure that no mistakes are made in this carefully choreographed sabre rattling, certain rules need to apply – primarily, the planes should not be invisible.
If Kim decides to take down one of the American planes flying in international airspace, as his grandfather Kim Il-sung did in earlier times, he would be gambling against the odds that President Trump will not respond with violence.
However, if USA would declare war on North Korea is a trillion dollar question. Will Trump order the Pentagon to attack North Korea disregarding the worst, devastating consequences?
The Implication of China’s Diplomacy in APEC and ASEAN
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.
An uncertain step in moving China-Japan relations
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.
Red Flags: Why Xi’s China is in Jeopardy – Book Review
George Magnus writes about the dangers of the Middle-Income Trap in the Middle Kingdom, among other issues, in Red Flags: Why Xi’s China is in Jeopardy. President Xi’s face adorns the book cover, with his name looming above. Fitting, seeing as China has removed presidential term limits; China’s fate is thus likely to be tied to the decision making of Xi for the next couple decades.
Magnus writes about the dangers of Xi’s likely ascendance to President-for-Life. Ever since the excesses of Mao’s one-man rule, China’s Communist Party has largely ruled by consensus, while provincial governments have served as a counterweight to federal authority via control of their land and many of their local State Owned Enterprises (SOEs). Xi is challenging this staus quo. So-called Xi Jinping Thought is now official party canon, being taught in schools and in the media. The 2012 crackdown on corruption by Xi in his inaugural year was widely seen as a pretense for taking out political opponents and sending a message to his potential opponents. Ever since, Xi has been working to centralize power to himself. Magnus notes that being leader for life largely shields Xi from short-term popular discontent, but also means that every long-term decision, good or bad, will become part of Xi’s legacy. Hence, the book informally reads as a personal policy checklist for Xi.
Red Flags lists four, well, red flags of likely impediments to Chinese economic development. Firstly is debt. China has been an unprecedented money-making machine for the past three decades or so. However, signs are starting to appear of a possible economic slowdown. Most significant is the debt-GDP ratio, which has skyrocketed over the past few years. Magnus writes extensively about how China’s growth, up to this point, has largely been fuelled by credit (debt). China’s much-maligned (by Trump, most notably) trade balance surplus has shrunk to no more than a few percent, statistically insignificant. China could theoretically make up for shrinking foreign demand for goods and services with domestic consumers. Magnus is unfortunately the bearer of bad news in this regard: “Household savings rose from about 5% of disposable income in the late 1970s to about 38% in 2016, or just over 25% of GDP. Savings by companies are also elevated, amounting to about 17% of GDP in 2016.”
Hence, the Xi regime has been trying to maintain economic growth via ever-greater sums of state investment funding. Magnus explicitly warns against this: “The reason the investment rate has to fall is because the more China relies on it, the more inefficient that investment will become.” Such a statement might seem self-evident, but Magnus backs it up with facts. For instance, he points out, “Between 1978 and 2006, for example, China spent between 2 to 4 yuan of investment to get 1 additional yuan of GDP. Since then, the amount has risen steadily to reach about 9 yuan in 2015, corresponding to a marked fall in investment efficiency.”
Magnus writes a lot about the inefficiency of China’s thousands and thousands of SOEs. “Officially, and according to some China-watchers, SOEs now account for just a fifth of output and a tenth of employment. The presumption though that the rest of the economy is in private hands, as we understand it in the West, is incorrect. Many private firms have large or majority state owners, who exercise significant control over senior appointments and corporate strategy, and state ownership is often disguised by multiple layers of investment companies ultimately owned by a state entity. Allowing for these opaque adjustments, the purely private part of the enterprise sector may actually be little higher than 20–30 per cent.” SOEs have built much of modern China, but their efforts are increasingly being wasted on skyscrapers and airports that remain almost empty, Chinese Roads-to-Nowhere. A blank check invites planners to ignore long-terms concerns of viability, blinded by short-term gains that go directly into the pockets of Party-affiliated contractors. China’s financial services sector isn’t much better off. Magnus writes about all the bailouts, takeovers and general heavy-handedness by the government of various Chinese banks and other related companies. Due to a slowdown in trade and many other issues discussed in the book, state investment will figure to play an ever-larger role in China’s economy, inefficiency be damned.
The book’s second diagnosed problem for China’s future growth is its currency, the renminbi. Xi mirrors the isolationist mindset of China’s ancient emperors with regards to cash inflows and outflows. It’s very hard for Chinese investors to send renminbi out of the country. Likewise, China restricts the ability of foreigners to own reserves of renminbi, or Chinese financial assets in general. The renminbi is subject not only to this lack of liquidity, but also the confines of a planned economy. China is infamous for its strict control of its currency valuation, as well as its monetary policy via diktats, investment and bailouts. Its ownership of USD and other foreign currency reserves must always be flawlessly balanced to safely back up the value of the renminbi. This resulted, for instance, in the selling off of a trillion of its USD reserves between 2014-2016. The combination of currency illiquidity and over-management limits the ability of the renminbi to fuel Chinese economic growth.
Thirdly, the book mentions the so-called Middle Income Trap. Once a country reaches a certain benchmark of development, it’s hard to maintain further momentum. China’s already experiencing slowed growth due to factors such as increased global manufacturing competition. As Magnus points out, China has already had its coming-out party to the world economy. It can’t join the WTO again or eliminate mass hunger again. Likewise, China has stalled in terms of rural development and education. Rural China is increasingly falling behind the major cities and the hukou system of restricted movement and rights for migrant workers isn’t helping. Students in China still attend far fewer years of school than students in developed countries like the US, especially in advanced fields like IT. These issues of inequality and 21st-century education must be addressed if China is to fully develop.
Lastly, Magnus writes about the demographics crisis. China has one of the highest ratios of elderly people in the world. Combine this with China’s 1.45 birth rate and the gender disparity caused by the 1-Child Policy and you have a ticking time bomb. The workforce is increasingly running out of youngsters who can take the place of retirees, causing a slowdown in economic output. The higher the elderly population becomes, the more each working-age person will have to contribute to pensions and healthcare. The economic burden that only-children will have to shoulder taking care of their aging parents will inevitably lower marriage rates and thus further lower the unsustainably low birth rate.
This is the most dire problem because there’s very little that society can do about it. Xenophobia has prevented any meaningful amount of migration to China, but even if China were to let in tens of millions of foreign workers, that would be a drop in the bucket for a nation of 1.4B people. Even after China ended its One-Child Policy, couples are still averaging well below 2 children, despite increasing prosperity. The only real hope for China’s demography problem would be a literal ex machina: automation. Robots may be able to generate untold wealth that could buoy a small nation like Singapore, but even an army of robots is unlikely to completely offset the gradual loss of hundreds of millions of working-age people to aging. Even if AI is a magic bullet for all productivity woes, it take probably at least a century to meaningfully scale up, by which time China’s population will have substantially shrank. It doesn’t help that China is, in many respects, barely keeping pace in the AI race with the US, Japan and the EU. In the race for artificial intelligence, even being a year behind the competition can cost trillions of dollars; China’s tech sector will likely take a few decades to completely match Silicon Valley. Lastly, it should be noted that not even innovation can overcome the limit resources of our planet. We’re already running out of industrial resources like oil and lithium. It would be foolish to place all of one’s eggs in the basket of a sci-fi utopia.
Red Flags is a very detailed and interesting book about the future of China. Magnus isn’t anti-China by any means; he gives credit to China’s marvelous successes and doesn’t moralize. If anything, the book was too generous by barely mentioning the unrest in Xinjiang and not mentioning the occupation of Tibet at all. In an objective fashion, he succinctly explains China’s problems and offers possible solutions. China has shown an unprecedented ability to adapt to change. This flexibility may wind up being undone not external adversaries or limitations, but by increasing autocracy. Dictatorship has rarely resulted in long-term, across-the-board growth. One can look at a fellow Communist country for an example: the Soviet Union. Though the USSR made impressive leaps in technology, manufacturing and agricultural output and human longevity, it was ultimately undone by its ideological rigidity. A lack of accountability for its leaders meant that the USSR was forever a captive to bad policy. Likewise, a lack of freedom stunted innovation. If Xi is to avoid the pitfalls of the USSR, he must avoid letting his power get to his head and embrace a flow of ideas from both fellow Party members and private citizens. Xi’s consolidation of control and crackdown on dissent would point otherwise, unfortunately. Only time will tell if China will continues to beat the odds…
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