China’s North Korean gamble

By S.P.SETH

North Korea continues to be a terrible nightmare. It is a nightmare because it has the support of China. Otherwise, it would have imploded long ago.

Beijing’s support has several components, even though North Korea’s waywardness annoys it occasionally. But China is stuck with it. It is, as one senior Chinese official reportedly said a while ago: “ North Korea is our East Germany.”

And: “Do you remember what happened when East Germany collapsed? The Soviet Union fell.”

This is an important insight into the psyche of the Chinese communist leadership. There are two things that worry China’s communist oligarchy the most.

First, of course, is the fear of social instability and resultant collapse of the regime--- a process of hollowing out from within.

The speed with which the Soviet Union collapsed is a salutary lesson for China.

Second, and inter-related, is the fear of internal democratic dissent and external encouragement of a democracy movement in China.

China’s 11-year prison sentence of Liu Xiaobo, the co-author of China’s Charter 08 for democracy (and now the winner of Nobel Peace Prize), is an example of such paranoia.

China also fears that any implosion of the North Korean regime, and its unification with South Korea, might bring the US too close to China’s borders under the US-South Korean military alliance.

There are some suggestions that Beijing might be amenable to assurances of a benign US presence in Korea to ensure a relatively peaceful political transition in North Korea.

But a paranoid regime in Beijing is unlikely to entertain such assurances. Having been unimpressed by joint US-South Korean military exercises, Beijing is now even more peeved over US-Japan military exercises.

According to its Foreign Ministry spokeswoman, Jiang Yu: “Brandishing of force cannot solve the issue.”

But China’s recent bellicosity to assert its regional dominance, and North Korea’s belligerence, has created alarm among its neighbors leading to the tightening of their military and political ties with the US.

For instance, not long ago, South Korea used to placate Pyongyang and cultivate China, despite its alliance with the United States. But President Lee Myung-bak’s regime abandoned this policy in favor of strengthening ties with the United States.

Seoul was greatly disappointed with China when it took a neutral stand on the torpedoing of its naval ship, Cheonan, in March, with deaths of 46 of its personnel.

With such North Korean belligerence, and the recent artillery shelling of a South Korean island, Beijing still continues to counsel restraint and diplomatic efforts to calm down the situation. It is refusing to put necessary pressure on Pyongyang to act responsibly.

Indeed, for the first time, South Korea has felt obliged to move toward some sort of a trilateral military nexus with the US and Japan by sending military observers to the Japan-US exercises.

China fears that a reunified democratic Korea might have subversive effect on its political system. The demonstrative effect of the democratic political dispensation in Korea across the border might prove infectious for China.

It, therefore, makes sense when a Chinese senior official compared North Korea with East Germany, with the latter’s collapse contributing to the Soviet Union’s fall.

Be that as it may, any collapse of North Korea would pose immediate problems for China. There are two views on this in China’s academic community.

According to Zhu Feng, a professor of international relations at Peking University, the inevitable collapse of the North Korean regime would leave China with no choice but to support South Korea-led reunification.

Because: “If China dispatched troops across the Yalu River what would be the result? They will outrage South Koreans, raise unbelievable concerns from Japan, and US-China policy could change very tremendously.”

On the other hand, Cai Jian at Fudan University believes that China wouldn’t tolerate a “hostile regime” in North Korea as well as US military presence there. He opines that, “If South Korea keeps its pro-US policy then China has to maintain stability through North Korea.”

What it means is that unless a unified Korea agreed to be under China’s sphere of influence, China would continue to regard North Korea’s communist regime as an instrument of its policy on the Korean peninsula.

In other words, Beijing is determined to side with the Kim Jong-il dysnasty.

It might be recalled that Kim Jong-il’s youngest son was anointed as his successor after the elder’s Kim’s visit to China. He obviously received necessary support and guarantees from China’s rulers. In that case, they see the Kim dynasty as an instrument of their Korean policy.

Knowing fully well that the Kim regime is not only expanding its nuclear program but also supplying nuclear materials and technology (including missiles) to other countries, Beijing is apparently well aware of the dangerous consequences of its support for Pyongyang.

Indeed, the WikiLeaks cables suggest that some of this trade is actually conducted through China.

Since North Korea continues to be a law unto itself with its nuclear program, artillery shelling of a South Korean island as well as threats of unleashing more attacks on South Korea, China should know that its protégé is beyond any call for restraint and diplomacy as advocated by Beijing for the contending parties.

China is thus, wittingly or unwittingly, complicit in North Korea’s belligerence leading to regional instability.

And if China were to interpret US-Japan, and US-South Korean military exercises and preparations, as a potential threat to its security, this could set the scene for a repeat of the 1950-53 Korean war with China crossing the Yalu river against a perceived threat from the United States.

With social unrest mounting in China, its communist oligarchs might even prefer such a dangerous diversion in the name of protecting China’s national interests.

In Korea, therefore, we are entering dangerous waters (both literally and figuratively) with unpredictable results all-round.

China’s oligarchy versus Liu Xiaobo

By Sushil Seth

Much has been written about the award of Nobel Peace Prize to Liu Xiaobo, who is serving an 11-year prison sentence for his advocacy of democratic rule in China. We know that he is China’s leading political dissident and has authored the alternative blueprint, Charter 08.

But the more we know about him the more you understand why China’s ruling oligarchy is so deadset against him.

First of all, the Charter succinctly exposes the contradictions of the existing political system—a cruel Orwellian joke on its people. It says, “…the political reality, which is plain for anyone to see, is that China has many laws but no rule of law; it has a constitution but no constitutional government…”

Not surprisingly: “The stultifying results are endemic official corruption…weak human rights, decay in public ethics, crony capitalism, growing inequality between the wealthy and the poor, pillage of the natural environment… and the exacerbation of a long list of social conflicts…”

Which would lead to the logical conclusion that, “The decline of the current system has reached the point where change is no longer optional.”

The Charter 08 then goes on to propose the enactment of a new constitution based on the democratic principles of separation of legislative, judicial and executive power as well enshrining guarantee of human rights, freedom of expression and a whole lot more.

Such a prescriptive Charter will be the death knell of the political monopoly of the Communist Party of China. No wonder, China’s rulers went ballistic against Norway and the committee that awarded the prize. And, at home, they rounded up some activists.

Beijing has stopped dialogue with Norway on furthering trade relations, and demanded an apology from the Nobel committee for awarding the Peace Prize to a “criminal”, thus showing disrespect for China’s legal system.

These days China is big on demanding apology. Japan too was asked to apologize over the detention of the captain of a Chinese fishing trawler that collided with a Japanese patrol boat in the East China Sea. But that is another story.

However, Professor Liu Xiaobo is one of those rare people who is not for turning when he believes in what is right. The Party would like to see the back of him if he were to leave China for comfortable pastures abroad, where he has had academic stints in prestigious universities in the United States and elsewhere.

But he keeps coming back to pursue his passion and commitment to change his homeland. Though his current 11-year stint in jail is the longest so far, he is not new to such persecution at the hands of his country’s communist oligarchs.

He was jailed for 20 months in 1989 when he went on hunger strike to support the democracy movement. He spent another three years at a re-education camp from 1996 for his criticism of the party’s monopoly on power.

After serving his current 11-year mandatory sentence at the sheer pleasure of his country’s communist cabal, he would have spent 16 years in jail.

Still, Liu remains unbowed with his indomitable will to pursue the cause of political reform for his country. If democracy has to succeed in China at some point, men like Liu are the ones who would keep the torch alive.

Speaking at his trial on December 23, 2009, he recalled, “…[after] I was imprisoned [in 1989] for ‘counter-revolutionary propaganda and incitement to crime’… I was never again allowed to publish or speak in public in China.”

He went on to say that, “ But I still want to tell the regime that deprives me of my freedom… I have no enemies and no hatred… For hatred is corrosive of a person’s wisdom and conscience…”

Speaking on a note of hope, he said, “I hope to be the last victim of China’s endless literary inquisition, and that after this no one else will be jailed for their speech.”

Because:” Freedom of expression is the basis of human rights, the source of humanity and the mother of truth…”

From a perusal of the text of his statement at the December 2009 trial, Liu comes out as a towering personality of immense courage and compassion.

It is hard to believe that he is regarded as a “criminal” in his own country for exercising his right to free speech and saying the things which some of China top leaders have also said at times.

For instance, President Hu Jintao reportedly said in 2003 that the Communist Party faced “inevitable extinction” if it did not increase press freedoms.

And more recently Premier Wen Jiabao told CNN that, “Freedom of speech is indispensable for any nation. China’s constitution endows the people with freedom of speech.”

He added, “The demands of the people for democracy cannot be resisted.”

If so, why is Liu Xiaobo in one of Premier Wen’s jails for exercising his right to free speech under the Chinese constitution? Or is it all a charade?

Liu’s Noble peace prize created a bit of excitement among some Chinese party elders and a group of scholars, making renewed calls for democratic reforms.

In an open letter, 100 Chinese scholars urged “China should join the mainstream of civilized humanity by embracing universal values.” Because: “Such is the only route to becoming a ‘great nation’ that is capable of playing a positive and responsible role on the world stage.”

All this activity urging political reforms was probably intended to influence the deliberations of the Communist Party plenum just held. But it was ignored, as has happened in the past.

The only passing reference to this in the communiqué read: “Great impetus should be given to reform of the economic system, while vigorous yet steady efforts should be made to promote reform of the political structure.”

Which is neither here nor there.

Some China-watchers were heartened by Premier Wen’s support for political reforms. But Wen’s background as an aide to Zhao Ziyang during the tumultuous days preceding Tiananmen massacre and his conversion thereafter, is a testimony not only to his great instinct for political survival but also coming out a winner.

Therefore, one shouldn’t read too much into his rebirth as a political reformer.

But Liu and his band of political dissidents could one day become the rallying point of a popular movement against the party’s corrupt and politically suffocating rule.

China’s Middle Kingdom syndrome

By S.P.SETH

China has been firing salvoes in all directions, asserting its sovereignty/power over South China Sea, East Asia Sea and Yellow Sea, and as far away as the Antarctica.

According to Wei Wenliang, who heads China’s Antarctic program: with China’s increased scientific and maritime capability, it is now equipped to “shoulder responsibility” to administer the region.

As in the regional seas where other countries have competing claims, China will have to contend with quite a few countries about their respective claims in the Antarctica.

But closer to the region, it is a much more serious matter. For instance, China-Japan scuffle over their disputed sovereignty in East China Sea, where a Chinese fishing trawler collided with a Japanese patrol boat and its captain detained, created quite a serious crisis in their bilateral relationship.

The subsequent release of the captain, followed by a meeting between premiers of the two countries on the sidelines of an international conference, has calmed things down a bit, but the potential for a flare up is always there.

Even though Japan’s wartime record generally weighs against it in the region, it would appear that this time China’s reaction appeared to be a bit over the top, threatening “consequences” and what not.

Kosuke Takahashi of the Jane’s Defense Weekly, who follows these matters closely, has said, “If you look at the editorials in Southeast Asia and the US in major newspapers, you can see China overreacted.”

Expanding on it, he added, “South Korea also has issues with China over the Socotra Rock. The Philippines and Vietnam have territorial issues with China. Those countries look at the Chinese reaction and they are worried.”

China has been virtually telling its regional neighbors that they have no option but to lump China’s claims of sovereignty. As Dr Malcolm Cook of the Lowy Institute, an Australian think tank, has said, “It’s certainly given an example of China’s actions that don’t fit a ‘peaceful rise’ narrative…”

This is creating a new nexus between the United States and Southeast Asian countries, worried about China’s assertive sovereignty claims, with no provision for peaceful resolution of disputed issues. This is particularly reflected in closer strategic relations between the US and Vietnam, and renewal of military ties with Indonesia.

At another level, China is facing intense pressure from the United States and Western Europe in trade matters, particularly its undervalued currency.

Even though there is a reluctance in official quarters to brand it as “manipulation of currency” to give China a trade advantage in flooding the world with its cheap goods and accumulating vast currency reserves from trade imbalances, there is no ambiguity in the message about the need for China to revalue its currency.

This is starkly reflected in the US House of Representatives’ recent legislation to enable the US to impose retaliatory counter measures against China. The US Congress has been exercised over this issue for a long time, and, finally, the House has acted on this. The Senate still has to take up the issue. It will do so after the mid-term elections in November.

And it is high time too, according to the New York columnist and Nobel laureate, Professor Paul Krugman. In his recent column, he writes: “Diplomacy on China’s currency has gone nowhere, and will continue going nowhere unless backed by the threat of retaliation.”

He adds, “The hype about trade war is unjustified—and, anyway, there are worse things than trade conflict. In a time of mass unemployment [in the US], made worse by China’s predatory currency policy, the possibility of a few new tariffs should be way down on the list of worries.”

China’s response is contradictory. At one level they say that their currency value has nothing to do with China’s trade surpluses.

At the same time, Premier Wen Jiabao has reportedly said, “We cannot imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs.” In other words, China’s undervalued currency is a hidden export subsidy for China’s exports.

At the official level, the US is trying to hose down the danger of a looming trade war, while keeping up the pressure on China for a significant appreciation of its currency.

According to Timothy Geithner, US Treasury Secretary, “We’re not going to have a trade war. We’re not going to have currency wars.”

(Geithner might not think so but even IMF is worried about it, with different countries seeking export advantage through a possible bout of competitive devaluation of their currencies.)

He believes, though, that it is in China’s “own interest to allow its currency to appreciate in response to market forces.”

Will China do it significantly? Doesn’t look like. In other words, political, strategic and economic factors are converging to make for uncomfortable times ahead.

Europe too is worried about China’s undervalued currency. Beijing, though, is working to wean away Europe from a united front with the United States. Both the US and Europe have trade deficits with China.

Premier Wen Jiabao was recently in Europe on a charm offensive. He maintained China’s position on its currency value; arguing that his country needed rapid growth to pull millions of its people out of poverty.

But he assured that China would help maintain euro’s value by buying European bonds to help them refinance their struggling economies.

Speaking in Greece, during a one-week tour of Europe, he said, “I have made it clear that China supports a stable euro.” He added, “We will not reduce our holdings of European bonds in our foreign exchange portfolio.”

The choice of Athens as the starting point of his recent European tour, and remarks about supporting euro, is significant as China recently entered into a wide-ranging set of agreements for economic cooperation between the two countries.

Like Greece, which is in considerable trouble because of its indebtedness, the message is also meant for other similarly placed European economies like Portugal, Spain and Ireland to create closer economic links with China.

As some of the weaker economies in euro zone are struggling to keep afloat, China’s assurance on buying euro bonds will be a welcome relief.

At the same time, it might distract them somewhat from the issue of China’s undervalued currency, where the US is much more concerned because of its huge recurring trade deficit with China. The seemingly united front between the United States and Europe might, therefore, be susceptible to Chinese machinations.

At the same time, China’s increased investments in European bonds will give it even greater leverage over Europe, as it becomes beholden to China’s extended credit line, and a web of new and expanded economic linkages.

Even Europe’s largest economy, Germany, is increasingly becoming dependent on China for its exports. Anthony Faiola recently reported in the Washington Post that, “China passed the US last year as the No I overseas market for big-ticket German machinery, with titans from Siemens to Volkswagen—which so far this year has sold 1.3m cars in China, five times as many as it has in the US…”

However, it is not smooth sailing for China. Its provocative assertion of regional dominance is worrying its neighbors. And its under-valued currency is creating global fear of currency wars.

China needs two things to solidify its great power status. First, it needs a decade or more to consolidate and strengthen its position. Its recent loud declarations to be the master of the Asia-Pacific region were premature.

The United States still remains the world’s strongest military power. And even with its myriad economic problems, it still is the world’s largest economy and China’s major export market.

Second, and more importantly: without corresponding political reforms with wider popular representation and accountability, China’s economic edifice is built on very weak foundations subject to social and political eruptions.

Witness, for instance, China’s hysterical reaction to the awarding of Noble Peace Prize to Liu Xiaobo, who is languishing in jail for his advocacy of human rights and democracy in China.

Will US hit back at China?

By S.P.SETH

Over the years China has learnt how to play hard and soft with the United States, depending on the situation. After hectoring and warning the United States recently about China’s territorial sovereignty over the South China Sea, and Yellow Sea (objecting to the joint US-South Korean military exercises), and generally making a claim for regional primacy, Beijing is reversing the gear slightly to calm Washington’s ruffled feathers.

This was apparent at the high level reception accorded early this month for Larry Summers, President Obama’s senior economic advisor and Thomas Donilon, deputy national security advisor. They were apparently there to discuss economic and security relations.

These two officials were received by President Hu Jintao, and a bevy of government and party heavy weights like Premier Wen Jiabao and others. While the content of their conversations with the Chinese leaders is not revealed, they are believed to have been “frank” and “productive”--- whatever that might mean.

Considering that the US-China bilateral relationship has been quite tense lately, it might be assumed that the US officials went there to do some straight talking, both on economic and security issues.

On the economy, the high value of Chinese currency is a major issue in the United States. And on the security front, China’s recent saber rattling must have figured prominently.

If the US officials did some tough talking, Beijing wasn’t showing its discomfiture. Indeed, some Chinese (non-official) sources reportedly sought to put the best spin on the visit: that it might lead to improved military ties, and that the recently upgraded ties with North Korea weren’t based on friendship but on realpolitik.

As Zhu Feng, a Chinese academic, reportedly said, “Kim Jong-il wants to be spoiled over a new cold war between China and the US. They think it’s a very big chance to earn big aid and support from China.”

He added that the US officials’ visit and their high level reception would, “…be a very big message to the Dear Leader that China and the US are staying on course and there will be no new cold war.”

What Beijing seems to be conveying, albeit through non-official sources, is that its upgraded ties with North Korea are only a tactical shift and might be reversed for a quid pro quo from the United States like, for example, the withdrawal of US support for Taiwan.

In other words, if the US were to recognize China’s regional primacy, Beijing would be more cooperative.

The point, though, is that in that case Beijing would have achieved almost all of its objectives in Asia-Pacific, with the US losing face and credibility in the region.

At this point of time, it doesn’t look like that the US would be prepared to pay such a high price for China’s friendship.

Even if China’s softer face with the visiting US officials is intended to reassure the United States on political and security issues, the undervalued yuan remains as intractable as ever.

There are moves in the U.S. Congress for legislating levies on Chinese exports into the United States because of the unfair advantage China has from its undervalued currency.

As Paul Krugman recently wrote in his New York Times column, “Right now, China is following a policy that is, in effect, one of imposing high tariffs and providing large export subsidies, because that’s what an undervalued currency does.”

Krugman argues that, “…what China is doing amounts to a seriously predatory trade policy, the kind of thing that is supposed to be prevented by the threat of sanctions.” And he is for going all the way to force the issue with China.

As he says in his column, “I say confront the issue head on and if it leads to trade conflict, bear in mind that in a depressed world economy, surplus countries [like China] have a lot to lose…while deficit countries may end up gaining.”

The US administration is under considerable pressure in the Congress on the question of China’s unfair trade advantage from an undervalued currency. To relieve that pressure it is simultaneously moving the World Trade Organization to look into China’s unfair trade practices like, for instance, blocking US steel exports into China.

According to Ron Kirk, US trade representative, “The duties imposed by China have raised the price of hundreds of millions of dollars’ worth of American steel headed into China, with the practical effect of reducing or blocking exports of our steel to that country.”

And he warned that, “This case makes clear that the United States will not permit China to threaten American steelworkers’ jobs by using anti-dumping and countervailing duty proceedings to harass US exports.”

It is quite clear that until and unless there is some resolution of China’s undervalued currency, and lifting of its measures to restrict and block US exports, US-China economic relationship might be headed toward a trade war. Certainly, the US’ yearly trade deficit with China of over $200 billion is unsustainable.

Many in the US Congress are highly agitated calling for countermeasures, like imposing high tariffs and other penalties on Chinese goods headed to the US.

According to Senator Charles Schumer, “China’s currency manipulation is like a boot on the throat of our recovery and this administration refuses to try to get China to remove that boot.”

The Obama administration is still reluctant to call China’s undervalued yuan as a case of currency manipulation; even though candidate Obama had no hesitation in using this terminology during his election campaign.

China is trying to lower the heat by allowing a small appreciation of its currency. But that wouldn’t solve the problem.

As Treasury Secretary, Timothy Geithner, told the Senate Banking Committee, “We’d like to see a sustained period of appreciation”, designed to largely erase the yuan’s undervaluation.

China’s response is, as it has always been, to show small gestures (like minor appreciation of yuan) to hopefully relieve internal pressures on the US administration. It is part of the pattern to soften the US while still holding on to a hard line position.

Will it work? China has certainly managed it well over the years, while it continues to build up its economic and political power.

The strategy seems to be that as China gets stronger, the US might not have much leverage to influence its policies from a weaker position.

On the other hand, China’s brinkmanship over a whole range of economic, political and security issues might push the US into a situation where it has no option but to hit back.

China is obviously taking a calculated risk, emboldened by the United States’ timid response so far for fear of escalating the developing crisis in US-China relations.

US-China contest for supremacy

By S.P.SETH

The recent China visit of the North Korean leader, Kim Jong-il, is an important development. This is the second of his two recent trips, the first one around the time of the sinking of the South Korean warship, believed to be Pyongyang’s doing.

During that visit, Kim obviously gave his own version of the incident, apparently absolving his country of any wrongdoing. China maintained neutrality on the issue, counseling both sides to maintain calm.

Which disappointed South Korea and the United States, as they believed, on the basis of an investigation into the issue, that North Korea was responsible.

When the United States and South Korea subsequently conducted joint military exercises to emphasize their preparedness and resolve, Beijing was not impressed. It sought to bar the United States from conducting joint naval exercises in the Yellow Sea, because it constituted a threat to China’s security. (South China Sea is already being billed as China’s territorial lake.)

Apart from warning the United States, China was also implicitly cautioning Seoul against involving foreign vessels in Yellow Sea.

Another message is that the Korean peninsula is China’s security zone and the US involvement could trigger a Chinese response, like in the Korean war of the early fifties.

Indeed, the Xinhua news agency report of Kim Jong-il’s visit, not so subtly, pointed out the link, with the North Korean leader having said, “Through this visit the [North Korean] side had yet another in-depth experience of the preciousness…of the friendship created by older generations of revolutionaries of both countries.”

The spirit of the Korean War was thus invoked, when China halted the US military advance toward the Yalu river.

Against this backdrop of such fraternal ties going back many years, the Chinese press ran a flurry of editorials defending a stable relationship with North Korea.

What it means is that China is veering toward more assured support for North Korea and the Kim Jong-il dynasty.

The reinforcing of the 1950s fraternal ties, forged during the Korean War, is not a good portent.

The Korean War had also intensified the Cold War.

This time, it will be China, and not the former Soviet Union, that would hold the opposing flag.

The US is aware of the new danger China is posing to its naval dominance in the Asia-Pacific region. To counter China’s challenge, it is cultivating and expanding political and military ties with regional countries, like Indonesia and Vietnam.

China, for instance, is not pleased with an impending agreement between Washington and Hanoi to share nuclear fuel and technology for Vietnam’s plans to build 14 nuclear power stations over the next 20 years.

The two countries reportedly signed a memorandum of understanding in April about co-operation on nuclear power, including access to “reliable sources of nuclear fuel.”

China has accused the United States of “double standards” when simultaneously pushing its non-proliferation campaign, and disturbing “the preset international order.”

The US obviously is activating regional resistance to thwart China’s moves to declare Asia-Pacific region as its own bailiwick, as it has done with South China Sea, Yellow Sea and the Korean peninsula.

Although the regional countries are careful not to antagonize China, they are unlikely to be enthused about a sudden chorus from China of its regional primacy.

And why is China ignoring its neighbors’ sensitivities and concerns? Wang Hanling, a maritime expert at the Chinese Academy of Social Sciences, has an explanation.

According to him, Beijing used to be concerned that the South-East Asian states might gang up against China to promote their own competing claims.

But not any more. Because: “We found our neighbors had territorial-water disputes to wrangle over and national interests to defend, which makes it very difficult for them to build a unified front against China.”

Moreover: “Even if they succeed in joining together, they are still not strong enough to defeat China.” In other words, they are easy to ignore.

It is in this overall context of China’s virtual declaration of its own Monroe Doctrine that the renewal of the Chinese-North Korean friendship (harking back to the fifties) appears part of a pattern to assert China’s security parameters.

China seems determined to drive out the US navy from regional waters. Robert D. Kaplan argues in a recent issue of Foreign Affairs: “China’s strategy to deny the U.S. Navy entry into certain waters is designed not only to keep U.S. forces away generally but also, specifically, to foster its dominance over Taiwan.”

China’s Taiwan strategy is two-fold. First, it is seeking the economic integration of Taiwan with the mainland to a point where its existence as a separate sovereign entity will be difficult to sustain.

The present Taiwanese government, wittingly or unwittingly, is helping the process.

Second: simultaneously, the military pressure on Taiwan is steadily built up by targeting increasing number of missiles.

At the same time, China’s own military build up is designed to deter the United States from weighing in significantly.

Kaplan highlights the seriousness of China’s military build up by pointing out, among other things, that it is “… constructing a major naval base on the southern tip of Hainan Island, smack in the heart of the South China Sea, with underground facilities that could accommodate up to 20 nuclear and diesel-electric submarines…”

China is also developing anti-ship missiles to target US aircraft carriers and other surface vessels.

Some China scholars have felt over the years that China’s transition to great power status need not lead to conflict, like it happened during the two World Wars.

The main argument has been that China is a beneficiary of the existing global system as facilitating its rapid economic growth.

Professor G. John Ikenberry, a proponent of this argument, put it this way in an article in Foreign Affairs: “Technology and the global economic revolution have created a logic of economic relations that is different from the past--- making the political and institutional logic of current order all the more powerful.”

But things are changing too fast, even in the last two years since Ikenberry wrote his article. China’s military build up continues apace, and it has started to assert sovereign claims over important waterways.

While Western economies (including that of the United States) are struggling to recover, China seems to grow increasingly confident about its new place in the world.

In this state of affairs, Professor John Mearsheimer is closer to truth than Sinologists like Ikenberry.

According to the former, “If China continues its impressive economic growth over the next few decades, the United States and China are likely to engage in an intense security competition with considerable potential for war.”

We are already witnessing a trial run of this in the Asia-Pacific region.

Politics in the midst of natural disaster

By S.P.SETH

The Muttahida Quami Movement leader in self-exile, Altaf Hussain’s, call for a military coup to depose the country’s civilian government, is another nail into the country’s political culture— that is to say, what is left of it. Indeed, Pakistan’s enormous tragedy is highlighting the poor state of its institutions and leadership. Only in Pakistan you had the spectacle of its President undertaking a foreign trip when the country was drowning, so to speak. President Asif Ali Zardari’s European trip seemed to breathe new life into the old proverb of Nero fiddling when Rome was burning.

For President Asif Ali Zardari to leave the country at such a time to tread foreign pastures was not only an act of political stupidity but also showed total lack of empathy for the plight of his suffering countrymen. He was in the United Kingdom to talk about the adequacy or otherwise of Pakistan’s efforts to combat terrorism, when he was needed to set an example for his administration by being on the frontline of this natural disaster.

On the other hand, as his critics have pointed out, Zardari was in the United Kingdom to promote his son’s political prospects back home by making party-political speeches in Birmingham. If so, it simply beggars belief.

Zardari is an accidental President, when his wife, Benazir Bhutto, was tragically gunned down in 2007. Having become President (following elections) against the backdrop of such national and personal tragedy, it was hoped that he would rise to the occasion to prove all his critics wrong who called him Mr Ten Per Cent when he was a minister in his wife’s cabinet.

After long army rule, only in the last few years Pakistan is under a democratic dispensation with an elected President and Prime Minister. Since Pakistan’s civil institutions have tended to be weak, the proper functioning of its nascent democracy is very important. Without it, the army will continue to dominate national affairs. Some politicians, like Altaf Hussain, will always seek political advantage in courting the generals. Judging by reports, the army still continues to have a controlling role. For instance, it has been reported that the government ministers often make house calls on the army chief when so summoned.

There was widespread skepticism when the tenure of the army chief was extended for three years, supposedly by the country’s civilian government. Apparently, they were told what was required of them.

With such deep-rooted popular cynicism in the country’s institutions, restoring faith in the supremacy of the civilian political order is a tall task, as it is. But it gets even harder when President Zardari decided to go on a foreign trip in the midst of the country’s worst floods. It is important to stress that the President of a country symbolizes the nation. And if he tends to function betraying lack of empathy for his people, it brings into question the entire edifice of a nation.

In its present predicament of probably the worst floods in the country, it is quite natural that Pakistan should seek international help. And the aid is now starting to flow, though it would have to be on a larger scale. And it is quite natural that Pakistan’s leaders should be canvassing the global community for more generous aid.

But it is jarring to see President Zardari overplaying the terrorist card and reportedly saying that if aid wasn’t forthcoming adequately militants will exploit the situation to further destabilize the country, even to the point of taking away orphaned babies and putting them in terrorist camps. This is the kind of rhetoric that makes Pakistan look like a failed state.

Pakistan’s human tragedy requires international help as a human gesture, and not as part of an anti-terrorist strategy. It is the duty of the government in Pakistan to requisition all internal and external resources to deal with the situation, without making it another front against terrorism.

Human disasters of the kind Pakistan is facing are also an opportunity to do some soul searching. If Pakistan were to have an effective government committed to provide economic and physical security for its people, the terrorists wouldn’t find a fertile ground for creating mayhem here and there. In other words, the rise of Pakistani Taliban is, to a large degree, an indictment of the Pakistani establishment’s (both military and civilian) failure to govern in the interests of its people.

The military establishment, for instance, has taken a disproportionate share of the country’s financial resources, which might otherwise have gone into developing the country’s woefully neglected education, health sectors and other nation-building activities. In addition, it has devoured a large share of the foreign aid Pakistan has been receiving for the last 30 years, first to beef up the Mujahideen in Afghanistan against the Soviets and, second, to help US fight the Taliban in Afghanistan and in Pakistan’s border areas.

This never-ending Pakistani involvement with US strategic objectives has not only eaten into foreign aid Pakistan has received over many years (much of it pocketed by corrupt military and political elements), but also brought its governing establishment into disrepute with its own people by making the country look like a US puppet.

In an article entitled, Pakistan on the Brink, Ahmed Rashid wrote in the New York Review of Books last year: “Under [President] Bush, the US poured $11.9 billion into Pakistan, 80 per cent of which went to the army.” And where did all that money go? According to Rashid, “Instead of revamping Pakistan’s capacity for counterinsurgency, the army bought $8 billion worth of weapons for use against India---funds that are still unaccounted for…”

No wonder many people in Pakistan do not trust their government with the aid now filtering into Pakistan for relief and recovery programs. As one victim of the floods reportedly said, “They [the government] are taking all the aid for themselves. They are pocketing it. There is nothing coming to the people.” Even if this is an exaggeration, Pakistan’s suffering people cannot be blamed for dumping on their government when they hardly see any real improvement in their lives. And no wonder either that sometimes the Taliban look a better alternative than their corruption-ridden government. When people are suffering even the bad alternative sometimes appears appealing.

Therefore, the Pakistani government has a lot of work to do to establish their credibility and legitimacy with the people. And the country’s present calamity is the time to prove that Pakistani state is up to its task when it comes to helping its people from the country’s flood-ravaged disaster.

Note: This article was originally published in Daily Time

US-China showdown looming

By S.P.SETH

China is no longer squeamish about throwing its weight around. It even seems willing to take on the United States to protect/promote its perceived national interests. And since its core national interests are expanding all the time, the US has a serious security problem on its hands. Which explains the rapid deterioration in their relations.

The dive in US-China relations started with Washington’s decision early in the year to sell defensive weapons to Taiwan. China responded by cutting off defense talks with the United States.

Why is China so hypersensitive to such weapons’ sales when the Ma Ying-jeou administration in Taiwan has been falling over backward to please Beijing? Because China simply wants to overwhelm Taiwan with its superior political and military reach, leaving it with no option but to do China’s bidding.

Only with US arms supplies and commitment, Taipei might be able to counter/deter China’s political and military plans to incorporate Taiwan.

It is a bizarre situation that even when relations between China and Taiwan are the most peaceful it has ever been, the former is still reportedly deploying between 1050 and 1150 short-range ballistic missiles targeting Taiwan. The so-called mother country (mainland China) is prepared to devastate Taiwan to have its own way.

The US worry over China’s hawkish posture is reflected in the Pentagon’s annual report on its expanding military capability. According to the report, China is developing a “carrier killer” anti-ship ballistic missile; it has “the most active land-based ballistic missile and cruise missile program in the world”; it also has “one of the world’s largest forces of surface-to-air missiles”, as well as nuclear-powered submarines.

China is also said to be pouring money into space warfare systems and cyber-warfare capabilities. All in all it is developing an well-rounded military force to project and exercise power way beyond its coastline.

Indeed, there is a certain correlation between its growing economy and military build up. China is reported to have overtaken Japan as the world’s second largest economy (after the United States) based on the second quarter growth figures; though, in terms of per capita income, China is still way behind.

What it means is that China is feeling increasingly confident about its strength, especially when the US’ military power is over-stretched and its economy is struggling to recover. It would seem that China has concluded that the present is the right time to challenge US primacy in the region.

China’s confidence (misplaced or otherwise) is reflected in its strong reaction to the recent joint US-South Korean naval exercises against the backdrop of Pyongyang’s sinking of a South Korean warship.

A foreign ministry spokesman said at the time that China “firmly” opposed any foreign warships or aircraft conducting activities that undermined China’s security in the Yellow Sea and China’s coastal waters.

At about the same time, Pyongyang threatened US with “physical response” if it went ahead with new sanctions. Its official mouthpiece, Rodong Sinmun, was even more colorful in its warning. It said, “If the US provokes another war, it will only be corpses and graves that it will be presented with.”

Beijing might not be as blunt as Pyongyang, but the intent is clear. Which is that it will not take lying down the activities of the US navy in, what it regards as, its waters.

Rear Admiral Yang Yi, of the National Defense University, told an Australian journalist based in Beijing that, “It is some kind of challenge and humiliation to China’s national interest and the feelings of the Chinese people”, when the US decides to “hold this kind of military drill” in its coastal waters.

South China Sea is emerging as another problem area. In the 1990s, China passed domestic legislation proclaiming sovereignty over South China Sea. However, a number of other regional countries have competing claims to islands in these waters.

Under a 2002 proposal China had agreed to resolve these issues peacefully through diplomacy. But that is no longer the case because China has declared South China Sea as its “core national interest” and hence beyond any negotiation.

In other words, China might undertake to restrict or control, in its “national interest”, the passage of foreign ships through this important highway. For instance, one-third of all commercial shipping in the world is said to pass through these waters.

In a way China is challenging the dominance of the US navy on grounds of its national security. With the overhang of the “century of humiliation”, China’s rage over the activities of the American navy is reflected in this recent comment (reported in the Economist): “A retired Chinese admiral likened the American navy to a man with a criminal record ‘wandering just outside the gate of a family home.’’’

In other words, trouble is brewing in Asia-Pacific region, with China ramming up the pressure on the United States to force it out of the region as a dominant power.

There is a strong belief among many Chinese that it is their destiny to once again become the centre of power. As a retired general, Xu Guangyu, recently told South China Morning Post: “China’s long absence from its exclusive economic waters over the past decades was an abnormal historical accident and now it is just advancing to normal operations.”

China seems engaged in a concerted campaign to whip up national hysteria, spearheaded by serving and retired generals. Major General Luo Yuan of the Academy of Military Sciences, for instance, recently threatened to use the US aircraft carrier in the exercises as a “live target”.

He has also suggested the withdrawal of US Treasury bonds to destabilize US economy.

The US is obviously concerned. To quote Admiral Robert Willard of the US Pacific Command, “ …of particular concern is that elements of China’s military modernization appear designed to challenge our freedom of action in the region.”

How will the United States respond to it? Obviously, it is not itching to pick up a fight. But, over time, the choice will be to either recede or confront China.

China appears supremely confident of reaching the top. The US, on the other hand, is keen to accommodate China as a strategic partner but without much success. China has its own independent agenda.

One doesn’t need to be a strategic genius to opine that the US-Chinese strategic rivalry is heading toward a showdown of some sort over a period of time. Its scope and intensity, of course, will depend on a host of factors that might emerge with time.

US-China strategic competition and its dangers

By S P SETH

The reported military exercises by Chinese forces to defend against a possible US attack have raised tensions between China and the United States. The question is: why has China raised the stakes in its relations with the United States?

It is important to realize that this is not a sudden phenomenon. There is a history of antagonism between the two countries, following the communist victory in 1949 in China’s civil war. Indeed, with their long historical memory China hasn’t forgotten the humiliation of Western domination in the 19^th century, including the United States’ advocacy of “Open Door” policy in 1899.

But with the ascension to power of Deng Xiaoping in the late-seventies, China sought to concentrate on building up its economy to create a modern and strong nation. Deng’s advise for his people was to bide their time until China was ready to play its role as a great power.

Apparently, his successors believe that China’s time has come, with its increased political, economic and military strength. Against a backdrop of its “century of humiliation”, China’s reaction to any perceived threat to its sovereignty has a tinge of bitterness with a new resolve not to allow any power to trample on China’s homeland.

Two recent incidents have highlighted this sensitivity. First: The holding of joint US-South Korean naval exercises in regional waters, against China’s stated opposition, has angered Beijing. It regards such activities by foreign warships and aircraft as a threat to China’s security.

By holding its own exercises, China has expressed its anger concretely. As the People’s Liberation Army (PLA), Military Weekly, newspaper said, “…they send a message… If other people threaten our interests, we have enough military means and technological methods to keep them in check.”

Second: North Korea is increasingly emerging as another flashpoint between China and the United States. The United States and its Western allies seem determined to reverse North Korea’s nuclear path. But Pyongyang is equally determined to use that as a tool to extract as much political and economic advantage from it.

With a view to achieve its goal of de-nuclearization in North Korea, the United States has actively sought China’s help, with its considerable leverage with Pyongyang that relies heavily on Chinese supplies of essential goods. In this respect, the United States did have some success, with Beijing hosting six-nation talks (including North Korea, South Korea, Japan, China, Russia and the United States) on non-proliferation until North Korea walked away from the talks.

Pyongyang wouldn’t agree to abandon its nuclear program without a sequential link between its various stages and the provision of political legitimacy, aid, trade and other related advantages. Since it wouldn’t agree to dismantle its nuclear weapons as a starting point, the entire negotiating process has collapsed. And Pyongyang is now refusing to return to the China-hosted six-nation talks. It is threatening a “physical response” to new US sanctions and has condemned US-South Korean naval exercises as “gunboat diplomacy.”

China’s response basically has been to counsel restraint. It has refused to take sides between North Korea and South Korea on the sinking of the South Korean warship, Cheonan, blamed on North Korea. But it hasn’t taken kindly to the US-South Korean exercises in seas that it regards as its security zone. Which accounts for China’s counter move to stage its own comprehensive exercises around Beijing and surrounding areas. According to General Zongqi of the PLA, “The aim is to raise fighting capabilities in this military region and make effective preparations for military combat.” This warning is as serious as they come.

North Korea is, therefore, a serious flashpoint. China has obviously decided to detach itself from the US-coordinated continuous pressure on Pyongyang. The US-South Korean joint naval exercises have obviously hardened China’s position. A serious flare up in the Korean peninsula is likely to send a flood of refugees from North Korea into China’s neighboring region.

At the same time, China regards Korean peninsula and seas surrounding it as its security zone. Therefore, the US participation in military exercises is regarded as a threat to China’s security. China seems to suffer from the Fifties’ Korean War syndrome when American armies pushed closer to its border with North Korea, inviting Chinese entry into the Korean War. Broadly, though, they want the US naval forces out of Asia-Pacific. If that were to eventuate, China will have no real challenge to its regional primacy.

In this tug of war for regional primacy, another important contentious issue is the South China Sea. In the nineties, China declared South China Sea as its territorial waters, thus overriding the rival claims of some of its neighbors to a clutch islands in these waters. However, it agreed to resolve these issues through diplomacy. But now it regards South China Sea as its “core national interest”, which puts it beyond any negotiation.

Even though some of China’s South East Asian neighbors might grumble about its high-handedness, most, however, are getting resigned to China’s growing power. The US, though, is not resigned to it because, among other things, China could restrict or control commercial and naval traffic through South China Sea through its exercise of sovereignty. For instance, one-third of global commercial shipping is said to pass through the waters that China claims its own.

In other words, the strategic competition between China and the United States is likely to intensify in Asia-Pacific region. Considering China’s “century of humiliation” by the West (in which the United States was a late entrant), it is seething with anger, just below the surface, to exclude foreigners from “its” region. Such anger is reflected in the comment of a retired Chinese admiral (reported in the Economist) who likened “the American navy to a man with a criminal record ‘wandering just outside the gate of a family home’.”

It would appear that even though neither the United States nor China is itching for military confrontation, there is always the danger of some miscalculation in a charged atmosphere. Over time, the strategic competition is likely to increase and intensify. And if the history of the two World Wars is any guide, there is always the danger of such competition sliding into confrontation and, eventually, leading to conflagration.

Note: This article was first printed in Daily Times

China’s push to oust US from Asia-Pacific

By S.P.SETH

China is flexing its muscles to assert its power on a range of issues. An interesting recent development of considerable significance over a period of time is the downgrading, by China’s Dagong Global Credit Rating agency, of US Treasury bonds from the top AAA rating to AA rating, with negative outlook.

This is China’s first entry into the world of rating credit worthiness of different countries. China believes that the existing international credit rating system (involving agencies like Moody’s, Standard and Poor’s and Fitch) hasn’t worked well.

The Dagong chairman, Guan Jianzhong, reportedly said, “The essential reason for the global financial crisis and the Greek crisis is that the current international rating system cannot truly reflect repayment ability.”

By downgrading the US Treasury bonds and assessing other countries’ economic credentials (for instance, Japan, Britain and France have low AA- ratings), China is setting itself up as the alternative, if not the only, economic powerhouse.

If China were to follow the logic of its own Dagong agency, it would stop investing in US Treasury bonds and might even start winding down its considerable investments in the US bonds. Which could be very de-stabilizing for global economy, and damage China’s US-denominated investments.

The important question is: what leads China (Dagong obviously is a government approved credit agency, because nothing of this significance happens in China without its authorization) to believe that it can do a better job of credit rating than the existing agencies?

The assumption here is that China has a strong economy, with virtually no sovereign credit risk. But, if China were an open and transparent country, it would have to be concerned about its economic vulnerability on two counts. First, China’s total debt (to include central, regional and local authorities as well as other government instrumentalities) is estimated by some experts as close to 100 per cent of its GDP. If the hundred percent figure is true or close to reality, China’s credit worthiness is as flaky as the most indebted countries in the world.

Any country that rates its debt at 20 per cent, when the real figure is so much higher, cannot be trusted with rating the sovereign credit risk of other countries.

It should also apply to Western credit agencies because their track record in predicting the recent global economic crisis, as well as the Asian crisis of 1997 and 1998 and the bursting of the dot.com bubble of year 2000, was pretty terrible.

In their case, though, one might be able to say that they didn’t speak for their governments. In China’s case, despite the Dagong’s claim of independence, it is not believable. For instance, its report was launched at the headquarters of China’s official Xinhua News Agency.

At the second level: in the last year China experienced a phenomenal growth in lending by its banks and other agencies. According to one estimate, in the first half of 2009, Chinese bank lending was 28 per cent higher than official figures.

More and more loans have been repackaged into investment products, not unlike the subprime mortgage products. As William Pesek writes in Bloomberg, “Repackaging loans and moving them off balance sheet is exactly what got corporate America into trouble and almost killed Wall Street.” He adds, “Such practices raise the odds that China is paving the way for a wave of bad debts.”

China’s economy seems to combine the elements of both American and Japanese economic malaise of phenomenal credit growth, and emerging bubbles in real estate and stock markets.

In other words, setting up a credit rating agency doesn’t make China a superpower.

But China is not only challenging the US on the economic front, but also in regard to issues of territorial and maritime sovereignty. For instance, in the nineties, it had passed domestic legislation claiming South China Sea as its territorial waters.

However, at that time, it looked like an ambit claim still subject to peaceful negotiations with its Asian neighbors, with rival claims. China has now proclaimed the South China Sea into its “core national interest” beyond any negotiation.

Which means that China could restrict and control traffic through South China Sea, with one-third of all global commercial shipping passing through it.

In this way, China is not only claiming sovereignty, but also challenging the dominance of the US navy.

But the US response is as timid as it could be, with its Assistant Secretary of State, Kurt Campbell, emphasizing the importance of dialogue “not just with China but with our friends in south-east Asia, to ensure that we fully support the 2002 process between China and south-east Asian states to deal with any outstanding issues through diplomacy.”

China certainly doesn’t have any intention of doing it through diplomacy when it has nominated South China Sea as its “core national interest.”

At the same time, China has reacted strongly to the joint US-South Korea naval exercises in waters around South Korea. Coming as these exercises do after the sinking of the South Korean naval ship, Cheonan, by North Korea, these are a warning to Pyongyang that the US remains committed to the defense of South Korea.

China’s foreign ministry spokesman, Qin Gang, had earlier warned that China “firmly” opposed any foreign warships or aircraft conducting activities undermining China’s security in the Yellow Sea and China’s coastal waters.

China, though, is unwilling to exercise its leverage on Pyongyang to draw it back from its brinkmanship.

Indeed, North Korea is ratcheting up its rhetoric by warning of a “physical response” to new US sanctions—whatever that means.

The US Secretary of State, Hillary Clinton, said at the recent ASEAN Regional Forum gathering in Hanoi that ”… Peaceful resolution of the issues on Korean peninsula will be possible only if North Korea fundamentally changes its behavior”.

That doesn’t look like happening soon, if at all, while China looks the other way.

North Korea’s belligerence, as well as China’s assertive claims to maritime areas in South China Sea and elsewhere, is causing great concern in Japan. The US is also worried about China’s expansive claims to regional waters, now backed up with its blue-water fleet.

A Japanese government panel has reportedly recommended deploying more armed forces in coastal areas where Chinese naval traffic has increased.

The panel also recommends a more activist role for Japan in its alliance with the US. The report, as quoted in Yomiuri Shimbun, says: “From the viewpoint of strengthening the Japan-US alliance, there should be political will…to allow [Japanese forces] to attack missiles bound for the United States.”

In other words, the recommendation is for further strengthening and tightening of US-Japan security relationship.

China is pursuing a policy of laying claim to as much of Asia-Pacific (whether as sovereign territory or sphere of influence) as it can get away with it.

Most of its neighbors, even where they contest China’s claims, are not inclined to stand up to Beijing because of its growing power.

As for the US, it seems to have lost its puff. China obviously wants to push the US out of the Asia-Pacific region. And if the US doesn’t take a stand on issues like South China Sea, the US might find itself pushed out of Asia-Pacific region.

At present the US has two loyal allies in the region—Japan and Australia. In the case of Japan, unless the United States asserts its regional role and presence, Tokyo might feel abandoned and start adjusting itself to a China-dominated region.

As for Australia, its medium and long-term prospect looks like being China’s quarry, with Beijing eventually able to dictate its policies.

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