The Kindleberger Trap


January 16, 2017

The Kindleberger Trap

by Joseph S.Nye @www.project-syndicate.org

Image result for thucydides trap

CAMBRIDGE – As US President-elect Donald Trump prepares his administration’s policy toward China, he should be wary of two major traps that history has set for him. The “Thucydides Trap,” cited by Chinese President Xi Jinping, refers to the warning by the ancient Greek historian that cataclysmic war can erupt if an established power (like the United States) becomes too fearful of a rising power (like China). But Trump also has to worry about the “Kindleberger Trap”: a China that seems too weak rather than too strong.

Charles Kindleberger, an intellectual architect of the Marshall Plan who later taught at MIT, argued that the disastrous decade of the 1930s was caused when the US replaced Britain as the largest global power but failed to take on Britain’s role in providing global public goods. The result was the collapse of the global system into depression, genocide, and world war. Today, as China’s power grows, will it help provide global public goods?

In domestic politics, governments produce public goods such as policing or a clean environment, from which all citizens can benefit and none are excluded. At the global level, public goods – such as a stable climate, financial stability, or freedom of the seas – are provided by coalitions led by the largest powers.

Small countries have little incentive to pay for such global public goods. Because their small contributions make little difference to whether they benefit or not, it is rational for them to ride for free. But the largest powers can see the effect and feel the benefit of their contributions. So it is rational for the largest countries to lead. When they do not, global public goods are under-produced. When Britain became too weak to play that role after World War I, an isolationist US continued to be a free rider, with disastrous results.

Some observers worry that as China’s power grows, it will free ride rather than contribute to an international order that it did not create. So far, the record is mixed. China benefits from the United Nations system, where it has a veto in the Security Council. It is now the second-largest funder of UN peacekeeping forces, and it participated in UN programs related to Ebola and climate change.

China has also benefited greatly from multilateral economic institutions like the World Trade Organization, the World Bank, and the International Monetary Fund. In 2015, China launched the Asian Infrastructure Investment Bank, which some saw as an alternative to the World Bank; but the new institution adheres to international rules and cooperates with the World Bank.

Image result for thucydides trapSparta Vs Athens–America Vs China

On the other hand, China’s rejection of a Permanent Court of Arbitration judgment last year against its territorial claims in the South China Sea raises troublesome questions. Thus far, however, Chinese behavior has sought not to overthrow the liberal world order from which it benefits, but to increase its influence within it. If pressed and isolated by Trump’s policy, however, will China become a disruptive free rider that pushes the world into a Kindleberger Trap?

Trump must also worry about the better-known Thucydides Trap: a China that seems too strong rather than too weak. There is nothing inevitable about this trap, and its effects are often exaggerated. For example, the political scientist Graham Allison has argued that in 12 of 16 cases since 1500 when an established power has confronted a rising power, the result has been a major war.

But these numbers are not accurate, because it is not clear what constitutes a “case.” For example, Britain was the dominant world power in the mid-nineteenth century, but it let Prussia create a powerful new German empire in the heart of the European continent. Of course, Britain did fight Germany a half-century later, in 1914, but should that be counted as one case or two?

World War I was not simply a case of an established Britain responding to a rising Germany. In addition to the rise of Germany, WWI was caused by the fear in Germany of Russia’s growing power, the fear of rising Slavic nationalism in a declining Austria-Hungary, as well as myriad other factors that differed from ancient Greece.

As for current analogies, today’s power gap between the US and China is much greater than that between Germany and Britain in 1914. Metaphors can be useful as general precautions, but they become dangerous when they convey a sense of historical inexorableness.

Even the classical Greek case is not as straightforward as Thucydides made it seem. He claimed that the cause of the second Peloponnesian War was the growth of the power of Athens and the fear it caused in Sparta. But the Yale historian Donald Kagan has shown that Athenian power was in fact not growing. Before the war broke out in 431 BC, the balance of power had begun to stabilize. Athenian policy mistakes made the Spartans think that war might be worth the risk.

Athens’ growth caused the first Peloponnesian War earlier in the century, but then a Thirty-Year Truce doused the fire. Kagan argues that to start the second, disastrous war, a spark needed to land on one of the rare bits of kindling that had not been thoroughly drenched and then continually and vigorously fanned by poor policy choices. In other words, the war was caused not by impersonal forces, but by bad decisions in difficult circumstances.

That is the danger that Trump confronts with China today. He must worry about a China that is simultaneously too weak and too strong. To achieve his objectives, he must avoid the Kindleberger trap as well as the Thucydides trap. But, above all, he must avoid the miscalculations, misperceptions, and rash judgments that plague human history.

https://www.project-syndicate.org/commentary/trump-china-kindleberger-trap-by-joseph-s–nye-2017-01

Here’s What World Leaders Think Is the Greatest Risk for 2017


January 16, 2017

DAVOS 2017

Here’s What World Leaders Think Is the Greatest Risk for 2017

Image result for Davos 2017

Some of the world’s most powerful leaders are growing more concerned, it seems, about the world’s most powerful leaders. More so, in fact, than climate change and financial panics, like a collapse of the euro.

Weapons of mass destruction now ranks as the No. 1 concern of global leaders, according to a new survey from the World Economic Forum. And that was before Trump tweeted about the possibility of a new arms race. It’s the 12th year that the World Economic Forum has published the survey, which polls 750 of the group’s members, including CEOs and leaders and experts in various fields. The organization publishes the survey on the eve of its annual confab in Davos, which kicks off next week.

The survey was conducted in September and early October.

In a report that accompanied the survey results, the World Economic Forum wrote that a rise of nationalism and less cooperation among world powers was raising the risks of global conflicts.

Weapons of mass destruction have come up as a concern before on the survey. But they have never ranked as the biggest perceived risk in terms of potential impact in the immediate year about which the world leaders were surveyed. Last year, WMDs were the second biggest concern of world leaders behind climate change. Nonetheless, climate change remains a major worry. Of the top five worries of global leaders, the other four are related to climate change. Among those, extreme weather conditions was the No. 1 concern, followed by water crisis, major natural disasters, and the failure of climate change efforts to make a difference.

Image result for Davos 2017

Another big difference than in past years: The lack of concern about some sort of financial shock to the global economy. For the first eight years of the survey, from 2007 to 2014, “asset price collapse” or financial crisis ranked as the No. 1 concern on the survey. The WEF crowd is more focused on economic issues. Nonetheless, in this year’s survey, concerns about markets have largely disappeared. Not a single economic issue made it in to either the top 5 concerns of world leaders for 2017 in either the potential biggest impact category or likeliest to happen. It was the first year in the survey’s existence that an economic issue didn’t show up in either list. In both 2009 and 2010, world leaders put down economic issues as four of their five biggest risks that could have the largest impacts on the world in that year.

The lack of concern about economic issues could reflect that fact that banks and financial markets do seem more resilient following reforms that were made after the financial crisis. It could also signal complacency about world markets following a year in which major world surprises failed to jolt markets.

Instead, this year, it appears world leaders are concerned that the rise to power of a growing number of politicians that seemed to be more focused on domestic issues than in recent years. Indeed, the theme of this years annual conference in Davos is responsible leadership.

“As technological, demographic and climate pressures intensify the danger of systems failure, competition among world powers and fragmentation of security efforts makes the international system more fragile, placing collective prosperity and survival at risk,” the WEF wrote in its annual risk report.

Harping on Chinese FDIs in Malaysia


January 16, 2017

Harping on Chinese FDIs in Malaysia

by Josh Hong @www.malaysiakini.com

Image result for China's Malaysian Investments

A leopard never changes its spots, does it? Having failed to offer a set of alternative policies and convince the general public of their ‘reformist’ credentials, Dr. Mahathir Mohamad, Zainuddin Maidin and Muhyiddin Yassin are now all back to bashing Najib Abdul Razak along the not-so-subtle racial lines.

Yes, China has been investing aggressively in Malaysia, but the Chinese are not the first ones who came, saw and conquered our market in recent years.

Before that, the Americans, Japanese and Arabs, too, had pursued very proactive business strategies in South-East Asia. With its relatively well-developed infrastructure and affordable land, Malaysia stood to benefit tremendously from their investments for more than three decades.

Since the 2000s, the Arabs, too, have been investing heavily in strategic industries in Malaysia, especially the petrochemical sector and real estate development, with the United Arab Emirates emerging as one of Malaysia’s largest trading partners and among the most vigorous investors in Malaysia’s oil and gas industries.

Mubadala Petroleum is currently setting its sights on Sarawak, while the International Petroleum Investment Company remains a key investor in Malaysia despite the 1MDB debacle. Both Putrajaya and Abu Dhabi maintain bilateral and trade relations are rock solid.

Meanwhile, the Qatar Investment Authority is a big player in Malaysia’s strategic real estate, commodities and energy sector. In 2013, it had plans to develop the Pengerang Integrated Petroleum Complex in southern Johor that was worth US$5 billion, aimed at making the country a petrochemical regional hub, not too dissimilar from China seeking to help turn Malaysia into a ‘transportation hub’ via Bandar Malaysia and the proposed high-speed rail terminal.

Even less well-known was that an agreement was signed in 2012 to make Qatar Holding a cornerstone investor in Felda Global Ventures Holdings Berhad, no doubt a highly important and vitally strategic global agricultural and agri-commodities company, while the Kuwait Investment Authority invested US$150 million in Malaysia’s IHH Healthcare.

At one time, the Qataris and the Najib government even agreed to build a ‘seven-star’ Harrods Hotel in the Bukit Bintang area in Kuala Lumpur, right next to the upmarket Pavilion shopping mall. The business venture somehow went awry and subsequently called off.

This aside, Saudi Arabia several years ago ranked fifth among Malaysia’s leading sources of investment, just behind Japan, South Korea, the US and Singapore. China was nowhere to be seen then.

Image result for Mahathir on Chinese Investments in Malaysia

Mind you, PetroSaudi International was deeply involved in the scandal-ridden 1MDB and the Saudi Foreign Minister Adel al-Jubei even confirmed in April last year that money was wired into Najib’s personal account and it was a “genuine donation with nothing expected in return”.

Now, one may derive from the s statement that the Kingdom of Saudi Arabia was complicit in corruption on a global scale but did any Malay or Muslim leader in UMNO or outside of it accuse the Saudi government of seeking to undermine Malaysia’s sovereignty or taking over the country? Is Saudi Arabia beyond reproach simply because it is where Mecca, Islam’s holy city is located?

The Arabs have been coming but no-one, certainly not UMNO, Mahathir or his minions in Bersatu, has said a word against investors from the Gulf region.

Nobody is talking about Najib turning the country into an Arab colony except for Marina Mahathir who lashed out at ‘Arab colonialism’ because traditional baju Melayu for women are now more difficult to find than in the old days as compared to the increasingly popular Arab attire. But her father has yet to cast aspersions on Najib selling Malaysia out to the Arabs through all the strategic investments.

Instead, Mahathir has been harping on Chinese nationals buying up lands and properties and blaming it on Najib, hoping that this would heighten the siege mentality of the Malays which would in turn alienate them further from UMNO.

Image result for Mahathir on Chinese Investments in Malaysia

But Mahathir’s subterfuge can escape anyone but me. After all, it was his alleged racist rhetoric that kept him in power for over two decades, and Malaysia’s complex racial dynamics have created a fertile ground for a cunning strategist like him.

Crafted with the Malay constituency in mind

The messages by Mahathir, Zainuddin and Muhyiddin are not a coincidence, for they are all carefully crafted with the Malay constituency in mind.

They cannot openly demonise the Chinese Malaysian community because they need to ensure the opposition parties including DAP win enough Chinese votes, but at the same time, they are in dire need of denying Najib critical Malay support. So the best way to achieve this is to play up China as a bogeyman.

Mahathir and Bersatu may appear to be concerned over the influx of mainland Chinese capital and money, but their articulation is nothing but a veiled warning to the Malays that continued support for Najib would mean a greater Chinese presence in Malaysia, to the detriment of the ‘indigenous population’, of course.

Why pick on the Chinese when your Muslim brethren from the Middle East are no less commercially greedy and strategically ambitious?

It is not very different from the days when Mahathir ‘cari pasal’ (find fault) with Singapore in order to consolidate the Malay base. Stigmatising Chinese Malaysians comes at too huge a political cost, hence the sudden ‘realisation’ of mainland Chinese investments being a threat.

It is nothing more than a repackaged argument that, in favouring the (mainland) Chinese, Najib would only end up marginalising the Malays, just like the British.

If Mahathir and his cohorts have an issue with excessive foreign investments, they must not just single out China but the Gulf countries also. Mahathir may even question his own national car policy which only resulted in Malaysia becoming almost totally dependent on Japan for spare parts and technology, while failing to make Proton a car giant as he would have dreamed!

I have a problem with Islamic conservatism, but I have no problems with the Muslims; I am sceptical about American expansionism but I am fine with the American people; I am opposed to Israeli policies on Palestine but I don’t hate the Jews; I disagree with Shinzo Abe’s historical revisionism but I appreciate Japan as a wonderful country, and I look askance at communist ideology yet I enjoy the friendship of my mainland Chinese friends.

And I remain very much a leftist and a liberal who considers neo-liberalism a major source of the global chaos today. But unlike Mahathir, I vow not to use race or religion as my weapon even if I am wary of the destructive power of capitalism, because I have always been acutely aware of the hard fact that capital and money have no motherland.

Go on supporting Mahathir and Bersatu if you want, and I won’t shed a tear for you even if one day you find yourself trapped in the quicksand of racial politics and unable to be free.


JOSH HONG studied politics at London Metropolitan University and the School of Oriental and African Studies, University of London. A keen watcher of domestic and international politics, he longs for a day when Malaysians will learn and master the art of self-mockery, and enjoy life to the full in spite of politicians.

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

China’s Investments–Geo-Political Implications for Malaysia


January 14, 2017

China’s Investments–Geo-Political Implications for Malaysia

by Dennis Ignatius

Image result for China's Investments in MalaysiaHe is praying for the best but not doing his best

China’s ravenous appetite for Malaysian infrastructure assets has resulted in yet another multibillion ringgit deal. In early January, a RM6.3 billion deal to redevelop and expand Penang Port was signed between two Chinese port operators (Shenzhen Yantian Port Group and Rizhao Port Group) and local partner, KAJ Development, a relatively unknown reportedly state-owned company incorporated in 2001.According to press reports, the project would increase the port’s ship handling capacity to 100,000 ships per year.

Dominating the transport sector

The Penang deal comes on the heels of KAJ Development’s RM30 billion Malacca Gateway Project with another Chinese conglomerate, Powerchina International Group. The Gateway project includes extensive land reclamation and the development of what is expected to be the biggest port in the region.

Image result for RM12.5 billion Kuala Linggi International Port

Barely 55 km away from the Malacca Gateway project, work has begun on the RM12.5 billion Kuala Linggi International Port project, funded by China Railway, Port & Engineering Group. When completed, Linggi port will become, according to a company statement, “the world’s preferred shipping hub in the Straits of Malacca” offering port facilities, storage and transshipment of crude oil and petroleum products and repair and bunkering facilities.

According to press reports, construction has gone ahead despite objections that the project could well be an environmental hazard. Not to be outdone, the Port Klang Authority is now planning to build another giant port on Carey Island which is expected to cost RM200 billion. According to reports, the transport ministry is in talks with China Merchants Group to finance the project.

On the east cost of Peninsular Malaysia, another Chinese company, Guangxi Beibu International Port Group already owns a 40% stake of Kuantan Port Consortium and is investing billions to double the port’s capacity. China is also a key investor in Sarawak’s Samalaju Industrial Port project.

At this rate, and given China’s already sizeable investments in our railway infrastructure, China will soon be the dominant player in Malaysia’s transportation sector.

Unanswered questions

Quite apart from the obvious security implications, China’s massive investments in ports and railways have also raised a number of concerns which have yet to be adequately addressed.

How much port capacity, for example, do we really need bearing in mind that we spent billions developing the Port of Tanjung Pelapas (making it one of the largest container ports in the region) and that not all of our ports are operating at fully capacity?

And how will other major port developments now being planned along the Malacca Straits, such as the mammoth Tuah project in Singapore and the China-funded Tanjung Sauh port in Indonesia’s Batam island impact overall capacity? It certainly looks like this whole port building frenzy has gone off the deep end, especially as no convincing argument has been made that such a significant increase in port capacity is even warranted.

Without credible feasibility studies and greater transparency, these projects could well end up like the Petroleum Hub project which was taken out of service in 2012 after the government had spent more than RM100 billion on land reclamation, costs which Malaysia’s long suffering taxpayers are now having to shoulder. 

It is also unclear what the actual financial arrangements are for many of these Chinese projects and what kind of concessions and guarantees Malaysia has had to offer. That some of these projects involve secret negotiations and secret agreements with companies that don’t appear to have much experience or which have been blacklisted by the World Bank, only adds to concerns about control, ownership, costs, viability and the potential for corruption.

And unlike earlier infrastructure projects where local companies retained significant oversight and decision-making authority, projects with China invariably end up with Chinese companies in charge of management, design, procurement and construction. Even the workers come from China!

Whatever happened to all our national policies about equity, local participation and transfer of technology? At the end of the day, it is hardly the kind of “equal, mutually beneficial, win-win” situation that the Chinese embassy here likes to brag about.

OBOR?

Image result for China’s One Belt One Road (OBOR) Initiative

The other thing about many of these Chinese projects is the constant reference by Malaysian politicians and businessmen to China’s One Belt One Road (OBOR) initiative. Suddenly, it is no longer about Malaysia’s national development goals or priorities but about whether or not it is relevant to OBOR.

It is perhaps a testimony to China’s increasing power and influence that many of our political and business leaders are now gamely parroting the Chinese line about how great and magical OBOR is and how fortunate we lesser mortals are to receive Chinese loans, Chinese technology and Chinese expertise to help build OBOR-related infrastructure.

What they don’t see or don’t want to acknowledge is that through clever financing arrangements, China is in fact getting us to pay for the infrastructure that it needs to establish economic primacy in the region. OBOR is primarily about China’s strategic national objectives; whatever benefits to Malaysia are purely incidental.

In the absence of a critical and in-depth assessment of whether these OBOR-related projects genuinely serve Malaysia’s interests and are worth the costs to Malaysian taxpayers, it would be ‘bodoh’ to acquiesce to it.

The geopolitical element

And let’s not be unmindful of the geopolitical considerations as well. Will we see Malaysian ports, for example, being integrated into the Chinese Navy’s regional infrastructure to support its growing naval presence in the region?

While the government is coy about the kind of naval access that has been given to the Chinese Navy for obvious political reasons, port calls by Chinese naval vessels are increasing. Two Chinese submarines, for example, quietly docked at Kota Kinabalu port recently while Chinese warships now regularly use other Malaysian port facilities.

Image result for Chinese Navy in the Straits of Malacca

China of the 21st Century is a nation of geo-strategic thinkers and state entrepreneurs–Keeping Asia secure and safe means China is safe too.

China is making strategic investments to fortify its position as the dominant player in the South China Sea with modern port facilities in ASEAN and expand trade in Chinese manufactured goods and services. It is using Malaysia to have important stakes in the Straits of Malacca (in Malacca, Penang and Johore ports). Why not, particularly when assets in Malaysia can be acquired on the cheap or profitable investments made  at inflated cost (for the benefit of corrupt UMNO and Barisan Nosional politicians). I am not against Chinese investments per se, but I am very concerned with deals done on a hush-hush basis by Najib and his cohorts. China’s moves in Asia does not end with the  South China Sea. It is back to the age-old objective of keeping the barbarians at the gate.–Din Merican

Of course, naval vessels from other countries regularly berth at our ports, and in itself is no cause for alarm. However, only China is aggressively pursuing territorial claims against Malaysia. For that reason alone, caution is called for. Does it make sense for us to facilitate the very naval force that is intruding into our waters, harassing our fishermen, laying claim to our reefs and islands and gathering data to support those claims?

Colony building

Image result for RM100 billion Forest City project

There are also growing concerns about the massive residential and commercial development projects that are being built with Chinese capital.

The RM100 billion Forest City project, for example, one of two being built by Chinese conglomerate Country Garden, will reportedly house more than 700,000 people in a development that will include office towers, parks, hotels, shopping malls and an international school.

Meanwhile, China state-owned Greenland Group is building office towers, apartments and shops on 128 acres in Tebrau, Johor, while Guangzhou R & F Properties Co. has begun construction on the first phase of Princess Cove, another mixed development along the Johor coast, with hotels, offices, parks, shopping malls and clubhouses.

Image result for bandar malaysia – china’s new regional capital

In Kuala Lumpur, China Railway Group (CRG) will be developing the mega Bandar Malaysia project which is expected to cost between RM160 – 200 billion. Bandar Malaysia will host the world’s largest underground city together with shopping malls, indoor theme parks, a financial centre, residential and commercial units as well as the RM8.3 billion regional headquarters of China Railway.

CRG is also involved in another RM2.1 billion project in Ampang to build 7,000 residential units as well as commercial and retail outlets. In keeping with the management practices of most China-based corporations, CRG has been appointed the main contractor with sole responsibility for monitoring, managing and supervising the day-to-day construction and operations of the project.

Reports suggest that these massive residential and commercial developments in Malaysia are being marketed mainly to PRC nationals who wish to work, reside or holiday in Malaysia. Country Garden, for example, has been aggressively promoting its Forest City project in China; it is already the 11thmost popular investment destination for Chinese home buyers on Juwai.com.

In addition, relatively cheaper living costs, affordable private medical facilities, a (mostly) smog- free environment and proximity to both China and Singapore, make Malaysia a preferred retirement destination for middle-class Chinese. China’s ageing population (240 million over the age of 60 by 2020) makes for a huge potential market that Chinese developers are hoping to exploit.

If the expectations of these China-based developers are realized, we could be seeing more than a million PRC nationals living in Malaysia within a decade.

Malaysians must ask themselves whether it would be desirable to see a huge influx of citizens from just one country establishing foreign enclaves here. It is not beyond the realm of possibility that these colonies could soon evolve into exclusive, semi-autonomous zones serviced and managed by PRC nationals for the benefit of PRC nationals.

What impact will this have on the social, cultural and political fabric of our nation? How will it affect property prices? How will any downturn in the Chinese economy influence the local property market? How much of the related infrastructure costs of these projects are being borne by Malaysian taxpayers? And what kind of concessions are being given to these property developers?

Viewed from almost any perspective, therefore, Malaysia’s burgeoning economic, political and military relationship with China ought to set off alarm bells across the nation.

Image result for bandar malaysia – china’s new regional capital

The combination of a rising power with global ambitions backed by an unlimited stash of cash buying up strategic infrastructure assets, on the one hand, and a local political elite bent on staying in power at all costs tethered to cronies more interested in profits than patriotism, on the other, could prove a fatal one.

Even in the best of circumstances, it would be simply too risky to allow any one country to dominate our economy and control critical infrastructure networks the way China is now set to do. It gives China too much power and influence in the affairs of our nation and it leaves us too indebted, too exposed to a country whose intentions must be considered with some circumspection.

How far will China go to protect its position?

One thing we can be sure of, though, if history is anything to go by: the more China invests in Malaysia, the more China will be tempted to intervene and meddle in our affairs to protect its investments and ensure its strategic position is not jeopardized. Indeed, China has already begun to do so.

In a statement just this week, the Chinese embassy lashed out at opposition leaders and others for questioning the government’s policies towards China, accusing them of having ulterior motives and instigating hatred against China and warned that “China will not allow anyone to jeopardize the mutually beneficial bilateral cooperation between China and Malaysia.”

Amazingly, the Embassy also dared to presume to speak for Malaysian Chinese when it suggested that such actions by the opposition would not earn them the trust of the Malaysian Chinese community.

Clearly, the Chinese embassy now feels it has the right to threaten our politicians, inveigh against those who raise questions about China’s investments and inject itself into what is essentially a domestic discussion.

Such brazen interference in our domestic affairs will only get worse. How far will China now go to stifle domestic opposition and criticism to its increasing role in our nation? Will it work behind the scenes to prop up local pro-China leaders in much the same way as the CIA did in other countries? 

The most pressing foreign policy challenge

Tellingly, while the Chinese embassy grows bolder, many of our own leaders remain silent despite blatant acts of interfere in our domestic affairs.

In the early years of our relationship with China, our security agencies were extremely concerned that Malaysia’s ethnic Chinese community might sell out to China; who would have thought we would end up in situation where many of our politicians and officials would be so blinded to the challenges that China now presents or worse still, resign themselves to the inevitability of some sort of Chinese domination?

One minister, for instance, recently remarked in his blog that “it is futile trying to resist China’s great march forward just like it was futile to resist Western colonialism 500 years ago.” He also said that China is buying up assets all over the world and that is something that “Malaysia needs to accept or else get left behind and perish.”

Let’s be clear: this is not about trying to stop China from rising or about shunning Chinese investments but about ensuring that we don’t get colonized again, about making sure that China does not get to the point where it controls our economy and is able to dictate policy as it already does in some neighbouring countries.

Whatever it is, Malaysians must not be lulled into a false sense of complacency by all the sweet talk of mega contracts, grandiose promises of prosperity and jobs or the effusive pledges of eternal friendship for that matter.

China is no different from any other big power and we would do well to be wary when dealing with it.

Image result for tun muhammad ghazali bin shafie

As the late Tun Ghazali Shafie, arguably the best Foreign Minister we’ve ever had, was fond of reminding us at Wisma Putra: small countries on the peripheries of a big power don’t have the luxury of taking anything for granted.

At the very least, we owe it to ourselves, and to future generations, to have a national debate on this, the most pressing foreign policy challenge we now face as a nation. And the Chinese embassy would do well to butt out of it.

 

 

China’s Advice–Pursue the path of mutually beneficial cooperation for regional peace and stability


January 12, 2017

China issues urges small and medium-sized countries to pursue the path of  mutually beneficial cooperation for regional peace and stability

Image result for China the SuperpowerChina–Exercising Soft Power in Asia

by Channel News Asia

SINGAPORE: China on Wednesday (Jan 11) issued its first white paper on issues related to Asia-Pacific security cooperation.

In the six-point proposal, reproduced in full by Xinhua, Beijing stated that “small- and medium-sized countries need not and should not take sides among big countries”.

“All countries should make joint efforts to pursue a new path of dialogue instead of confrontation and pursue partnerships rather than alliances, and build an Asia-Pacific partnership featuring mutual trust, inclusiveness and mutually beneficial cooperation,” the white paper read.

It added that China would step up its role in regional and global security to take on greater responsibilities. “China is ready to pursue security through dialogue and cooperation in the spirit of working together for mutually beneficial results, and safeguard peace and stability jointly with other countries in the region.”

Image result for China the Superpower and the South China Sea

“The realities of geography, military and vast economic power yield China essentially permanent advantages over its near neighbors. They are always going to live in the shadow of China, and their economies will continue to be become more closely integrated with China’s. China’s neighbors will always need Beijing more that it needs them. This leverage means that over the long term, whether control is centralized or not, China’s strategic approach to maritime issues will leave little room for compromise.”http://nationalinterest.org/blog/the-buzz/the-real-south-china-sea-problem-the-shadow-china-12015–

China remains committed to “upholding peace and stability in the South China Sea” and will continue to maintain dialogue on the issue with the Association of Southeast Asian Nations (ASEAN), it said.

However, Beijing also warned that it could be forced to issue “necessary responses to the provocative actions which infringe on China’s territorial sovereignty and maritime rights and interests, and undermine peace and stability in the South China Sea”.

It added that no effort “to internationalise and judicialise” the South China Sea issue “will be of avail”.

The paper concluded that China’s development would add to “the momentum for world peace”.In a news conference to explain the white paper, Vice Foreign Minister Liu Zhenmin said it proposes to strengthen cooperation by promoting common development, perfecting existing regional multilateral mechanisms, promoting rule setting, intensifying military exchanges and cooperation, and properly resolving divergences and disputes.

“We hope that all countries in the region will work along with China to uphold win-win cooperation and make joint efforts in achieving long-lasting peace and stability in the Asia-Pacific region,” he said.

 

 

http://www.channelnewsasia.com/news/asiapacific/china-issues-white-paper-warns-small-and-medium-sized-countries/3430786.html

Vacillations and Dramas Exist in Sino-Philippines Relations Too


January 12, 2017

Image result for Asia-Pacific Bulletin
Number 367 | January 11, 2017
ANALYSIS

Vacillations and Dramas Exist in Sino-Philippines Relations Too

By Chu Yin

The new Philippine President Rodrigo Duterte has damaged diplomatic relations for his country with his bold anti-US attitude and warming of Sino-Philippine relations. The Philippine attitude towards China has vacillated heavily. Since the founding of the Third Republic of the Philippines in 1946, there have been six distinct periods in Sino-Philippine relations:

The first period lasted from 1946 to 1960 when the Philippines adhered to anti-Communist party and anti-China policies, and thus was opposed to Chinese revolutionary rhetoric.

The second period began in late 1960 and ended in 1986 when the Marcos dictatorship fell. Under the Nixon Doctrine, Sino-Philippine relations began to thaw. The Chinese leadership took measures (such as lowering fuel prices to the Philippines in 1975) to promote economic activities and speed up the establishment of diplomatic relations. This was a steady, long-term process.

The third period from 1986-1998 commenced with the ascent of the Aquino-Ramos government. Due to the growth of the Taiwan economy especially during the latter part of the 1980s, the Philippine government sought Taiwanese investments to develop its economy; to that end, Manila strayed from the One China policy in favor of a One and Half Chinas policy, and thus was seen – successor to Aquino –  with suspicion in Beijing. Although the Ramos government adapted a foreign policy emphasizing full-scale diplomacy with Asia, it did not substantially change the policy prioritizing Taiwan. Meanwhile, sovereignty disputes between China and the Philippines over the South China Sea were on the rise in the mid-1990s.

The fourth period took place during the Estrada-Arroyo governments from 2001-2010. The Philippines continued to pursue territorial claims in the South China Sea as its predecessors had, however, both the Chinese and Philippine governments took more realistic and flexible stances and communicated more often with each other, strengthening mutual trust. During this period the Philippines returned to a One China policy. In 1995, Manila removed China from the list of Communist Central Ruled Economies, and in 1996 Chinese president Jiang Zemin made a state visit to the Philippines. During this visit, the two governments agreed on terms for a Sino-Philippine relationship of friendship, mutual trust and cooperation for the 21st Century, and decided to shelve differences and seek joint development over the South China Sea. The Arroyo government, though, continued to strengthen its political connections to the US during this time.

The fifth period was marked by the Benigno Aquino III government from 2010-2016. In 2009, the US, under the Obama administration, undertook a “Pivot to Asia,” while concurrent shifts in the domestic atmosphere of the Philippines earned the Arroyo government massive criticism for its economic cooperation with China. Aquino the Third – being pro-America and anti-China – won the election. Having campaigned on the slogan of anti-corruption, he not only cleared Arroyo’s political assets, but also took a strong stance on the South China Sea issue.

President Duterte, elected in 2016, represents the sixth period of Sino-Philippines relations. In contrast to his tough rhetoric towards the US, Duterte has shown a realistic attitude towards China, after President Aquino III had forced China to take a back seat. The Philippines under President Duterte shelved the arbitration against Beijing and thus won generous aid and the opening of fishing grounds on Huangyan Island from China, though the decision did not solve the impasse facing Sino-Philippine relations over the South China Sea.

Sino-Philippine relations have three basic features. First, relations with China are never the most important diplomatic relationship for the Philippines; Philippine-American ties are always more important. On the one hand, the Philippines adapts its relations with China according to the state of its relationship with the US. During the Nixon-era Sino-US cooperation against the Soviet Union, Sino-Philippine relations improved rapidly; however, when the U.S. returned its focus to the Asia Pacific area, Sino-Philippine progress was largely undone. On the other hand, the Philippines hedge against American influence by entertaining Chinese interests. This strategy is demonstrated in Duterte’s diplomatic turn.

Second, the Philippines’ self-centered, national interest-based foreign policy is always at the core of relations with China. When the Philippines perceived Taiwan as more valuable than China, it distanced itself from Beijing. When Manila saw China as a threat to its national security in the South China Sea, it turned back to the US. Later, feeling the pressure of US interests, the Philippines again warmed to China. Although many hold the point that the Philippines is merely a pawn of China and the US, the Philippines shows its own will and interests through these strategic vacillations.

“On the one hand, China should take advantage of this chance to bolster relations with Manila. On the other, Beijing should remain wary of historical fluctuations in the relationship.”

Third, compared with the US, China functions as a more external and secondary factor for the Philippines. China’s policy on Taiwan and the South China Sea do influence Sino-Philippine relations. On the contrary, the US is the primary actor in American-Philippine and Sino-Philippine relations. American choices for pro and anti-China Filipino politicians are always a crucial factor in Philippine elections. Philippine elite families wield top down influence over the country, and thus when more citizens participate in democracy, the impact of American policy upon Philippine lawmakers will be mitigated. Duterte might represent an inevitable step in the Philippine transition from family politics to democracy. However, this does not mean that the US will lose the Philippines or that Duterte will be an anti-America hero. It only means that the US cannot depend on its historical influence over Philippine elites, and may turn to other means of courting the Philippine decision makers.

As for China, the periodic swing of Sino-Philippine relations means China should remain cautiously optimistic. On the one hand, China should take advantage of this chance to bolster relations with Manila. On the other, Beijing should remain wary of historical fluctuations in the relationship. China should take a realistic attitude and seek cooperation with the US, to steady the swing of Philippine policy instead of attempting to dominate the region. Such a strategy would make Philippine policy less likely to change with each new administration, and would protect Duterte from American scorn. Shelving differences over the South China Sea issue for the time being could make a later renegotiation more likely.

About the Author

Chu Yin is an Associate Professor at the University of International Relations and an Academic Committee Member at the Pangoal Institution. He can be contacted at chuyincn@aliyun.com.

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