How to win the Cold War with China–Dr. Fareed Zakaria


October 15, 2018

How to win the cold war with China–Dr. Fareed Zakaria

https://www.washingtonpost.com

The Trump administration’s most significant and lasting decisions will be about U.S. policy toward China. Far more consequential than even the Supreme Court’s composition or immigration policy is whether the 21st century will be marked by conflict or cooperation between the two most prosperous and powerful countries on the planet. The last time there was such a question — when Britain confronted a rising Germany 150 years ago — it did not work out so well.

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Since the end of the Cold War, we have lived in an era of almost no genuine great-power competition, which has led to the emergence of a dynamic global economy and a huge expansion of international trade, travel, culture and contact. All this happened under the United States’ uncontested supremacy — military, political, economic and cultural.

That age is over. Twenty-five years ago, China made up less than 2 percent of the global gross domestic product. Today that figure is 15 percent, second only to the United States’ 24 percent. In the next decade or so, the Chinese economy will surpass the size of America’s. Already, nine of the 20 most valuable technology companies in the world are based in China. Beijing has also become far more active on the global stage, ramping up its defense spending, foreign aid and international cultural missions. Its Belt and Road Initiative, infrastructure investment in dozens of countries, will ultimately be at least seven times larger than the Marshall Plan, if not far more, in inflation-adjusted terms.

The Trump administration has many of the right instincts on China. Beijing has taken advantage of free trade and the United States’ desire to integrate China into the global system. The administration is right to push back and try to get a fundamentally different attitude from China on trade. But instincts do not make for a grand strategy.

Were Washington to be more strategic, it would have allied with Europe, Japan and Canada on trade and presented China with a united front, almost guaranteeing that Beijing would have to acquiesce. It would have embraced the Trans-Pacific Partnership as a way to provide Pacific countries an alternative to the Chinese economic system. But in place of a China strategy, we have a series of contradictory initiatives and rhetoric.

President Trump’s Trade Gangster–Peter Navarro

If there is one person in the White House whose ‘to do’ list you want to avoid, it’s Peter Navarro. They call him the ‘most dangerous’ man for the global economic order. He is radical, determined and wields enormous influence on US President Donald Trump– source–https://blogs.economictimes.indiatimes.com/letterfromwashington/peter-navarro-most-dangerous-man-for-the-global-economic-order/

In fact, the administration seems divided on the broader issue of U.S.-China relations. On one side are people such as Treasury Secretary Steven Mnuchin, who want to use tough talk and tariffs to extract a better deal from China, while staying within the basic framework of the international system. Others, such as trade adviser Peter Navarro, would prefer that the United States and China were far less intertwined. This would undoubtedly mean a more mercantilist world economy and a more tense international order. There is a similar split among geo-politicians, with the Pentagon being more hawkish (not least because it ensures huge budgets) and the State Department more conciliatory.

Vice President Pence recently gave a fiery speech that came close to declaring that we are in a new Cold War with China. An outright labeling of China as the enemy would be a seismic shift in U.S. strategy and would certainly trigger a Chinese response. It could lead us to a divided, unstable and less prosperous world. Here’s hoping the Trump administration has thought through the dangers of such a confrontational approach.

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History tells us that if China is indeed now the United States’ main rival for superpower status, the best way to handle such a challenge lies less in tariffs and military threats and more in revitalization at home. The United States prevailed over the Soviet Union not because it waged war in Vietnam or funded the contras in Nicaragua, but because it had a fundamentally more vibrant and productive political-economic model. The Soviet threat pushed the United States to build the interstate highway system, put a man on the moon, and lavishly fund science and technology.

The former head of Google China, Kai-Fu Lee, has written an important book arguing that China is likely to win the race for artificial intelligence — the crucial technology of the 21st century. He points out that China’s companies are highly innovative, its government is willing to make big bets for the long term, and its entrepreneurs are driven and determined.

Tariffs and military maneuvers might be fine at a tactical level, but they don’t address the core challenge. The United States desperately needs to rebuild its infrastructure, fix its educational system, spend money on basic scientific research and solve the political dysfunction that has made its model less appealing around the world. If China is a threat, that’s the best response.

China-US Relations: Whither the Trade War?


August 6, 2018

China-US Relations: Whither the Trade War?

by Bunn Nagara

http://www.thestar.com.my

FOR further proof that China’s planners don’t always get it right, look no further than the current trade war with the United States.

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According to the latest reports including from within China, Beijing is flitting between damage control mode and full-on panic. A senior researcher at a Chinese think tank recently remarked that China has never seen anything as aggressive as the Trump administration’s current actions on trade.

Yet these are still early days – far worse may yet come. China is unsure what to do and never saw any of it coming. It cannot understand Trump, and there is no sign it ever will. Not that Donald Trump’s style is necessarily comprehensible or even decipherable.

China is now reportedly casting about for useful advice on managing Trump. It is even looking abroad for workable tips.

Amid all the uncertainty, at least three things are clear. One, things are all set to get worse before they get any better. And while China still has buttons to press, it is inadequately prepared for more fallout.

Two, China cannot “read” Trump’s moves because they seem coded or inaccessible to sensible interpretation. That is actually his strength.

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A trade war hurts everybody and benefits nobody. A shooting war, likewise. An expenditure war, or competition to build transnational infrastructure, improves connectivity for trade and travel. It benefits everybody and hurts nobody. In the past, however, a country such as the US would have to borrow from China to initiate such projects.–Bunn Nagara

Three, the prospect of meaningful trade talks is virtually nil. China just has to sweat it out or worse, at least for now.

As of midweek, the US and China have imposed 25% tariffs on US$34bil (RM139bil) of each other’s goods with another US$16bil (RM65bil) of products as the next tranche.

At this point, Trump’s legion of critics in the US may need to take a breather to suspend their cynicism about his style. His very unpredictability, so often an object of ridicule, is actually a tactical advantage useful for keeping his opponents guessing, distracted and off-balance.

By bobbing and weaving, he seems to be inconsistent and even unsteady. But it helps to keep the other side wrong-footed. It is something China should know about – drunken kung fu or drunken boxing. China’s stiff and straitlaced policymakers today forget their own culture and history at their peril.

An international consensus is developing that China should have acted to address US trade complaints, and acted sooner. Now the costs of delay for China may be higher than anticipated.

It is not just the tariffs and trade restrictions, of course. For today’s excess-capacity China the problems include the risk of ballooning unemployment, crimped liquidity and the knock-on domestic social problems they can cause.

Paradoxically, the years of cruising on fat growth figures have bred a crippling complacency. Thus the sense of unpreparedness now stings so much more.

China’s once-abundant funds are now becoming cramped. Last week the People’s Bank of China injected US$74bil (RM302bil) into the system and the State Council announced another US$200bil (RM815bil) for infrastructure.

Among China’s miscalculations was its assertiveness over its South China Sea claims. With its overbearing presence in disputed territory, it upset neighbours and consumed decades-long goodwill and trust in the region.

That was not what the China of Deng Xiaoping or his immediate successors would have done. China then was wiser and more circumspect, knowing how to bide its time and apply soft power to win friends and influence people.

But that is not today’s China. Nonetheless, questionable conduct comes with a price tag quite regardless of any positive achievements before.

Another mistake was to misread European complaints about Trump’s trade policies. China thought it could lead an alliance of sorts against those policies, only to find that core Western interests meant more to Europe.

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As a result of these missteps, the US excluded China from its biennial Rimpac (Rim of the Pacific) 26-nation military exercise this year, while inviting Vietnam for the first time. But another exercise hosted this month by Australia, and involving 27 countries including China, will proceed as planned. However, there will be no live-fire drills for China.

Meanwhile Britain is raising its level of naval activity in the region but will not be part of Australia’s programme. A calibrated response to China’s South China Sea assertiveness seems to be emerging among the Western allies.

China will not fail to take notice. But whether it will have any effect on Beijing’s plans and policies is another matter.

Nonetheless, regardless of what concessions Australia is prepared to make with China, Canberra is still competing with Beijing on some issues.

One of these is Australia’s aid programmes for South Pacific island nations. This comes to A$1.3bil (RM4bil) for this year. Although this amount may seem paltry, it compares favourably to China’s US$1.7bil (RM7bil) for 2006 to 2016.

Ordinarily, China would be able to top Australia’s allocation in a single stroke. But the trade war with the US is making itself felt. Besides, China has other cost items to look after, not least the sprawling multi-nation Belt and Road Initiative (BRI).

The BRI is not just another project – it has been set in stone in the destinies of the Communist Party of China, the state system and President Xi Jinping himself.

If Australia’s aid efforts in the South Pacific still appear limited, the US State Department is on a spending spree in a renamed Asia-Pacific with an India option, now dubbed the “Indo-Pacific.”

At an Indo-Pacific Business Forum in Washington last Monday, Secretary of State Mike Pompeo unveiled new largesse for developing infrastructure in the region.

The trio of countries in this scheduled spending exercise are the US, Japan and Australia.

Not officially mentioned is the great big elephant in the room, China, the object of this round of manoeuvres.

Can the US really hope to outspend and out-construct China? Can it do so even with the help of Japan and Australia? There was also a time when the answer would be an unqualified no. But now China’s spending style has become somewhat cramped.

The trade war aside, little if anything has changed in the fortunes of Japan and Australia.

Japan’s economy remains largely in the doldrums for a quarter of a century now. No great elevation in fortunes seems likely.

The Australian economy is increasingly drawn into China’s orbit, while Canberra is in two minds about opting to be more Asian or staying fully within the Western alliance.

The US economy has not risen substantially in recent times, nor has it shown much sign of doing so sustainably over the long term.

A trade war hurts everybody and benefits nobody. A shooting war, likewise. An expenditure war, or competition to build transnational infrastructure, improves connectivity for trade and travel. It benefits everybody and hurts nobody. In the past, however, a country such as the US would have to borrow from China to initiate such projects.

It may still have to do so. The countries between them would probably benefit the most. In spite of itself, China has begun to undergo a sobering experience about the costs of massive infrastructure projects.

It has unwittingly become more conscious of the predicament of countries like Malaysia. Asking questions about the viability and returns on investment of such projects is Beijing’s new normal.

The larger question is whether the trade war will hurt China or the US first, appreciably, to alter the course in the other’s favour.

But don’t hold your breath.

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.

Malaysia: Embracing Abe-san and Bro Modi


August 1, 2018

Dr. Mahathir’s Look East (Japan) and West (India) Geo-Economics–Embracing Abe San and Bro Modi

by Dr. Shankaran Nambiar, MIER

http://www.eastasiaforum.org/2018/07/13/mahathirs-foreign-policy-reset/

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Malaysian Prime Minister Dr.Mahathir greets Bro Modi

Prime Minister Mahathir Mohamad appears to be setting the tone for a revision of Malaysia’s geo-economic policy, if the bilateral meetings with his Indian and Japanese counterparts in the early days of his administration are anything to go by. 

 

Indian Prime Minister Narendra Modi called on Mahathir not too long after the latter assumed office. The meeting was significant in so far as Modi is keen on ‘Acting East’ and forging stronger ties with ASEAN. With Mahathir at the helm, Modi may well have an active and influential partner in the region.

India is likely to be an economic powerhouse in the coming decade or two, and any long-term economic architecture in the region will have to take this reality into account.

Does Mahathir run the risk of disrupting Malaysia’s economic relations with China by engaging with other partners? Not quite, but he does want to tilt the balance.

Mahathir is not questioning China’s intention to build friendly, harmonious and prosperous relations with the region or with Malaysia. But he is adding a dose of reality to some of the more questionable investment agreements that Malaysia has entered into with China and wants these deals to be reviewed. Mahathir has said that ‘we will be friendly to China but we don’t want to be indebted to China’.

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With Ali Baba’s Jack Ma of China

The Prime Minister is keen to do business with anyone who means business, provided there are no hidden caveats and Malaysia is not compromised. If there was any question of wanting to cut off China, Mahathir would not have met with Chinese entrepreneur Jack Ma.

This brings us to Mahathir’s meeting with a second foreign leader, Japanese Prime Minister Shinzo Abe. Why did Mahathir choose to go to Japan on his first official overseas trip soon after he came to power?

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Teaming with Abe-San on Look East Partnership with No.7 Jersey

Mahathir probably sees value in reviving his ‘Look East’ policy, which he pursued while prime minister in the 1980s, perhaps in a different form and for slightly different reasons. There is an element of nostalgia, to be sure. But Mahathir is not is not a sentimentalist.

The previous Najib administration did not treat the notion of equidistance from global superpowers with the sensitivity it deserved. There was a tumbling over to China coupled with a reticence to engage with Japan, at least with nothing of the enthusiasm that Tokyo enjoyed during the Mahathir 1.0 era.

Mahathir has always believed in maintaining equidistance from other powers, preferring to work with the larger economies as equals. Mahathir would, by logical extension, be willing to cooperate with China’s Belt and Road Initiative as long as the partnership is fair and without Beijing using Malaysia as its playground. In that respect, reaffirming Malaysia’s long friendship with Japan is a reassertion of Mahathir’s pragmatic approach to geo-economic policy.

But equidistance is not possible without the existence of something like the Non-Aligned Movement. In lieu of that, Mahathir will likely pursue equidistance through a more integrated ASEAN in partnership with other countries such as the United States, China, Japan, South Korea, India and the Central Asian states. This would be a revival of his East Asian Economic Caucus (EAEC) concept.

A close-knit ASEAN, through the EAEC, would be able to give countries such as Malaysia more access to foreign markets without having to pay an onerous price for doing so. It would allow countries like India to trade and invest in Southeast Asia or other places while being able to show their home constituencies that they can make gains without paying for them with tough commitments.

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Strengthening ASEAN’s economic cohesion and including other powers through the EAEC would mean that neither the United States nor China could dominate Malaysia’s foreign policy. Malaysia would not have to choose between aligning with either power.

Mahathir’s discussion with Jack Ma after his India and Japan meetings shows the Prime Minister’s pragmatism — more than being caught up in great power politics, Mahathir wants to push ahead with attracting no-strings-attached investment, be it from China, India or any other part of the world.

Mahathir understands that trade and investment are Malaysia’s lifeblood. Improving Malaysia’s networks with the rest of the world’s markets must take top priority to foster better trade and investment connections.

Mahathir’s meetings with Modi and Abe will set in motion a couple of initiatives. Malaysia will return to its default position of maintaining equidistance between superpowers. Japan will not feel it is being edged out of Malaysia’s investment landscape.

Malaysia will stand for a free and unaligned ASEAN, with Mahathir leading a campaign for a new trade architecture that might be more palatable to Southeast Asian countries  and which will minimise the conflicting demands of China, the United States and India by embracing Japan.

Of course, the EAEC idea will have its share of detractors and non-adherents. Much as Mahathir has a tough job setting domestic affairs right now, he has the no less difficult task of realigning the country’s geo-economic policy.

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Shankaran Nambiar is a senior research fellow at the Malaysian Institute of Economic Research.

A version of this article originally appeared here in The Sun Daily.

US-North Korea Singapore Summit– A Long Journey to Peace Ahead


July 26, 2018

US-North Korea Singapore Summit– A Long Journey to Peace Ahead

by Charles K Armstrong, Columbia University

http://www.eastasiaforum.org/2018/07/25/too-early-to-tell-if-the-singapore-summit-was-successful/

“Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. As Pompeo rightly stated, North Korean denuclearisation will take a long time. But the goal to which Seoul, Pyongyang and Washington have committed is not just denuclearisation: the goal is a lasting and stable peace. Building that will take a great deal more patience than we have tended to see in Washington.”--Charles Armstrong

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The 12 June US–DPRK summit meeting was vastly oversold, not least by US President Donald Trump. The day after the summit, Trump tweeted that the North Korean nuclear threat had been removed, even though Pyongyang had taken no verifiable action toward eliminating its nuclear program. On 12 July, one month after the summit, Trump brandished a letter from North Korean leader Kim Jong-un, who declared their Singapore meeting ‘the start of a meaningful journey’ and said he was looking forward to their next meeting. Trump took this as a reflection of the ‘great progress’ that the two countries had made despite the frustrations that had beset US Secretary of State Mike Pompeo in his recent visit to Pyongyang. Six weeks after the Singapore summit, North Korea’s nuclear arsenal has not diminished, US and UN sanctions against North Korea remain in place, and the US government continues to forbid US citizens from visiting North Korea (and vice versa) without special permission.

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Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. But tensions on the Korean Peninsula have eased and that is a major step forward in relations.

Still, despite the largely critical coverage from the Western press — the media in Asia, including in South Korea, has generally been more positive — it is far too early to tell whether the Singapore summit was a success or a failure. Kim’s ‘nice note’ is correct: the meeting of the two leaders was only the start of a journey and was the beginning of a long and unpredictable process of normalising relations between two countries that have been in conflict for 70 years.

As critics were quick to point out, the joint declaration was remarkably vague — not much of a ‘deal’ at all. Trump offered North Korea unspecified ‘security guarantees’ in exchange for which Kim Jong-un ‘reaffirmed his firm and unwavering commitment to complete denuclearisation of the Korean Peninsula’. The one concrete action proposed was the return of US soldiers’ remains from the Korean War. Here some progress has been made: according to a US official who was present at the North Korea–US talks on 16 July, North Korean has offered to send back the remains of over 50 US servicemen on 27 July, which is the 65th anniversary of the Korean War armistice.

The summit was oversold in North Korea as well. The Trump–Kim meeting was covered extensively in the DPRK media, and the usually virulent anti-US propaganda has softened. There has been a new focus on economic development in recent months, and the summit was supposed to be a breakthrough moment that allowed North Korea to shift from nuclear weapons to rebuilding its economy. But the economy still languishes; according to the Bank of Korea in Seoul, North Korea’s GDP shrank by 3.5 per cent in 2017 — its worst performance in two decades. On 20 July, Pompeo reiterated the US position that sanctions could not be lifted until North Korea takes further steps toward denuclearisation, and he criticised Russia and China for failing to enforce sanctions on North Korean oil imports.

As with US–Russia relations, there can be a sizable gap between statements from the White House and the actual policies of the administration. While Trump and Kim (as well as South Korean President Moon Jae-in) emphasise peace and cooperation in more general terms, Pompeo and others in the administration speak the old language of CVID (complete, verifiable and irreversible dismantlement of North Korea’s nuclear program) as a precondition for any change in the US–North Korea relationship. These two approaches may be complementary, but more often they appear contradictory and confusing. Trump himself seemed to walk back on his bullish statements on North Korean denuclearisation by announcing on 20 July the ‘unusual and extraordinary threat’ North Korea still poses to the United States.

In the meantime, relations among the countries of Northeast Asia are moving forward — with or without a dramatic change in US–DPRK ties. Russia and China have so far resisted US calls to block oil deliveries to North Korea. Kim’s three meetings with Chinese President Xi Jinping in less than two months reflect the rapidly warming ties between North Korea and China after several years of cool relations. Russian media recently reported plans for a Kim–Putin summit. President Moon spoke to the Russian lower house on 21 June — the first South Korean president to make an official visit to Russia since 1999 — where he called for greater cooperation between Russia and the two Koreas on economic development and denuclearisation.

On the Korean Peninsula itself, the Moon administration remains upbeat about relations with the North three months after the inter-Korean summit in Panmunjom, which called for a peace agreement to replace the Korean War armistice by the end of this year. Reunions of Korean families separated by the North–South conflict are scheduled for August. Joint inspection has started for reconnecting North–South railway lines. But only so much can be done while North Korea is under heavy UN sanctions. South Korea has requested (and received) special permission from the UN Security Council Sanctions Committee to allow the equipment and materials for communication between the two Koreas’ militaries. Establishing liaison offices between the Seoul and Pyongyang governments, another goal of the Panmunjom Summit, faces similar sanctions obstacles.

Dismantling a 70-year-old system of conflict and confrontation is an enormous and complex task. As Pompeo rightly stated, North Korean denuclearisation will take a long time. But the goal to which Seoul, Pyongyang and Washington have committed is not just denuclearisation: the goal is a lasting and stable peace. Building that will take a great deal more patience than we have tended to see in Washington.

Charles K Armstrong is The Korea Foundation Professor of Korean Studies in the Social Sciences at Columbia University and author of The Koreas.