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The US Trade War: How China Should React

Dr. Bawa Singh

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During the presidential campaign 2016, Donald Trump had made more than 280 promises. However, the pollpromises were formalized through the “Contract with the American Voter,” on October 22, 2016, listing out about the 60 promises for action, the day President would be in office. Out of these promises, currently the plan to curtail Chinese trade was put in practice by the initiating the trade war with China to bridge up the trade deficit with China. In this context, the new trade war has already been set in by imposing a higher tariff against China, particularly its steel and aluminum. It will remain interesting to see how the trade war will unfolds and how China would react?

Out of the  280 poll promises made during the presidential campaign (2016), Donald Trump formalized the same through the “Contract with the American Voter,” issued on October 22, 2016. Realizing the drastic consequences out of trade deficits with China, Trump rolled out a  plan to curtail Chinese trade was the key plank of “Make US Great Again” policy. At the domestic front, the US administration has repeatedly acknowledged that economic slowdown and unemployment in the country are attributed to the trade deficit with China.Trump criticized frequently the North American Free Trade Agreement (NAFTA). He has taken it as, “the worst trade deal the US has ever signed.” He has also called Trans-Pacific Partnership (TPP) as “the death blow for American manufacturing.” Donald Trump in a video message (November 21, 2016), introduced an economic strategy of “Putting America First.” The main focus of the strategy would be to negotiate  the “fair, bilateral trade deals that bring jobs and industry back to American shores.” Only after the three days after becoming president (January 23, 2017), the President Trump withdrew the US from theTrans-Pacific Partnership with the conviction to strengthen the U.S.economy.

The most serious concern for Donald Trump is China and hence he avowed to turn the trade balance in the US favourby imposing high tariffs and other non-tariff trade barriers to resuscitate its economy and creation of job opportunities.

Trade Between the US and China

As per the office of US Trade Representative (USTR),China is the largest trading partner of the US. China is the largest goods trading partner of the US, the quantum of whichwas standing at $578.2 billion in two way during 2016. The trade in services between the US and China is stood at an estimated quantum of  $70.3 billion (2016). The exports of the services on part of the US is $54.2 billion while the imports of the same were $16.1 billion having services trade surplus in its favour of the value of $38.0 billion (2016).The exports of goods on part of the US is totaled at $115.6 billion, whereas the imports of the same is  $462.6 billion. Therefore, as far as the trade balance is concerned, it is in favour of China,totaled at  $347.0 billion in 2016.

As far as the US export of goods is concerned since 2001, it has shown exponential growth i.e., 503%. In 2016, it was reached to $115.6 billion, however, the same has shown somewhat minor slump i.e., 0.3% ($330 million) during the year of 2015. The top goods include in the export category are agriculture ($ 21 bn); grain, seeds, fruit ($15 billion); aircraft ($15 billion); electrical machinery ($12 billion);  machinery ($11 billion) and vehicles ($11 billion). In the services category, the export was estimatedat$54.2 billion (2016). It is said that it was increased roughly 908% since 2001. The leading services exports from the U.S. to China are intellectual property (trademark, computer software),travel, and transport sectors.

The US is the largest destination for Chinese exports. The Chinese goods export to the US is totaled $462.6 billion (2016). However, it has shown somewhat decline at the rate of 4.3% ($20.6 billion) from 2015, but it has shown continuous increased growth at the rate of  60.8% since 2006. The Chinese contribution in the overall US goods import accounts for 21.1% (2016). The Chinese goods export list included electrical machinery ($129 billion), machinery ($97 billion), furniture and bedding ($29 billion), toys and sports equipment ($24 billion) and footwear ($15 billion). China is the 3rd largest agricultural goods exporter to the US i.e., $4.3 billion (2016).

The major concern on part of the US is the trade deficit, which is in favour of China. In 2016, the same was stood at $367 billion (2015), however, it was decreased at the rate of 5.5% decrease ($20.2 billion) totaling at $347 billion in 2016. Again, the trade deficit reached $375 billion (2017). The US exports to China were only $130 billion, whereas its imports from China were $506 billion. Moreover, China is the largest lender to the US. The debt of the US from China as of January 2018, is $1.17 trillion. The leadership of the US percieved that it gives a massive political leverage to China over the US fiscal policy.

Trade War Between the US and China

The major root of the trade war been the US and China has been embedded in the trade deficit. Even being a major power, the US has not been able to bridge up the gap of trade deficit. It has been argued that trade war originates from Chinese trade and industrial policies. Apart from these policies, Chinese currency manipulation has further put the both countries on confrontational mode. However, Trupms’s being one plus year in office, the trade deficit has not been showing any positive sign in the US favour. Ultimately, hehad  to launcha salvo of tariffs against China as in the year of 2017, the U.S. trade deficit with China is stood at US$   375 billion in 2017. The  U.S. exports to China is only $130 billion, whereas it imports stood at $506 billion.

The trade deficit of the US vis-a-vis China has been percieved as a consequence of the latters’restrictive trade practices. The restrictions include a wide array of barriers to foreign goods and services. Although, China has introduced its open market economy in 1978 and even expanded the scope of the same after becoming the member of the WTO (2001). However, China  has introduced the market economy but its trade and industrial policies are aimed at protecting the state-owned enterprises by levying the high tariffsover the imports. Moreover, the other restrictions such as theindustries required special permission to import goods, inconsistent application of laws and regulations, transfer of technology from the foreign firmsfor the Chinese market access etc. Apart from these restriction, the lack of transparency and currency manipulation on part of China have been emerging as major concerns for the Trumps’regime. Therefore, it has become a major compulsionon part of the Trump regime to take a hard-line stance against China.

Within the seventy-day in administration, the President Trump  in his administration’s annual trade policy report to Congress (March 2017), had openly challenged the World Trade Organization (WTO)particularly for “China’s unfair advantage.” He went further with the accusation of  Chinese dumping of  steel,  aluminum and chemical products. In the same month, the US Department of Commerce had announced two antidumping (AD) and countervailing duty investigations (CVD)against China. Even the pre-Trump regimes have also been engaged with China over the dumping casesin the WTO. The Obama administration had become frustrated over Chinese economic reforms and increasingly skeptical about the prospect for future reforms. Till date, the US has registered 16 cases against China, to address its concerns such as Chinese Ads, CVDs, industrial policy and the dominance of state-owned enterprises.In this background, China has turned to the Dispute Settlement Mechanism (DSM) of the WTO to address such perceived unfairness use of such investigations. China had filed 11 cases against the US at the WTO as the former percieves per se the leading target of the USs’ AD and CVD investigations. Robert ELighthizer (United States Trade Representative) has also givenan indication that the U.S. may take action against the WTO for its alleged failures not to check the Chinese unfair trade practices.

President Trump has aired portentous signals with the beginning of the year of 2018. The salvo of high tariffs had launched against its trade deficit with China. President Trump by using the Section 301 of the US Trade Act of 1974, had unilaterally imposed trade tariffs on China. In January, he imposed tariffs on solar panels and washing machines. In a tweet issued on March 2, 2018, Trump asserted that “Trade wars are good and easy to win.” President Trump had signed an executive memorandum on 22 March 2018 to enforce  25 percent tariff on steel and a 10 percent tariff on aluminum imports. The measures have been designed to counter the Chinese unfair trade practices as the administration believes that it involves stealing of the US companiesintellectual property. Trump gave signals that the tariffs would cover at least cover  $60 billion in tariffs on Chinese goods.

Chinas Reactions

China has reacted very aggressively to the US’s new trade war. It has been seen that China is in assertive mode and not going to budge to the US pressure. The Chinese Foreign Ministry spokeswoman Hua Chunying said, “We don’t want a trade war, but we are not afraid of it.”If we unfold the statement, it clearly conveyed the message to the US, how China is likely going to take the sanctions? Moreover,  the Chinese Commerce Ministry has  also used the same tone and tenor while asking  the Trump regime on 28 March not to go ahead with such planned tariffs. It can be taken as a warning signal to the Trump regime as China could set off a same chain of  reactions. Moreover, the Xi governemnt has given clear signal that China would,“fight to the end.” Although, the US economically and militarly is in stronger position but at the same time China has also been following the suit. China has been emerged a stronger economy, moreover, it is a major lender to the US which gives its stronger position vis-a-vis the US. If the trade war lingers on, the losses or gains are not unilateral. One can percieve  that the US has to suffer more losses as compared to China. The developing countries have already opened up and messed up their economies under the global instituions’ pressure. In this milieu, loss of employment opportunities, health services and education, suicides of the farmers, loss of local industries and many more challanges have become the part and parcel of the people’s life.  In this miliu, it should be left to the individual countries’ decision, how much its economy is to be opened? Moreover, if any country is asked for the same, it should be under the international laws, not as per the invidual countries’s whimsical and impulsive actions.

Dr. Bawa Singh is teaching in the Centre for South and Central Asian Studies, School of Global Relations, Central University of Punjab, Bathinda, India-151001. bawasingh73[at]gmail.com

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East Asia

China’s Imprint underneath the Pyongyang Joint Declaration

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On September 18, the leaders of two Koreas met each other in Pyongyang, the capital of the DPRK. The world media focused on the meeting during which the two sides issued the “Pyongyang Joint Declaration”. If we see the Panmunjom Declaration serving as the cornerstone of the dialogue between two Korea, it is necessary to say that this joint declaration took a substantial step to the denuclearization of the Korean peninsula that is vital to the regional peace and beyond.

Literally speaking, the Pyongyang joint declaration highlighted the key issues as follows. First, both sides are determined to achieve the denuclearization of the Korean peninsula. Second, they will work together to improve their relations with a view to the existing state of war, as the defense chiefs from the DPRK and ROK earlier signed a comprehensive agreement aiming to reduce tensions on the peninsula. Third, they will promote the peace talk process of the Korean peninsula. Given that Kim pledged to work toward the “complete denuclearization of the Korean Peninsula”, it would be seen as a political declaration that would mark a starting point for peace negotiations. If all goes well, a peace treaty would be sealed and then comes normalization of DPRK-US relations after it achieves complete denuclearization.

As a close neighbor to the Korean Peninsula, China always supports the DPRK and ROK as well in improving their relations through dialogue and consultation and promoting reconciliation and cooperation. This is the consistent and persistent position of Beijing, which has been playing a responsible role in politically resolving the Korean Peninsula issue and achieving the long-standing peace of the region.

In effect, prior to the leaders of two Korea met each other this week in Pyongyang, they have closely contacted their respective allies or strategic partners. Among them is China, dealing with both sides – Pyongyang and Seoul – in a unique way. It is true that China is the largest trading partner of the ROK while it is equally the only legal ally of the DPRK as well as its largest ideological partner now. If we review the bilateral relations between China and North Korea since last March, Kim Jr. has paid three significant, though unofficial, visits to President Xi of China. For example, during his March 25-28 visit, both sides vowed to continue their traditional solidarity in terms of their shared ideologies and common strategic interests. Xi especially proposed to strengthen the close ties between the two ruling parties. As he said to Kim, “party-to-party and state-to-state relations are the common treasure to both sides. And safeguarding, consolidating and developing China – DPRK relations are unswerving guidelines for China’s foreign policy and security strategy.

During his second meeting with Xi in Dalian summer resort, Kim vowed to terminate all the nuclear tests and to follow denuclearization if the United States took corresponding measures with good wishes. Then following his meeting with Trump in Singapore on June 12, Kim came to Beijing again on 19 to meet his Chinese counterpart. Xi confirmed China’s “3-no change” policy towards the DPRK, that is, political solidarity between the two parties remains unchanged, the friendship between the two peoples remains unchanged, and China’s support of a socialist Korea remains unchanged. Essentially, they serve as the foundation of the strategic consensus between Beijing and Pyongyang. In return, Kim reiterated his permanent shutdown of all nuclear tests and facilities if the US would respond sincerely and responsibly.

Given all the analysis above, it is understandable to conclude that China’s long-standing adherence to the goal of denuclearization of the Peninsula through dialogue and consultation is fully reflected in the Pyongyang Declaration. Meanwhile, China’s stance remains evident since it claims that the Korean issue must be resolved eventually by the Korean people rather than any external power. Therefore, peace not force is the only acceptable way. Also, as China and Russia have repeated that no coercive change of the regime by outside power is tolerated, North Korea can be confident and comfortable to proceed the permanent shutdown of the missile engine test site with international experts observing; and then a complete denuclearization is not too far in the future.

Here is necessary to argue that China has never claimed to play an exclusive role in the Korean Peninsula. Instead of that, China has always encouraged the DPRK to talk to the United States and other relevant parties. Since Kim has agreed to make a trip to Seoul for further talks and to meet the US high-ranking officials in Pyongyang soon, the summit between Kim and Moon marks a leap forward toward peace.

Yet, as the lessons in history show, it is better to approach realistically the Korean issue simply because it has involved too complicated concerns and memories and the overlapped interests. Therefore, we should be ready to accept trial and challenges lying ahead. China has insisted on diplomacy which means that all parties concerned should be brought to the negotiating table under the mandate of the UN Security Council.

Now, Beijing has navigated the course of denuclearization proactively to protect two sides’ common core security stakes when Kim reportedly promised to give up his nuclear program if the United States and South Korea respond to his proposal with good will. Due to this reason, China will do what it can to help ensure “no change of regime by force and denuclearization at the same time in the Korean Peninsula”. This is China’s influence or Beijing’s imprint on the Korean denuclearization issue and the regional peace.

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Middle Eastern Black Swans dot China’s Belt and Road

Dr. James M. Dorsey

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If any one part of the world has forced China to throw its long-standing foreign and defense policy principles out the window and increasingly adopt attitudes associated with a global power, it is the greater Middle East, a region that stretches from the Atlantic coast of Africa to north-western China, a swath of land populated by the Arab, Turkic and Persian worlds.

It was a series of incidents in 2011 during the popular Arab revolts that drove home the fact that China would not be able to protect with its existing foreign and defence policy kit its mushrooming Diaspora and exponentially expanding foreign investments that within a matter of a few years would be grouped as the infrastructure and connectivity-driven Belt and Road initiative linking the Eurasian landmass to the People’s Republic.

Policy principles of non-interference in the domestic affairs of others, an economically-driven win-win approach as a sort of magic wand for problem solution, and no foreign military interventions or bases needed reinterpretation if not being dumped on the dustbin of history.

The incidents included China’s approach to the revolt in Libya as it was happening when it deviated from its policy of non-interference by establishing parallel relations with the opposition National Council. The outreach to Libyan leader Col. Moammar Qadhafi’s opponents did not save it from being identified with the ancien regime once the opposition gained power. On the contrary, the Council made clear that China would be low on the totem pole because of its past support for the Qadhafi regime.

The price for supporting autocratic rule in the greater Middle East meant that overseas Chinese nationals and assets became potential targets. To ensure the safety and security of its nationals in Libya, China was forced to evacuate 35,000 people, its most major foreign rescue operation. The evacuation was the first of similar operations in Syria, Iraq and Yemen.

The evacuations didn’t stop militants in Egypt’s Sinai from kidnapping 25 Chinese nationals and radicals in South Sudan from taking several Chinese hostages. The kidnappings sparked significant criticism on Chinese social media of the government’s seeming inability to protects its nationals and investments.

With Uyghurs from China’s strategic north-western province of Xinjiang joining militant jihadists in Syria and two Uyghur knife attacks in Xinjiang itself in the cities of Hotam and Kashgar, the limits of China’s traditional foreign and defense policy meshed with its increasingly repressive domestic approach towards the ethnic Turkic people.

Finally, the greater Middle East’s expectations were driven home in a brutal encounter between Arab businessmen and ethnic Chinese scholars and former officials in which the Arabs took the Chinese to task for wanting to benefit from Middle Eastern resources and trade relations without taking on political and geopolitical responsibilities they associated with a rising superpower.

Add to all of this that in subsequent years it was becoming increasingly difficult for China to remain on the sidelines of the Middle East’s multiple conflicts and rivalries. This was particularly true with President Donald J. Trump’s coming to office. The greater Middle East’s problems escalated with Mr. Trump’s abandonment of any pretence of impartiality in the Israeli-Palestinian conflict; his heating up of the rivalry between Saudi Arabia and Iran by withdrawing from the 2015 international agreement curbing Iran’s nuclear program; and his toying with attempting to change the regime in Tehran that encouraged Saudi Arabia to step up Saudi support for Pakistani militants in the province of Baluchistan; the likely return of Uyghur jihadists in Syria to Central and South Asia that has prompted the establishment of Chinese military outposts in Tajikistan and Afghanistan and consideration of direct military intervention in a possible Syrian-Russian assault on Idlib, the last rebel-held stronghold in Syria; and finally the potential fallout of China’s brutal crackdown in Xinjiang.

Already, the events in 2011 and since coupled with the mushrooming of Belt and Road-related investments has led to the creation of the country’s first foreign military base in Djibouti and the likely establishment of similar facilities in its string of pearls, the network of ports in the Indian Ocean and beyond.

China’s potential policy dilemmas in the greater Middle East were enhanced by the fact that it doesn’t really have a Middle East policy that goes beyond its shaky, traditional foreign and defence policy principles and economics. That was evident when China in January 2016 on the eve of President Xi Jinping’s visit to the Middle East, the first by a Chinese head of state in seven years, issued its first Middle East-related policy white paper that fundamentally contained no new thinking and amounted to a reiteration of a win-win-based approach to the region.

Moreover, with China dependent on the US security umbrella in the Gulf, Beijing sees itself as competitively cooperating with the United States in the Middle East. That is true despite the US-Chinese trade war; differences over the Iranian nuclear agreement which the United States has abandoned and China wants to salvage; and Mr. Trump’s partisan Middle East policy.

China shares with the United States in general and even more so with the Trump administration a fundamental policy principle: stability rather than equitable political reform. China’s principle of non-interference is little more than another label for the US equivalent of long-standing support of autocracy in the Middle East in a bid to maintain stability.

In some ways China is learning the lesson, despite recent developments in Xinjiang, that US President George W. Bush and Condoleezza Rice, his national security advisor and subsequent secretary of state, learnt on 9/11. Within a matter of weeks after the Al Qaeda attacks on New York and Washington, Bush and Rice suggested that the United States was co-responsible for the attacks because of its support for autocracy that had fuelled anti-American and anti-Western sentiment. It was why Bush launched his ill-conceived democracy initiative.

China, as a result of its political, economic and commercial approach towards the Belt and Road, is starting to have a similar experience. Chinese overseas outposts and assets have become targets, particularly in Pakistan but also in Central Asia.

The kidnappings in 2011 in the Sinai and South Sudan were the beginning. Uyghurs joined groups like the Islamic State and Al Qaeda not because they were pan-Islamist jihadists but because they wanted to get experience they could later apply in militant struggle against the Chinese.

Beyond profiling themselves in fighting in Syria, Uyghurs have trained with Malhama Tactical, a jihadist for profit Blackwater, the private military company created by Erik Prince.

Anti-Chinese sentiment in countries like Kazakhstan and Tajikistan is on the rise.

Iranians are grateful for Chinese support not only in the current battle over the nuclear accord but also in the previous round of international and US sanctions. They feel however that last time round they were taken for a ride in terms of high Chinese interest rates for project finance, the quality of goods delivered, and a perceived Chinese laxity in adhering to deadlines.

Resentment of the fallout of the Belt and Road investment taps into the broader threat involved in supporting stability by backing autocratic regimes That is nowhere truer than in the greater Middle East, a region that is in a period of volatile, often bloody and brutal transition. It’s a transition that started with the 2011 Arab revolts and has been pro-longed by a powerful Saudi-United Arab Emirates-led counterrevolution. Transitions take anywhere from a quarter to half a century. In other words, the Middle East is just at the beginning.

China, like the United States did for decades, ignores the rumblings just below the surface even if the global trend is toward more authoritarian, more autocratic rule. 9/11 was the result of the United States and the West failing to put their ear to the ground and to take note of those rumblings.

Of course, current rumblings may never explode. But the lesson of the people’s power movement in the Philippines in 1986, the video in late 2010 of a fruit and vegetable vendor in Tunisia who set himself alight that sparked the Arab revolts, months of street and online protests in Morocco in the last year, the mass protests in Jordan earlier this year against a draft tax bill that have now restarted because of the legislation’s resurrection, and the current protests in the Iraqi city of Basra potentially are the writing on the wall.  All it takes is a black swan.

Said Financial Times columnist Jamil Anderlini:” China is at risk of inadvertently embarking on its own colonial adventure in Pakistan— the biggest recipient of BRI investment and once the East India Company’s old stamping ground… Pakistan is now virtually a client state of China. Many within the country worry openly that its reliance on Beijing is already turning it into a colony of its huge neighbour. The risks that the relationship could turn problematic are greatly increased by Beijing’s ignorance of how China is perceived abroad and its reluctance to study history through a non-ideological lens… It is easy to envisage a scenario in which militant attacks on Chinese projects overwhelm the Pakistani military and China decides to openly deploy the People’s Liberation Army to protect its people and assets. That is how ‘win-win’ investment projects can quickly become the foundations of empire.”

The Chinese crackdown in Xinjiang could just be a black swan on multiple fronts given the fact that its fallout is felt far beyond China’s borders. For starters, the wall of Western and Muslim silence is cracking with potentially serious consequences for China as well as the Islamic world.

What is happening in Xinjiang is fundamentally different from past incidents including protests against a novel by Salman Rushdie and Ayatollah Khomeini’s fatwa ordering his killing; the 2006 Muslim boycott of Danish products because of controversial Danish cartoons depicting the Prophet Mohammed, and the more recent protests sparked by the burning of a Qur’an by a Florida evangelist. The Chinese campaign in Xinjiang challenges fundamentals of the Islamic faith itself.

The earlier incidents were sparked by protests, primarily among South Asians in either Birmingham or Pakistan. This month has seen the first of Xinjiang-related anti-Chinese protests in Bangladesh and India. The first critical article on Xinjiang in the Pakistani press was published this week.

Malaysia is the first Muslim country to speak out with condemnations by a senior figure in Malaysian prime minister Mahathir Mohamad’s political party as well as the country’s likely next head of government, Anwar Ibrahim.

Consideration in Washington of Xinjiang-related sanctions by the Trump administration, coupled with United Nations reporting on the crackdown and a German and Swedish ban on deportations of Uyghurs, puts the issue on the map and increases pressure on Muslim nations, particularly those like Saudi Arabia, Iran, Turkey and Pakistan that claim to speak on behalf of Islam.

This together with the fact that Chinese support for autocratic or authoritarian rule creates a potential opportunity to export its model of the surveillance state, the most extreme example of which is on display in Xinjiang, constitutes risks and involves potential black swans. To be sure, Pakistan can hardly be described as a liberal society, but it is also not exactly an authoritarian state, yet Pakistan is China’s first export target. And others closer to home could follow.

If all of this is more than enough to digest, factor in the geopolitics of Eurasia, certainly as they relate to the greater Middle East. The Chinese-backed Russian-Iranian-Turkish alliance is brittle at best, witness differences over the possible battle for Idlib and the post-war presence of Iran in Syria.

Saudi Arabia, the United Arab Emirates and Iran, and to a lesser degree Israel are players in what is a 21st century Great Game. That is particularly true in the Caucasus and Central Asia as well as Pakistan and as it relates to port diplomacy in Pakistan’s Gwadar and the Indian-backed Iranian port of Chabahar.

Add to this the fact that if Saudi Arabia is the world’s swing oil producer, Iran is Eurasia’s swing gas producer with the potential to co-shape the supercontinent’s future energy architecture.

And finally, there are multiple ways that China risks being sucked into the Saudi-Iranian rivalry not least if the United States and Saudi Arabia decide to take plans off the drawing board and initiate a campaign to destabilize Iran by stirring unrest among its Baloch, Kurdish, Iranian Arab and Azeri minorities.

The long and short of this is that the Great Game in Eurasia remains largely undecided and that change in China’s foreign and defense policy is already a fact. The question is how all of this will affect China and how potential obstacles on the Belt and Road will play out.

Edited remarks at the RSIS Book Launch of China and the Middle East; Venturing into the Maelstrom (Palgrave 2018), 20 September 2018

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East Asia

A de facto alliance exists between China and Russia

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From mid-August to September 15, 2018, Chinese troops went to Russia to participate in the “Vostok-2018” strategic military exercise, which was the largest strategic exercise organized by the Russian military since the 1980s. It was also the first time that China had sent such a large group of troops to attend a military exercise outside its territory. Since China and Russia have been the comprehensive strategic partners of coordination, it is supposed that the two Eurasian powers have in effect forged the allies in all terms. According to classical balance of power theory, states forms alliances in order to prevent stronger powers from dominating them. This is precisely the root cause of Beijing and Moscow having decided to move forward since the collapse of the Soviet Union toward the current strong ties.

Over the past decades, some have argued that either China or Russia, ostensibly avoiding challenging the United States, might be cautious to advance their overall strategic ties to a real military level, yet the “Vostok-2018” drill has proved that a de facto alliance between the two powers comes out of age. It is self-evident that China and Russia vowed to further deepen military ties and improve their troops’ combat abilities to respond to various security threats, as they formally concluded the “Vostok-2018” strategic drills with a military parade at the Tsugol training range in Russia’s Trans-Baikal region. President Putin praised Russian and Chinese troops who participated in high-level drills in which they demonstrated their capability to counter potential military threats.

To the realist scholars, like Kissinger, Kenna, Walt and Mearsheimer, they believe that China and the former USSR and now Russia are doomed to compete with each other in light of their geographical vicinity and the lack of mutual trust resulted from the pursuit of greatness and historical memories. Kissinger even argued that neither country will entrust the security of these borders to the continued goodwill of the other, whatever its current irritation with an allegedly hegemonic United States. Yet, the Fourth East Economic Forum held in September 13 in Vladivostok witnessed the leaders of the two countries vowed to promote their bilateral relations to a new stage in a new era, especially regarding investment, e-commerce and people-to- people exchanges in the Far East region and beyond.

China and Russia have come to so close and coordinated strategically due to primarily the hegemonic policy and conduct of Washington. For example, in 2017 U.S. National Security Paper defined China and Russia as the strategic rivals. Also the NATO headed by the US has pushed Russia to its defined red-line; and the US have tried to align Japan and India to advance what is termed the Pacific-Indian Ocean strategy that aims to “contain” the rise of China rather than engagement of China. Because of this stark reality, the strategic partnership of Beijing and Moscow has proceeded at a steady and occasionally cautious-like pace. As long as Russia struggles for advancing its legitimate national security and its economic recovery, Xi deems that China and Russia will certainly be able to provide driving forces for mutual security, regional stability and global peace and justice. Equally, China needs Russia’s support in realizing trilateral cooperation between Russia, China and Mongolia, not mention of the advanced weaponry.

In addition, the strategic consensus between China and Moscow come out of their common belief that the U.S. has consistently ignored the U.N. resolution by unilateral launch of wars against Iraq, Libya and Syria. In that context, China and Russia have the consensus to promote multilateralism rather than any single hegemony in the world. The two leaders have reiterated that they are firmly fighting against any sort of unilateralism and protectionism. In terms of the recent trade war between China and the US, China has been well-aware of the urgency to promote economic cooperation with Russia. It is true that the two Eurasian powers have huge potentials which are complementary in view of strategic resources and manufacture capabilities. As close neighbors, they bestow them a strategic depth to coordinate and support each other, including the China-proposed Belt and Road Initiative and the Russia-led Eurasian Economic Union. During his state visit to China this summer, President Putin stated that deepening Russia-China comprehensive strategic partnership of coordination is the priority of Moscow’s foreign policy. In order to correct the relations between the two powers in terms of “politically warm yet tepid economically, Putin’s Russia also enhances the cooperation with China in such areas as agriculture, energy and infrastructure. For example, trade between the two countries has developed remarkably over the past decade and, as a result, China was Russia’s largest trading partner in eight continuous years up to 2017. The bilateral trade volume reached over 84 billion dollars, representing a 20.8 percent increase year-on-year, and is expected to increase to as high as 100 billion dollars in 2019.

It is clear that this military exercise aims to send a signal to the world that China and Russia will continue their military cooperation and explore new possible ways to boost their combat abilities, which covers a classic anti-invasion campaign and equally shows off the two countries’ sophisticated approach to modern warfare with the ability to conduct surgical style, precision attacks. However, China and Russia have moved their strategic ties to such a historical level due to the personal contributions of President Xi and his counterpart President Putin. As Chinese FM Wang Yi said that the joint efforts by the two leaders have injected new dynamics into the relations between the two countries, and particularly propelled by the personal efforts of Xi and Putin, Sino-Russian comprehensive strategic partnership will probably set an example for building a new type of international relations and developing equality-based and mutually beneficial cooperation between major countries.

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