In the turbulent world politics involving extensive international coverage, stable and humdrum Japan does not have much of a presence. Yet, Japan is the world’s largest creditor nation while continuously playing significant roles in trade, direct investment and economic assistance. Japan in the background has reinforced itself as a leading geo-economic power while having almost thoroughly eliminated its huge non-performing loans in the banking sector and other structural vulnerabilities over the so-called “lost two decades” consequent on its bubble burst in the early 1990s.
Emphasizing Japan’s world-largest public debts that amount to nearly 240% of its GDP is misleading given that its public assets amount to nearly 200% and that the holding of the government bonds by the Bank of Japan, practically, a part of the government, amount to more than 80%. This is consistent with the good stability of a strong yen and very low long-term prime rates.
On the other hand, the U.S. faces deepening structural vulnerabilities in stocks that have resulted from the bankruptcy of Lehman Brothers in 2008 and the ensuing financial crisis, while experiencing a transitory booming in flows. Also, the E.U. remains mired not only in serious structural vulnerabilities but also in a persistent recession. Consequently, both the U.S. and the E.U. have a significantly less free hand in foreign economic policy, while keeping themselves busy to obtain or retain comparative gains through their strategic interaction, most notably in trade.
With the quantitative tightening of the U.S., the E.U., and, finally, the Japanese central banks, BRICS and other major developing economies encounter increasing difficulties in financing for investment and growth, compounded by the shrinking of their U.S. and European export outlets.
Particularly, the Chinese yuan is effectively pegged with the U.S. dollar, while China’s money supply in yuan is in fact based on its dollar reserves. Consequently, China is sliding into a serious recession, aggravated by the intense trade war with the U.S. No wonder that, last October, China made an abrupt about-face on its persistent anti-Japan policy, and concluded the currency swap agreement with Japan that would surely furnish China with 3 trillion Japanese yen (or less than 270 billion U.S. dollars) in the event of an acute liquidity crisis.
Looking closely at the recent Japan-China interaction, Japan’s quiet rise is more conspicuous. For several years prior to the official reconciliation of October 2018, the two countries appeared to geo-economically compete head-to-head, centered on aid and development according to China’s “One Belt One Road Strategy” and Japan’s counter-strategy, or “Free and Open Indo-Pacific Strategy”.
China is undergoing serious setbacks because many recipient/investee states have cancelled, cut down or postponed China-sponsored development projects. These states have suffered China’s “debt trap”, and many of the projects have turned out be financially, environmentally, and socially unsustainable. China is increasingly constrained to finance development projects due to the hardly discernible yet significant dwindling of its dollar reserves that is statistically covered up by its foreign borrowings.
Certainly, China has succeeded in luring more than ninety developing and developed countries with its huge fabricated foreign reserves as show money to participate in the China-led Asian Infrastructure Investment Bank. But, the country has failed to secure the AIIB memberships of Japan and the United States, respectively the world’s largest credit nation and the key currency nation with most developed financial and bonds markets. Without sufficient funds and staffs, the AIIB cannot but co-finance projects with the World Bank and the Asian Development Bank to obtain a favorable credit rating necessary for financing though international financial markets.
In contrast, Japan has demanded China to observe international standards in aid and development, and only agreed in October 2018 to selectively coordinate its policy with China only when the country meets these stringent conditions. There has been no major successful coordination case between the two to date. Given that many of traditional Japanese aid recipients are no longer low-income countries, the Japanese approach will necessarily focus more on high quality aid and development in terms of sustainability through the public-private sector cooperation. The approach will be superior to China’s, at least over a medium to long run.
Additionally, Japan plays a leading role to preserve the existing free and open international economic system. Against the tide of populism and protectionism, most notably U.S. President Donald Trump’s “America First”, Japan successfully led the formation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after the U.S. made an abrupt exit from an early TPP in the making, and concluded the Japan-EU Economic Partnership Agreement.
In nutshell, Japan’s geo-economic power and influence will be outstanding, at least for a mid-term. Yet, the country is not free from serious risks and problems. For a short term, Japan’s rise will remain quiet and, perhaps, unnoticeable, especially because its geo-economic power and influence may be reduced by geo-political risks and crises, and because its vested bureaucratic interests hamper consolidation of its huge public debts and assets, which involves the great risk of a liquidity crisis. For a long term, Japan needs to find out a societal equation to cope with an unprecedented low birthrate and a high longevity rate. The world must stay tuned on humdrum Japan.
The Thucydides’ Trap: the Avoidable Destiny Between the US and China
The controversial “Thucydides trap” argument has sparked a heated debate since 2013, when President Xi Jinping of China told a cluster of western guests: “We must all work together to avoid Thucydides’ trap.” Later, this concept was elucidated by Professor Graham Allison in his articles, talks and famous book Destined for War: Can America and China Escape Thucydides’ Trap. So, what exactly is this Thucydides ’trap?
The phrase originates from the ancient Greek historian Thucydides who had observed that the Peloponnesian war (431BC-404BC) was caused by the growth of Athens, the rising power, and the corresponding fear of Sparta, the ruling power. Currently, this historical scenario is applied to discuss the relations between China, the emerging power, and the United States (US), the established power. The rise of China and the relative decline of the US allude that a gradual power imbalance may repeat history and lead to war. In fact, 12 of the 16 historical power shifts have resulted in catastrophe. More importantly, this narrative, to some extent, suggests the current dominant power is taking preemptive measures against the rising one. In reality, the US-initiated Sino-American trade war reflects this precautionary attitude.
The world may argue that although China has become more assertive than before, this war is the consequence of President Donald Trump’s radical foreign policy. Consequently, Trump started this war even though it may harm the Sino-American economic ties, leading to a negative economic impact on both sides. As a matter of fact, the Sinophobic turn in Washington is essentially a bipartisan consensus that realistically considers the economic facts thanks to strategic thinking. Based on the research of Alyssa Leng and Roland Rajah, the US had been at the helm of world trade until 2000, trading with over 80% of countries worldwide. However, in 2018, this number has plummeted to just 30%, as China has replaced the position of the US in 128 of 190 countries. Thus, “this bipartisan shift may have coincided with Trump’s arrival but the very fact that it is bipartisan demonstrates that it was not Trump who created it. Like a rooster at dawn, his crowing simply called forth the inevitably rising sun”. This situation raises the following questions: which side suffers the least? If the US achieves its goal of putting down China, who will win? According to Bruno Macaes, “in the end, the question of whether a new world order will be born, or the status quo preserved is less important than the question of whether the outcome will be determined peacefully or whether China and America are destined for war”.
This does look like the inevitable Thucydides’ trap, but where is the solution? It is conceivable that the trade war is just a sign that might follow more fierce disputes militarily. As historical determinists, Professor Graham Allison and Professor Jonathan Holslag both believe that the strategic transformation of structural forces between China and the US are doomed to conflict that has already emerged and will transpire more dramatically, ineluctably reshaping the global geopolitical landscape. Currently, China is not strong enough to compete with the US in general and “the balance of power could continue to be in America’s favor for quite a long time into the future.” It is then justifiable for the US to want to suppress China’s growth right now. However, I argue that the reality is far more complex than the aforementioned circumstance and there indeed exists some way to avoid this “inevitable” trap.
First, diplomacy and leadership in the US and China play pivotal roles in avoiding this dilemma. Former Australian Prime Minister Kevin Rudd argues that political leaders and elites are not “simply some kind of puppet of anonymous structural forces”, but can change the historical tendency, to some extent. He proposes “constructive realism” as a solution by saying, “agency—what leaders decide, and those elites who advise them shape— actually determines the future course of history”. By suggesting that based on reality, the leaders of both sides should differentiate between the non-negotiable and negotiable national interests, thus managing the Sino-American strategic competition. In this context, the China-represented authoritarian capitalism versus the US-led liberal capitalism, is able to compete without one devastating the other and finally let the winner prevail.
Similarly, Chinese prominent scholar Jin Canrong suggests that when drawing on the wisdom of the Chinese and American leaders and diplomats, the two countries should neither have a “Hot War” nor a “Cold War”. The first may result in total planetary destruction with the example of the two World Wars during which great losses were suffered due to militaristic action worldwide. The later might bring about a deconstruction of the entire international trade system. Because of today’s economic globalization, a “Cold War” would devastate our internationally integrated economy, specifically, the existing Sino-American interdependent economic connections.
Nevertheless, Professor Jin proposes that the two sides should have a “Chess War”, as a metaphor of playing chess, which denotes that the two sides should be more transparent, reveal their strategic capabilities and intentions and reasonably bargain with each other. This is analogous to Rudd’s approach of distinguishing clearly between the non-negotiable and negotiable national interests of both parties. Furthermore, Jin argues that when China develops to a certain level, it will comprehensively compete with the US in all aspects. The US, as a commercial and pragmatism-centered empire, will compromise and accept China’s position, thus forming the global bi-core leadership and co-governing the world. He argues that the new global system is akin to the Concert of Europe/Age of Metternich, the balance of European powers between the Napoleonic War and World War One. The notion is to forgive France, the war initiator, and invite it to be part of European leadership, maintaining peace in Europe for a whole century.
The second plausible approach to this dilemma can be taken from the angle of a third party. Facing the increasingly Sino-American tension and the potential outbreak of a proxy war, Professor T. V. Paul advocates for “Soft Balancing”, meaning small-scale countries relying on “international institutions, limited ententes” to unite and enhance their strength. Uniting smaller countries thwarts the threatening behavior of the rising or ruling powers through economic instruments or moral and legal condemnation, thereby avoiding the Thucydides’ Trap. By comparison, the military capabilities or “Hard Balancing” of a country, remain important, but are clearly not as cost-effective as the institutionally driven “soft” method. Taking the ASEAN states’ soft balancing strategy toward China as an example, in addition to aligning with the American navy as hard balancing tactics, the ASEAN has involved diverse institutional engagements such as the ASEAN Regional Forum, the ASEAN Plus Three (China, Japan, and South Korea), the Chiang Mai Initiative and Regional Comprehensive Economic Partnership. These measures not only benefit the ASEAN countries from the economic rise of China, but simultaneously limit China’s territorial claim in the South China Sea by the united voice of ASEAN. To some extent, this strategy alleviates the Sino-American hostility and competition for leadership in this area, allowing the countries involved to have a fighting chance in the race for power.
To summarize, both approaches are aimed at constructing the scarce asset through frequent diplomatic communication: trust. In the anarchical international system, due to the fact there is no central authority to enforce laws, international actors, in the course of interactions, are always suspicious of each other’s real intentions. Indeed, human beings are distrustful and forgetful, repeating 12 identical mistakes throughout history. As the Western philosopher George Santayana said, “those who cannot remember the past are condemned to repeat it.” Similarly, the Chinese poet Du Mu wrote about how a destroyed dynasty vanished before it could reflect on its mistakes. Du details that the later generations of the dynasty felt the impact of this failure, yet did not learn from the past, continuing the cycle of collapse. While Graham Allison believes that the US and China may be destined to a violent collision, his relevant Ted Talk leads one to believe that the last two power shifts of the world were peaceful. Between the US and Soviet Union power shift from the 1940s to the 1980s, and the UK, France and Germany power shift from the 1990s until now, demonstrated how we are able to break the cycle of destruction. Especially, the European power shift proved the importance of diplomatic leadership. Hopefully, as time progresses, mankind may learn to draw lessons from a series of historical tragedies. When the political leaders of the world face irreconcilable conflicts of interest, they will look into the dark and bottomless chasm in front of them and say, “that is indeed a very deep hole which we should not fall into.”
From our partner RIAC
A story of resilience: China’s revival against Covid-19
A nation that embraces resilience in catastrophic times can retaliate and cope with any calamity that comes their way. A resilient nation is able to gather their abilities in the face of adversity and utilize their resources and strengths to cope and recover from unprecedented hardships and challenges. Amid the Covid-19 pandemic, China has curbed the deadly pathogen, after a formidable fight, with courage and conviction. The joint, and globally lauded, efforts of Chinese officials and health professionals along with its unprecedented organized and proactive dynamics of disaster management has provided an abundance of assistance in restraining the pandemic.
The epicenter of Covid-19, Hubei province of China, has recorded zero new cases for the consecutive four days, 19th to 22nd March, contrary to the 15,000 cases reported on 13th February 2020. From the recovery and discharge of 70 percent out of 80,000 patients in the overflowing hospitals of China to the completion of world’s first lung transplant of a Covid-19 patient by ingenious and committed doctors; and the construction of two 1000-beds hospitals, Huoshenshan and Leishenshan, in two weeks, China’s efforts to intercept the pandemic have proven to be extraordinary, heroic and unforeseen.
The strategic trajectory China has adopted to curtail the outbreak is threefold. During the first phase, the approach was to block the transmission and contain the source of the virus, therefore abating the further spread of the infection; the main strategy was to prevent importation and exportation of the virus in and from the Hubei province, respectively. On that account, about 50 million people were put under lockdown in Wuhan and other cities of Hubei, consequently diminishing the number of cases. For the diagnosis, The National Medical Products Administration of China, in collaboration with biotech companies, developed sufficient and reliable diagnostic kits for all fever clinics and hospitals in the country within two weeks. The testing was, publicly made free and easily accessible.
Fever clinics – especially designed clinics used in 2002-03 for containing SARS epidemic – were re-established to isolate, triage and test the patients; the health professionals and workers in PPE were/are employed to treat the affected patients. Additionally, laboratory testing and epidemiological researches were conducted accompanying the initial management of contact tracing. The use of contact tracing to track every potential individual infected by the virus has been a critical tool for China. For instance, in Shenzhen city as of 17th February 2842 contacts were traced, out of which 2240 completed the medical testing and among those, 88 were found to be infected. This technique was used in every part of China with officials militantly and steadfastly tracing every single individual that had come to contact with Covid-19 patient. In an interview, Dr. Bruce Aylward of World Health Organization (WHO) has said that he was impressed by the speed of carrying out the procedures and the key to containing the virus from proliferating depends on your ability to “swiftly detect and isolate the infected patients and trace their close contacts.”
In the second phase, the foremost approach was to lessen and limit the intensity of the pandemic. The active treatment of the patients was conducted in Wuhan and other provinces; the aim was to reduce the number of deaths and further enhance the prevention of exportation of the infection, therefore redlining mass gatherings and other public transport activities.
The guidelines to educate people of the basic precautions and updates regarding the Covid-19 was enhanced nationally. In six weeks, the national knowledge on how to take care of an infected person was expanded by six times. To tackle the spread of disinformation, Chinese social media outlets such as WeChat, ten-cent, and Weibo shared centralized, accurate and reliable information and blocked the misleading keywords on the internet. The Cyberspace Administration of China (CAC) has issued a statement that if a website or an individual would misinform the public, they would have to face legal consequences. Moreover, food delivery services were, efficiently, activated by the country to facilitate the citizens and the non-urgent medical cases were consulted online by doctors and medical consultants.
The third phase of the outbreak bring out new technologies such as big data and artificial intelligence to thoroughly control the pandemic; contact tracing was strengthened. The deployment of facial recognition cameras and phone tracking technologies in public places helped Chinese officials to detect elevated temperatures and track close contacts. In Zhejiang province, health QR codes were established: the red code is for 14-days self-quarantine; the yellow code requires 7-days self-quarantine; the green code authorizes you to travel freely. Additionally, scientific and medical research was conducted to develop relative vaccines and medicines.
Furthermore, other provinces have also sent help to assist Wuhan’s administration, for example, 42,000 doctors and other related staff were sent from other provinces to Hubei. Even at the individual level, the people of China have adhered to the measures given by the government, whether it is the lockdown or travel restrictions; the Chinese populace came out as a resilient and dedicated nation. They endorsed the sense that the duty is ours to help the country in catastrophic times.
Where the exemplary response by China is being commended and deliberately studied globally, China is dedicated to helping other infected countries as well to surpass this pandemic. It is nearly impossible for the developing and resource-less countries to deal with an unprecedented pandemic. Hence, China is continuously sending millions of masks, medical supplies and other related and much-needed items to Italy, Serbia, Spain, Belgium, Iraq, Iran, United States, France, and Pakistan; It is also sending doctors and medical teams to these countries with the constant help and funding of Jack Ma, co-founder of Alibaba.
Concisely, Chinese people’s dedication and its visionary leaders’ untiring and zealous efforts have helped China revive its stability inside and outside the borders.
China’s experience in fighting the COVID-19 could serve as a lesson for other countries
There is substantial fear that most of the countries are not acting seriously and quickly enough, or taking urgent and aggressive actions against the spread of the COVID-19. Even those countries or communities where the virus has spread throughout can be controlled and suppressed. While it is reasonable when the COVID-19 hit China, a country with more than 1.44 billion people –aggressively fights tooth and nail against the spread of the disease. Their struggle bears fruits; it is now on the decline in China. Thanks to the Chinese government and people who enthusiastically liaise and fight against the COVID-19.
A few weeks ago, in the mid of February, the Chinese hospitals, including the two new-build makeshifts, were overflowing with patients; after three weeks, the beds are no more overflowed. The Chinese bold and aggressive measures to control the rapid spread of the COVID-19 has altered the course of the rapidly escalating epidemic. So far, it will not be an exaggeration to say that hundreds of thousands of people didn’t get infected because of the aggressive response by the Chinese government and people.
The question now is whether the world can learn a lesson from the Chinese measures against the COVID-19 or whether massive lockdown and pushing the citizens with electronic surveillance will work in other countries. The matter is now a serious threat to the entire humanity, and the world must follow the Chinese measure to fight against the novel-corona. Chinese said that the containment measures are working, complete lockdown, strict quarantines, travel restrictions for the internal citizens as well as for foreigners.
It might be worthy of understanding that how China makes it? However, it’s nothing new or state-of-the-art but well-intentioned to know. The latest report published by the World Health Organization, it is mentioned that an infected person appears to spread the virus to an average of 2.6 people, which means that after massive transmission within a week, the initial infected person can infect almost 3500 people. The fact is, somehow, the world has seen and observed. China, on the other hand, followed the same astute measures and broke the cycle of human interactions, in the same vein, China imposed the most substantial and more draconian quarantine in human history. Factories are closed, public transport stopped, people remained indoors for more than two months, strict measure for people entering China, build two makeshifts in a week or two for the infected people to ensure proper isolation. Following such measures stringently, the virus in China is on the decline, but the rest of the world is now faced with the most significant challenges.
Elsewhere in the world, Italy, Germany, Iran, America, and France are struggling to control the virus. So far, more than 41,000 confirmed cases are recorded in Italy, almost 20,000 in Germany 19,000 in Iran, more than 19,500 in the US, and nearly 13,000 in France, with more than 172,600 active cases worldwide as of Saturday. As mentioned above, the number of infected people rapidly escalating day by day, and yet most nations couldn’t even logistically attempt it or take a severe measure to control it.
Before it’s too late, the other countries must learn from China, the rapid imposition of quarantines, the use of advance digital surveillance for tracing the potential virus carriers, massive mass testing possibly help China to control the spread of the virus. Besides, such measures will indeed work for other infected states. The most affected countries where the virus is multiplying every single day should follow the Chinese strategy, which provides a vital lesson for a global response. The Italian National Health Institute’s chief epidemiologist Rezza said that at first, he was doubtful of implementing the Chinese strategies against the COVID-19 in Europe; however, as the number increased dramatically over the weekend, he changed his mind which was a huge mistake. Here and now Italy is the most suffered state in the whole Europe.
The fact that other countries would like to face significant problems while implementing the same measures, which required patient, tolerance, and willingness. Yet without Beijing’s tactics, it would be pretty tough for the rest of the states to control the virus. In order to get rid of the virus or, indeed, lessen the number of infections and deaths, the world must follow the experienced Chinese strategies, which, according to Beijing, work more than any other thing.
International relations experts warn that instead of accusing China or other states of being responsible for the spreading of the virus, the world must come together to fight against the virus. It’s the right time for the states to unite and fight with one voice, power, and passion.
Finally, in such harsh circumstances, the world can learn from the Chinese government and people as well. Well-educated citizens must work together with the government, follow the rules, and implement the rules. The Chinese government indeed perform outstanding work while fighting with the virus; on the other hand, the Chinese people willingly cooperate with the Chinese government, and without their cooperation, Beijing may not have eliminated the virus as fast as they did.
Every epidemic can be pushed back with more force only with coordination and a comprehensive approach that engaged the entire government administrations to work collectively with the citizens. Consequently, it is not just the state’s responsibility; the citizens of each state must work together with their government to fight the disease.
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