Harapan entering a grey area, a year before 2020

December 26, 2018

Opinion  |  by Phar Kim Beng

https://www.malaysiakini.com/columns/457606

 

 

Opinion  |  by Phar Kim Beng

COMMENT | As I write this, Malaysia, as governed by Pakatan Harapan, is entering both a festive occasion – marked by Christmas and the New Year – and a festering one too. There are five telltale signs of the latter:

• The tragic death of firefighter Muhammad Adib Mohd Kassim in the Seafield temple riots.
• The 55,000 who gathered in Kuala Lumpur for the rally against the International Convention on the Elimination of All Forms of Racial Discrimination (Icerd).
• Authorities seemingly forgetting about M Indira Gandhi’s missing daughter, and about Teoh Beng Hock’s death nearly ten years ago.
• Close to 15 percent of Malaysia’ population will be above 60 years of age by 2023.
• About 38,000 Felda settlers getting cost of living aid  and deposits for replanting.

In any one of the above, Harapan has at best either been silent, or belatedly proactive. Meanwhile, the world continues to change in five ways:

• US President Donald Trump deciding on two simultaneous withdrawals from Syria and Afghanistan, signalling the end of American presence in two of the most conflict-prone regions in the world.
• Russia staying quiet on the pullout of American troops, although this strategic withdrawal is akin to the collapse of the Berlin Wall.
• Islamic State and the Taliban also staying quiet, suggesting a deeper motivation to push deeper into the Western world, or perhaps Asia, to wreak more havoc;
• China’s One Belt, One Road initiative, which appeared to be all but irreversible, has been challenged by the Quad (United States, Japan, Australia and India).
• Japan, one of the key powers in the Indo-Pacific region, continuing to shrink in terms of population, thus further heightening its insecurity.

These are dangerous times. There are some quaint parallels: the elan of the Vietnam War, when Communist forces pushed forward from the north to south in 1975; the fall of Kabul in 1989; the Russian incursion in Georgia in 2008; and the slow but organic militarisation of South China Sea from 2011 onwards when China, for the first time, referred to the area as its “core interest,” a term previously only reserved for Taiwan and Tibet.

But there is no telling if Harapan is aware of the whiplash effects of these world events. Political scientist Arthur Stein once warned of the importance of “relative gains” in international relations, wherein all great powers see gains and losses in zero-sum terms.

Granted, Malaysia has a foreign and defence policy that seems to be geared towards the centrality of ASEAN. But there is no telling if it wants to adjust to a post-US-Japanese world and the emerging Sino-Russian world order.

East Asia is entering this post-US-Japanese world. The US had always made it a point to keep Tokyo informed of any dramatic moves.

But now, at the speed of a tweet, Trump proceeded to announce the withdrawal of the US from the theater of the Middle East and South Asia, without notifying its staunchest East Asian allies Japan and South Korea.

Japan got its first taste of the ‘Nixon shock’ when the then-US president announced his plan to visit China in 1971, before Nixon announced his New Economic Programme, which included abandoning the gold standard.

The country would be shocked again when it received no thanks from Sabah Al-Ahmad Al-Jaber Al-Sabah of Kuwait for its financial contribution to Operation Desert Storm led by then-president George Bush.

What Trump did in recent weeks must constitute a third shock for Japan – a major ally pulling out of two regions at the same time, even with the opposition of outgoing Secretary of Defense James Mattis.

By pulling out of Syria and Afghanistan, Japan must be reeling from the fear that its security relationship with Washington can be subject to the same forces that catapulted Trump to power – populism and the American far right.

China and Russia must also be smiling in glee, with the American admission of the impossibility of conducting simultaneous conflicts in two regions.

Malaysia is entering a world of uncertain geopolitical realities and flux.

What adds to the instability is the fact that it is ruled by a new coalition of four parties now beset by infighting – and one still due for a possibly messy transition at the top.

Prime Minister Dr Mahathir Mohamad still looks set to hands over the reins to Anwar Ibrahim, although there are signs that things are less than rosy behind the scenes – such as when the daughter of the latter quit her posts in government.

The new year seems likely to put Malaysia in a pinch as it looks ahead to 2020.

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PHAR KIM BENG is a multiple award-winning head teaching fellow on China and the Cultural Revolution at Harvard University.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

 

 

Decoupling the US from Asia

November 21, 2018

Author: Editorial Board, ANU

ww.eastasiaforum.org/2018/11/19/decoupling-the-us-from-asia/#more-155952

 

...[D]ecoupling or divorce from China, Cold War-style, is an option that would threaten economic and political turmoil and promise a global winter of discontent that stretched the Asia Pacific order to breaking point”.

Maybe US Vice President Mike Pence didn’t mean to fire the opening shots in a new Cold War with China in his 4 October speech at the Hudson Institute, but the global policy community can be forgiven now for taking the proposition seriously.

 

The idea of a new Cold War is of course not new: it had been canvassed in security circles in Washington and the chill has been cultured actively by some in allied capitals for some time. A range of President Donald Trump’s advisors and former advisors, Steve Bannon, Peter Navarro, John Bolton and Robert Lighthizer, all identify as proponents of political and economic decoupling from China to a more-or-less extreme degree. Navarro most recently advocated the idea in its most extreme form at his CSIS speech about how China was undermining US national security, giving the impression that an economic ‘self-sufficiency’ strategy, like that which has been so disastrous in North Korea, was the only way to keep America secure. Larry Kudlow, Director of the President’s National Economic Council, disavowed that thinking with an unequivocal declaration that Navarro had misspoken and had no authority to speak on the matter on behalf of the Trump administration.

The new Cold War narrative gained traction as President Xi Jinping consolidated his power and began to assert the discipline of the Chinese Communist Party across the government and society in China. It has been accompanied by a discernible shift right across the political spectrum in the United States towards a hard-line posture on China. The conflation of frustration with China’s military assertiveness in the South China Sea and the perception that its Party dominated political system qualified every commitment China had made under international law to the rules-based international economic system has been an easy logical slide even for those in the US policy community who had been architects of China’s entrapment within that system.

Make no mistake. There are real issues on the agenda for negotiation in securing a more efficient and more equitable foundation for the next phase of the economic and political relationship between China and the United States. China is no longer a poor, developing country aspirant to membership of the WTO but a very large, upper-middle income economy that is the largest trader in the world. While China’s entry to the WTO was on terms that were more onerous than that even advanced and established members of the WTO had to bear, issues beyond the coverage of the WTO, with respect to its foreign investment regime for example, and new issues, such as those related to digital trade, beg negotiation. Contrary to much of the new American narrative, it is not that China has flagrantly flouted the rules of the system to which it and its partners signed on in 2001 — it is rather that it has outgrown them bigtime.

Many of the issues for negotiation now that have the highest priority — to do with treatment of foreign investment, intellectual property, industrial subsidization and competition policy — were encompassed within the negotiations that had been on-going between China and the United States over a Bilateral Investment Treaty, that have now been suspended. There is also the issue of further trade liberalisation and industrial reform that the absence of progress with multilateral negotiations through the WTO has left unattended. Attending to these issues is not only in the interests of the United States and other countries, it is also in the interests of China in prosecuting the reform agenda that it has articulated as the path towards catching up with at least lower-end advanced industrial economies and avoiding the middle income trap.

All these things would seem eminently negotiable, if only President Xi and President Trump could agree to sort them and some others things out.

But as Gary Hufbauer warns in our lead essay this week, the Pence declaration last month represents a significant departure from ‘business-as-usual’.

‘Economic sanctions are the front line of the new Cold War, unlike the US–Soviet confrontation of yesteryear,’ says Hufbauer. ‘But military escalation cannot be far behind. Since the United States and China already possess enough intercontinental nuclear missiles for “mutually assured destruction”, and since the United States would be hopelessly outnumbered in conventional land battles, military escalation will focus on naval power and hypersonic short-range missiles.’

Hufbauer worries that the United States will ramp up its economic war, with the goal of securing an economic divorce from China. While the immediate complaints from the Trump administration are about the persistent US trade deficit with China and the appropriation of US firms’ technology, the real story is simply fear that China will overtake the United States economically and technologically as the arithmetic, however manipulated, suggests it will by 2030 or 2050, take your pick.

Hufbauer sees American attempts to decouple from the Chinese economy and the close down of US trade and technological ties as a loser’s game — a national science and technology strategy that stayed open to scientific and technological links would more likely keep the United States ahead of the game, incorporate less risk of pushing China back into a corner from which it posed a bigger threat and strengthen US economic and political security, he suggests. But he rates the chances of this outcome low, barring unlikely conciliation from Xi’s China. The new Cold War promises, he assesses, to be a lasting legacy of presidents Trump and Xi.

Yet, in a hard-headed if gloomy assessment of where China and the United States are at right now, Henry Paulson, Secretary of the Treasury under former US President George W Bush and leading US China expert, sounds a strong warning on the decoupling strategy.

Decoupling, he says, is easier when you’re actually a couple. But the United States and China are not a couple. They are part of an international economy that is multilaterally integrated on an unprecedented scale, especially within Asia.

The United States might well continue to pursue divorce through cutting back trade, capital and technology flows, but that’s a cost no Asian country, including US allies, can readily afford, Paulson says. The cost is a function of their geography, of economic gravity and of the strategic reality in which they live day-by-day.

Many countries around the world may share many of Washington’s present concerns. But decoupling or divorce from China, Cold War-style, is an option that would threaten economic and political turmoil and promise a global winter of discontent that stretched the Asia Pacific order to breaking point.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

Mahathir on Malaysia’s Foreign Policy

November 8, 2018

 

China’s Foreign Policy under Xi Jinping

October 24, 2018

by Neil Thomas, University of Chicago

http://www.eastasiaforum.org/2018/10/21/chinese-foreign-policy-under-xi-jinping/

  …”contrary to some recent commentary, it seems unlikely that ‘world power’ or ‘world domination’ are China’s priorities. The CCP observed the Soviet errors of external overreach and antagonism toward the US-led system during the Cold War. China now interacts with the international order like other major states: it complies with the order because to do so serves its interests and tries to influence this order where it does not”.–Neil Thomas

There is a risk of a ‘new Cold War’ between the United States and China. After decades of bilateral engagement and multilateral collaboration, the Trump administration’s first National Security Strategy (NSS) branded China a ‘revisionist power’ that seeks to ‘displace the United States in the Indo-Pacific region’ and ‘shape a world antithetical to [US] values and interests’ in an age of renewed ‘great power competition’.

 

Rising powers like China rattle ruling powers like the United States because their ascendance creates tension within existing structures of global power. US power lies in its unmatched military capabilities and the ‘international order’ of multilateral institutions, interstate rules and global norms that promote economic openness and rules-based dispute resolution. The charges of ‘revisionism’ levelled in the NSS show that the Trump administration fears that China will replace the United States as global hegemon and threaten the basic tenets of international order.

China has indeed become a more active participant in global affairs under the leadership of Xi Jinping, who took office in November 2012. Signs of China’s rising power, though, are a natural result of its growth. More important is what China intends to do with its newfound capabilities. Does Xi want to revolutionise Chinese foreign policy? Stop opening China’s economy? Overturn the international order?

International policymakers must study Xi’s words because he, as the Chinese Communist Party’s (CCP) General-Secretary and head of the Central Foreign Affairs Commission, is pivotal in setting the overarching orientations and strategies of China’s foreign policy. The most authoritative articulation of Xi’s policy agenda is his ‘Report’ to the 19th CCP National Congress in October 2017.

An analysis of Xi’s foreign policy discourse suggests that there may exist more continuity than often assumed between the strategies of Xi and his predecessors. This intersection between past and present is captured neatly in the foreign policy section of Xi’s Report: ‘Following a path of peaceful development and working to build a community of common destiny for humankind’.

What’s new is that Xi stamped his authority on CCP foreign policy under his signature formulation of ‘building a community of common destiny for humankind’ — although Hu Jintao had used the phrase previously. The ‘community of common destiny’ is basically an international system in which deeper economic integration and political dialogue eases conflict and bolsters security. Xi is proactively ‘building’ this future through an intense focus on the Belt and Road Initiative (BRI) and global governance.

What’s not new is that Xi retains the ‘peaceful development’ strategy articulated by Hu in the mid-2000s, which derives from the CCP’s ‘basic line’ of ‘peace and development’ in international relations that Deng Xiaoping introduced in 1985. In the Report, Xi framed the foreign policy achievements of his first five-year term, including the BRI and the Asian Infrastructure Investment Bank, as ‘new contributions to global peace and development’. He has told Party leaders that the ‘peace and development’ strategy is ‘aligned with the fundamental interest of the country’ and is a ‘fundamental foreign policy goal’.

This ‘peace and development’ strategy reflects the belief that China’s economic development requires a peaceful external environment and cooperative relations with major powers. It replaced the Maoist creed of inevitable conflict between the capitalist and socialist worlds as the CCP’s official ‘assessment of the international situation’. Deng believed this strategy would help China ‘exert a much greater influence’ in a global system that the CCP perceived as dominated by Western powers.

 

Xi’s policy statements imply that the overarching concern of China’s foreign policy remains the creation of a ‘more enabling international environment’ for China’s continued development. As China’s interests continue to expand, so too does its desire to participate in global affairs.

But contrary to some recent commentary, it seems unlikely that ‘world power’ or ‘world domination’ are China’s priorities. The CCP observed the Soviet errors of external overreach and antagonism toward the US-led system during the Cold War. China now interacts with the international order like other major states: it complies with the order because to do so serves its interests and tries to influence this order where it does not.

Xi’s Report also reaffirmed Deng’s ‘opening to the outside world’ as a ‘basic national policy’. ‘Opening’ for Deng meant China would integrate into the global economy, enter international institutions and improve living standards in a manner that sustained CCP control.

Xi has insisted that China ‘absolutely must not waver’ from ‘reform and opening’ because it is the ‘propelling force’ behind China’s ‘international status’. He even framed his signature economic policy — a ‘new normal’ focused on consumption, services and markets — as a ‘new structure’ of reform and opening that ‘improves its quality and level’.

Xi’s continuation of key strategies like ‘peace and development’ and ‘reform and opening’ suggest he may not have changed China’s objectives so much as the means by which the CCP pursues them. Xi’s China is ‘revisionist’ in the narrow sense of hoping for changes that reflect new realities but not in the existential sense of wanting to supplant the current order or global hegemon.

Until recently, White House views on China were quite consistent: the United States would ‘welcome the rise of a stable, peaceful, and prosperous China’ and ‘reject the inevitability’ of ‘confrontation’ if China acted within the international order. But the latest NSS said the ‘engagement’ strategy had ‘failed’.

The endurance of ‘reform and opening’ and of ‘peace and development’ in Xi’s foreign policy discourse imply that engagement is not such a failure. The continuance of these two key foreign policy concepts intimate that, while Xi’s CCP does want to project China’s power, it is still constrained by a belief in the benefit to China of global order and stability.

US relative power in global affairs is declining, but this trend is mostly the result of other countries’ embrace of the international order built by the United States, which nonetheless retains significant advantages in military, diplomatic, commercial, technological and cultural power. It would best advance its national interests by accepting but proactively managing China’s rise within an improved iteration of this order. We should avoid a ‘new Cold War’.

Neil Thomas is Research Associate in the Think Tank of The Paulson Institute at the University of Chicago.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘Asian crisis, ready or not’.

China is Losing the New Cold War

September 9, 2018

https://www.project-syndicate.org

 

by Minxin Pei

In contrast to the Soviet Union, China’s leaders recognize that strong economic performance is essential to political legitimacy. Like the Soviet Union, however, they are paying through the nose for a few friends, gaining only limited benefits while becoming increasingly entrenched in an unsustainable arms race with the US.

 

HONG KONG – When the Soviet Union imploded in 1991, the Communist Party of China (CPC) became obsessed with understanding why. The government think tanks entrusted with this task heaped plenty of blame on Mikhail Gorbachev, the reformist leader who was simply not ruthless enough to hold the Soviet Union together. But Chinese leaders also highlighted other important factors, not all of which China’s leaders seem to be heeding today.

To be sure, the CPC has undoubtedly taken to heart the first key lesson: strong economic performance is essential to political legitimacy. And the CPC’s single-minded focus on spurring GDP growth over the last few decades has delivered an “economic miracle,” with nominal per capita income skyrocketing from $333 in 1991 to $7,329 last year. This is the single most important reason why the CPC has retained power.

But overseeing a faltering economy was hardly the only mistake Soviet leaders made. They were also drawn into a costly and unwinnable arms race with the United States, and fell victim to imperial overreach, throwing money and resources at regimes with little strategic value and long track records of chronic economic mismanagement. As China enters a new “cold war” with the US, the CPC seems to be at risk of repeating the same catastrophic blunders.

At first glance, it may not seem that China is really engaged in an arms race with the US. After all, China’s official defense budget for this year – at roughly $175 billion – amounts to just one-quarter of the $700 billion budget approved by the US Congress. But China’s actual military spending is estimated to be much higher than the official budget: according to the Stockholm International Peace Research Institute, China spent some $228 billion on its military last year, roughly 150% of the official figure of $151 billion.

In any case, the issue is not the amount of money China spends on guns per se, but rather the consistent rise in military expenditure, which implies that the country is prepared to engage in a long-term war of attrition with the US. Yet China’s economy is not equipped to generate sufficient resources to support the level of spending that victory on this front would require.

If China had a sustainable growth model underpinning a highly efficient economy, it might be able to afford a moderate arms race with the US. But it has neither.

On the macro level, China’s growth is likely to continue to decelerate, owing to rapid population aging, high debt levels, maturity mismatches, and the escalating trade war that the US has initiated. All of this will drain the CPC’s limited resources. For example, as the old-age dependency ratio rises, so will health-care and pension costs.

Moreover, while the Chinese economy may be far more efficient than the Soviet economy was, it is nowhere near as efficient as that of the US. The main reason for this is the enduring clout of China’s state-owned enterprises (SOEs), which consume half of the country’s total bank credit, but contribute only 20% of value-added and employment.

The problem for the CPC is that SOEs play a vital role in sustaining one-party rule, as they are used both to reward loyalists and to facilitate government intervention on behalf of official macroeconomic targets. Dismantling these bloated and inefficient firms would thus amount to political suicide. Yet protecting them may merely delay the inevitable, because the longer they are allowed to suck scarce resources out of the economy, the more unaffordable an arms race with the US will become – and the greater the challenge to the CPC’s authority will become.

The second lesson that China’s leaders have failed to appreciate adequately is the need to avoid imperial overreach. About a decade ago, with massive trade surpluses bringing in a surfeit of hard currency, the Chinese government began to take on costly overseas commitments and subsidize deadbeat “allies.”

Exhibit A is the much-touted Belt and Road Initiative (BRI), a $1 trillion program focused on the debt-financed construction of infrastructure in developing countries. Despite early signs of trouble – which, together with the Soviet Union’s experience, should give the CPC pause – China seems to be determined to push ahead with the BRI, which the country’s leaders have established as a pillar of their new “grand strategy.”

An even more egregious example of imperial overreach is China’s generous aid to countries – from Cambodia to Venezuela to Russia – that offer little in return. According to AidData at the College of William and Mary, from 2000 to 2014, Cambodia, Cameroon, Côte d’Ivoire, Cuba, Ethiopia, and Zimbabwe together received $24.4 billion in Chinese grants or heavily subsidized loans. Over the same period, Angola, Laos, Pakistan, Russia, Turkmenistan, and Venezuela received $98.2 billion.

Now, China has pledged to provide $62 billion in loans for the “China-Pakistan Economic Corridor.” That program will help Pakistan confront its looming balance-of-payments crisis; but it will also drain the Chinese government’s coffers at a time when trade protectionism threatens their replenishment.

Like the Soviet Union, China is paying through the nose for a few friends, gaining only limited benefits while becoming increasingly entrenched in an unsustainable arms race. The Sino-American Cold War has barely started, yet China is already on track to lose.

Minxin Pei is a professor of government at Claremont McKenna College and the author of China’s Crony Capitalism.

ASEAN: South China Sea code of conduct still a speck on the horizon

September 8, 2018

by Gregory B Poling, CSIS

After two decades of talks, scepticism about the development of a South China Sea Code of Conduct (COC) is well-deserved, but it is also important to acknowledge progress when it happens. The agreement on a single draft negotiating text, revealed ahead of the ASEAN–China Post Ministerial Meeting on 2 August 2018, is an important step in the process that deserves recognition.

The COC will not resolve the South China Sea disputes, nor was it ever meant to. Instead the COC is intended to manage disputes to avoid conflict pending their eventual resolution by direct negotiation or arbitration among the claimants. But any system to effectively manage the South China Sea disputes would require three things, none of which are achieved yet in the draft text.

First, an effective COC would need to be geographically defined. The claimants do not need to resolve their disputes, but they do need to agree on where those disputes are if they hope to effectively manage them.

For instance, any agreement that did not include the Paracel Islands and the waters around them would be unacceptable to Hanoi. The same goes for the Philippines in the case of Scarborough Shoal. And what of waters and undersea features in the claimed exclusive economic zones of Indonesia and Malaysia? These areas are all claimed by China via the nine-dash line and would continue to be sites of tension if excluded.

According to Carl Thayer, who revealed many details of the draft text, Vietnam suggested that ‘the present Code of Conduct shall apply to all disputed features and overlapping maritime areas claimed under the 1982 UNCLOS [United Nations Convention on the Law of the Sea] in the South China Sea’. But that is too vague to be effective and is worded to exclude areas in which Beijing claims historic rights not recognised by other parties under UNCLOS.

Indonesia suggested adding that ‘the Parties are committed to respect the Exclusive Economic Zone and continental shelf of the coastal states as provided for in the 1982 UNCLOS’. But again that would seem to purposely exclude areas in which China claims and is sure to assert historic rights. It might be a legally correct position to take, but it is not an effective basis for a COC.

The only way that any code could work is if it clearly encompasses the areas under contention, including all reefs, rocks, submerged banks, waters and airspace in which China seeks to assert its historic rights. Specifying this without using language that would be unacceptable to any of the claimants would be difficult, but possible if all parties were committed to reaching a deal.

Second, an effective COC would need a dispute settlement mechanism. Disagreements over interpretation and application of the text are inevitable. This is clear from the history of the 2002 Declaration on the Conduct of Parties in the South China Sea, which was too vague and had no means to resolve disagreements. As a result, most parties violated the text while insisting that they were still in compliance and pointing their fingers at others.

To resolve this problem, both Indonesia and Vietnam reportedly suggested that parties to the COC be able to take disagreements to the High Council under the ASEAN Treaty of Amity and Cooperation. That body, which has never been convened, would include representatives nominated by ASEAN members to hear and mediate disputes. Its rulings would not be legally binding or necessarily enforceable, but they would have considerable weight.

A major problem with the High Council suggestion would be that under the Treaty of Amity and Cooperation it can only be constituted by ASEAN members. A more effective option might be to spell out the procedures for convening a High Council-like body that would draw arbiters from a pool nominated by all parties, including China.

Third, any effective regime to manage the South China Sea disputes would need detailed provisions on fisheries management and oil and gas development. But the positions enumerated in the negotiating text so far are contradictory and fall well short of outlining a detailed and coordinated system to manage resources.

For instance, Jakarta suggests that states should coordinate on fighting illegal fishing as a form of transnational crime, but Indonesia’s definition of illegal fishing includes activities that others, especially China, consider legal. And China’s suggestions on oil and gas cooperation seem more geared towards excluding foreign companies than towards equitably managing resources with fellow claimants.

Unfortunately, there is a fundamental contradiction in the COC. It is the wrong vehicle to discuss details on resource management because of its membership, but it cannot be an effective means to manage the disputes without doing so. Most of the ASEAN states have no stake in the contested fisheries or hydrocarbon resources and would be uninterested in negotiating the specifics of overlapping entitlements and resource rights.

The solution to this problem could be a COC signed by all 10 ASEAN members and China that establishes general rules of behaviour within a clear geographic area, sets up an effective dispute settlement mechanism and endorses the immediate start of follow-on negotiations involving only the relevant claimants on fisheries management and oil and gas cooperation.

Such a document would be a major step towards peacefully managing the South China Sea disputes and there are hints that at least some sections of the negotiating text might be on the right track. But the differences between parties remain considerable and final agreement on an effective COC still seems some way off.

Gregory B Poling is Director of the Asia Maritime Transparency Initiative and Fellow with the Southeast Asia Program at the Center for Strategic and International Studies in Washington, DC

.http://www.eastasiaforum.org/2018/09/06/south-china-sea-code-of-conduct-still-a-speck-on-the-horizon/