Trump’s Engagement with Asia on America’s Terms


March28, 2017

Trump’s Engagement with Asia on America’s Terms–creating new opportunities for US businesses 

by Mieczysław P Boduszyński and Tom Le

http://www.eastasiaforum.org

Former US President Barack Obama sought to move the United States away from what he saw as costly, distracting and unwinnable entanglements in the Middle East. Instead, he pivoted his foreign policy efforts towards Asia where he believed that US military, political and economic engagement could reap much greater rewards for the country.

Obama championed the Trans-Pacific Partnership (TPP) as part of his signature ‘pivot to Asia’. Obama’s pivot served as a security reassurance for US allies in the region and fortified linkages among those allies, encouraging, for instance, reconciliation between Japan and South Korea. Most importantly, the pivot signalled to Asian allies that they would never be just an afterthought or a region only important when it was useful for US grand strategy. The future lay in Asia and the United States would be a part of that future.

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Today, many of the pivot’s achievements are at risk under President Donald Trump’s brand of isolationism and a transactional ‘America First’ approach to foreign policy. The TPP is dead and alliances may be next. Trump has repeatedly stated that the United States is ‘losing’ and has suggested plans to re-evaluate Washington’s security guarantees in Asia. Despite more recent backpedalling, Trump’s apparent affection for Russia and his early willingness to barter Taiwan’s sovereignty for a good trade deal with China has signalled to longstanding US allies that the security reassurances of the Obama era are a thing of the past.

While the ‘liberal internationalist’ tenor of Obama’s pivot may have passed, a Trumpian worldview can and should still build on Obama’s momentum in Asia. If Trump can enhance, repair and deepen alliances without committing to a US-led regional order in the mould of the Obama administration, he could stay true to his worldview by creating new opportunities for US businesses while encouraging Asian allies to play a more active role in their security. The pivot need not be reversed and there are steps Trump should take to ensure it remains.

In lieu of the TPP, Trump could work to build new bilateral free trade agreements in East Asia, modelled on the existing US–South Korea and US–Australia Free Trade Agreements.  The region’s support for the TPP, and its potential replacement, the Regional Comprehensive Economic Partnership (RCEP), suggests that Asian countries are willing to negotiate new trade deals. But the Trump administration must be ready to make some concessions. Trump can also capitalise on the positive personal relationships he has with Asian leaders.

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Obama had a very poor relationship with Filipino President Rodrigo Duterte, who flung insults, threatened to kick out US troops and sought closer relations with China. While Obama was highly critical of Duterte’s bloody anti-drug campaign, Trump’s focus on US business interests presents an opportunity to repair the US–Philippines alliance. Duterte expressed a very positive view of Trump after a brief phone call. The Philippines have longstanding historical ties to the United States and it is a crucial alliance to preserve.

Trump’s budding relationship with Japanese Prime Minister Shinzo Abe could also serve as his basis for diplomatic success. Although the Obama–Abe relationship improved over time, it was always marred by Obama’s criticisms of Abe’s revisionist tendencies. Yet thanks in part to Obama’s pivot, Japan passed new security laws increasing its ability to defend US forces during times of war directly related to Japan’s security.

Once South Korea chooses a new president, Trump could continue to support the deployment of the Terminal High Altitude Area Defence (THAAD) missile defence system and build upon the General Security of Military Information Agreement (GSOMIA) between Japan and South Korea. Both are critical to counter the North Korean nuclear threat. But such actions are likely to draw the ire of China as the United States makes it clear that it is fully committed to its allies and the region.

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Vietnam’s Blossoming Relations with Xi’s China

Along with maintaining existing alliances, Trump could work towards forging new relations in East and Southeast Asia. Vietnam has been receptive to a US role in the region as it tries to prevent further Chinese encroachment in the South China Sea. The US–Vietnam relationship is exceptionally pragmatic and there are ample opportunities to build on an already solid foundation. Besides a free trade deal, moving forward with military linkages such as the base-sharing agreement that was announced, and cooperating in areas such as higher education and scholarships should be on Trump’s agenda.

The pivot to Asia was by no means a resounding success. Unfinished business in Obama’s pivot gives Trump the chance to craft his unique brand of foreign policy in East Asia — a willingness to work and trade with almost anyone. This way, the United States can maintain its pre-eminence in East Asia without pursuing a comprehensive security community. Unlike highly politically charged issues such as Russia and immigration, policy in Asia need not be divisive in domestic US politics.

By leading with direction without directing, the United States can influence its East Asian allies to take more responsibility for maintaining regional stability. As the country has long advocated a rules-based order in East Asia regarding freedom of navigation and trade, the Trump administration must be present to help write those rules.

Mieczysław P Boduszyński and Tom Le are Assistant Professors of Politics at Pomona College, California.

50 Year Old ASEAN–No Longer Business As Usual


February 10, 2017

50 Year Old ASEAN–No Longer Business As Usual

by Dr. Munir Majid@www.thestar.com.my

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IT is not business as usual. As ASEAN’s array of official and private sector meetings roll out for the year, urgent thought must be given to dramatically new challenges beyond the stubborn issues that continue to arrest the region’s meaningful integration.

The advent of Donald Trump as President of the United States has overturned many regional assumptions and threatens to cause economic as well as political turmoil. These developments should make ASEAN think crisis management – even if, in the end, the worst does not happen.

There are a number of “what ifs” which should be addressed.What if Trump causes a trade war to break out between America and China by imposing the punitive import duties on Chinese goods that he has threatened?

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It will then not be a simple outcome of relocation of manufacturing centres from China to low-cost Vietnam, for instance, as some have rather sanguinely suggested. The supply chains to which many ASEAN exports are linked for the finished Chinese product would be broken. There will be export disruption – not just for China.

There are countries in ASEAN, apart from Vietnam (90%), like Singapore (176%), Thailand (69%) and Malaysia (71%) whose exports amount to a substantial proportion of their GDP.

On top of exports through China, their own direct exports to the US will also be affected, as will any relocated exports from Vietnam.

There will be no winners in a trade war, no benefits to be derived from China’s apparently singular predicament. The knock-on effect will be widespread. In time, as excess capacity looks for export sales, dumping will become a problem, as will protection against it.

Motor cars that cannot get into America will have to go somewhere. Steel turned away from the US as Trump seeks to protect mills and jobs in the mid-west will have to be shipped somewhere else. Even the textile industry will be spinning in different directions as Trump has promised to revive it in America.

The whole global free trade ecosystem will go topsy-turvy. How will free trade within the ASEAN Economic Community, such as it is, be maintained? Can ASEAN+6 move on to the Regional Comprehensive Economic Partnership (RCEP) as the fallout from Trump’s America First trade policy hits the world?

Asia – and ASEAN – will have to stick together and carry on with the open, albeit reduced, global free trade and investment system. Will that happen?

Some ASEAN states with larger domestic economies are less dependent on international trade than others. Already, now, they take a different position on opening up their market. Will it get worse in the situation of stress, should it come about?

ASEAN must talk about these possibilities now, before they happen. Someone must take the lead. Too often this does not happen in ASEAN. Can the officials, or the secretariat, or the private sector do this scenario-setting for the ministers, for the leaders? Or is ASEAN going to carry on as if everything is not changing around it?

I am reminded of what George Orwell has been said to have remarked: In a time of universal deceit, telling the truth is a revolutionary act. The tendency to take to the ASEAN level what routinely happens in many ASEAN domestic systems should be snapped. Some functionary in ASEAN must warn the regional grouping of the dire threat facing it.

The other challenge facing Asia and ASEAN is the risk Trump poses to regional peace and stability. This comes from the challenge again thrown at China, this time in respect of its claim to the South China Sea. As China’s predominance in the disputed expanse of territory is by no means ideal, its exposure to a more counter-assertive and belligerent American stance under Trump – no Chinese access to islands artificial or militarised that do not belong to China “under international law” – may encourage claimant ASEAN states to be less compliant with the China-set path of dispute management.

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Since the law of the sea tribunal decision last July, there has been a lowering of temperature in the South China Sea dispute, even if at the cost of not highlighting the baselessness and futility of China’s claims under international law. The return has been a commitment by China in the diplomatic channeling with ASEAN to having a code of conduct (COC) finally in place this year – although only in framework form.

It has been a long-term ASEAN objective to have this COC for peaceful conduct in the South China Sea. China has hitherto been dragging its feet on this. With a more assertive American policy against China, would there be among ASEAN states a disposition to push with the US to get a better deal on the South China Sea?

This kind of geopolitical arbitrage may be attractive, but it would come at a longer-term cost to regional cooperation, which has become critical because of Trump’s foreign economic and trade policies. This is a dilemma ASEAN states would do well to address together.

Already, beyond ASEAN, India appears attracted to taking advantage of the predicament China might be in with Trump. India, of course, has long-standing border disputes with China, which Beijing has been happy to keep unresolved. At the same time, there is strategic competition between the two over their regional place in Asia.

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Another could be Japan which, again, has many unresolved disputes and issues with China. India, in particular, appears to want to flirt with Trump even at the cost of frustrating conclusion of the RCEP. The cost to India, however, could be isolation from the Asia-Pacific region for an uncertain alliance with Trump’s America.

You cannot do strategy with a counter-party whose leitmotif is transactional. With Trump it is not going to be win-win. It is going to be win-win-win for America.

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Trump’s Win For America First Foreign Policy

ASEAN states should want to address these profound issues. Even dissuade member and partner countries from wanting to sup with the devil, as it were.

China, of course, has not been the ideal big country partner beyond platitudinous statements and suffocation of ASEAN by money. Its actions in the South China Sea are not indicative of a great power that will not grind your face in the dirt if you did not do its bidding.

Will China become the good big brother it claims it wants to be, even as America becomes the bad and ugly one?

It looks like ASEAN might be caught between a rock and a hard place. Individual member states no doubt will be doing their calculation with the hope to position themselves in a better than survival mode.

However they will all be better off if they also worked together among themselves and partnered Asia-Pacific countries to achieve better economic integration, whose benefit will discourage them from playing dangerous geopolitical games.

So, as ASEAN under Philippines leadership looks at themes such as inclusive growth, an excellent focus, and addresses the many stubborn issues that are barriers to better integration, it must prepare also for the very difficult economic and political environment which will be fashioned by the Trump administration.

Tan Sri Munir Majid, Chairman of Bank Muamalat and visiting senior fellow at LSE IDEAS (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute.

 

Post Obama Era: Time for Americans to come together


January 25, 2017

Time for Americans to come together and get down to serious business

by Bunn Nagara@www.thestar.com.my

Now that the US presidential inauguration is over, all parties need to reconcile themselves with the Trump Presidency regardless of preferences and inclinations.

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AFTER all the hype and hoopla of Donald J. Trump’s inauguration as the 45th US President, the opportunity now exists to reconcile political differences and begin to rebuild a more unified United States.

The opportunity at least is there, whether or not all parties choose to seize it. From all indications, personal, ideological and partisan ill will still rankles.

According to Gallup, Trump’s public approval rating rose from 34% to 42% following his election win. However, his 40% last Tuesday is the lowest historically going into a presidential inauguration.

It had been a rough and bruising campaign, and an unprecedented degree of bitterness lingers. And much of it comes from the anti-Trump side of the fence, from libellous false news to boycotts of the inauguration to protest rallies on the streets.

Trump’s pugnacious style alienates many, including conservative institutions and liberal interest groups. In the US context, dissent swirls around such issues as racial and gender equality, abortion, conflicts of interest and the future of healthcare provisions.

Trump has no gift of a smooth persona, soothing public relations in self-promotion, or even an appreciation of the need for good PR. His grating bluntness signals an uncompromising, open and direct character.

In taking Establishment sacred cows head-on, he displays no Establishment slyness, deception or double-dealing. How he handles political expediencies as they filter through his aides later remains to be seen.

His is a love-or-hate, take-it-or-leave-it position on issues that offers no room for fence sitters. Appropriately, he finds fence-sitting awkward, feeble and uncomfortable.

The US remains the most powerful and influential country in the world. Naturally, other countries need to understand the Trump Presidency to avoid mistakes and make the best of their bilateral relations.

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There is no need to project forward on the basis of a Trump assassination before the inauguration. When independent analysts do this it is rejected as conspiracy theory, but when CNN did it two days before the inauguration it was accepted as healthy media fare.

This was the same CNN embroiled in controversy over reproducing false news from such sources as Buzzfeed to malign Trump in a familiar partisan broadcast. Trump supporters say CNN’s projection only encourages assassination attempts in an already emotionally-heated environment.

The fact remains that no country in the world is able, anxious or inclined to attack or undermine the US. Trump knows this, however much his opponents in the US may try to demonise Russia and implicate Trump to delegitimise his Presidency.

Such attempts at casting guilt by association to already presumed guilty parties have only a limited effect. It saw the departure of Trump campaign chairman Paul Manafort, who allegedly acted as consultant to Ukraine before President Viktor Yanukovych was toppled in a pro-Western coup.

Beyond US borders, three issues stand out: will Trump actually proceed with a wall on the border with Mexico, will he really restrict Muslims entering the US, and how many undocumented immigrants will he deport?

These issues were controversial when they were first aired during the campaign, but they have since been modulated by Trump himself.

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The US-Mexico border already has a fence as most borders do. Trump has said parts of the border may remain a fence, since the objective is to keep illegals out effectively.

He first said travel restrictions would be placed on Muslims from troubled countries like Iraq and Syria. This was followed by restrictions to be placed on individuals linked to suspect groups.

Would Trump deport as many as two million or so illegal immigrants as he said? Al Jazeera reported that Obama had already deported 2.5 million people, more than the total deported by all previous presidents throughout the 20th century.

The prospect of a meeting between Trump and Putin has already been floated. It will be a first, and the mainstream media are already poised to spin it to vindicate their allegations of Trump’s “allegiance” to Putin.

Clearly both men share certain attributes: a “take charge” personality with a penchant for grandstanding, no patience for time-wasters, and little respect for established practice just because it is established.

But that is not the same as one being beholden to the other. By their very character, neither is given to being beholden to anyone or anything else.

Trump’s earlier comment about possibly lifting sanctions against Russia has now been revised to exchanging it for a cut in Russian missiles. Whatever the practicalities of such a deal, he is suggesting a quid pro quo with Moscow instead of a blank cheque.

For international strategists, Trump’s dismissive comments about NATO remains an issue. However, his Defence Secretary James Mattis holds the opposite view that is set to dilute if not neutralise his own.

The Trump Administration’s approach to China is actually more nuanced and interesting. Ultimately, it may also be more significant for China, East Asia and the larger Asia-Pacific.

At its crudest, it takes the shape of cudgels in China-bashing over Beijing’s alleged financial and economic improprieties. Much of this comes from anti-China hawks among policy advisers like Peter Navarro.

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On another level, it is about reacting to provocations from Beijing. When China scolded Trump for “consorting” with Taiwanese President Tsai Ing-Wen over her congratulatory phone call to him, he reciprocated.

China’s weakness remains a dogged misreading of Trump. By continuing to press the wrong buttons, Beijing may well “succeed” in provoking him into a trade war of sorts that both sides say they reject.

So far, the negative exchanges have not dwelt much on China’s contested actions in the South China Sea. If Beijing remains as wooden in mishandling Trump, he will easily adopt the Pentagon’s position on the issue to China’s own detriment.

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Heinz the Survivor and US Foreign Policy Iago

Much of what prevails in US relations with China and Russia over the next four years at least may result in the quiet campaigns of one individual: Henry Kissinger.

The former Secretary of State and pioneer of US-China relations has both been hailed and criticised as a pro-China dove. The reality may be more complex.

Kissinger has lately been active in three areas: renewing ties with China, promoting relations with Russia, and getting close to Trump. Some observers see his efforts as eventually distancing China from Russia.

In recent years, Russia and China have been working more closely over a range of issues outside the ambit of the US. Kissinger may regard this as a strategic challenge to Washington.

If driving a wedge between China and Russia is Kissinger’s current objective, it is not new. The US opening to China in the early 1970s that he led was already an attempt to distance Beijing from Moscow.

Given Trump’s personality and character, he is more likely than not to attend the ASEAN Summit in Manila in November. His host is admirer President Rodrigo Duterte, who has been likened to Trump.

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With Duterte’s Philippines chairing ASEAN, it is virtually a foregone conclusion that Trump will be in the region. Only his absence will be in doubt.

Trump and his ASEAN counterparts will have to work out what to say in their diplomatic exchanges by then. But well before that, ASEAN leaders need to understand the implications for the region in “make America great again.”

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

The Kindleberger Trap


January 16, 2017

The Kindleberger Trap

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

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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

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.”

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“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

Putting the Pacific on China’s Radar


January 6, 2017

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Number 366 | January 5, 2017

ANALYSIS

Putting the Pacific on China’s Radar

by Tristan Kenderdine

As China’s foreign direct investment strategy is increasingly formalized into international capacity cooperation funds, Pacific Island economies are struggling to engage China’s broader Belt and Road policies. While Beijing’s investment and trade strategy continues to transform the ocean corridor west from Southern China to Southeast India, the South Pacific looks to be orphaned through yet another period of history. However, the Pacific Islands Forum economies have a huge opportunity to align with China’s global geo-strategy through the new capacity cooperation financing mechanisms.

In 2016, China embarked on a massive capacity cooperation funding campaign to develop a parallel trading system which bypasses international capital infrastructure and allows China to invest abroad while maintaining a closed capital account. This campaign forms the vanguard of a state trade strategy with a transformative power over the macro Asian region. Targeted economies include Central Asia, West Asia, Southeast Asia, Africa, Latin America and most recently Central and Eastern Europe.

Both the People’s Republic and the Republic of China have long engaged in aid-for-diplomacy strategies in Pacific Island states. However Beijing now sees a crossroads emerging between South America and China through the Pacific, and has a new strategic interest which goes beyond the Taiwan issue.

China’s slowing industrial economy has also seen a growing desperation from Beijing to offshore industrial growth. Foreign direct investment from Chinese state-driven infrastructure projects has increasingly found its way to states recognizing the People’s Republic: Papua New Guinea, Fiji, Tonga, Samoa, Vanuatu, and the Federated States of Micronesia. Despite this, no specific capacity cooperation funds – the finance mechanism for Belt and Road offshoring industrial capacity – have yet been earmarked for Pacific Island states.

China’s wider ocean strategy includes industrial and agribusiness offshore investment. Its Pacific Island trade and investment strategy is run through Guangdong Province and provincial level cities there which coordinate investment in Pacific Island fisheries, agriculture, and infrastructure.

The more specific Belt and Road strategy links China’s eastern and southern port cities with Europe via the Indian Ocean port system. Designated trading routes pass through the South China Sea and the Malacca Straits, then through Myanmar and Sri Lanka on the way past India, and the Middle East toward European sea terminals in Greece, Turkey and Italy.

Pacific Island countries sit at a different crossroads, between South America and China’s East Coast. The development of China’s rail and canal projects is opening logistics infrastructure hubs in South and Central America. This means that a new South Pacific shipping corridor is likely to open up.

A deep-water container port at a half-way point could replicate Dubai’s air strategy on the sea. Fiji becoming a maritime Dubai would bring investment to the region and facilitate trans-Pacific trade logistics. As Papua New Guinea has benefited from liquefied natural gas exports to Taiwan, China and Japan, so too can other Polynesian, Melanesian, and Micronesian island economies find new trade avenues into the Asian mainland.

Containerized intermodal shipping logistics and refrigerated shipping will see huge demand as China’s domestic cold-chain logistics system develops. Chinese demand for a variety of commodities from South and Central America will see increased demand for both soft and hard commodities shipping. A global downturn in shipping paired with an oversupply of ships creates opportunity for Pacific Island countries to develop trade routes while infrastructure is affordable.

South Pacific fisheries and food industrialization present an opportunity to feed China’s huge and growing demand for fish protein that neither global wild catch nor industrial aquaculture can currently service. Mariculture, landing stations and harbor infrastructure, fish processing facilities, and aquaculture development all hold potential for Pacific Island economies. Fish processing facilities could leverage Chinese investment in infrastructure, build aquaculture employment bases and export clean fish products to the Chinese mainland. China’s distant water fleets already exploit wild-catch in both the Pacific and Southern Oceans and China has a huge demand for high-quality, safe, standardized food.

Gene industrialization and gene research is a key strategic industry for China. Legal and organizational developments in seed and animal genetics are laying the groundwork for China to become a world leader in genetics. Interest in biodiversity in the Pacific and the seabed are clear. Negotiations on Biological Diversity Beyond Areas of National Jurisdiction demonstrate China’s interest in marine biodiversity.

“Commerce with China [could] build the Pacific Islands into a genuine trade bloc.”

China is also at the forefront of international seabed mining, taking a leading role in the International Seabed Authority. Chinese state owned enterprise, China Ocean Mineral Resource Research and Development Association currently has 15-year exploratory rights over areas in the Clarion-Clipperton fracture zone, searching for ferromanganese, cobalt and polymetallic nodules. As more industrialized nations engage in the 21st century submarine land-grab, the Pacific Island economies are sitting on more land than most continental countries that, if leveraged well, could bring huge benefit to their populations.

Aerospace technologies, satellite communications and space policy are also rapidly being developed by China, which has signaled a desire to create a network of floating satellite ground stations. Given an increasing constellation of satellites and more sophisticated use, China needs reliable communications surface stations in the South Pacific.

China also faces a dependency on US controlled submarine internet communications lines. The global internet infrastructure is dependent on cables lying across the ocean floor such as Blue Sky – the proposed line from New Zealand to the US. China has already laid its own cables between South America and Africa, and faces bottlenecks to both service and security in the Hawaiian dominated north Pacific. A South Pacific communications route to South America would be invaluable to China, and access to this cable infrastructure would be equally valuable to Pacific Island economies.

In 2016, China embarked on a massive capacity cooperation funding campaign to develop a parallel trading system which bypasses international capital infrastructure and allows China to invest abroad while maintaining a closed capital account. This campaign forms the vanguard of a state trade strategy with a transformative power over the macro Asian region. Targeted economies include Central Asia, West Asia, Southeast Asia, Africa, Latin America and most recently Central and Eastern Europe.

Both the People’s Republic and the Republic of China have long engaged in aid-for-diplomacy strategies in Pacific Island states. However Beijing now sees a crossroads emerging between South America and China through the Pacific, and has a new strategic interest which goes beyond the Taiwan issue.

Thinking of China as a net exporter of capital goods, and importer of consumer goods, means small economies plugged into China need pay attention to consumer sentiment and behavior in the country. China’s wider geopolitical and marine strategies will bring investment and infrastructure to Pacific Island economies. This capital of course comes with state mercantilist strategies attached. However, access to these consumer markets will allow Pacific Island exports to feed China’s demand for fish protein, hydrocarbons, minerals, biopharmaceuticals and marine energy.

Outside analysis of economic development in the Pacific has too long focused on tourism, remittance and aid, ignoring the export potential of the island economies. As the Pacific Island economies increasingly engage with global trade, capital investment from China can help to develop industrial infrastructure for further regional economic integration. While both Chinese capital and construction projects present sustainability and quality problems, an impending wave of investment should be harnessed by the Pacific Islands Forum as an opportunity for capital, infrastructure and economic development for the region as a contiguous whole. Let commerce with China build the Pacific Islands into a genuine trade bloc and let us banish dependency economics once and for all.

About the Author

Tristan Kenderdine is Research Director at Future Risk and Assistant Professor at Dalian Maritime University. He can be contacted at Tristan.Kenderdine@anu.edu.au.

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