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Asia Pacific

The Asia Cauldron: Boiling Over

The Asian Cauldron: Boiling Over

  • These events over the past two months have created a significant deterioration in the stability of the Eastern Pacific; China has significantly improved her long-term strategic position vis-a-vis the United States in any potential conflict, by securing energy supplies from Russia that cannot be interdicted by the US Navy, while also undermining American and European efforts to isolate Russia and apply economic leverage in the Ukrainian crisis. This also benefits China by forcing the US to reconsider its distribution of forces towards Asia by having to now take into account the possible need for additional support to Eastern Europe.
  • President Obama has also drawn Chinese ire by two recent moves: during the President’s recent Asia visit, he reaffirmed the American commitment to the mutual defense treaty with Japan an specifically included the Senkaku Islands, which China claims as the Daioyu Islands. Then this week, the United States formally charged five senior Chinese officials with cyber-espionage against American military and industrial targets. The Chinese were not pleased;
  • China continues to implement their “salami slicing” tactics to expand influence and seize practical control of areas of the disputed South China Sea. These tactics consist in provocative actions that stop short of providing a pretext for military action by the aggrieved party. In this latest incident, China has towed a floating oil rig into position near the Thompson Shoal, disputed with Vietnam, and prevented the approach of Vietnamese naval vessels by the interposition of “civilian” Coast Guard vessels;
  • Japan, meanwhile, is debating an amendment to their pacifist Constitution, imposed by the US after the Second World War, which would allow Japanese self-defense forces to be used in “collective security” situations as well as in response to direct attack on the home islands. This would represent a major change in Japan’s military and strategic posture, which if approved, would increase the probability and utility of creating a “Pacific NATO” aimed at containing Chinese ambitions in the East and South China Seas. China has condemned this proposal as a destabilizing return to “Japanese militarism”:
  • China and Russia have also just signed a trade and investment deal worth hundreds of billions of dollars. China will receive substantial energy exports from Russia, but more importantly, will finally have access to Russian companies and Russian infrastructure projects from which they had previously been excluded. Russia, in turn, reduces her dependence on Europe as a market as well as on European and American investors for financial and managerial resources that Russia lacks. This is not the recreation of the anti-Western Stalin-Mao alliance, but it is an important geopolitical move with widespread implications;

 

The situation in the Eastern Pacific has suffered a rapid deterioration that not only threatens the peace and stability of the region, but which also has global implications for the United States and European Union. While these developments are not unexpected – Common Sense has been warning of the increased militarization of Asia since 2009 – the speed with which events have been moving is cause for dismay. In the space of two months, China has underlined her ability and willingness to enforce her claims in the disputed seas around her, significantly improved her energy security, and placed the United States in a difficult position with respect to her Asian pivot and European commitments. All has not gone China’s way, but the Asian superpower is indisputably the winner in the recent exchange of moves in this Great Game.

To begin with, starting on April 22nd, President Obama spent a week in Asia which included Japan, South Korea, the Philippines, and Malaysia – pointedly not to China[1]. Every one of those nations has an unresolved territorial dispute with China. The purpose of the visit was both to allay growing fears among American allies that the United States would not be willing to bleed for them in the event of confrontation with China, and to bolster negotiations for the mega-trade agreement, the Trans Pacific Partnership. The tour began in Tokyo where, standing next to Japanese Prime Minister Shinzo Abe, the President reiterated American commitment to their mutual defense pact and went out of his way to include the Senkaku/Diaoyu Islands disputed by Japan and China. It is true that Mr. Obama then went on to call for restraint and negotiation on both sides to lower tensions and find a negotiated solution to the impasse, but I’m pretty sure that Chinese officials had stopped listening at that point. If the point of the trip was to reassure US allies, it is possible that they bought what the President was selling; but there is no doubt at all that the Chinese got the message. ‘We plan to contain you.”[2]

asia trip

The White House further antagonized Beijing by slapping indictments for industrial and military espionage against 5 senior military officials connected to China’s shadowy cyber-security services[3]. America has long known that China was exploiting cyberspace to steal as much R&D as they could get away with; it came as no surprise that China has been able to field a fifth generation fighter that looks almost exactly like the F-35 so quickly. Nor that Chinese companies mysteriously produce almost exact copies of Western goods so soon after their market launch. This, without mentioning the billions of dollars in lost revenue to Western companies due to blatant piracy, copyright and patent infringement[4]. The loss of American military and technological secrets represents a grave security threat; so do the gaps in corporate and government information systems that foreign hackers exploit for their gain. President Obama’s move is long overdue and should be applauded, but the timing stinks.

china indictments

For the Chinese, the explicit guarantee of Japanese sovereignty over the disputed islands – which theoretically includes the use of American nuclear weapons – is an intolerable affront. If the Americans are going to meddle where they are not wanted, the only acceptable meddling would be in favor of Chinese interests. First and foremost, the Chinese have come to view these uninhabited rocks as inseparably Chinese as we think of the Aleutian Islands (when we think of them at all). They are as likely to give up their claim as we are to return Sitka to Russia: in other words, not for love or money. Secondly, the Chinese leadership has lost face, both with America’s public support of Japan’s sovereignty claim and with the federal indictment of the Chinese cyber-soldiers: something it cannot tolerate, as economic progress and nationalist prestige are the only things that provide legitimacy to the Communist Party. By not responding, the CCP would have been seen as weak by their people, which is also out of the question.

It was clear that China would have to respond to this provocation, and so they did. Not long after Mr. Obama returned to the United States, the Chinese Navy towed a floating oil rig just south of the Paracel Islands, flat dab in the middle of the disputed waters with Vietnam[5]. The rig was escorted with sufficient military force to prevent any thought of intervention by the Vietnamese, but once in place, the unarmed platform has been protected only by Chinese large fleet of civilian Coast Guard ships. The Vietnamese did react, naturally enough: besides lodging a formal complaint with the Chinese government, the Vietnamese Navy has attempted to close with the platform. All of these efforts have been thwarted by the swift interposition of the Chinese Coast Guard, which have not been shy about ramming the Vietnamese ships and liberally using powerful water cannon to make life difficult for the sailors onboard. The Vietnamese, though furious, aren’t stupid enough to respond with deadly force: the Chinese Navy is waiting in the wings and Vietnam has already lost two naval engagements with a far less powerful version of that same Navy more than 20 years ago[6]. They are no match for the modern version, and know it: so as much as it might burn them, they are forced to swallow their pride and proceed through diplomatic and international legal channels. While the Vietnamese government was forced to suffer what it must, the Vietnamese people rioted and burnt Chinese factories in their country, forcing thousands of Chinese nationals to flee home for safety. This took the Chinese government by surprise.[7]

oilrig

It is significant that China decided to react by antagonizing Vietnam, a much weaker potential opponent than either the United States or Japan. It signifies that they are not yet ready to roll the dice in what could easily escalate out of control. Japan does, after all, have the third largest navy in the world, and it is an effective force kept at high readiness, enjoying both high morale and a long, proud tradition. In other words, the Japanese might not back down, even if the US were less than keen on going to war over an oil rig dragged near the Senkakus. Nonetheless, the Chinese move was a clear riposte to the US escalation, and was understood as such by everyone in the region. China once again demonstrated that their ‘salami slicing’ strategy was both well-considered and effective. In basic terms, the strategy is as follows: if someone tells you they will slap you if you take a salami that you are both interested in, then rather than taking the whole stick, you only cut off a small slice. Given that you are no weakling yourself, that small slice is too insignificant for the other party to escalate to a full scale war over it. It would be grossly disproportionate for the US Navy to start bombing China over a civilian oil rig and some Coast Guard cutters using water cannon. So you keep slicing, and eventually there is so little of the original salami left that it is simply not worth fighting over. It is a very effective asymmetrical strategy: it uses American strength against itself to prevent action and achieve the objectives. Can anyone imagine the CNN footage of a US carrier task force blasting apart a bunch of Chinese civilians? Exactly.

The salami slicing tactic is not infallible. For one thing, it depends on a very nice calculation of the value of the slice that you are taking. You might get it wrong, and if the slice is too big, you could provoke a response you are unprepared for. The strategy is also easier to implement against a single, rather than multiple adversaries: this is because the value of the slice might be different for each of the parties. Think again of the Senkaku Islands. That slice is worth a lot to China, but not much to the United States, so China might be tempted to use the salami slicing tactic there. Unfortunately, the value of the Senkakus is very high for Japan, which prevents China from risking a Japanese reaction which would then drag in the Americans. Finally, the tactic can be used against you as well. Imagine if Vietnam or the Philippines were to place a floating oil rig over the Thompson or Scarborough Shoals. China works hard to maintain an international reputation as a peaceful and responsible power: it is questionable whether they would be willing to use force to expel these civilians, though they just might, given the disparity in power between the three navies. At this point, however, neither Vietnam nor the Philippines are in a position to take such measures.

Prime Minister Abe had already launched a debate on an amendment to Article 9 the Japanese Constitution that would permit the nation’s self-defense forces to engage in collective security operations, rather than being limited to defending the home islands[8]. The definition of “collective security operations” was left deliberately vague: it could in practice cover almost any eventuality. Mr. Abe and his right-of-center colleagues have long sought such a change; they argue that Japan has paid its dues for the Second World War, been an exemplary contributor to world peace and economic growth, a good global citizen, and thus it is time for Japan to become like any other “normal nation”, i.e. with a military that is not restricted by post-war prohibitions. The Japanese themselves are divided on the issue. On the one hand, they are not blind to the growing strength and threat from China and, to a lesser extent, North Korea. Nor are they entirely comfortable relying exclusively on US defense guarantees, especially in what might be considered the grey area around the Senkaku Islands. Yet many Japanese are very proud of their pacifist tradition since 1945: they are the only nation to have renounced the use of war in their charter document. Some Japanese liberals even quietly agree with China, and fear a possible return of militarism to their islands. Yet it seems likely that, sooner rather than later, Japan will indeed become a “normal nation” and give greater freedom to their Self-Defense Forces.

This has major implications for the region. Japan is China’s boogeyman in a manner that the United States will never be. Perhaps 10 million Chinese died in the Sino-Japanese War of 1938 to 1945, a conflict in every way as brutal and inhuman as the German invasion of the Soviet Union. Those scars are still very visible in China, and South Korea for that matter; and both nations routine castigate Japan whenever elected official visit the Yasukuni Shrine. Unlike Germany, Japan has never officially admitted to any war crimes or special guilt over their actions in the 1930’s and 1940’s, and they have never apologized to the victims of their wars of aggression. Thus the prospect of Japan “normalizing” its military posture has a very chilling effect, even on Japan’s Asian allies, who remember all too well how that “Greater East Asian Co-prosperity Sphere” was to be established: on the point of Japanese bayonets. Beyond the merely visceral reaction, Chinese leaders would have to consider the possibility of joint Japanese-American guarantees to the Philippines and Malaysia, which increases the complexity both for political and military planners; though it is open to debate whether Japan was not have sent ships and troops to areas outside of the home islands in the event of a real shooting war with China, constitutional prohibition notwithstanding.

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Japan would also be able to significantly upgrade the counterstrike capabilities of her Armed Forces. The current Constitution not only limits the JSDF from anything but a pure defense of their homeland, it prohibits the development and deployment of entire classes of offensive weapons, such as aircraft carriers, strategic bombers and ballistic missiles. Along with opening the door to collective defense and greater cooperation with the United States and other Asian democracies, Mr. Abe’s proposal would allow Japan to develop weapons that would pose a very grave threat to Chinese national security. One of China’s great strengths is their progress in “area denial” weapons: hypersonic ballistic missiles that are almost impossible to intercept and which are designed to sink American aircraft carriers from outside the range of these ships’ aircraft. These missiles are on mobile launchers organized in batteries, and in case of a war, they would be moved frequently, making their destruction by long-range American aircraft a very difficult prospect. If Japan were to develop their own hypersonic missiles, however, these could be used to devastating effect against the Chinese launchers: the short distance between Japan and China and the extremely high speed of the missiles means that the targets would have only a seconds to react. Furthermore, there is less risk of escalation: if America were to launch ballistic missiles from Guam or the continental United States, the Chinese would have to seriously consider the possibility that the warheads on those missiles were nuclear, with ramifications that need no elaboration on my part. Japan, however, has no nuclear weapons, so a Japanese strike could only be conventional.

If we take the implications of Mr. Abe’s reforms to their logical conclusion, even this assumption does not hold. Japan certainly has the capability to rapidly develop a military nuclear capability and no one miniaturizes like the Japanese. There is not the slightest doubt that they could build a bomb and put it on a ballistic missile in very short order. Given that the only nations Japan has serious disputes with all possess nuclear weapons – China, Russia and North Korea – it is very possible that Japan will sooner or later withdraw from the Non-Proliferation Treaty. Sooner if the United States continues down its isolationist trend much further; but Japanese demographics argue in favor of nuclear deterrence as well. Japan does not have a surfeit of young people to feed into the maw of war and the oldest nation on earth may decide that the atomic “big stick” is the surest way of avoiding a bloody conventional war, which could cripple Japan even if it were prosecuted successfully.

Needless to say, such a decision would really stand Chinese hairs on end. It might also spell the end of any lingering non-proliferation hopes that remain in the world. If Japan determines to go nuclear, there is a high probability that South Korea would also take this step. The US is not going to impose sanctions on either of our allies for this action – for one thing, it is highly likely that the US would have at least tacitly acquiesced to the decision – making the case for punitive actions that much more difficult in cases like that of North Korea and Iran, or any other sovereign state that has the capability and will to invest in WMD.

A nuclear Japan is a concern for the future; the Japanese must first agree to amend their constitution and then overcome their visceral dislike for atomic arms. The more immediate concern for US strategy is the mega-deal between Russia and China signed on May 21st in Shanghai[9]. Though labelled as an energy deal, the $400 billion agreement is much broader in its terms than just providing the insatiable Chinese market with Russian oil and gas. For the first time, Russia is giving China access to invest in her companies, even to take minority ownership stakes in them. Not controlling interest, of course, but a seat at the board. China will also be able to bid on major infrastructure projects in Russia, something the Kremlin had not been keen on in the past.

russiachina

The deal addresses key concerns of both nations and seeks to shore up strategic weaknesses that the West has in the past either threatened or actually exploited. For Russia, access to the Chinese energy market means diversification away from Europe and a lessening of European leverage. The additional factor of access to Chinese FDI means that Russia will no longer be so heavily reliant on American and European capital for her economic development. Throughout the Ukraine crisis, Western sanctions have been a relative non-factor in Mr. Putin’s calculations, but capital flight from Russia has caused the economy to fall into recession in the second quarter of the year. China has plenty of capital and is keen on buying into Russia’s vast untapped resources in Siberia.

Besides the aforementioned access to capital markets and raw materials supplies, the Chinese also gain in the diversification of their energy suppliers. China currently imports around 90% of her oil from the Middle East, and ships them by tanker through the Indian Ocean and the South China Seas. That route is easily interdicted by the US Navy, a situation clearly intolerable to China in the event of conflict with America or her allies. China has tried to shorten this route by building a major oil port and pipeline in Myanmar, which would allow ships to avoid transiting the important choke points at the Malacca and Sunda Straits, through which almost all oil tankers steam. But a Russian pipeline is even better. For one thing, it avoids the dangers of any sea journey at all as the USN could still intercept tankers before they docked in Myanmar. Secondly, the Russian pipelines would run through territories mostly inaccessible to tactical US airpower and politically untouchable: for while the US might, in case of war with China, ignore Myanmar sovereignty to bomb the pipeline in the mountainous provinces before it entered Chinese territory, it is not about to do the same with Russia.

The deal is not a political, much less military, alliance. It is a smart and timely economic agreement between two totalitarian states that find it congenial to cooperate in snubbing the Western imposed regime of intrusive human rights and aggressive democratization. It nonetheless reduces the strategic options available to the United States in dealing with Russia and China, while broadening the options of the latter two powers.

Policy Implications

In both cases, the US must rethink its strategic approach, though continuing to rely on regional partners. In Europe, the age of benign neglect must, of necessity, end. A decade ago, Europe was a continent of strong economies, EU accession and integration, and profound peace. Today, neither continued European growth nor European integration can be taken for granted, and the profound peace has been shattered by a return of Bismarckian politics. America’s traditional European allies all lie too far removed from Russia and too consumed by internal and EU politics to do much about rebuilding NATO. The US must therefore rely on our new Eastern European allies – Poland, Romania, Czech Republic, Slovakia, Hungary and the Baltic States – to form the new core of NATO. That requires money and support. The money could come from wealthier Western Europe in the form of an EU Defense Fund that mirrors the operation of the EU Inter-Regional Development Fund; though it remains doubtful that member states will be willing to fund Polish military preparedness while facing high rates of unemployment at home. The support must come from the United States, through the repositioning of units and equipment in Eastern Europe. At the least, the US should go back to the force levels that existed in 2005 – though 2001 force levels would be better. This would not only reassure Eastern Europeans that the US did indeed have “skin in the game” while providing a timely warning to deter any possibility of Russian adventurism, it would also provide a credible core for a defense force of the Baltic States should Russia attempt to agitate the Russian-speaking population in Estonia or Latvia[10].

Regarding the Asia pivot, we are drifting into a strategy of containment; it is not yet doctrine, but it seems to be the policy option by default. After all, it worked in the Cold War, it could work again, right? Wrong. Assuming that the US policy of containment worked even during the Cold War would be a mistake, a Western-centric reading of history. When did we ever actually contain the Soviets? They didn’t invade Western Europe, that’s true, but it might not have ever been on the agenda. The USSR had a sufficiently deep strategic buffer in Eastern Europe that invasion of the Western part of the continent was unnecessary. “Containment” didn’t stop the USSR from invading Afghanistan, or sending missiles to Cuba, or deploying thousands of “advisors” to Africa and Central America. We should be careful about drawing the wrong conclusions from history based on bias and a too short analysis horizon.

It is also worthwhile asking, contain China from what? The rivalry with China is not fundamentally about territory or economic ideology; it is a good old fashioned XIXth century Great Power rivalry.  Against the Soviet Union, the ideological struggle of democracy and capitalism versus communism and central planning were the key elements; those are lacking in our current competition with the Chinese, though there is certainly an element of democracy versus authoritarianism at play. In fact, Chinese territorial ambitions are extremely modest – while China should not be allowed to simply claim the whole South China Sea basin as an exclusive economic zone, this is a far cry from the possible implications of Russian recidivism, which would include the reabsorption of Ukraine and Belarus at a minimum into the new Russia. China’s main territorial claim – over Taiwan – has not been disputed by the United States since the Nixon Administration.

An overt strategy of containment would be a mistake. I fully support President Obama’s pivot to Asia, so long as the objective is to provide a sufficient deterrent to prevent unilateral military actions by China, as well as prevent the “Finlandization” of her weaker neighbors. Beyond that, the encirclement of China is more, not less, likely to provoke an economically disadvantageous arms race and to increase the possibility of military conflict. Furthermore, “containment” is itself vulnerable to the salami-slicing tactics currently being used with such success by the Chinese; unless a means short of armed conflict is found to prevent the continuation of these encroachments, they will continue, undeterred by the number of aircraft carriers America has deployed in the Pacific.

The United States should also pursue a policy of “reciprocity” with China. China has long benefited from numerous WTO exceptions in market openness, capital and currency controls, foreign ownership of local companies; these loopholes should have been closed by now, but have not been. The United States should both work through the WTO litigation and adjudication process to challenge the Chinese to level the playing field for Western companies; and in the meanwhile, we should act in concert with our European partners to apply reciprocal measures on Chinese companies and investments in our own markets. In China, like everywhere else, money talks and the other stuff walks: they will listen more closely when billions are at stake.

Progress on the two mega-trade deals of our own is also critical. I maintain personal reservations about the provisions of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), which remain under negotiation and secret; but in general terms, both agreements are critical for the economic prosperity and continued relevance of North America and Europe to the world economy. These negotiations promise to have far-reaching implications beyond that of mere GDP growth: by uniting the largest democratic economies on the planet, the TTIP and TPP promise to be the Bretton Woods of the XXIst century, establishing trading norms, product and technology standards, consumer and investor protections and litigation procedures that will be global in context and application. They would prevent China from using her economic weight through bilateral negotiations to gradually change the trading regime in ways that disproportionately benefit her economy. Chinese norms would still form a barrier to entry into China, but they would not become global norms, giving Chinese companies an advantage outside of their home market[11].

Of course the Chinese protest that this is all part of a nefarious Western plot to encircle their country and contain it, the TPP in particular. This plays well at home, but it is not so; and having China *eventually* join the TPP would make obvious sense: but conditional on conformity to the operational norms, as well as the existing WTO structure which the Chinese continue to flout. Commitment to a pacific resolution of the South and East China Seas disputes could also be required; but first, we must hammer out the deal with our current negotiating partners. These trade deals remain one of the most potent levers the US and European Union have in play to provide more carrot than stick in dealing with states seeking to revise and undermine the global order.

The United States must play for time. It may seem strange at first, but time favors the United States more than it does China. The demographic outlook for the People’s Republic over the next forty years is as stark and unappealing as Japan’s; thanks to the “One Child” policy, the Chinese population is getting old at a phenomenal rate, and China will soon find itself dedicating more and more of her budget to the pensions system and health care. We know from experience that these are very expensive programs that will lead to less money available for military spending and to the growth of divergent interests between generational segments.  Weathering these competing demands will be difficult and time consuming for the CCP. If they are unable to provide sufficient social benefits for the elderly, it might provoke a crisis in the social compact that holds the regime in place. If they go too far in the other direction, the same thing could happen with the overtaxed and underfunded workers. America’s demographics, thanks to a large component of fertile immigrants, continue to look robustly stable through 2050.

chinapoppyramid

Time is on our side, and the XIXst bids to be a continuation of the American Century so long as we avoid ruinous wars and keep our own house in order. We will, however, pass through a danger zone, when a domestic crisis in China could be turned into an international crisis by an opportunistic CCP eager to shore up legitimacy and support by enflaming the nation against the “foreign devils”. It is critical to have built up the institutional links with China, and to have deployed a sufficiently large deterrent force, to avoid an unwanted escalation to war. China has shown itself to be less than willing at times to build these links or maintain them, but we must continue to promote them as a necessary pre-condition to avoid an even less desired encirclement strategy.

 

Sources and Notes:

 

[1]Jethro Mullen and Kevin Liptak, “Obama begins Asia tour with reassurance of Japan,” CNN, 23 April 2014

[2]Dhara Ranasinghe, “Obama reassures ally Japan, no breakthrough on trade,” CNBC, 24 April 2014

[3]These are not “slap on the wrist” sanctions, such as have been levied against Russia; these are federal indictments which could lead to the arrest of the indicted officials should they travel to a nation that has an extradition treaty with the United States. AP, “US charges Chinese officials in cyberspying case,” The Washington Post, 19 May 2014

[4]You may not be sensitive to corporate balance sheets; but if you consider that this loss represents an indirect subsidy by American, European and Japanese taxpayers to Chinese manufacturers, you may be more concerned.

[5]Wendell Minnick, “China-Vietnam Sea Spat Heats Up,” Defense News, 25 May 2014

[6]The Battle of the Paracel Islands, January 1974 (against South Vietnam); and the Battle of Johnson South Reef, March 1988.

[7]Hilary Whiteman, “How an oil rig sparked anti-China riots in Vietnam,” CNN, 19 May 2014

[8]“Abe says it is time to revise pacifist constitution,” Japan Today, 01 January 2014

[9]Elena Mazneva and Stepan Kravchenko, “Russia, China Sign $400 Billion Gas Deal After Decade of Talks,” Bloomberg, 21 May 2014

[10] Estonia’s “Russian demographic” is approximately 30% of the population; it is 25% in Latvia, while only 5% in Lithuania.

[11] It is easy enough to see this in operation: the Chinese have prevented global multinationals in technology (Google), finance (Visa) and other industries from entering their market through such restrictive (and illegal) practices.

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