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Donald Trump’s Asia tour: North Korea top on agenda

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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.

Itinerary

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.

US-China relations

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?

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China & Nepal working towards a genuine good-neighbour tie

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Authors: Himal Neupane & Jamal Ait Laadam

Although China and Nepal are very different in terms of each territorial size, population, economic capacity, technological prowess and above all military power, the bilateral relations between them have been undergone consistently and significantly. Since 1955 when China and Nepal formally recognized each with, their bilateral relationship has been characterized by equality, harmonious coexistence, everlasting friendship and overall cooperation. Particularly during the past over 40 years, China and Nepal have undergone substantial developments in view of mutual understandings. For example, in 1996 the two sides for the first time agreed to build up a good-neighbour partnership of the 21st century.

In line with this spirit of mutual respect and equality, Chinese President Xi Jinping paid a state visit to Nepal on October 12-13, during which the heads of the two states formally announced that they elevated the China-Nepal Comprehensive Partnership of Cooperation to Strategic Partnership of Cooperation in light of their many common values to enhance cooperation It is reported that President Xi frankly said Nepal wouldn’t be a landlocked country in the future as the trans-Himalayan connectivity network ultimately will support sustainable development and stability of the entire South Asia region. This is not only a promise from a large neighbor, but also a sort of responsibility from a rising major power of the world, which aims along with other parties, either large or small,  to create an international community of shared future.

Accordingly, on October 12, Nepal and China signed 18 memorandums of understanding and two letters of exchange. The priority was laid down with a focus on the implementation of signed agreements and acknowledged policies. Besides, they also reaffirmed the commitment to broaden the level of cooperation under the spirit of the Belt and Road Initiative (BRI). Moreover, China and Nepal have agreed to enhance connectivity through ports, railways, roads, aviation and communications within the broad framework of the BRI and the Trans-Himalayan Multi-Dimensional Connectivity Network which are of strategic significance. As Chinese President Xi put it, “our two peoples have shared weal and woe, and set an example of friendly exchanges between neighboring countries, and we would act to carry forward the traditional friendship and take the bilateral relationship to a new and higher level via his state visit to Nepal.

For sure, nothing is free in the realm of international politics as the realists argue what China and Nepal need from each other are their common geopolitical and geo-economical interests? This kind of inquiry is sensible and also cynical. In fact, historically China and Nepal had been at good terms for a few centuries, and during the British colonial era, Nepal actually acted as a natural buffer state between imperial China and colonial India. Since 1949 when the People’s Republic of China was founded soon after the independence of India, Nepal ended its isolation and forged amicable ties with India and other countries. Initially, Nepal had close ties to India in terms of culture, ethnics and even military affair, but it never accepts external domination. In 1955 Nepal formally recognized Beijing as the legitimate government of China and since then, it has consistently supported China in foreign affairs. Meanwhile, China has offered economic aid to Nepali reconstruction in a gradual way.

However, since the 1980s, China has steadily transformed itself into the second largest economy of the world with its alarming manufacturing capability and progressive technologies. Due to this, China has provided more assistances to Nepal and other neighbours to share Chinese public goods, especially in terms of the infrastructure projects and alleviation of poverty. For example, President Xi announced in 2018, “In the coming three years, China will provide assistance worth RMB 60 billion to developing countries and international organizations participating in the Belt and Road Initiative, and contributing an additional RMB 100 billion to the Silk Road Fund.” As a developing country nestled in the heart of the Himalaya, Nepal surely needs to expand its infrastructure through involving itself into the BRI with the view to exploring and finally harnessing its huge potential sources —hydropower—for export.

Strategically speaking, China needs to maintain its border areas peaceful and stable in light of its “NEWS strategy” that means while China tries to consolidate its entente partnership with Russia on the North and pacifying its East coast, it necessarily aims to sustain the BRI projects to the West and the maritime silk route to the South. This is the core of the NEWS strategy initiated by the Chinese elite since President Xi took power. Consider Nepal’s strategic location and political stability, China is sure to promote the bilateral ties as the two previous MOUs were signed in Beijing including to rebuild Chinese—Nepali transit road network agreements. It will help northern Himalayan areas get an alternative transit route and also facilitate the local economics, as much important part of the BRI as the economic corridor between China and Pakistan. Moreover, since 2016, a freight rail line was even completed linking Lanzhou, a heavy industrial city in the West of China through Xigaze in Tibet, down to the capital of Nepal. This is a truly strategic pivot of the grand BRI project.

To that end, President Xi revealed to his Nepali counterpart Bidhya Devi Bhandari that the two sides should work closely to carry out the construction of a trans-Himalayan connectivity network, and expand exchanges and cooperation in various fields. For her part, Nepali President Bhandari graciously welcomed Xi’s state visit to Nepal and stressed that the rise of China backed up by its modernization drive will help bring benefits to Nepal and promote regional peace and prosperity. In light of this cordiality, the two governments issued a joint statement on Oct. 13, agreeing on more practical cooperation in the new phase of bilateral relations. For a few key points serve to inllustrate that first, the two sides agreed to take the BRI as an opportunity to deepen mutual benefits in arious fields including the Kathmandu-Pokhara-Lumbini Railway Project. Furthermore, cooperation will cover the Zhangmu/Khasa port, the Lizi/Nechung port, and the three North-South corridors in Nepal. Second, the two sides will hold comprehensive discussions to strengthen trade relations, including to take positive measures to increase Nepal’s exports to China and to facilitate Chinese banks to open their branches and other financial services in Nepal. Last, China promises to help Nepal shake off the status of being a least developed country and achieve the sustainable development goals in the next two decades.

Since states are committed to each other by the nature of the world in which they exist, any close cooperation between China and Nepal is never bilateral only, that means there is always local, regional and international concerns, suspicions and even hostilities towards either China or Nepal or both. Geopolitically, India is the first power, understandably, to feel uncomfortable if not angry. This is the reason why President Xi made his first trip to India prior to his state visit to Nepal, and held comprehensive talks with Indian Prime Minister Modi. Second, China and Nepal also need to coordinate each other deftly to convince other neighbours such as Sri Lanka and Bangladesh that any sort of their cooperation would never be exclusive but inclusive and open all others in the South Asia. Geo-economically, China has reiterated that it would not seek to use its economic or financial leverages to “dictate” the local affairs of the recipient countries. Meanwhile, Chinese companies also need to move in prudently and read the local laws and political norms before jumping into the businesses.

Xi has frequently said, China is the largest developing country and also a learning country all the time. In order to promote China’s strategy to link the countries involved, mutual respect and equality are the prior condition to the long-term cooperation. In light of this, it is expected that Xi’s state visit to Nepal, the first one by a president of China over the past 26 years, will unlock new strategic opportunities for bilateral relations, as well as positively promote their ties with India by understanding the prospects for trilateral cooperation. It is clear that Chinese-Nepali economic integration through BRI is unstoppable, so it is sensible for India and the others in the region to take the opportunity to extend the proposed high-speed railway between those two all the way south to the nearby West Bengal port of Kolkata to more closely tie the three together in a system of complex economic interdependence. This is a balanced approach to prevent an open rivalry between the key member states of the BRICS and the SCO over their common neighbors. Given this, Xi’s visit to both India and Nepal might be the very time to enhance the trilateral understanding among Nepal with its giant neighbor. To that end, Nepal, though a much smaller state compared to China and India, could play positively a role as the bridge for building a more trust-based relationship across this region.

China has showed its willingness to share with Nepal its development experiences, practices and inclusive economic governance approaches. In doing so, geopolitical factors should never be the obstacles for China-Nepal cooperation. Rather, Nepal could serve as a dynamic bridge between China and India, and China and South Asia.

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Semiconductor War between Japan and South Korea

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Authors: Gleb Toropchin and Anastasia Tolstukhina

In the summer of 2019, a trade conflict broke out between Tokyo and Seoul and the matter is about more than the history between the two countries. The two developed economies have long been locked in a competition on the global cutting-edge technologies market. At the same time, they are links in the same technological chain.

At first glance, the exchange of trade restrictions that is taking place against the background of mutual accusations is nobody’s business but Tokyo and Seoul’s. Nonetheless, the consequences of the confrontation between the two countries have a global nature. The present article analyses the causes of the disagreements and looks at how the situation may develop

Introducing Restrictions and Removal from the “White List”

Despite the events of the colonial past [1], as well as the current territorial disputes that are so typical of Asia’s international politics [2], South Korea is one of Japan’s three largest trade partners. Japan exports into South Korea up to $54 billion in goodsThe key commodities include semiconductors and materials for their manufacture

The dependence of South Korean companies on imports of fluorinated polyimides and photoresists exceeds 90 percent, and their dependence on imports of hydrogen fluoride is around 44 percent (although this figure has fallen gradually from 72 percent in 2010)

However, on July 1, 2019, the Government of Japan announced restrictions on the export of commodities to South Korea that are of critical importance for microelectronics, and on July 4, the changes to the procedure came into force

Given the long-established delivery mechanism, such a political step was a surprise for many. The restrictions mainly affected three key materials for the microelectronics industry: fluorinated polyimides, hydrogen fluoride, and photoresists (these materials are used in the manufacturing of semiconductors and display panels). This measure does not mean that deliveries of these materials to South Korea have been completely stopped; however, from now on, it may take up to 90 days to approve transactions. Additionally, Japan said it would be taking South Korea off its “white list” of trade partners. The list includes states that are believed to be safe from the point of view of exporting strategic commodities and that are granted trade preferences

Let us try to understand why the Government of Japan took such steps

Pressure from Taiwanese and South Korean competitors

In 1986, an agreement was signed between Tokyo and Washington that prohibited Japan from undercutting global semiconductor prices. This step was initially intended to make the United States more competitive. However, even in those circumstances, Japan managed to take a significant chunk of the global semiconductor market from the United States in the late 20th century and retain its high positions until the 2010s. However, as early as 2012, experts noted that pressure from Taiwanese and South Korean competitors resulted in semiconductor sales of Japan’s four chip-makers, Toshiba, Renesas, Sony and Fujitsu taking a marked dip

Samsung Electronics succeeded in mastering the subtleties of developing technologies just at the right time, while Japan began to lag behind in R&D due to problems with formal education, and its revenues from global sales of microelectronics were falling against the backdrop of falling prices and the high exchange rate of the Japanese yen. Among other causes of this phenomenon, Japanese experts cite the desire to create hi-tech goods without account for high costs, and lack of innovative ideas

Today, South Korea is the leading manufacturer of memory microchips. Samsung Electronics and SK Hynix hold two-thirds of the global market. Additionally, both the United States’ Apple and China’s Huawei depend on the products produced by South Korean companies. Integrated circuit units account for 17 percent of South Korea’s exports (the entire microelectronics sector accounts for nearly a quarter of its exports), compared to less than 4 percent for Japan

An analysis of the global microelectronics market demonstrates that, currently, the market particularly values dynamic random-access memory semiconductors (DRAMS) that hold tremendous significance for such cutting-edge technologies as artificial intelligence, the Internet of Things and robotics. South Korea holds impressive positions in this area as well: Samsung and SK Hynix control 72.8 percent of the DRAMS market and 46.8 percent of the global flash memory market

Reasons for Introducing Restrictive Measures

The East Asia Forum reports that Japan’s strategy of opposing Seoul was developed jointly by the country’s Ministry of Economy, Trade and Industry, Ministry of Foreign Affairs and Ministry of Agriculture, Forestry and Fisheries. The Cabinet of Ministers subsequently supported these measures, thereby making the key decision to transfer the issue into the political realm

It appears that Japan’s decision to impose restrictive measures was prompted by the fact that the country has clearly fallen behind technologically on the global microelectronic market, which negatively affects both the country’s economic indicators and its national security

According to the expert June Park, the Government of Japan decided to institute the restrictive measures out of concern for national security, since, in exporting rare materials to South Korea, Tokyo cannot be certain they will be used properly

The Japan Times notes that Tokyo justifies the introduction of increasingly strict export requirements by claiming that confidence in South Korea has been undermined. In particular, some media outlets report that between 2015 and March 2019, no fewer than 156 materials, including hydrogen fluoride, were smuggled out of South Korea. There were also reports of hydrogen fluoride being exported to countries that are under international sanctions (Iran, Syria and even North Korea). Another reason for the restrictions is Tokyo’s concerns that South Korea violates intellectual property rights

South Korea denies all accusations. Its arguments are logical: Iran and Syria are friends of North Korea, therefore, Seoul has no reasons to help their regimes. President of South Korea Moon Jae-in called for the differences to be resolved by diplomatic means. However, the talks held on July 12, 2019, in Tokyo did not yield any results. Consequently, Moon Jae-in instructed the relevant agencies to develop reciprocal measures. At about the same time, there were reports of South Korea possibly filing a grievance with the World Trade Organization. As a result, hearings on the issue were launched in Geneva on July 24, 2019

In late July 2019, news broke that Tokyo was considering further restrictions since Japan believes the re-selling of strategic materials by Seoul to be a violation of the non-proliferation regimes regarding both weapons of mass destruction and conventional weapons. In this case, the restrictions would extend to other types of commodities and materials. On August 2, the Cabinet of Japan approved the decision to take South Korea off its “white list” (where the Republic of Korea was the only Asian state), thereby depriving it of trade preferences in regard to the materials mentioned above. The full list exceeds 1100 items

Despite these events, several deliveries of these materials from Japan to South Korea were made in August. However, they did not result in a thaw in bilateral relations. Seoul reciprocated by putting Japan on a restrictive trade list and terminating the military intelligence-sharing pact with Tokyo

“Wu Wei” American Style

China holds leading positions in deposits of rare-earth metals. Moreover, approximately 90 percent of the world’s rare-earth magnets are manufactured in China. Japanese companies use China’s raw materials to manufacture fluorinated polyimides, hydrogen fluoride and photoresists that are subsequently supplied to South Korea, Taiwan and other countries to be used in manufacturing chips, displays, etc. The circle is complete when these commodities go back to China to be used in the manufacture of finished products (such as smartphones and tablets), creating a sort of a closed-loop. Thus, the manufacture of competitive hi-tech products today is impossible within a single economy, and Chinese companies depend on parts coming from other Asian countries

Tracing the entire technological chain, we can assume that the Japan–South Korea conflict is closely linked to the trade war between China and the United States. South Korea’s Samsung Electronics is hindered by the restrictions on deliveries of Huawei memory chips since the latter is under U.S. sanctions. In turn, interrupting the chain of semiconductors delivery from South Korea will slow down the development of artificial intelligence in China. And who benefits from this? This is a rhetorical question

It would seem that the United States should be interested in cordial relations between their allies in the region, allies that form a sort of counterbalance to China and are ideological antagonists to North Korea. The White House, however, intentionally or unintentionally, demonstrates adherence to the Taoist principle of inaction, or “wu wei” (无为 in simplified Chinese), which entails a conscious refusal to act and the assumption of a contemplative stance. From the outset of the confrontation in July 2019, the United States announced it would not interfere in the conflict. Despite individual experts calling upon the United States to act as an intermediary between the two Asian states, Washington did not change its position

We should also note here that the Japanese company Toshiba announced the construction of a facility for the production of NAND-type (from the English NOT-AND, that is, a binary logical element) flash memory devices in Iwate Prefecture in cooperation with U.S. chip manufacturer Western Digital. We can cautiously assume that the United States and Japan are progressing toward a “technological union” in order to defeat China in the race for domination of the semiconductor industry

Public Opinion

Speaking of the impact that the conflict has on public opinion in both countries, we can quote a survey conducted by Japan’s Asahi Shimbun in mid-September 2019. Overall, slightly less than one third (29 per cent) of respondents admitted that they had a negative opinion of South Korea. This was far more pronounced among older people, which can be linked to their conservative views and the “proximity aberration” phenomenon (put simply, the older generations remember the events of the 20th century well)

As for South Korea, an anti-Japanese “grassroots” campaign has been launched in addition to the “top-down” process. In the second half of the summer of 2019, slogans『 가지않습니다 사지않습니다 』 (Korean for “Do not visit, do not buy”) calling for boycotting trips to Japan and Japanese goods spread on Korean social networks. And it looks like they were successful to a degree. For instance, the Yonhap News Agency reports that the number of South Koreans travelling to Japan in August fell by 60 per cent compared to the same period last year

In the run-up to the 2020 Summer Olympics in Tokyo, the trade conflict has become a reason for manipulating public opinion in South Korea. Additionally, we cannot rule out the possibility that populists use the disagreements between Japan and South Korea to advance their domestic agenda on the eve of the elections to South Korea’s unicameral parliament scheduled for April 15, 2020

Forecast: Cloudy in the East

Losses from the Japan–South Korea trade war may exceed $80 billion. There has already been a drop in sales of South Korean semiconductors manufactured by Samsung Electronics and SK Hynix. Moreover, the conflict threatens to disrupt the entire global technological production chain in microelectronics. The expert Robert Farley described this conflict (and the U.S.–China trade war) as “weaponizing interdependence.” One of the analysts with The Economist Intelligence Unit called this situation “mutually assured destruction.”

The Yonhap News reports that the consequences of the trade conflict have had greater negative effect on the Japanese economy than on the South Korean economy. For instance, in July–August, South Korean exports to Japan have fallen by 3.5 per cent, while Japanese exports to South Korea have dropped 8.1 per cent

The South Korean economy has also suffered against the backdrop of these events. Here, Seoul has only two ways out of this predicament:

-Transitioning to domestic analogues, which LG Display and Samsung Electronics already did in September of this year. Additionally, the country earmarked 2.1 trillion South Korean won in the 2020 budget to overcome the dependence on the export of rare materials from Japan

-Searching for alternative sources of hydrogen fluoride and other rare materials for microelectronics. Media outlets have reported that Russia might be a potential supplier of high-purity hydrogen fluoride. The head of the Korea International Trade Association said that Moscow had offered to supply hydrogen fluoride to Seoul. However, it is not easy for South Korean companies to transition to Russian imports of this and other materials for microelectronics. The physical and chemical properties of the products must be tested for a rather lengthy period of time (upwards of six months)

Apparently, the status quo on the microelectronic market will continue in the short-term, and both parties will seek ways to minimize losses. And we can already see evidence of this. In September and October, the Government of Japan approved deliveries of hydrogen fluoride to Samsung Electronics and SK Hynix

At the same time, if Tokyo and Seoul fail to find common ground in the medium and long term, then the current global technological chain in microelectronics may be dismantled, which will, of course, negatively affect the growth rate of the global economy. However, so as not to end our study on a pessimistic note, let us note that, under the current circumstances, many hi-tech companies around the world, including those in Russia, now have the chance to become new links in the value chain and occupy its niche in microelectronics

From our partner RIAC

[1] In 1910, the Empire of Japan annexed the entire Korean peninsula. Korea essentially became a Japanese colony. The Japanese language and culture were forced onto the Korean people. Up to 200,000 ethnic Koreans served in the Imperial Japanese Army during World War II (including future president of South Korea and “father of the economic miracle” Park Chung-hee). Today, Japanese war crimes are a subject of talks between South Korea and Japan. In 2015, Minister of Foreign Affairs of Japan Fumio Kishida promised 1 billion yen to the victims of violence in compensation, and Prime Minister Shinzo Abe offered a public apology for Japan’s actions during the war.

[2] The dispute concerns the Liancourt Rocks, a group of small islets that the Koreans call Dokdo (“Solitary Islands”) and the Japanese call Takeshima (“Bamboo Islands”). Back in the early 20th century, Japan claimed sovereignty over these islands; however, following its defeat in World War II, it was forced to abandon its colonial acquisitions. On the other hand, the 1951 Treaty of San Francisco does not mention this territory, which gives Japan formal grounds to dispute the sovereignty of the islands where South Korea maintains military and civil infrastructure.

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East Asia

Future Trends of China’s Diplomacy

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This year 2019 marked the 70th anniversary of the founding of the People’s Republic of China (PRC), and China’s diplomacy has also gone through a journey of 70 years. The 70-year history of the PRC can be divided into the first 30 years after its founding and the second 40 years since opening and reform were initiated in 1978. The characteristic of china diplomacy is a responsible nation, rational behavior and the confidence of great power.

China had a clear break with the old diplomacy of humiliation; established a new kind of diplomatic relations with other countries on the basis of equality and mutual benefit; secured an equal position and dignity on the global stage; gained diplomatic independence by safeguarding and strengthening national independence, and protecting national security and territorial integrity; settled the border disputes left  over from history with most neighbors by peaceful means, creating a stable neighborhood in general; established strong friendships with the vast majority of developing countries through mutual support; and set up a new diplomatic contingent for seeking the diplomacy of independence. The following are the future expectations of China diplomacy:

Firstly, Deng Xiaoping’s directive, “Don’t seek for leadership,” stays powerful in China’s new diplomacy, so China’s future diplomacy will keep on emphasizing on the management of the crisis, economic diplomacy, multilateral diplomacy, cultural diplomacy, cooperation, and accommodation while protecting the main national interest. Solving problems and managing crises will stay an important characteristic of China’s diplomacy, particularly in its ties with other major powers. Meanwhile, in cooperation with other major powers, China will appear to be more active in managing fundamental global issues at the strategic level.

Secondly, The Chinese government has repeatedly said that China does not have a plan of challenging the international system and has focused on the importance of being a “responsible member” of the universal society. As of late, China has developed new concepts for its foreign policy orientation, just as (1) “new security” emphasizing shared and cooperative security, (2) “peaceful development” focusing on non-violence commitment, (3) “win-win” cooperation denying a zero-sum comprehension of international affairs, and (4) building a “harmonious world” that promoting harmony with diversity, solving conflict through dialogue, and democratization of world governmental issues.

As these concepts demonstrate, China has no desire of being revolutionary in the international system, rather, it intends to be a responsible member of world affairs. Economic diplomacy will remain to be emphasized by china. While trade will keep on being a fundamental diplomatic focus, energy security and energy diplomacy will be given additional accentuation. Energy supply, energy shipment, and energy-saving cooperation will be fields where the diplomacy of china will move forward.

Lastly, Multilateral diplomacy will take on an even greater role in the future diplomacy of China. China will become more involved at the global level and in regional affairs at the United Nations. As the identity of China is more globally and regionally established, the current concept of multilateralism in the overall diplomatic strategy of china can be re-defined to realize national interests, address thorny issues, and provide governance in a complex world. More attempts will be created to improve regional integration between the SCO and East Asian. Finally, various needed diplomatic attempts may need to be further reinforced. China will keep on being cooperative, however, it will likewise be more active. All things considered; cultural diplomacy will be a new attribute of China’s diplomacy. Confucianism, an extremely cosmopolitan doctrine that promotes harmony and peace through human relations, will be an important component of cultural diplomacy, both to strengthen China’s soft power and to reduce the negative result of the China threat theory.

China has accumulated a wealth of experience over the past 70 years, understanding that China cannot develop without the world and that without China the world cannot prosper. China’s future and fate have been closely linked to the rest of the world. What is certain is that China will adhere to the path of peaceful development and that the people of China will join the people from all other countries in working to realize the lofty dream of a harmonious world.

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